1999 deregulation leaves newsagents half pregnant

When the Federal Government led newsagents to the trough of deregulation in 1999, Prime Minister John Howard crowed that he had delivered a good outcome for this small business channel. It’s a claim he repeated during the 2004 electron campaign.

The Prime Minister is wrong. The job was only half done. Newsagents have been left with operational processes which disadvantage them and, indeed, provide their new competitors an unfair advantage.

Indeed, the government demanded that newsagents deregulate but did not provide funding for professional representation through the deregulation negotiation process. This say newsagents negotiating with lawyers from newspaper publishers, magazine distributors and the ACCC. A government concerned about small business would have made sure that they were professionally represented so that the discussions had some balance.

The supply and accounting processes newsagents have today are the same as in the regulated world when we had more customers and a certain exclusivity. Today, with many others taking the top selling product, we have less traffic yet onerous supply arrangements for the lesser selling product. This is choking some newsagencies.

Australia needs to decide if it wants this newsagent channel. While that sounds dramatic, the question is realistic for unless more equitable magazine supply arrangements are put in place for low volume titles, newsagents will go broke.

Magazines are important to newsagents. Hence the need for newsagents to consider the economic viability of current processes so that we can maintain our position as magazine specialists and so that all publishers have access to a viable magazine retail network.

Below are my proposed proposed magazine distributor Key Performance Indicators I’d like to see discussed between newsagents and magazine distributors. I am sure that through discussion a set of KPIs can be agreed which serve all stakeholders.

TECHNOLOGY

1. Implementation of appropriate systems in supplier offices to enable scale out decisions based on current data and not data 13 weeks old as happens today.
2. Provision of supplier invoices electronically without any cost to access the service.

SUPPLY

1. Scale out to reflect title performance in that outlet with supply to be no more than 25% above recent sell through rates except in exceptional circumstances where the additional product is expected to sell due to cover feature or special promotion. With higher scale out to be accepted for an additional fee.
2. Offering of a carrying fee for titles which do not meet minimum performance criteria so that the newsagent is paid to carry the title.
3. Newsagent to be able to easily and electronically alter order quantities (i.e. without having to call a call centre and wait on line for too long)
4. Changed supply figures not to be altered without reference to newsagent unless such change absolutely supported by sales data.
5. No cut of supply below current recorded net sales.
6. No reissue within six months of last issue of a title.

RETURNS

1. Online returns to be implemented ASAP.
2. Returns to be credited within 48 hours of provision of electronic returns data or 7 days of provision of physical returns form.
3. Returns to be called no later than the date of the next issue of the same title going on sale.
4. Agreement of record keeping requirements for returns form and immediate acceptance in the event of a distributor losing a form and the newsagent proving local store compliance with standard practice.

ACCOUNTS

1. The threat of cutting off of supply to cease in cases where there is a legitimate dispute over the amount owed.
2. Agreement in independent arbitration in the event of a credit dispute – similar to an ombudsman approach. This could be something the distributors all fund like the telecommunications Industry Ombudsman.

I estimate that newsagents care currently subsidising at least 50% of the magazines they carry. This is an inequitable situation which cannot continue if newsagents are to survive. The only solutions are for under performing titles to be cut or for newsagents to be paid a fee to carry under performing titles. Maintaining the status quo will kill many of these independent small businesses.

The Prime Minister has been told of the challenges as has Fran Bailey the Minister for Small Business and Helen Coonan the Minister for Communications. They have done nothing.

The Federal Government needs to decide if it supports small business and the newsagent channel in particular. Turning its back as it has done for the last six years puts more than 20,000 jobs at risk and thousands of families’ life savings at risk. It also puts at risk the cultural, social and economic value of the unique newsagent channel.

The challenges are not that great. All it takes is will on all sides to navigate them in pursuit of a more level playing field than the Federal Government has created.