Look at this evidence of Network Services increasing supply some issues back of Belle to a newsagent without any justification in the sales data. Network is owned by Bauer. Bauer representatives told the ACCC recently that they want to support newsagents and help them grow their businesses. The actions from Bauer indicate something different. No wonder newsagents early return.
Shame on Bauer.
Look at this evidence of Network Services increasing supply of Empire magazine to a newsagent without any justification in the sales data. Network is owned by Bauer. Bauer representatives told the ACCC recently that they want to support newsagents and help newsagents grow their businesses. The actions from Bauer indicate something different. No wonder newsagents early return.
Shame on Bauer.
Look at this evidence of Network Services increasing supply of Good Medicine magazine to a newsagent without any justification in the sales data. Network is owned by Bauer. Bauer representatives told the ACCC recently that they want to support newsagents and help newsagents grow their businesses. The actions from Bauer indicate something different. No wonder newsagents early return.
Shame on Bauer.
One newsagent told me yesterday they had received 27 new titles from Bauer Media’s Network Services this month and two reintroduced titles. 27 new titles is nuts. Performance data from the business does not support this expansion.
The result is cash, time, space and paper wasted as well as competitive disadvantage for the newsagent and, I suspect, plenty more like them in the channel.
At some point there will be newsagents who shut down their Bauer account believing it could be the only way to stop gross oversupply by the company.
Here is evidence of more overloading by Bauer. Not one issue of Homes+ has come close to selling out since October 2014 yet they increase supply by 20%. This from the company that says it supports newsagents and wants to help us make more money from magazines.
Their actions do not match their words.
Bauer Media increase supply of the Australian Women’s Weekly for a newsagent by 44% yesterday for no reason in sales history as data in the screenshot indicate. Even with the terrific Julia Morris cover story the increase is not justified.
This unwarranted oversupply is a waste of paper, labour, fuel and space. But Bauer would have known this. The oversupply makes a mockery of what they recently told the ACCC they want to do in relation to magazine supply.
The ACCC has witten to interested parties advising the decision to approve the MPA application for authorisation to conduct a pilot program. Click here for the Determination by the ACCC.
The ACCC decision is despite:
The majority of post-draft determination submissions were received from newsagents opposing authorisation of the pilot.
The role of the ANF is documented in the determination including at point 21 (page 5) their strong support for the MPA application and then at point 27:
27. The ANF provided a submission maintaining its support for the pilot and responding to issues raised by newsagents. Another from a provider of point of sale software opposed the arrangements.
The ACCC in the determination makes a number of comments I may comment on here at a later time as I disagree with their thinking.
The reality is – the result is what it is. We all move on. I remain committed to pursuing fair and equitable magazine supply for newsagents.
Here is magazine sell through rate data at the MPA category level for Network Services titles supplied to a newsagency.
Click on the image for a larger version.
Ignore the last column as the month was not complete when the report run. The eleven months prior offer damning evidence for some title categories.
A consistent sell through rate of 50% is necessary for break even in the newsagency from which I have this data. They are losing money in more than half the categories from Network Services.
It is data like this a newsagent could use as cornerstone evidence supporting a claim of unfair behaviour by a magazine distributor.
To magazine publishers I would say – here is the data newsagents have. Plus they have it down to the title level. I have not published that here as it would surely upset some publishers. It disgusts me to see a title consistently selling at 22% each month or less for every month of the year.
This is what is causing newsagents to reduce floorspace allocation of magazines. It is not a new situation.
Here is the full text of a letter I sent on newsXpress letterhead yesterday to the ACCC in relation to the MPA Pilot program that tests proposed new magazine supply rules. I am sharing it here to keen all newsagents informed.
In Annexure C of the submission by the Association of Magazine Publishers Australia Inc. (MPA), the MPA claims newsagents have become increasingly disengaged with the magazine sector (point 7). They say this has occurred because of labour costs, freight costs and cash flow issues (point 6).
