ANITA BALDWINSON, CARM ALFANO, CRAIG SWEETMAN, DEAN WALDRON, JERRY LYNCH

Meet the Presenters

Carm AlfanoVice President of Purchasing TNG

• A member of TNG for over 15 years• Currently manages all aspects of Category Management for both books

and magazines in our retailers• A member of the Industry Action Group.• Prior to TNG ran an Indigo/Chapters large format book store

� � �Industry Leader

All around, funny guyMagazine & Book Advocate

Meet the Presenters

Craig SweetmanOwner of CRS Media Consulting

• Over 36 years of industry experience• Held Executive/Management positions at Conde Nast, CMG and Coast to

Coast for 30 of those years• Launched and managed the growth of such successful publications as

Vanity Fair, Conde Nast Traveler, ZOOMER & Inside Fitness into the Canadian marketplace

• Chair of the Industry Action Group• 2013 recipient of Newsstand Marketer of the Year from CMC and

Magazines Canada• 2002 recipient of Conde Nast Excellence Award for Newsstand Marketing

& Circulation• Post-secondary education in the areas of Business Administration,

Marketing and Psychology

� � �Industry Leader

Builder of Publications

Magazine Advocate

Meet the Presenters

Dean WaldronDirector of Procurement and Supply Chain Metro

• A 34 year industry veteran• Currently responsible for the purchasing and distribution of all products• Directs the Metro360 IT group. • Over the years Dean has been involved in many corporate projects such

as:• The planning and start up of Prologix, • Implementation of Scanned Based Trading• The Book purchasing and distribution agreement with TNG • The development of numerous systems to both grow sales as well

as reduce costs • A system to manage Metro’s new corporate direction of being a

Diversified sales & marketing organization distributing & manufacturing lifestyle products to retail

� � �Industry Leader

Operation & Systems Expert

Magazine & Book Advocate

Meet the Presenters

Jerry LynchPresident Magazines & Books at Retail Association MBR

• President of IPDA since 2006…..MBR is merged entity of IPDA & PBAA• Deep retail experience and knowledge • A member of the Industry Action Group• Previous career with Wegmans Food Markets in Rochester, NY

� � �Retail Expert Industry LeaderMagazine & Book Advocate

Meet the Presenters

Anita BaldwinsonDirector Retail Services | Marketing TNG

• A member of TNG the team for over 13 years• Manages marketing, web and communications for TNG• A member of the “Industry Action Group” (IAG)• A board member of the CMC “The Voice of Audience Development”• 2014 recipient of Newsstand Marketer of the Year from CMC and

Magazines Canada• Previously worked for a Marketing and Business Strategy agency,

developing brand, marketing and web solutions for businesses. • Holds a B. Comm Marketing degree

� � �Marketing & Communications Specialist

Fitness & Health Advocate

Inbound Marketing Certified

1IntroductionMagazines matter

3Magazines At RetailWhat place do print magazines have at retail

4Books At RetailWhat’s working

2What’s Happening At RetailRetail today is challenging at best

5Quebec MarketWhat’s working

7OpportunitiesContinued work to ensure future

8DiscussionAudience participation

6Securing the FutureWhat’s already been accomplished

1IntroductionMagazines matter

2What’s Happening At RetailRetail today is challenging at best

Bryan Pearson in Forbes

What’s clear is the path of retail has rarely been a straight one. The best we can do for its future is to learn by following in its footprints.

Retail Today Is Under Fire

CANADA RETAIL

4.5

1.50.70.1

6.7

Consumer Price Index

Bricks & Mortar Retail TodayChallenging….

�

Sales difficult & moving

around

Across many

categories

Trips … if up, basket

size impacted

Trips... If down, then

they are down &

basket size down

�Sales difficult

and moving around

Across classes of trade

Demographic ShiftsNon-majority populations

Major Macro Polarizers

• Source: Kantar Retail Analysis

TechnologyNew Generations

GeographyUrban Explosion

Incomes DivergeHave/Have Nots

FACTIONALFRAGMENTED FRACTUREDThe death of “average” in a splintered landscape

Shopper Rationalization = Loyalty to “Chosen Fewer,” Unique Retailers…

Average Number of Retailers Shopped in Past Four Weeks*(among all primary household shoppers)

• * Inclusive of visits to stores and websites; averages are for Q1-Q3 of each year.

