150 newsagents have lost BP outlets as customers with the decision by Pacific Magazines to supply their titles direct instead of through the newsagents. My post from a week ago has been confirmed. My understanding is that Pacific felt they had to act to protect their BP revenue. Last year they lost retail shelf space in Coles and Mobil outlets because they refused to go direct. To lose more shelf space to ACP Magazines would have impacted significantly. The Pacific move protects their revenue stream, provides BP with 25% commission and cuts the existing newsagent suppliers out of the loop.
While I am disappointed by the decision, I understand. Pacific had no choice – either go direct or lose sales altogether. They have been running trials since 2004 and this decision has only come after a long review of the direct supply trial results.
The Pacific decision is a victory for BP and indirectly for Coles, Woolworths and Mobil. It’s a loss for newsagents and small business. Coles has driven this push for direct supply of magazines from the outset. They demand margin. Whereas newsagents used to service their magazines daily, Coles would rather extract better margin and have a poorly maintained magazine display. Their actions and those of their colleagues demonstrate poor social responsibility.
Sub agents, like BP, are important to many newsagents. They help justify the maintenance of a delivery infrastructure. The erosion of sub agent revenue by the Pacific decision this week and the ACP direct supply decision in 2004 (which hit more than 850 newsagents) has eroded sub agent revenue for newsagents to a point which will see more newsagents get out of distribution altogether. This is the breakdown of the most efficient newspaper and magazine distribution system in the world. It’s a breakdown as a consequence of deregulation driven by the current Federal Government.