The MPA proposes a three-pillar solution at point 8 of Annexure C: a Code of Conduct, Channel Engagement (educating of newsagents to revive interest in magazines) and Retail Skills (training newsagents on how to manage magazines efficiently).
It is our view that the goals set by the MPA could be achieved if newsagents are supplied on the basis of what will reasonably sell in their businesses. We do not see a need for training or education. Indeed, newsagents themselves have demonstrated how much they value magazines by engaging in matters related to this point by the MPA and not quitting the category altogether.
To demonstrate that a trial is not needed, newsXpress sought from its members magazine sell through data from the last year. We provide this data to the ACCC today under cover of this letter. Each report is for one business and details the sell through rate percentage by distributor and magazine category. Some provide data at the magazine title level.
In the reports from a selection of businesses for which we have received sell through rate data you can see situations of gross oversupply over the long term. This is the sole reason newsagents have become increasingly disengaged with the magazine sector. Fix this and you fix the problem.
In the reports you can see the extent of product wastage. Newsagents carry the major cost of this in terms of space, labour, freight and opportunity cost. They have no mechanism for reducing any of these costs as they have no control over supply.
The MPA has the capacity to address this oversupply issue among publishers, indeed among their own membership. While the MPA has been prosecuting the case for ACCC approval of its Pilot program, some of its members have knowingly engaged in oversupply not supported by the sales data evidence provided by newsagents. Again, fix this and you fix the problem.
The package of data provided with this letter demonstrates just some of the evidence of oversupply of magazines that newsagents have on their computer systems. This is evidence that has been offered to the Australian Newsagents’ Federation in the past in support of making a case for fair and equitable supply of magazines.
This sell through rate data is also available to the magazine distributors and publishers.
For the record we note that the sell through rate is the percentage of copies of magazines unsold by the end of the on-sale period. The sell through data is isolated to individual issues. For example, a sell through rate of 30% for Food magazines for, say, June 2014, would be the result of supply for the June issue less returns for the June issue when it came off sale.
We hope the data piques the interest of the ACCC in this matter and that it asks why it is that small business newsagents are supplied some magazine titles at a level to drive a continuously uneconomic sell through rate.
The MPA says the ACCC should not open its consideration of this matter to be broader, into a consideration of supply to newsagents versus other retailers. We say consideration of such matters is invited through the MPA description of the supply model to newsagents. That this model is quite different to the model for newsagent competitors is a key factor in the efficiency of magazines for newsagents. It sits at the heart of our ability to be competitive with magazines. Any change maintains terms for us that hinder our ability to compete ought to be considered as having little public benefit.
newsXpress would welcome an opportunity to further explore the data provided and the points canvassed in this letter should the ACCC be open to such.
The letter will be on the public register of the ACCC. Due to confidentiality requirements, the comprehensive magazine sell through rate data will not be put on the public register.
Ever since I and other newsagents started speaking about the poor representation of newsagents by the ANF on the proposed magazine supply rule change trial being organised by the MPA, representatives of the ANF have attacked some speaking out but refuses to engage in real dialogue.
There was Ann Nugent, QLD ANF staffer, reportedly speaking out about me at a public meeting, ANF Chair Stuart Kilborn on the phone to a newsagent he’d never spoken to complaining, ANF CEO Alf Maccioni responding to newsagents putting down those challenging the ANF approach and the ANF SA rep, Colin Shipton out in SA reportedly putting down any who disagree with the ANF.
While the ANF is entitled to say what it likes, this approach of attacking those questioning its strategy and then ducking for cover and not engaging reminds me of a propaganda film used in the US in the 1950s: Duck and Cover.
I proposed a debate with the ANF CEO so that newsagents could judge for themselves. Refusing this opportunity of transparency damages the ANF and opens for question among newsagents why it is not open to publicly talking about its policy position, a position it established without consultation of those it claims to represent.
The suggested debate (or discussion if you prefer as I don’t see it as adversarial) offers the ANF an excellent opportunity from which to show newsagents their approach is right, it shows them not ducking for cover.
