While there is a considerable difference between a newsagency and Woolworths, take a look at the terms (discounts, rebates and the like) Woolworths listed as at two weeks ago:
Warehouse allowance
Distribution allowance
Quantity buy allowance
Ullage
Co-Operative allowance
Business volume rebate
National volume rebate
Tax
Freight
Standard deal I/O
Standard deal deferred
Promotional deal I/O
Promotional deal deferred
Settlement discount
These are the various rebates, discounts and allowances which cold be paid by suppliers to Woolworths in return for them stocking product.
Newsagents have no such allowances, rebates or discounts in place except in the greeting card category and even then it is a flat rebate.
In the newspaper, magazine and greeting card categories, newsagents as a channel are more important than Woolworths yet I suspect their deals are far better. While one could argue that is because there is one account and a central management point, the in-store real-estate and labour investment by newsagents is far more significant.
Yes, “one could argue that this is because there is once account and a central menagement point” – but this wouldnt explain why independant supermarket groups (namely IGA and Foodworks) get access to many of these as well. They are structured a little differently to compensate for the nature of the supermarkets being ‘independant’, but that is to be expected.
If suppliers want newsagents to become more aggressive in their retailling and ditch bad habbits they too need to change their ways. They cannot continue to refuse undertaking commercial practices that other industries widely use.
As it stands today, I cannot see suppliers ever giving better terms, rebates, allowances to newsagents unless they really really have to. I totally agree that suppliers “need” to change their ways with newsagents but unless “forced to” by marketing groups or national federations then I cannot see it happening. Why would they give away money when they don’t have to?
Niall,
Some will be forced (eventually), some will come to the party willingly because they see it as benificial to them.
Providing rebates to marketing groups and individual stores within those groups is designed to be beneficial to both parties. Usually, by providing a rebate that supplier can guarantee better exposure of their product through those stores or, in some cases, even become the exclusive supplier of a certain range.
Providing money to a marketing group will also give that group more financial resources with which to grow the brand. The better the recognition of a marketing group brand, the better the exposure of the products in those stores.
Rebates are partly an indirect ‘investment’ in marketing and brand exposure.
Those suppliers who accept this way of thinking early will be better off for doing so. Those suppliers who don’t will not reap the benefits.
Jarryd,
Your points are absolutely correct and I totally agree. Unfortunately there are not as many (or at least don’t appear to be as many, looking from the outside in) straight thinking and proactive newsagents out there like yourself and Mark and others who comment here and at your blog.
A business partnership between supplier and in this case newsagent/group will always give the best return for both parties. The problem as I see it (as I said looking from the outside in as I am not a newsagent….yet) is that currently some or many suppliers don’t see the newsagency industry as a major account/customer for them.
I know one supplier who told me recently that they have newsagencies (namley GNS) on their books because they can and have no plans to drive this relationship (this is a point I know has been debated many times here before).
It appears from reading this blog that this could be changing as more current newsagents lift their game and new ones with new thinking come in. I hope this is the case. With close to 5000 newsagencies, this could be a very powerful group and for suppliers a very important account.