March 21 (Bloomberg) -- For years, publishers could count on bored shoppers waiting in the checkout line to pick up a magazine, get engrossed in an article, and toss it into their cart alongside the milk and eggs. Then came “mobile blinders.”
These days, consumers are more likely to send a quick text and check their Facebook feed than to read a magazine or develop a momentary craving for the gum or candy on display. That has spurred companies such as Hearst Corp. and the Coca-Cola Co. to reconsider how they showcase their wares in supermarkets.
Hearst, which sells 15 percent of its U.S. magazines at retailers, is adding cardboard displays in places other than the checkout line. And consulting firm Leo Burnett/Arc Worldwide says it has worked with Coca-Cola to add soft drink coolers to locations like the supermarket deli.
“We avoid the dreaded cell phone at checkout,” said John Loughlin, general manager of Hearst’s magazine unit, which includes titles such as Cosmopolitan, Seventeen and Esquire. “Magazines are an impulse purchase, so we have more than one opportunity to capture the consumer’s attention.”
The problem has worsened in the past 18 months, as more than half of all Americans now carry smartphones, Loughlin said. Single-copy sales of U.S. consumer magazines fell 8.2 percent in the second half of 2012 from the year-earlier period, according to the industry group Alliance for Audited Media.
The gum category also “has been challenged” and declined 5.5. percent last year, Hershey Co. Chief Executive Officer John Bilbrey said during a conference call in January.
The problem of “mobile blinders is a huge factor,” said Marshal Cohen, an analyst at NPD Group. “Companies have to rethink the in-store experience.”
To catch consumers by surprise, companies are setting up more temporary cardboard displays around stores, sometimes offering unexpected combinations of products. Shoppers browsing the aisles of 1,500 Kroger Co. supermarkets may stumble upon a display offering a $3 discount on a six-pack of Diet Coke and an issue of Cosmopolitan.
Similar promotions will appear in CVS Caremark Corp. pharmacies and Target Corp. stores this year. Hearst is preparing 20 in-store campaigns with the likes of Coke and L’Oreal SA, up from four in 2012, Loughlin said.
Last October, Hearst put together a display with coupons, the Food Network magazine, and bottles of wine and set it up in 200 Harris Teeter Supermarkets Inc. locations. Magazine sales in those stores rose 50 percent, Loughlin said. Even so, Hearst isn’t abandoning the checkout aisle: The company continues to offer its magazines in wire pockets near the register since that’s where shoppers are used to seeing them.
Not all companies are making changes, said Artemis Berry, senior director for content and community at the National Retail Federation’s digital division, Shop.org. Stores selling shoes or accessories, which rely less on impulse sales at checkout, aren’t suffering as much from mobile blinders.
“It’s retailers with more traditional checkout experience, with a lot of impulse purchases displayed and long line times,” Berry said.
Mark Peterson, vice president of newsstand sales at Meredith Corp., publisher of Better Homes and Gardens, Family Circle and Eating Well, says he’s seen anecdotal information about mobile blinders, though no empirical data. He suspects that other trends are hurting sales of checkout items as well, including higher taxes, commodity prices and gasoline costs.
Some products could leave stores altogether, said Nick Jones, executive vice president at the retail practice of Leo Burnett. Gum, for instance, may need to move from the checkout display to a vending machine at restaurants, he said.
Leo Burnett worked with Coke on adding new single-serve drink coolers away from the front of the stores. It’s natural for companies to look for alternatives to impulse-buying at the checkout counter, Jones said. Marketers placed magazines and candy there in the first place, he notes, when they saw an opportunity for making extra sales.
“The smartest marketers are looking at user behavior” and adapting, he said. “People will have to find those kinds of insights for the 21st century.”
The checkout process itself may change radically in the next few years, and again, mobile phones are to blame. Soon, shoppers could simply scan their items and pay with their phones, with no waiting in lines, Jones said.
“You might see magazines in produce or the meat department, in the context of cooking,” Jones said. “It’s one of those situations where you could look at technology as your nemesis or salvation.”
Retailers and consumer-goods makers can also use smartphones to boost sales. When a shopper buys steak, for instance, a company could send him a mobile coupon for a bottle of red wine, prompting an extra purchase, Jones suggested.
Hearst is teaming up with Realtime Media and Prizelogic to offer consumers in-store prizes. Consumers may be able to text “Cosmo” to win prizes like a Prada bag or cash -- and get a coupon to purchase a magazine on the spot.
Such offers, Loughlin said, are “a way of using the mobile device to our advantage.”
To contact the reporter on this story: Olga Kharif in Portland at email@example.com