The newsagent who sent me this evidence of oversupply of Wheels magazine must be wondering if this is payback for some offence as there is no logic behind Bauer Media’s decision to double supply of Wheels magazine. There is no evidence in the data either. Look at April, Bauer bumped supply from 4 to 8 even though at 4 they were not selling out. The newsagent feels helpless. They also feel their work in ensuring accurate sales data is wasted.
Bauer is the driving force behind the MPA supply rule change trial, a trial with a rule of no early returns.
Bauer Media does not need any trial to sort out its own systemic oversupply to small business newsagents. No, all it needs to do is change its practices.
You’d think a magazine distributor owned by a publisher could get the scale out of that publisher’s titles right. Sadly, Bauer media’s own network Services has failed on that score. They have increased our supply of the Take 5 Crime & Puzzle Special from 12 copies to 16 to 18 despite the evidence showing that ten copies is appropriate based on our sales history.
While Bauer fronts the ACCC and says the company wants a strong newsagents channel and wants to be part of developing a fairer model, here they are doing the opposite. I know if I complain to Network they will say the increase is an error. I am tired of hearing that excuse.
I think I have been sent the extra stock because Bauer wanted it somewhere, anywhere – regardless of what would be considered fair based on the sales data.
Bauer complains through the MPA that I am wrong on the issue of the magazine trial. If only they put as much energy into fixing their magazine supply model as they do into complaining about newsagent concerns.
This increase in supply of Take 5 Crime & Puzzle Special is appalling, unwarranted, unethical in my view.
Magazine distributor Network Services increased our support of Muscle & Fitness magazine from 2 cipies to 4 to 8 and now to 9 despite the evidence indicating that three copies is probably optimal for us. Network will say it’s a mistake – surely they could not have done this deliberately. The publisher, if I spoke with them, would likely say the last thing we want is wasted inventory in circulation. I would not believe either of these responses. We have been sent increasing copies of this title because the magazine distribution model to newsagents is broken. This oversupply by Network Services of Muscle & Fitness is appalling and unfair – in fact, it is unethical.
We early returned this bagged Take 5 offer because it requires an additional pocket and because it’s a lame offer when compared to the broader offer in Woolworths. Sending them unannounced as Bauer does makes space planning difficult – hence the decision to early return. My view is if we are to pitch magazines at a discount we ought to be funded margin as if the titles are sold at full price.
I have created a magazine overhead cost calculator for newsagents to use to easily calculate your cost per magazine pocket.
Enter four data points in the the unshaded cells and the calculator will reveal the monthly and weekly cost per magazine pocket in your newsagency.
I have settled on four three data points as a result of decades of work with newsagents on this issue. The three data points are:
The purpose of the calculator is to make you informed for when you consider changes in your business. With rent increasing 5% annually and labour increasing between 2% and 4% annually and your magazine gross profit return in decline, as it is in most newsagencies, managing space is the best option you have to manage your situation.
My advice is get accurate figures into your calculator so you know your weekly and monthly cost. Next, start to look at titles. For example, a monthly magazine selling two copies a month and generating $3.975 in gross profit is loss making in the example I have used. The calculation does not factor in opportunity cost – the value of the best alternative use the space.
This calculator is particularly useful in assessing the value of long on-sale titles that are usually pushed to newsagencies with delayed billing.
To any publishers who say I am writing about this to turn newsagents against magazines I say the facts of the data speak for themselves. My goal here is for newsagents to be informed. Being informed is critical to any business person to make decisions appropriate to their business.
Completing the spreadsheet and assessing pocket allocation can help newsagents alter how the display magazines. For example, in my own case, I have several sections where I place six titles where previously there were two – thereby reducing the overheads associated with the titles while not reducing the range I carry. Indeed, this decision is the one I expect most newsagents would make on first go round with the spreadsheet.
Another use of the spreadsheet is to inform publishers of the overheads associated with magazines in our retail network. If could be that a stocking contribution is all that is needed for us to carry some titles that otherwise me might cut as a result of this analysis.
