Month: February 2011

Advertising Age in the US is reporting a decline in US newsstand sales of magazines in the second half of last year.

Magazine subscriptions and overall audiences usually grow or at least hold up from year to year, but their continued newsstand weakness is worrisome because advertisers consider single-copy sales a gauge of consumer demand while publishers use newsstands to attract potential subscribers.

Then there is this interesting par about the channel:

Conde Nast, where newsstand sales decreased 10.3%, stressed as it has in the past that it is increasing cover prices and abandoning inefficient newsstand outlets in a successful bid to make its newsstand sales more profitable overall.

While our market magazine retail channels are different to the US and consumer engagement with magazines equally different, the latest newsagency sales benchmark study suggests we ended 2010 with some challenging numbers.

Newsagents can read this and worry or they can be proactive.  There are plenty of proactive steps we can take in our businesses to show up and even grow magazine sales.  While some of the steps we can take are challenges by poor decisions and damaging actions by magazine distributors, doing nothing will increase the pain from the decline.

Gordon and Gotch is taking too long to introduce its Sales Based Replenishment model.  Newsagents continue to get treated as warehouses and cash cows.  Check out the Alan Baroushek’s Calorie, Fat & Carbohydrate Counter and The Pocket Food & Exercise Diary.

Both products have an on-sale of a year!

Rather than sending a single display unit based on sales history and topping up as we get close to selling our, Gordon and Gotch loaded us with too much stock.  Taking up valuable retail space (or creating a storage problem) and sucking our cash long before they should.

Newsagents, the weakest link in the magazine distribution model are once again carrying more than their fare share of financial burden here.  If the publisher wants to print enough stock to last a year they should carry the cost of warehousing and distributing that stock based on need.  They have the data.

Supermarkets and some other retailers would not put up with this.  They do not put up with this.  Why do newsagents?

With 65% of magazines cash-flow negative, effectively losing money for us, we have the financial incentive to control our key asset, our retail network. All we lack are a plan and will.  More fool us.

The ABC is running an interview on their Midday Report news program on ABC1 today at noon on newsagencies, the GFC and magazines.  I filmed an interview with them late yesterday.  It is good to see mainstream media interested in the challenges and opportunities facing newsagents.

Not sure how much of what was discussed will make it to air – there was a good discussion about how newsagents are treated by suppliers compared to supermarkets and others and the challenges we face from the current supply model.

The latest newsagent sales benchmark study indicates that magazine unit sales in newsagencies dipped 5.5% in December 2010 compared to sales for December 2009.  This decline is on the back of an even more significant decline in 2009 over 2008.

Special Interest, Craft and Hobbies,  Adult, Computers and Women’s Weeklies were the main categories contributing to the decline.

Comparing the sales data for December with October through December, suggests a slowdown in December for magazine sales.  The quarter long numbers are better.

While sales are declining, the accounts newsagents pay to magazine distributors are not.  I have seen some newsagents paying more than 10% more for magazine stock now than compares to a year ago.  This comparison is a total supply cost so it allows for the shifting of NDD titles to Network.  Cover prices are not up 10% across the board.

If anything, there should have been a decline in magazine invoices, given the decline in sales.  That is, as long as the magazine distributors do supply based on sales.  There is evidence which indicates that they do not supply based on sales or an expectation of reasonable sales.

The benchmark data is from a group of more than 100 newsagencies with accurate business sales data.  I’d love to see data for supermarkets and petrol and convenience for the same period.

I’ll have a more complete assessment of the sales benchmark data in a few days.

FourFourTwo magazine is losing money for us.  With a return rate of greater than 60%, we lose money once we account for labour and retail real-estate.  The loss could be reduced if the magazine distributor took a more newsagent friendly approach to allocations.  That we have a poor sell through without a fair allocation response shows that sell through is not important to the magazine distributor.  Remember, they get paid to distribute and we get paid based solely on sales.

I wonder what happens with other retailers with which newsagents compete when titles do not perform to a reasonable level? Are they compensated?  If they were, if newsagents were found to not have as good terms, newsagents would have every right to be angry and disappointed.  Just wondering…