• Source: Kantar Retail ShopperScape®, January 2007-September 2016; kriq.com

Dispersion of Promo Opportunities

More, Smaller Points of Commerce

Other Fracture Points : Fill-In Trips Increase at Expense Of Other Trips

Arrows indicate significant difference between 2011 and 2016 year to date (95% confidence level)

19

Primary Reason for Last Grocery/HH Essentials/HBC Trip (most recent trip to any mass/club/discount/drug/supermarket retailer to buy groceries/HH essentials/HBC products)

Stock-up

Fill-in

Immediate use

Sale items

Coupon items

Browsing

Special occasion

Source: Kantar Retail ShopperScape®, Feb/May/Aug/Nov 2012, 2013, 2014, and 2015; Feb/May/Aug 2016

Stores Lose Traction to Online Across All Facets of Shopping

• Source: Kantar Retail ShopperScape®, March 2015 and March 2016

20

Biggest declines on key value-oriented aspects of shopping, and even some experiential factors

Shoppers Who Indicate Store Is Best Venue for Key Aspects of Shopping, 2015 vs. 2016(among all primary household shoppers)

Threat

Bricks & Mortar Retail Today…Challenging!

Sales Difficult & Moving Around

Across Most Classes of Trade

Across Many Categories

Trips….. if upBy a Fraction

Basket Size Impacted

Trips if downThen They are Down

And Basket Size Dropping

How are Retailers Reacting?

Recent Survey Retail Execs

Bricks & Mortar Retail Today

Consolidation Continues

Now, a Firm Return to the Productivity Loop…with an Added Focus: Baskets

“We’ve got to win on baskets, and the economics are not only in our favor, but in the customers’ behavior if they shop a basket at a time” -Doug McMillon, October 2016

• Source: Company presentation, Kantar Retail analysis

25

Retailer CEO: Where to Position? Red Ocean | Blue Ocean Update

High

Low CostHigh Low

% $ = 21%% Growth = 21%

Avg. ROIC = 30.1%

% $ = 10%% Growth = 14%

Avg. ROIC = 27.8%

Low Cost

Differentiated

Transition

Red Ocean

LC Donor

Blue Ocean

% $ = 10%% Growth = 20%

Avg. ROIC = 18.3%

% $ = 19%% Growth = 16%

Avg. ROIC = 16.2%

% $ = 1%% Growth =

-0.2%

% $ = 40%% Growth = 29%

Avg ROIC = -2.0%

Source: RetailNet Group Database & Analysis; FactSet; Morningstar

Heightened Focus on Fresh

Publix Whole Foods

Commercialize Ideas: Fresh

Increasingly Found Across Players – Some Less Traditional Fresh Grocers

Heightened Online Focus

will invest approximately $1 billion into its Canadian retail business in 2016, ……….

construction projects for approximately 50 new stores and 150 renovations to existing stores, increased e-commerce expansion, and IT infrastructure and supply chain projects.

The grocery and pharmacy giant said the investment included the continued roll out of its Click & Collect ecommerce, improved health and wellness services, and the inclusion of fresh food at select Shoppers Drug Mart locations. Canadian Grocer 4/13/17

Expansion & Online Focus

Retailer Focus

Social Media

Consumer Focus

DifferentiationDigital Solutions

Watching Competition

Whole Store

Data Driven

SALES SALES SALESProfit - $$$ or %

Loyalty/Retention

Basket SizePrice Competitive

FREE UP CAPITAL

Traffic/Trips Long term focus

Control CostsSKU rationalization

Inventory | Labor | Space

Scale Matters

Traditional | New…. Aldi Lidl | DIGITAL | AMAZON

3Magazines At RetailWhat place do print magazines have at retail

Magazine Sales Canada by COT

Inflation

Magazine Market Share COT, Canada

Canadian Retail Magazine Sales Share of Market

The Challenges

• Sales decline MagNet estimates 7.1% US & 5.8% CA

• Units off nearly 12 % in Canada • Space allocated down• Quality of space is under fire• The negativity associated with

“PRINT” is very much still out there

More Hurdles

Disengaged RetailersWe lack passionate category merchants who are able to explain a category that breaks the rules.

�

Historical Strength Now a LiabilityRetailers did very little, only collected the cash. Sales were strong, space was plentiful.

Publishers Frustrated by RetailWhy the cutback at checkouts, in space and the poor locations? How can you cover a cover?