My understanding is that some magazine publishers pay stocking contributions or some similar pocket based fee to some other retailers – giving them a competitive advantage over our channel.
I’d be happy to talk and or work with any newsagent using the spreadsheet.
This spreadsheet is something practical the ANF could have done for newsagents. Instead, they took the lazy approach and agreed with the publishers to a supply trial that has not considered available data to better understand the current situation.
In the sample you can see the costs as calculated for one of my newsagencies.
The MPA wrote to the ACCC on May 28 to say the ACCC should ignore the submissions from newsXpress and to note it does not wish to disclose raw data from the trial. Click here to see the letter.
newsXpress has responded today. Click here to see the response.
In my letter to the ACCC is this passage discussing the role of the ANF. I share it here as the MPA relies on the fact that the ANF supports the trial of proposed magazine supply rules.
At the pre-decision conference in April, the ANF claimed a membership of 2,300. The majority of these members are indirect, they are members of other associations affiliated with the ANF. VANA and NANA, for example, have their own members who become ANF members by default.
It could be instructive for the ANF to provide the ACCC with a through understanding of its membership base, so the ACCC can see how many newsagents the ANF directly represents.
However, membership of the ANF is not at real issue here. The core ANF related issue is their consultation, or lack thereof.
While it is true the ANF supports the application, there is no evidence of consultation with newsagents by the ANF. We have put this position several times to the ANF and the ANF has not offered any evidence to the contrary. We are concerned that the ANF endorsed the trial and the supply rules at the heart of the trial without consultation with newsagents, making their endorsement defective.
Had the ANF consulted with newsagents, we suspect they would not have endorsed the application. Indeed, we expect that wide consultation with newsagents would have led the ANF to seek support from the MPA, Publishers Australia, other publishers and all magazine distributors for a root and branch review of the magazine supply model with the goal of removing barriers to the competitiveness of newsagents.
It is unfortunate the MPA is focussed solely on its proposed trial. As many newsagents have indicated, there are other options for addressing what the MPA seeks to address. I wish the MPA would consult with the newsagents who have engaged on this issue already as they are the newsagents fighting for magazines.
It would be a mistake to form a view that the newsagents who have responded are against magazines as only the contrary is true.
The MPA trial of new magazine supply rules would not give the ability to block junk like this from Network Services. I satisfy consumer demand for products like these with items off of which I make 50%+. I choose the products to tell a story and reflect a difference.
Network should distribute these products without my express permission – which would not have been forthcoming. But they did, because they have done for years. This has to stop as it is this type of scale out that disadvantages us. It dilutes our ability to compete with other retailers of magazines.
When I saw the products out this morning I took them off for immediate return. Sure some might sell – but I will make more from the space location with smarter product placement.
The reality, however, is that the supply of these products is outside the scope of the MPA trial. They don’t want to address this type of supply, not really … which is disappointing because this type of supply drives newsagent behaviour and newsagent behaviour is what they want changed. But they don’t get that.
Note: I would not deny Network the right to distribute the product – only their ability to scale out without newsagents opting in.
I emailed the CEO of the ANF on May 31 after being shown correspondence between him and a newsagent in which he referred to me. Click here to see the text of my email.
The ANF chairman responded to me last week. Click here to see this letter
Here is my response sent yesterday to the ANF Chairman, Stuart Kilborn, on this matter of equitable magazine supply for newsagents.
Stuart,
Thank you for your June 4 letter responding to my email to ANF CEO Alf Maccioni of May 31. I emailed Alf has he has been engaged in correspondence in which he comments about me and the Australian Newsagency Blog. While I am happy to respond to your letter, I am surprised that Alf did not respond to me as he is happy to talk about me behind my back.
Also, you write to me at Tower Systems. My agitation on behalf of newsagents and my own newsagency businesses on this issue is via the newsagency blog. The blog is a non commercial activity I spend my own time on publishing my opinions on matters I think will interest newsagents.
