I have written to Network Services and NDD advising that I do not wish to receive any Universal Magazines titles in my two newsagencies in the future. In the letter to each I have outlined two scenarios under which I would gladly reconsider.
Retail real-estate is expensive. Labour is expensive. Once these are factored into the cost of managing long shelf life magazines (greater than 30 days on-sale) most of them become uneconomic.
We newsagents have the magazine supply model we have because we permit it. The space is ours. The labour resource works for us. The key asset everyone craves is our network reach.
….and the silence was deafening.
I guess some are not going to comment for fear of their own legal poistion .. most are probably still thinking about a response.
If we say, we all agree and we will all do it too then that will create an interesting legal position too.
Perhaps we can be accurate by stating a few facts;
– space vs income in a newsagency is critical. What I can earn per linear metre is vital to my survival,
– magazines use more space than any other product in most newsagencies;
– margin return from magazines is not the highest item in most newsagencies;
– astute management of magazines is required to maximise returns;
– each newsagency requires a different mix of magazines to suit its demographic;
– its our decision what magazines we stock and how many;
– we would ALL (publishers too) benefit if the supply model for magazines was critically reviewed.
I for one will be very interested in the next few weeks.
Brett,
This is a very personal decision based on my own circumstances. Being in a shopping centre with magazine pockets costing close to $5.00 in rent and with labour costs increasing, it is only natural to analyse the performance of titles.
My decision to act was based on portfolio performance. I would gladly reconsider if terms were offered to all newsagents which were fair in our businesses.
To have stock on the shelf for six months without any compensation is grossly unfair.
I am sure many newsagents have numbers which are equal to or worse than mine.
Mark
Retailers are in a greater position of power than they think, every wholesaler needs them more than they know.
I’ve heard about a newsagent that wants to close his NDD account and source a couple of titles that sell from a neighbouring newsie.
Claims the savings to him are better doing it that way.
Any comments from others.
Good luck Mark. I have a good feeling this issue will be changed.
I have read Janice Williams post today on another blog post. A very intense statement from Universal’s point of view. personally I appreciated engagement by a publisher, although not much choice as defending her company was needed. I felt bad that Universal had been singled out after I read the post. Something has to change in this channel, Universal will survive and grow but it also knows it has to change it practice of oversupply which leads to cash flow problems for Newsagents.
Brett’s ideas are great.
Janice Williams suggested that all this should be sorted and addressed by the Associations, Please correct me if I am wrong has this been addressed by any associations?
By the way, I made an email enquiry last week about the Fee Structure to join NANA and I have not received a reply as yet! That is just the reason I am reluctant to have any one represent me other than a National united body.
I have closed my NDD account because I was oversupplied consistantly and after a few attempts to fix it the oversupply continued, my cash flow was tied up in magazines i had paid for but had not sold.
The unfourtunate problem is people like me jumped on the Universal bandwagon, its bigger than Universal its Publishers and Distributors wide. Small progress has been made in some titles however there is something wrong when someone get 70 odd magazines and returns 50 odd straight away.
I am still in Mark’s corner and my offer still stands as it is a one way street for the Publishers and Distributors.
Take Brett’s suggestions and integrate them into the channel and Newsagents to make it a fairer playing field.
Magazines are cashflow negative due to oversupply.
Last month our total sales for magazines was $11,500 however our bill was $12,200 due to the oversupply of titles and the “missing” returns data.
At a time when cashflow is deciding who survives and who dies this is a major blow to our business.
Hopefully the new ANF ceo can help sort this out, but did I read it correctly he was the head of the Student union at a university?
Must have heaps of industry knowledge or was he the best of a bad lot of applicants, as I thought most student unions went bust after compulsory unionism was stopped due to poor cash management.
Derek,
Universal is one of several local publishers I am focused on. The ANF has tried for years to fix this and failed. There is no point in giving them any more time. For the record I’d note that the year I was on the Board we tried and failed and I was part of that failure. The ANF is conflicted because it wants sponsorship money yet it needs to serve its members.
Once I have clarity on how the Universal situation will pan out I will either begin plan B on that front or look at another publisher.
Mark
Universal have made their position clear.
They have perhaps missed a key point! – one size does not fit all.
Trailrider the “No 1 audited trail bike magazine” sold one copy in my store over several months having been supplied 86! I made the decision (some time ago) to cut the title, my decision, based on the fact that my customers dont read it. No offence offered and non implied.
The really dissappointing thing is though that the supply model we all operate under now would have continued to supply that title. As Universal made clear, it costs them money to do that, it costs me money too! The model is broken if two major elements in the model find it not cost effective.
If “supply inefficiencies” are with industry standards then WE ALL need to look at the standards!
Brett, a key difference is that Universal makes money from advertising. We do not. Mark
Mark,
Correct, we place no ‘value’ on access to our channel – an extremely valuable resource!
Our industry representative should hang their heads in collective shame.
As a publisher myself (not in Australia) I monitor the supply and sales figures for each outlet we supply and have, in the past, cut delivery to outlets that sell less than 20 per cent of the supplied copies. That’s just good business sense for both us and everyone involved in the distribution channel. We don’t have infinite copies of our magazine so it makes sense to concentrate on the outlets that sell well.
