For more than two weeks now I have been hearing about another round of staff cuts (voluntary redundancies?) at magazine distributor Gordon and Gotch. I am not that surprised given the profit downgrade recently announced by the Gotch parent company PMP. With the share price at 38 cents, down from over seventy cents fur months ago, cutting costs has to be on the agenda. Click on the image to see the share price chart from the ASX website.
The challenge for Gotch, if they are indeed cutting staff, is that customer service often suffers from such a move. They are already under performing rival magazine distributor Network Services on the customer service front and fewer staff would have to make that situation worse.
To fix the situation, Gotch needs to get serious about working with newsagents, supplying magazines at a volume more closely aligned with sales, implementing real sales based replenishment and working more closely with publishers on providing timely sales data. Some system changes and a better customer service attitude from the top of the company could help build faith, sales and the financial return.
What ails Gotch needs top be addressed from the top down. While cutting staff may reduce costs and this may provide some relief around the share price, it is not a plan on which the business can rely to build the business.
Sort of related … What surprises me is that I have not seen a response from IPS, the Fairfax owned new magazine distribution business, to the Gotch challenges. IPS has a model which could see it pick up some of the Gotch titles and thereby lift its relevance to newsagents and further leverage its seven day a week delivery service. With logistics being such a high cost in magazine distribution I would have thought that IPS could offer a model of reduced costs for publishers.
Looks like a repeat of the NDD debarcle of only 18 months ago!
With less staff how are they going to manage allocations now?
Tim did they manage allocations? i think you may be confused with another business , the GG that i have known over the years have not managed allocations at all even with the staff they have . Ever since they got rid of the staff they had before they went online it has been down hill as far as allocations are concerned
i think if you asked their finance dept, they actually handle allocations very well, (for them)
IPS has to start distributing quality local titles by taking them off Gordon & Gotch and leaving Gotch with all their rubbish poor selling overseas titles.
This will give IPS more relevance in magazine distribution, at the moment they haven’t got much to offer in the way of big selling mags as most of their titles are insignificant.