In your letter you say:
Whilst we habitually choose to focus on positive impacts for our channel the negative effect you are potentially causing the channel through misleading information requires us to respond. If what newsagents have told me is true, in this matter of the MPA trial the ANF has not been focussing on positive impacts as it has reportedly engaged in character assassination with no regard as to the facts.
I’ll not respond at this time to much of the first two pages of your letter as what you have written does not relate to the MPA trial whatsoever.
For the record, I first became involved in discussions on magazine supply rule changes in late 2013. These discussions, including consideration on the rules at the core of the MPA trial today, predated the involvement of the ANF. My position has not changed.
I have called for newsagents to withdraw support for the ANF on the matter of the MPA trial because I think the ANF is profoundly wrong. It is unfortunate that you label my disagreement as a lack of courage. You imply that it is courageous to support the ANF and not courageous to disagree with the ANF. So much for robust debate. So much for free will. Your statement is ignorant nonsense.
I have read the MPA submission to the ACCC. In your letter you go beyond this and appear to put the position of the small number of publishers in the MPA and the two major magazine distributors – ahead of the interests of your members.
You ignore that the ACCC conference attended by the ANF, newsagents, publishers and distributors was called for by newsXpress. The ANF could have called for this conference but it did not. Given what was discussed at the conference it was worthwhile for newsagents to have had the opportunity if only to speak directly to the ACCC about the unfairness of magazine supply to our channel compared to those with which we compete.
Left to ANF representation only the conference would not have occurred and newsagents would not have had the opportunity to, for the first time, speak directly to the ACCC about the matters covered. Shame on you and the ANF for not pursuing this opportunity for subsequently denigrating some of those newsagents who did participate.
At the ACCC conference, the CEO of the ANF said the organisation has consulted with newsagents. All I can find to support this claim is a brief mention in a note from the CEO in National Newsagent magazine and a brief mention in an ANF news email. As I have written previously, on this most vital of matters, the ANF ought to have hosted capital city and regional centre forums to canvass newsagent opinions. It ought to have conducted an industry wide survey on each of the rules to be tested as documented to the ACCC by the MPA.
The ANF did not do these things.
The claim by your CEO to the ACCC conference that the ANF consulted is not supported by the evidence available. If there is other evidence of newsagent consultation please share it.
You say Consultation is a word that is loosely thrown around, and often regarded as ticking a box then proceeding down your own path. Maybe that is what consultation means within the ANF. I disagree with your definition. Consultation is a process of actively engaging with those you say you represent to fully explore and understand their views prior to you forming your own views as to how to represent their interests. The ANF has not done this on this issue.
THE NEWSAGENCY BLOG
I do not use the blog to manufacture negative factors and am offended that you claim I do.
The Newsagency Blog publishes directly through my posts and through comments by readers items that are encouraging of newsagents and those who service and engage newsagents commercially. Sure it shines a light on negative issues. This is done with facts and in an effort to change behaviour.
My take is that if I write a post that is critical of the ANF you label it as negative for the channel. I disagree with such a position. The ANF has made its own failure of representation of newsagents. The failure is exacerbated because of poor communication and a refusal for open and public discussion on matters of importance.
THE ANF CHAIRMAN
In my email to your CEO I make the point that you, Stuart, called a newsagent with the sole purpose of speaking about me. This is a newsagent to whom you had never spoken before. To suggest otherwise as you do on page four of your letter is unfortunate spin that seeks to divert attention from your actions. I don’t care whether you are paid for your time. Your letter goes on to canvass issues not pertinent to this discussion. You did call at least one newsagent to agitate against me and that’s okay. My point on this in my email to your CEO is that you should have the guts to speak to me. That you went behind my back as a whiney school kid is like communication reportedly by other ANF staffers about me and this issue of magazine supply.
