What we're seeing here is a sizeable shift in the pattern of consumption!
The Challenge:Retail Growth
What about the impact of price?You could drive a MAC truck through the gap shown on the right between dollar and unit sales,indexed to 1993.
Cover price increases have masked the real sales decline.And as you can see,these price increases have exceeded inflation by a factor of three,too much to simply be a result of the change in product mix.
However,I believe these price increases have been a reaction to,rather than a cause of retail decline.
And I am reminded of the experience of Lou Gerstner,shortly after he took the helm at IBM.He discovered that for 10 years the heads of IBM's mainframe business had systematically raised their prices to mask the inroads of an unfamiliar competitor-the personal computer,which was driving a tectonic shift in the Corporate MIS landscape to which they had become accustomed..
Our problem appears clear.Growth…or more precisely,lack of it.The root cause is less clear.Are we seeing a massive shift in the pattern of consumer demand?The impact of alternative media such as television and the internet?The encroachment of new competition at the checkout?Just what is driving this startling performance?
Drivers of the Retail Slowdown
In my view,retail contraction is being driven by a number of major shifts among consumers,and in the retail landscape.
Consumer behavior has changed.People are not shopping as frequently.Supermarket visits are down-from 85 per year in 1998 to 72 last year.That translates to one fewer shopping trip a month(6 trips instead of 7).For magazines,which are so strongly driven by store traffic,this is a serious issue.
The range of product we offer has changed.We have more titles,a lot more,up from 2,600 a decade ago to almost 5,000 today.We see more and more niche and special-interest titles,and with that comes the challenge of figuring out which outlets and product configurations will be best for producing optimal sales.