I was talking yesterday with a newsagent who has decided to sell their business. Nothing odd about that except that they have been in the business for three months. They say that the lack of control they have over their business is the reason. While I have seen this before, this instance is surprising. This person has successfully owned and operated retail businesses previously. They’re cashed up. They’re pro-active. It’s what they say are uncompetitive magazine rules and lack of control over core business activity which they hate.

Their newsagency competes with five magazine outlets nearby – three petrol/convenience and two supermarket outlets taking just the top selling magazines. He’s cool with competition but would prefer fair competition where he can choose his range as easily as his competitors. While he has sought to cull magazine titles to a more viable level he feels helpless to effect fair change in the supply model. Hence the decision to leave.

Any assessment of the magazine supply model would say that newsagents are disadvantaged. We need an easier way to control what we receive. We need more accurate scale out of new titles. We need fairer financial terms for titles which are to stay on the shelf for more than a month.

Unless the magazine supply model changes, more new newsagents will exit early and the channel will be the loser.

I appreciate that the supply problem is not just to do with magazines, however, magazines soak up the majority of the cash – I write cheques for more than $40,000 a month for magazines and half that is for product I return. Fix the cash-flow crisis and you create happier and more business focused newsagents.

It’s the second week of OK! in its weekly format and if other newsagents are like me the magazine arrived without posters. This means we won’t allocate promotional real-estate to push the title. Compare this to Famous, the Pacific Magazines weekly – this week, as usual, I received 6 posters, enabling my team to build a good display for the product.

I have now seen data from enough newsagents know that we are overloaded in the last week of the month with magazine stock. In one case, one supplier provided 37% of all stock in the last week. The problem with this is that the newsagent had no idea this was coming because titles were either one-shots or imported. The newsagent turns up to work last Wednesday, sees the problem for the first time. They have 30 days to pay for this stock bonanza. What other business operates like this – hitting small business within five days of the end of the month, all so conveniently within the billing cycle.

Newsagents are in the middle of a cash crisis and unless there is fundamental change in the magazine supply model – such as loading the last week of the month – more newsagents will close or exit the channel early.

Through my software company we have given newsagents a reporting tool to track the cost of end of month overloading. Hopefully some will use this to prove the behavior I have described.

I’ve seen sales data for OK! from twenty newsagencies to the close of business last night which suggests the title is tracking well. On average, after three days trade, a 20% sell through. The peak is a sell through of 75%. The strongest sales, for the stores providing such data, were yesterday.

OK! is a very different weekly and it will take time for consumers to warm to this. In my own shop, where I can get into the guts of the data, I can see that OK! has sold more than NW and Famous. I’d expect it to pass WHO. 30% of the time it’s been sold alone, meaning 70% of sales have been with another product – usually another weekly magazine.

I suspect one outcome of the launch to be a shift in on sale days for at least one other weekly, maybe two. But I’ve predicted that before and it didn’t happen. Maybe I am projecting because of the real-estate, promotion space and labour challenges.

In researching magazine supply patterns in several newsagencies I am seeing deliveries on the last Wednesday of the month which are between 10% and 50% above average for a Wednesday in dollar value. Timing of supply is part of the cash-flow challenge newsagents face. Unless distributors take more care in supply cycles they will kill the retail network which is so good to them.

Super Fitness exemplifies what is wrong with magazine distribution in Australia. It is proof of how the magazine distribution system disadvantages newsagents and starves them of vital cash.

Super Fitness’ cover price is $34.95. It has a return date more than six months from now. It’s production quality is poor – the cover is hard card material meaning after one browsing it will look second-hand. It’s playing is a crowded and well serviced category. It has high theft appeal – due to cover price and its subject matter.

I received one copy of Super Fitness yesterday and decided to return it immediately. I am not prepared to risk the $34.95 with just one copy on the shelf. To accommodate this title I would have to remove another and I’m not prepared to do that for what looks to be a dud product. Also, it would be the most expensive magazine in the category and, I suspect, act as a magnet for shoplifters.

The way magazine supply works, I will pay $26.21 for Super Fitness next month. I will get my credit for the copy I returned a month later. It’s cost me the $26.21 for a month. Multiply that by several hundred titles and you see the cash cost to my newsagency of similar dud titles.

In newsagencies, publishers have access to a low cost low risk retail distribution channel. Newsagents are idiots for continuing to support dud titles like Super Fitness. It is time for us to charge for access to our network and to make publishers accountable for what they produce.

Thanks to deregulation, magazines are supplied direct to all of my competitors. Consumers benefit from greater choice. The hidden side of deregulation is that only newsagents are supplied titles like Super Fitness – and in a way which makes is very difficult to control the supply of these titles equitably. Supermarkets, convenience stores and petrol outlets will not carry Super Fitness. They control what they receive. Try as I might, this control over my business remains a dream.

Someone should take Super Fitness out the back and put it to death. The few titles I receive like this the better.

It’s great having new weekly magazine on the shelves. The challenge is finding the space to do it justice. OK! went weekly today with what looks to be a good first issue. Woman’s Day, New Idea, TV Week, NW, WHO and Famous have their space locked in. To accommodate OK! in my own store we have had to trim an adjacent category – we have cut several under performing titles. Newsagents will have to do this if OK! is to get real-estate in the high traffic area.

OK! has a great website supporting the magazine.

It might be a coincidence but both NW and Famous have come out today with covers using more black than usual – they stand out in the usually colourful section of the women’s weeklies.

This graph illustrates how the Crossword magazine category is drowning in imported product. While data from a sample of newsagencies shows that Australian titles account for 75% of sales, imported product accounts for 64% of titles. 10% are homeless. In my newsagency, before I culled imported titles, they took up 60% of available real-estate. Most newsagents rely on distributors to manage their range. Distributors don’t talk to each other about range, leaving most of our 4,600 newsagencies over supplied.

With three magazine distributors needing to keep their engines fuelled with stock, titles cut by one distributor are soon picked up by another. This happened last year and the titles we all thought would not be imported again are now being supplied to newsagents – despite appalling sell through rates. With newsagents only getting paid if they sell a title it’s cheap system for publishers and distributors at the bottom end of the market.

Australia is a dumping ground for some overseas crossword publishers. The only way to stop this is the establishment of a joint industry taskforce involving magazine distributors and newsagents – a pooling of resources to ensure that junk titles do not find a way to abuse the efficient newsagent channel.

The latest issue of Fuel offers evidence of how newsagents are dudded by magazine publishers when they re-issue product. The photo shows a two pack, an old issue of Fuel with a current issue. The old issue is on the front. Check out our barcode (circled in red in the top left corner) – directly underneath is the barcode from the last newsagency which handled this specific copy. Customers will see the old issue and ignore the pack.

Twin and triple packs offering old issues of magazines are used often by magazine publishers to ‘promote’ titles. Newsagents don’t like the strategy because of the additional real-estate needed to adequately display the stock, the crappy way they are usually packaged, that customers open packs so they can see what’s inside and because we’re getting hit for cash again for a copy which did not sell in the last newsagency to carry it.

Publishers tell me the twin and triple pack strategy works. If they are going to continue to use it they need to NOT make the Fuel mistake and put the old issue on the front, they need better packaging, they need to tell browsers what’s inside so the packs are not opened and they need to pay a bonus to newsagents for the extra real-estate and work.

I am frustrated about this because I lost an hour yesterday tidying up twin pack junk in our crafts, home and men’s areas – customers had rifled through trying to find what is in the packs.

By the way, the barcode I have circled in the bottom right corner is crap and does not provide newsagents the ability to accurately track sales – hence the need for us to barcode this product ourselves.