A blog on issues affecting Australia's newsagents, media and small business generally.

I urge magazine publishers to make newsagencies magazine specialists once more – ditch supermarkets

I response to the article in mUmBRELLA last week reporting comments about newsagents by two publishers, I offered to write in support of newsagents and with a suggestion on how to grow magazine sales and support small business newsagents.

mUmBRELLA published my contribution yesterday. In this article I call on magazine publishers to supply newsagents and not supermarkets, thereby refreshing us as magazine specialists, giving us commercial reason to re-engage with the channel and allowing us reason to support the category as professionals and not as competitors to better funded and better supported but less engaged competitors.

I am serious in this suggestion as I am confident that if magazine publishers were to supply newsagents and not supply supermarkets, newsagents would partner with them to arrest the sales decline.

Newsagent responds to magazine publisher complaints and advice

It is frustrating reading that magazine publishers bagged newsagents at an industry forum without newsagents having a reasonable right of reply. But maybe that is how publishers like it, maybe they don’t want to mix with newsagents. We do, after all, only sell 50% of magazines sold in Australia.

Nicole Sheffield, the CEO of NewsLifeMedia says we need to exert more control on the titles we receive. Ash Hunter, CEO of Hunterfive Group, says newsagents entering the channel are of a poor standard.

While these opinions could be factors in challenges for magazines, they are only opinions. Sheffield, Hunter and other publishers ought to look at the facts. They took what was a specialist channel and took from it around 50% of magazine revenue and gifted it to supermarkets and convenience stores.

This new competitive landscape facilitated by the publishers left newsagents with less profitable titles. Newsagents and now, finally, responding by reducing retail space and labour they invest in the magazine channel. This is causing newsagents to not display all the magazine inventory sent as they no longer have the space for it.

Indeed, there is a fundamental disconnect between the retail space available in newsagencies and the inventory sent. Talk to Gotch and Network and they will agree – they do not know the retail space allocated to magazines and that they do not know is not a factor in what they send. Nuts!

If Australia wants a profitable magazine publishing channel it needs a profitable route to market. Newsagents are the best opportunity. Plenty of them want to be the magazine specialist, a destination for the magazine shopper. But the numbers do not work. The numbers could work if publishers ignored supermarkets and helped direct more magazine traffic to newsagencies.

My proposal is simple – make newsagents the magazine specialists by only supplying them.

This single move, of choosing to place titles exclusively in the newsagency channel, would encourage newsagent support. I am not talking here about one or two titles. No, I am talking about hundreds of titles, popular titles, titles in the top 200 even. Place these exclusively in the newsagency channel and you change the game, you get the attention of newsagents, you push back against the supermarkets and you respect your product.

While I am confident that a bold move such as I outline here would benefit publishers and newsagents it would need careful negotiating, involving many titles and requiring thoughtful newsagent engagement. And, yes, there would need to be a discussion on margin. Rent and labour in retail are considerable expenses and titles not paying their way serve no purpose in any retail business. However, margin can be considered in various forms. For example, there could be a base stocking fee or some other levy to support the category.

If sought after product is only available in one channel then the two main parties to such a relationship, the publisher and newsagents, ought to benefit. We would have a shared commercial objective, far more so than exists today.

My call to Sheffield, Hunter and other magazine publishers with opinions about magazines in newsagencies is simple – engage with us, invite us to your conferences, work with us on a =n alternative model as the current model is not working for anyone. Oh, and don’t engage with the newsagent associations as they are out of touch on this and most other issues as history has shown.

Footnote: I’d love Nicole Sheffield to explain the News Corp. position on pricing Inside Out $2.00 a copy less in Coles than in newsagencies.

35 likes
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Join the discussion

  1. Jon

    I am down to 400 pockets of magazines in my store and for the 250k we pull in they are not profitable. Either something changes or we will exit the category soon my time is best spent focussing on growing our card and gift sales which are over $3m. Magazines are slave labour in the current situation!

    5 likes

  2. Daniel

    Likewise – have to move shop in near future and giving serious consideration to dropping mag category in its entirety. After 12 years in the industry things have only got worse in term of how newsagents are treated by magazine distributors who only have themselves to blame for the situation they now find themselves in.

    4 likes

  3. Brett

    Mark,

    Makes too much sense, will never happen.

    3 likes

  4. James

    Its a self fulfilling death spiral in a declining product category just like stationery.

    “Newsagents” are now retailers just like any other retailer and should treat their offer and the value of their real estate accordingly. This is no longer space for suppliers to store their stock on the off chance someone will buy it. The competition and costs of holding space have increased greatly over time and yet here are suppliers still working a model from 40 years ago based on the same terms as the extinct “exclusive agency” model.

