Click here to access to report by Boston Analytics into the magazine distribution trial established by the MPA and run in selected newsagencies earlier this year to trial possible changes to the magazine supply model.
As I have written here, here and here (and more – search MPA at this blog) previously, the trial was flawed. It did not test a model that would serve the needs of newsagents and the majority of Australian magazine publishers.
A big challenge faced by publishers is the reduction in floorspace allocation for magazines in newsagencies. The MPA trial did not test any measures that would arrest floorspace allocation moves by newsagents. Further, everything changes when Network Services was closed earlier this year.
The solution as I see it for a bright future for magazines in newsagencies was outlined here in October last year where I urged magazine publishers to respect newsagencies as magazine specialists.
My proposal is simple – make newsagents the magazine specialists by only supplying them.
This single move, of choosing to place titles exclusively in the newsagency channel, would encourage newsagent support. I am not talking here about one or two titles. No, I am talking about hundreds of titles, popular titles, titles in the top 200 even. Place these exclusively in the newsagency channel and you change the game, you get the attention of newsagents, you push back against the supermarkets and you respect your product.
While I am confident that a bold move such as I outline here would benefit publishers and newsagents it would need careful negotiating, involving many titles and requiring thoughtful newsagent engagement. And, yes, there would need to be a discussion on margin. Rent and labour in retail are considerable expenses and titles not paying their way serve no purpose in any retail business. However, margin can be considered in various forms. For example, there could be a base stocking fee or some other levy to support the category.
If sought after product is only available in one channel then the two main parties to such a relationship, the publisher and newsagents, ought to benefit. We would have a shared commercial objective, far more so than exists today.
This call by me was published by industry journal Mumbrella. No publisher contacted me to discuss it.
Seems only fair to me that the publishers now try OUR idea.
Mark, publishers don’t want to talk to you about what newsagents want, they and the distributors are only interested in what is best for them not newsagencies.
They don’t get that a whole of business approach in the magazine channel will strengthen the channel and that involves newsagency profitability being increased.
The 10-13% decline in sales is no surprise as it closely mirrors the decline for the rest of the industry that were not involved with the trial. Something that they didn’t need to waste a trial and ACCC time on.
The 9% drop in returns to 38% is hardly anything to get excited about neither. In theory there can be close to ZERO returns if supply was set correctly. This of course will not happen because the advertising revenue is tied to the inflated distribution numbers. A 10-20% return figure would barely be tolerable.
On the allocation of floorspace it is a myth that newsagents have decided to cut magazine space without good reason. Space is cut AFTER sales have declined.
All in all, nothing will change willingly by any party above newsagencies in the newsagency channel, it will all be forced change by attrition over the next few years.
i do not intend to stock mags by 2020. it has been declining 20% consistently, so what is really left to expect other than lost making really?
650 titles currently but easy to see how it could become top 300 in our store within a couple of years.
UNLESS magazine distributors would like to change things to improve our results.Yes Peter B. Good point. Nobody has been pre empting the decline. The cutting of space takes place after the declines are apparent.
I am still waiting for it to plateau out.
As a collective group we need to stop talking about a return rate of 38% and call it what it is, an allocation over supply of 61%.
What other item in our stores would we order to such an inflated ratio.
Its time – 50% margin, firm sale.
We know the numbers that we need and on this supply model we tell the system how many of what we require.
Wastage minimised, saves money for everyone.
My store was part of the trial. When the trial stopped our supply from GG increased by over 50%! This is even with figures showing that during the trial period our total magazine sales declined. Work it out…