�

PublishersRetailers

What place and or role do print magazines have at retail?

Did You Know…

Readers of All Ages Enjoy Print

Canadians Prefer Magazines

More MagazinesCanada has access to more consumer magazine titles per capita than most other developed countries

�

Canadians Prefer Magazines

88%92%

Feel that it is important that a magazine have

editorial content specifically

created for them

�Agree that Canadian

magazines play a significant role in

informing Canadians about

each other

�

90%

Feel that U.S. titles don’t

effectively cover Canadian issues

�

Canadian Magazines Have Staying Power

9 Years 1, 200

Total number of magazine Titles have stayed above

English TitlesFrench Titles

Source: Mastheadonline; Magazines Canada; Statistics Canada; CARDonline

U.S. Spill In Long Term Decline

42%59%

Average Circulation Spill/Title

Overall Spill Circulation

Why Print Magazine Ads Work

� Preferred by majority (even millennials)

� More focused attention, less distraction

�Drives sensory involvement which contributes to its impact on readers

Slower reading speeds

�Stimulates emotions and desires

�Higher comprehension and recall

Paper Readers Remember More: Neuroscience says that reading on paper is slower and deeper; paper readers remember more.

Ads in Magazine Media Are Valued & Trusted

More than

ads in other

media

To view the CTC Box Score visit www.ctcmagazines.com/boxscore/

CTC Box Score

Out of 3,091 magazines sold on Canadian newsstands, how many increased their annual $ sales between 2012 and 2015?

Titles That Grew

0 143

367 688688

0 7

25 33

Categories That Grew

Of the 73 categories on the CTC Box Score, how many were up in total $ sales between 2012 and 2015?

15 Categories*

*In 2016, based upon TNG #

25

POS $ Up Versus $ Down

Source: TNG 2016 Versus 2015 POS Retailer Data

Some Awesome Retail Sales

Retailer 1

$40KIn 1 week

Retailer 2

$199K In English

Mags

$425K

$550KQuebec Retailer

How do you think mainline magazine titles performed in the past 3 years in terms of total annual $ sales?

Mainline Title Performance

-16% -24%

-8% +2%

2879 Mainline Only

TitlesOut of 3091

+2

Canada Comes Through

Canada is 10% of the North American population

However, on many USA magazines Canada outperforms this 10% number.

Title CDN % of Total NA Sales

Cosmopolitan 17.3%InStyle 15.2%O Magazine 20.2%Vanity Fair 17.7%Women’s Health 15.7%Vogue 15.0%National Geographic 16.8%Fine Cooking 21.7%Car & Driver 15.5%Popular Science 16.9%Dirt Bike 20.0%Threads 23.1%Mopar Muscle 28.8%

Here are some examples…

Just Some of the Titles That Resonate

ME-TimePrint offers escape from

hectic lives. Curl up & have an experience with favourite

Collectable

Premium content that thecustomer will pay for and

save

Tactile & AddictiveFeels good beneath the

fingertips and is an immersive experience

Just Some of the Titles That Resonate

Bookazines are up +25% $High quality, not price

sensitive, growing category

Sell Through Average 47%

Top-selling issue with +75% sell through in areas

+26% $, +8% UnitsIn 2017, so far, the higher

retail price helping Star

Just Some of the Titles That Resonate

14.3% In Unit Sales

Highest efficiency at 36.7%Increased cover price

56.5% In Unit Sales

Newsstand revenue increased 71.4%. Virtually

unchanged efficiency

121.7% In Unit Sales!

Highest sales efficiency ever at 51%. Increased price to

$8.95. Digest size.

Just Some of the Titles That Resonate

Sell Through Almost 50%2nd highest unit sales of any

Zoomer issue since inception

Original CoverTribute cover created within

24 hours of his passing

Field Agent Consumer Survey June 2015

Sought After Connection to the Consumer

read

coverphysical

articlesinteresting

pages

coupons

pictures

timegoodwant

feel

somethinginterested

storylook

recipesget

use

take

easier copy

interestsave

keepreading

able

pricearticle

Simply Great Product

4Books At RetailWhat’s Working

“Books Aren’t Dead, (They’re Just Going Digital)”-Newsweek, 2007“Are books an endangered species?”

