The thread on the Wrapaway margin cut for NSW/ACT newsagents includes a discussion on the broader issue of fair pay for service.
Our channel had its origins in Victoria in the 1800s as an agency model. I suspect that margin control had something to do with that. The agency model through last century and even into this century has been maintained for origin products like newspapers and magazines and more recent categories such as lotteries because, again, it offers the best way for suppliers to manage margin.
With many newsagents experiencing value from more commercial arrangements it is no wonder there are more fired up today when they experience disrespect from suppliers when it comes to margin.
Our businesses exist in a traditional commercial world. Our business overheads are set by commercial terms, tied often to performance of the economy outside of our small businesses.
Seeing agency suppliers push effective margin for retailers of their products in the opposite direction of economic factors intensifies the financial harm to businesses that stock them. This is an issue only with agency lines as they are the ones newsagents tend to want to keep and it is this desire that agency product suppliers leverage when they make decisions that disadvantage newsagents.
What has changed is that there are more newsagents now who care less about agency lines, there are more newsagents prepared to ditch agency lines rather than having to fight the fight to maintain a low and disrespectful margin.
Newsagents are finding their feet to make a stand on margin. As their businesses are confronted by disruption from the move online and more competitors stocking agency products, it stands to reason that they look for more equitable relationships. No longer are they prepared to let agency suppliers dictate take or leave it terms.
The Wrapaway decision to slice margin in half saw swift responses by plenty of newsagents. The company responded saying it needed two weeks to work on an alternative. Other suppliers need to take note as I suspect newsagents will react similarly, even with the small downward margin creeps driven by the newspaper publishers and the effective downward margin creep driven by magazine publishers who stifle needed cover price increases.
Experience is giving newsagents more confidence and power. It is good to see them exerting it.
Mark any decrease in traditional agency line margins can only lead to decreased floor space for these products.It already has. General disrespect of our channel by these suppliers simply accelerates their own decline. Our store commenced business in 1885 selling newspapers and general retail. A return to more general retail continues to reward both in monetary and self satisfaction terms.
Steve, I agree. It frustrates me when I hear of suppliers making the same old we’ll bring you traffic and that’s why the margin is small pitch to newsagents. For me, I ditched agency business, except for papers and magazines in 2 of my stores, years ago.