I don’t want to brag but I don’t think there are many publishers that act that way. Some, especially here in Thailand (because there’s no independent auditing) use their ‘magazines supplied’ figures in advertising as opposed to the actual sales. To them it’s great to say they distribute 50,000 copies, the truth being they only sell a fraction of that number.
Have NDD or Network given you any indication as to whether or not they will honour your request to have a publisher banned from supply in your store?
Nothing yet George.
At the risk of sounding like a broken record the ANF or any other association should not be receiving sponsership money from anyone / company outside the channel, it should be coming from Newsagents only. Hence it would decrease the amount of associations.
Please tell me why you need a Qld, NSW and Victorian Association when its a one lane highway like the Distributors and Publishes for example use, utilises, exploits because they understand the weakness in the Newsagency Channel and they feed it.
Same with the ANF once they accept sponsorships outside the channel they are comprimised!
That is why a blog like this is necessary, Mark indicated it could not be done, he was their and saw first hand why it cannot be done.
It is upto the visitors and posters to share their thoughts and views, good or bad.
Nelson,
Stores which are continually delinquent have their accounts closed.
Poor performing stores may be closed – it depends on whether they pay. This is a cash-flow consideration.
Some publishers will pull out of stores next year in pursuit of efficiency.
mark
Nelson, no disrespect, you seem to be quoting responses that have not been said.
Nelson,
I have seen suppliers respond at my newsagency to blog posts here – positively and negatively. It is a lame thing to do.
In terms of Network and NDD, they understand the problems with the magazine supply model. Their challenge lies in long term agreements which are out of date with what is needed today. I would be surprised if either treated me as you speculate but if so, Que sera sera.
I am not sure why you pose the question. If it is to ask am I prepared to cop it – yes. If it is to ask whether the risk is too great – I say no.
This blog has between 1,200 and 1,500 unique visitors a day. What started as an under the radar journal about what was happening in my newsagency has developed into an evolving conversation along newsagents and others which is watch with intense interest by many stakeholders in our channel. In some conversations it achieves good outcomes and keeps newsagents better informed.
On your comment about senior management – yes I have access. So do others. But what has that achieved, I mean seriously achieved? The magazine supply model is sick. It has been sick for many years. I have sat on committees, working groups and Boards. They have not achieved equity for newsagents. Putting in public what many of us experience daily is long overdue.
I want a good, fair and equitable relationship with suppliers. I want to have moire control over my businesses. Where I have control I am achieving more growth. By denying me the opportunity to make business decisions is holding me back.
My partworks sales increased dramatically once I got control.
Mark
Hi Nelson
With respect that question cannot be answered by me.
I wont go down that path with you either because the issues are not as black and white like your question is.
While I agree that many of Universal titles do not represent a fair return based on pocket life, there is a risk Mark that you are throwing the baby out with the bathwater!
I appreciate it takes time to manage magazines but it is a fairly bold step to throw out the complete range from this supplier. A better focus in my opinion as a first step would be to get the publisher to agree to accept tops/covers as a return. I find that a major problem with their titles is that they are invariably full return and the cost of this often can negate the profit made on small sales, before taking pocket holding costs into consideration.
John,
While topping the titles would be welcome, it does not address the long self life nor the poor sell through. The KPIs I put to Universal addressed these various options.
I don’t think the size of their range is enough to cause much pain if it is lost.
I want to be a magazine specialist but I want control so that I can be a business person managing this category. the current model does not permit that. If it is, if I had control, my magazine sales would increase.
Mark
John,
Marks decision may be seen as a bold step by newsagents, but I would say that this a reflection of the industry. Removing a entire range because it doesn’t perform as whole happens relatively often in other industries.
If a newsagent removed an entire supplier’s range of stationery because the majority of their products didn’t meet KPIs, would anyone think this a bold move? Why should it be any different for magazines?
Jarryd,
A very good point you make. Removing a range like Sovereign is a good idea. Crap $2 shop rubbish taking value from key established brands like Parker Sanford, Marbig, etc.
If a store does that, they are still into stationery, just the right brands. Same with magazines. Take one home designs mag off the shelf and you’re still left with about 6.
On the subject of changing returns to tops from fulls to save on freight, I have to say that with the excessive oversupply of some titles, the cost of time taken (by me since we are the only staff we can afford not to pay) far outweighs the freight costs. Perhaps this is only true for us, since we are metro brisbane and pay a flat monthly fee to a courier for all returns collections. So I say the question of changing full returns to tops is really neither here nor there when you consider that the real problem is excessive oversupply.
The distributors/publishers say we have control over supplies, and it is quite true that you can log in on any of the distributors sites and submit a request for changes, however, the levels requested are rarely kept down. Perhaps the distributors will one day stop to consider that most of us know what we are doing and selling. Instead of spending so much time changing supplies to suit publishers or distribution models, they could limit their interference to those newsagents who may appear to be inactive (but how about calling and discussing the entire range without offering ominous warnings about imminent supply cuts)