    Don’t even get me started on 12.5% sub-agent commission.

    Are newsagencies good businesses to own? Well just as good or as bad as any other bricks and mortar retailer. There is no longer anything special or advantageous about being a newsagency. There are good and bad retailers and so there are good and bad newsagents.

    Sooner or later it will hit suppliers and most importantly publishers that changes at the front end mean changes at the back end and in the end, print media will be no more than a convenience commodity between the dog food and the toilet rolls at the local quicke-mart.

    8 likes

  5. Chris

    James – Can I ask – are you a subagent or is your issue that your subagents earn half the commission?

    I actually think it could become a niche market where retailers earn higher GP and stock specialist titles.
    I take advantage of the fact that newsagents around me are reducing magazine space. I not only increase my magazine sales but I increase the sales of everything as the extra foot traffic it generates leads to add-ons. I understand there is a real issue with magazine supply and sales declines but I think you have to careful about any decision to cut too many magazine spaces. There is always an opportunity cost when making decisions like this and you need to make sure that the benefit far outweighs the cost over the long term.

    This leads to the big question – when do you stop being called a Newsagent and start being labelled something else. I do not want to be classified in the same business category as another business who doesn’t sell magazines. To me, a business who doesn’t sell magazines ceases to be a newsagent. That is their business choice but it should come with the loss of being able to be called a newsagent.

    4 likes

  6. Peter B

    Well said James.
    While the decline in magazine sales is largely due to technology with younger people not purchasing mags and the unfortunate but inevitable passing of our traditional buyers, the elderly, the decline in magazine space in newsagencies is a combination of the declining sales but largely a direct result of disrespect by distribution agents and publishers.
    The publishers have sat on their arses and watched the oversupply get worse so are equally as accountable for the demise of magazines in newsagencies as are the distributors. The “easy buck” from the supermarkets has left those magazines outside the top 200 titles in a vulnerable position as the supermarkets won’t touch them.
    We do want to sell magazines if they are profitable, but oversupply, stagnant cover prices, low margins and high labour costs all help to drag down the profitability of our businesses as a whole, making magazine importance to us diminish considerably. I believe the traffic generation is vastly overestimated as being valuable anymore, but Mark’s proposal will reinstate the traffic value.
    As for a newsagency selling mags or not, it’s just a shingle above the door. I see our newsagency as a retail business, if evolution takes control to change our business to be more profitable then that’s the way we will go. I don’t care about the name over the door, although newsXpress does look good!

    3 likes

  7. shauns

    Jon , 3 million in cards and gift WTF are you mucking around with papers and mags and I presume lotto for . Is that a normal figure for you guys on here , it just blew my mind

    3 likes

  8. Mark Fletcher

    We can bleat and moan all we like. I prefer to offer a practical solution that works for publishers and newsagents. Hence this proposal.

    0 likes

  9. Mark Fletcher

    FYI the best way for magazine publishers to consider this suggestion is as a practical suggestion on how to engage newsagents with respect.

    1 likes

  10. Amanda

    Wow Jon,

    I would love to get cards and gifts up to those levels. Where are you located? I would love to drop by your store and discuss your success.

    2 likes

  11. Mark Fletcher

    I think it is more important we compare ourselves with ourselves, year on year. This keeps comparisons grounded. For example, any newsagent not growing card sales by at least 6% year is gong backward. Also, newsagents not achieving gift revenue equal to at least 50% of card revenue are out of the game.

    1 likes

  12. Jonathan Wilson

    The big problem with your idea is that if, say, Pacific Magazines pulls their mags in a particular category out of the supermarkets (and petrol and convenience) but Bauer Media doesn’t, Bauer now gets all that extra business (especially if its a magazine of the sort that is usually found in some prominent place in the supermarket rather than hidden away in the magazine aisle)

    0 likes

  13. Mark Fletcher

    Jonathan, the detail for my plan, not published here, includes that it starts with smaller publishers committing to newsagents, even those who do today yet who newsagents may not know.

    0 likes

  14. luke

    I got out of the industry 3yrs ago and can say I have not visited a newsagency for anything in those 3yrs. No mags, newspapers, cards,lotto, office supplies. I pick up everything I used to sell during my other shopping at larger retailers and I get my current affairs via electronic media. I wish you all good luck as you are going to need it once the international retailers enter the market.

    5 likes

  15. Mark Fletcher

    Luke you are missing out. There is change happening in many newsagencies. Businesses are transforming. New shoppers are being attracted. For many it is less about news and less about being an agent. There is plenty of good news out there. Sure, plenty of bad news too. But I think we make our own news whatever it is.

    4 likes

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