Ugh!

All it takes is a couple of extra copies of a magazine to each newsagent and a publisher significantly increases the size of their scale out and, depending on the return cycle and their distributor agreement, significantly improves cash-flow. Magazine distributors are happy since they get paid per item then shift.

I saw several example of small supply increases on Wednesday this week which are not supported by net sales.

Hot Rod is the first title – we sell a couple of copies. Our sales and return data does not support any increase yet the magazine distributor’s system thinks we can carry extra stock. I am sure there will be some reason.  A reasonable response will be that it’s only one or two extra copies. Well, if they are not going to sell, why send them?

Mindfood is another example of an unjustified supply increase. In this case, I suspect that the increase is publisher driven – that’s just a hunch though. Beyond getting a couple of extra copies we will not sell, we have more stock than a single pocket can hold. This takes extra space and increases our costs.

Foreign Affairs is the third title for which we have received what we consider to be an unjustified increase in supply. I have gone back through our supply and return data and cannot see any reason for this move by the distributor.  More cash being drained.

These are just three examples. Indeed, there were plenty on Wednesday this week – sucking cash out of newsagencies. Every extra copy sent must be justified. This is not done, leaving us poorer in cash-flow terms.

Magazine distributors need to understand the damage these small creeps in supply is doing to the newsagency channel.  I am seeing magazine bills increase while sales are flat or falling.  This is unsustainable.

One way newsagents respond is early returning – and not necessarily of the new title. This is all about managing cash. Smart newsagents look for other titles from distributors causing the problem which can be returned to balance cash flow and space.  The problem is that since we have to pay to return stock we still have a cost which hits us.

To distributors reading this:

Look at your systems and consider carefully the impact on newsagencies of every extra stock item you send. Look at this as if it was your money and your business.  Would you put up with this?

Would you accept a supplier sending you something which all sales data indicates you will not sell and then expect you to pay for this on time and under the threat of not receiving other stock, very popular stock, if you do not pay the account on time? What is the size of your magazine bills to newsagents today as a ratio of overall magazine sales?  Are your bills declining in line with sales?

Newsagents are keen for dialogue on this.  Not the one way statements of the past.  Genuine dialogue.   Every copy of a magazine which you send and which is not supported by sales data as likely to sell has a considerable cost to the retail network on which you rely to stay in business.

Is it just me or did others receive considerably more magazines today than usual for a Wednesday.  Based on sheer volume (across the two bggest suppliers), our supply was up 50%.  This threw out space and labour requirements.  The only was we could accomodate the unexpectedly high volume is to return some existing titles early.

We received Netball magazine yesterday for the first time. As happens with Network Services, we were not asked if we wanted this title or whether we had the space. The title (new for us) arrived without any collateral so we put it on the shelf and hope that someone notices it. This in itself is a challenge because it is the only title of its type and we only received two copies.

In placing the title, I wondered, do we put it in the sports (mainly men’s) area or in with women’s health titles? We went with sports. I may give it a counter push next week because it strikes me as a title people will purchase if they know we have it.

I’d prefer magazine distributors to ask before they send me new titles. I’d also prefer them arrive on our shelves with coillateral tactics which are designed to help them find customers. Just getting shelf space in a newsagency does not achieve this.  that said, we permit our national network to be used this way.

The barrier to entry for magazines reaching our cahnnel is too low.

As for the Netball title itself, it looks pretty good. The challenge is finding those with this narrow interest.

Universal Magazines is using the goodwill (or apathy) of newsagents with the launch of a new title (for us at least) yesterday. Classic Kitchens arrived in-store and required re-jig of space allocation to make way for this new title. Like other Universal Magazine titles, we received too many copies and are expected to keep these for three months. You won’t see this title in our major competitors because they are smart enough to dictate their own terms. We are not so smart.

I expect that Classic Kitchens will be loss making for all but a few newsagents, probably forever. The supply model – volume and long on sale – make it cash flow negative, especially in a shopping centre situation where you are paying more than $1,000 per square metre in rent.

While Universal may have used sales of other titles to determine the scale out for this new title, such a model does not take into account the limited space in newsagencies nor the cash flow costs of servicing a new title.

The only way newsagents will stop this is if we take control of our network and introduce a gatekeeper, a magazine czar as I have written previously.  We need Universal to jump through hoops before supplying a title to a newsagency for the first time.  The current magazine distribution system is too easy.

People’s Friend did not arrive on Friday (again!) so we pinched twenty copies from one of our other stores. This did not even fill putaway requests. Gotch tells us that we will have our stock on Monday. In the meantime we placed the Susan Boyle book where we usually put People’s Friend. She is Scottish and probably appeals to the People’s Friend audience. Selling one or two copies of the book will soften the frustration at not getting People’s Friend.

I mention this today as an example of how we try and mitigate supply misfortune with a popular title by placing another product which appeals to the same shoppers. Sometimes it works while other times it does not. Banking the results from sometimes is better than leaving the space empty and getting nothing.

Gotch has increased our supply of the US version of Prevention magazine from three copies to five even though we donl;t sell our of the three we receive.  This is frustrating because we really want to focus on growing sales of the Australian edition of Prevention magazine.  This is far more important to us that the US edition.  these extra copies, while not beraking the back, take cash and space.  I can’t see any justification for the bump – even more so since Gotch handles distribution of the local edition.

In two of my stores this morning we received bulks of My Weekly labelled as People’s Friend magazine.  In each case, People’s Friend is in out top five weekly titles.  This screw up will leave many unhappy customers.  It will also make us look bad, again.  I say again because there have been regular People’s Friend supply issues ove the last year.