If you have an issue with me, confront me. I have written to the ANF about comments made by Ann Nugent in Queensland about me which upset several Queensland newsagents. I wrote to Ann and she did not respond. I wrote to Alf and he did not respond. If Ann did not make the comments she should say so and I can go back to the newsagents and ask whey they would make the allegation up. If Ann did make the comments then she need to answer for her behaviour. Remaining silent damaged the ANF.
Your letter then turns to the ACCC conference., noting that I say every newsagent who spoke at the conference disagreed with your CEO. To support your claim you include a note from the ACCC minutes. The quote you have included offers no support of the ANF’s position. Indeed, the minutes note the terms on which Ms Dixon agreed to participate in the trial, terms not reflected in the documentation submitted by the MPA to the ACCC.
PUBLIC DEBATE
The concerns in discussion between us relate to the poor performance of the ANF on this issue of magazine supply to newsagents and, most recently, the poor representation of newsagents on the issue of the MPA pilot of proposed new magazine supply rules.
The ANF says the trial is a good thing. I disagree. This is what I propose the ANF debates publicly with me. The worst outcome from such a public debate would be those attending agreeing that the ANF has not acted in the interests of members. The best outcome from an ANF perspective would be that those attending do agree with the position taken by the ANF. Either way newsagents benefit from a transparent exploration of how their interests have been represented and, more broadly, what is best for their representation on the issue of magazine oversupply.
I suggested a debate because it seems to me that the ANF has not debated the proposed rules for had it done this it would not have endorsed them. Remember, the documented rules are different to what the ANF claims the rules to be. For example, in the documented rules there is no provision for newsagents to control range and volume, no provision for early returns … yet the ANF says these benefits are part of the trial. As I noted at the conference, If this is the case why not document that.
A public debate would demonstrate to newsagents that the ANF is transparent and that it is consulting on this matter.
In your letter you say you have welcomed on many new members during this recent phase. Please advise your membership numbers prior to this phase and now. This is an invitation for you to be transparent.
CONCLUSION
If the ANF had professionally and thoroughly represented newsagents on this matter it would have:
The ANF says the trial is necessary to provide an understanding of magazine performance and newsagent engagement with the category. I say that such an understanding can be gained today by a thorough analysis of the data.
I believe in the newsagency channel and work hard in many ways outside your gaze and knowledge in support of newsagents, for the future of the channel. The MPA trial is trialing the wrong parameters in a wrong way. For newsagents to have a bright future they need fair and equitable supply of magazines – on terms that enable them to be commercially competitive with other retailers of magazines. Anything short of this is not a solution. The issue at hand here is not the trial so much as it is the proposed new supply rules being tested by the trial, rules the ANF has not challenged.
Remember, the ANF played a central role in the deregulation of magazine supply. Its representatives at that time failed newsagents miserably on this matter. They failed to seek and achieve for newsagents a change to the terms of supply to reflect a deregulated environment. Their failure in 1999 means that today our channel has magazine supply rules from the era of protection and regulation while our competitive benefit from supply rules designed for a competitive post-regulation marketplace. This is what must be fixed. I see no evidence in your correspondence and the ANF submission to the ACCC that the ANF gets this.
Stuart, you have to ask yourself, are you the right person to lead the ANF, are you the best the channel has available? Asking this question does not make me a bad person nor does it mean I am not courageous.
I am happy to meet to discuss this issue at any time face to face.
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Footnote: The MPA ought to have thoroughly analysed all data available on magazine supply, sales and returns prior to even considering this trial. They should have also discussed possible solutions with all stakeholders including other publishers outside their small group, all distributors, all newsagents and others involved directly in the magazine management within newsagencies.
This trial is ill-conceived because it was not properly researched prior to designing the proposed supply rules to be trialled.
As soon as it as invited to be involved last year, the ANF should have written extensively on the trial in its various communication platforms and actively sought newsagent feedback from far and wide. That it did not do this has left the ANF ill-informed and supporting a trial that does not address the fundamental challenges faced by newsagents, the uncompetitive terms of supply of magazines to our channel.