-Forbes, 2011

“What will become of the paper book?”-Slate, 2012

“It’s official – the book is dead”-Huffington Post, 2014

Stable Canadian Book Market

E-Book Share

Print

E-Book

Categories

�

POETRY79%

�

COOKING6%

�

COMICS & GRAPHIC NOVELS

7%

�

THRILLERS9%

�

LITERARY COLLECTIONS

14%

�

TRANSPORTATION28%

Hot Topics

Categories that saw a sales boost in 2016

Reader Discovery

Where were you browsing/searching when you became aware of this book? (N=2,690)How Canadians Buy Books 2015, BookNet Canada (September 2016)

WHERE WERE YOU SEARCHING?

45%PHYSICAL

STORE

Why is it Working?

Seasonal Displays

Holiday Endcap Mother’s Day Endcap Seasonal Gondola

Move on New & Hot Categories

Adult Colouring

The “Suggested” Purchase

Read of the Month

Pick of the MonthBook of the Month

Showcase Pick

Media Tie Ins

Data and Replenishment

Demand

Supply

Transport

Inventory

Planning Process

Safety StockReorder Level

Order Up-to LevelOrder Quantity

Service Level

Flexible Display Space

Topper Program Display What’s Hot Right Now

5Quebec MarketWhat’s working

Challenges and Successes of the Quebec Market

BOOK SALES OUTPACE OTHER

REGIONS

3 TO 1

8.2 MILLION

78% French

8% English14% Other

Challenges

• Fixtures

• Free for all

• Inconsistent checkout product

• No one followed POG’s

• Logo’s over-stickered

• Commissioned magazines

• No retailer support

• No English titles

• Lost Publisher support

We Believed

Fixing the System

2014 2017

1 Distributor Relationships Retail Relationships Execution2 3

Phase 2Phase 1 Phase 3

Build Cooperative Environment Analyzed Marketplace Demographic Rationalization

Results

Improved Relations

Professional business relationship with French

suppliers & Quebec based retailers.

Product Rationalization

Increased English product in stores . Exited stores in French

regions.

ComplianceCheckout and mainline

space compliance is now honored and adhered to

Publishers Participate

Publishers are now willing to participate in checkout

programs

Dedicated SpaceDedicated space/Pockets

for all suppliers on all fixtures based on

demographics

Continue Improvements

Expand major promotions. Test other opportunites

In the Midst of Every Crisis Lies Great Opportunity

6Securing the FutureWhat’s already been accomplished

The Good News to Build On

Product that is extremely profitable to

retailers

�

1

�

2

�

3

�

5

We are still here despite

the loss in volume

There are still significant category

sales

A supply chain that has

wrenched out costs

Retailers looking for

help

�

4

Industry Initiatives

SBT FORMED IAG RDA

Inventory

Industry Action GroupGroup of industry participants from the supply chain. Publishers, Distributors,

Industry Association Leaders, Wholesalers, Consultants

Pass-Through RDASimplified the system and highlighted retail discounts to retail more clearly.

Scan Based TradingRetailers no longer own the

inventory

Industry Action Group Mission

To work as a unified entity to identify challenges & opportunities and to find creative and positive solutions which create growth for today’s Newsstand Industry.

To facilitate communication of the consumer and business benefits of the reading category. We will work to move the industry forward by initiating positive changes and employing best practices while working to ensure that every participant in the Newsstand supply chain can benefit.

� 7OpportunitiesContinued work to ensure future

�Remove

“Dead” from vocabulary

84% More

engaged with ads

Digital will lose ad budgets (eventually)

New print start-ups +

digital publications

returning

�Retail looking for profitability & consumer connection

Reader demand

is still strong

Raise Expectations

• Expect to grow not to fall• Seize opportunities to do more• Incorporate digital to help sell more print• Engage & communicate with retail at all

levels

Communication is Key

Shopper Survey

Develop Resources

Promote

Brand-SparkCanadian Shopper Survey

Communication Tools

Tools for interacting individually & collectively

Newsstand Build upon momentum

Table Program Display What’s Hot Right Now

Retail Demands New Approach

Gondola Program Gondola ProgramNew Racking New Racking

A changing and evolving environment is creating

opportunities

Retail is changing

• Grow sales profitably• Complement the go-to market

strategy• Drive trips and or basket size• Energize Consumers

Demand for Categories

• Focus on consumer differentiation and loyalty

• Quality publications are exciting

Magazines Can Answer

��

8DiscussionAudience participation