Newsagents sell close to 50% of all magazines in Australia. There are ways we can grow this. There are ways magazines can be profitable for us. A trial of the ways and processes that could be employed to achieve these outcomes is appropriate.
It seems to me that few involved in the MPA trial are actually interested in putting the interests of newsagents ahead of their own interests.
This issue of Men’s Style magazine has been on the shelves a little over three weeks and we have not sold a single copy. This issue is loss making for us. Today, we early returned all stock to mitigate our situation. Without the right to early return I would not have been able to reduce the extent of the financial loss from this issue of Men’s Style.
If newsagents cannot control the titles we receive and the volume of each issue we must be able to early return.
This photo shows one week of magazine returns from one newsagency. None of the magazines has been topped – so the boxes contain full magazines which have failed to sell in time and others being returned early because considerably more stock was supplied than had ever been sold in this newsagency.
What a waste of paper, fuel, time and space.
The time spent on managing and processing this excess stock is a financial and time management burden on newsagents, it holds this business and thousands of newsagents back.
No trial is needed to understand this problem. Magazine distributors and magazine publishers have all the data they need to provide newsagents with fair and equitable supply. That they do not use this data is an environmental and financial scandal.
Over the counter magazine sales in the US and Canada were down 14.2% for the first quarter of 2015 compared to the same quarter a year earlier. While better than the 15.6 decline for the fourth quarter of 2014, the Q1 2015 decline is concerning.
I have taken results from a news release from Magnet an organisation formed by magazine wholesalers representing 99% of magazines sold.
If you read the release there is a claim that the sales decline is being driven by short supply. The release also documents challenges being faced by stakeholders including the reduction in retail space:
While there were some titles as well as entire publishing lines that had sales increases in the first quarter, overall the sales trend continues to decline. MagNet, like other interested industry participants, has continually recommended that the industry find a way to work together, with major publishers, distributors and wholesalers developing a strategic plan to engage retailers to again focus on our category. But currently, we see no signs that indicate this is happening. Instead, we see some retailers removing checkout pockets and reducing the size of mainline fixtures. Without a concerted effort by the major industry leaders to sell the overall value of our products to retailers, the loss of retailer real estate dedicated to magazines will continue as sales decline. Magazines at retail are an impulsive purchase. If consumers can’t find our product, they can’t purchase it.
This is happening in Australia too. Publishers and distributors need to understand the economics of retail and to fully understand the cost of each magazine pocket where the cost includes the space, services, labour and opportunity cost.
If the MPA was smart they would have undertaken this research before commencing testing new supply rules as I don’t think they understand why newsagents do what they do with magazines. There is bo point in testing a solution until this is understood. Key to achieving understanding is to be certain as to the costs points and what the costs actually are.
In the typical Australian newsagency today, magazines are primarily a destination purchase in my view. To maintain that space we need to range destination titles. If we had control over supply, smart newsagents would increase their range in pursuit of increased sales. Unfortunately, the paternalistic approach to magazine supply in our country is the key factor in driving magazine sales down.
But back to the North American results. While their situation is different, it is interesting to see suppliers being targeted for their role in the sales outcome.
This photo shows the typical range of magazine titles you will see in a drug store in the US, the type of retail business which most closely resembles a newsagency. The unit holds 156 regular sides titles. In Australia, where subscriptions account for a lower proportion of overall circulation than in the US, I think 156 titles is too few for a destination magazine store.
Australian supermarkets carry around this number, sometimes up too 200 titles while convenience and petrol outlets carry considerably fewer.
Considering sell through rates, the cost of retail space and the opportunity cost of this, my feeling is that the ideal range for a city or suburban newsagency is between 500 and 700 titles – around four of the units in the photo. In regional and rural areas the number could be somewhere between 800 and 1,000 titles depending on the costs of the business.
A good step we can take to controlling supply is controlling space allocation. This is best done with flexible deep magazine shelves on which we allocate one pocket per title and advising the distributors in writing of the total number of their titles we have space for. The type of fixture in the photo is ideal for this. It is what I use in my shops.
