The conclusion of last year’s DCM was that it was time for the industry to manage the undoubted turbulence in the market more creatively rather than to be resigned to terminal decline. While the slide in print copy retail sales continues, this year’s report charts a subtle, but real change in attitude. The environment remains challenging and, if anything, more volatile and erratic from country to country. Yet what is changing is the determination of a number of companies involved in cross-border distribution to think more laterally and creatively in order to reshape their businesses. Moving from Denial to Despair to Determination is a recurring pattern in press supply chains around the world. Tracking that movement is at the core of the DCM:
* Cross-border print distribution is still a significant business.
It accounts for an estimated 6% of global press sales. Print retail sales account for 73% of cross-border sales volumes, print subscriptions for 20% and digital for a small, but growing 7%.
* A slowdown in the rate of fall.
For newspapers, the global picture (excluding the rampant China and India who totally distort the figures) was -2.7% in volume in 2014 compared with -4.2% in the previous year. For magazines, the slowdown was more modest: from -4.6% in 2013 to -4.3% in 2014.
* The sense of free-fall is lessening.
While all the key indicators continue to trend downwards, more companies are reporting steadiness in areas such as business performance, business confidence, promotional budgets and the economic environment in which they are operating.
* The mood is shifting from denial and despair to determination.
A few operations are still in denial, running their businesses in much the same way as in the past in the hope that things will improve. Some are despairing of there being a future business at all and are focused on endless cost-cutting. Others are determined to find new ways to ride the flow of change. The growth companies are being driven by focusing on higher priced niche print products and by diversification into non-press products and services, including digital.
* With determination comes a more challenging and questioning attitude.
Each link in the chain and every process are coming under the microscope in terms of whether real value is being added. The consolidation of competitors is clearly a growing issue. Also, new partnerships and alliances - even between old competitors - are being forged in order to drive scale economies and open up new opportunities. Yet this questioning attitude is also resulting in more blunt discussion and friction in the supply chain. It is also revealing that the issues facing individual countries are increasingly similar and global and that more cross-border sharing of experiences would be beneficial.
* Domestic market issues coming more to the fore.
The rate of change is clearly speeding up and the changes themselves are becoming more radical. Yet a significant change in this year’s DCM is the tone of the comments and the fact that the different links in the chain are being more openly critical of each other as the pressures build. On one hand, publishers clearly feel that the “middlemen” are not delivering in areas such as smart marketing activity, the usage of data to provide better copy allocations and simple attention to detail. On the other hand, the middlemen feel starved of copy and promotional support and they question the level of publisher commitment to the retail channel in comparison to digital or postal subscriptions.
Conclusions
The 2015 DCM maps a world where the pace of change is accelerating and where the supply chain solutions are becoming more radical, especially among the pressured “middlemen” of wholesalers and distributors – consolidation, competitors sharing services such as transport and logistics, increasing outsourcing, getting involved with digital editions. Yet behind all these shifts, there is a growing suspicion which is being voiced more openly: that publishers are not fully committed to print, retail or cross-border distribution and that they are simply not putting their “money where their mouth is” especially in terms of promotional budgets and supply levels. Confronting that perception openly is the next stage in a global debate about the future of the press supply chain. To invest in a channel which is still trending down is a bold and strategic move. Yet boldness and strategic intent are what is needed at the moment in order to make the most of a business which remains at the core of the industry and which still has considerable potential.
Press retailing challenges
The global perspective
• A general reduction in the number of retailers handling press products.
• The erosion of the range of press products handled by the retailers which remain and a reduction in the shelf space dedicated to the press.
• The fluidity of retail types as retailers themselves change and flex their product ranges and consumer offers.
• The growth in the share of the supermarkets in virtually all markets.
• The growth of the “convenience” format in many, but not all, markets.
• The vulnerability of the independent retailer to tough trading conditions. The share of the multiples is growing at the expense of the independent.
• The erosion of “press specialists” as “retail generalists” grow their share of the press.
• An increasing focus on non-traditional outlets as traditional press sales points decline.
• A renewed focus on traditional press specialists and core outlets types in order to slow their decline and protect range retailing.
Supply chain change
The global perspective
78% of companies involved in the press supply chain from 49 countries around the world report that there is structural change taking place in their domestic supply chain, with 26% seeing “radical change” - a significant increase on 2014’s 14%.
The most commonly stated factors relate to wholesalers and distributors. Cost cutting, financial instability, reducing service standards were all quoted as factors in a period of massive and rapid change for the “middlemen”. Much of that change is being driven by falling press volumes passing through the supply chain, but great pressure is also coming from the changes at retail which include:
• The reduction in the size of the retail universe.
• Competition for shelf space from other categories, especially in the convenience channel.
• More aggressive demands from retailers regarding both margins and processes.
• The ongoing shift in share from independent retailers to multiples.
Behind the specifics, there is also much more open questioning by publishers as to the fundamental role of the middlemen, particularly in countries where there are distinct distributor and wholesaler tiers - is there a real need for both of them?
Background to the DCM
This is the second Distripress Circulation Monitor – the first was commissioned in 2014 – which provides an overview of print press sales trends around the world and the key issues facing those companies involved in distributing press products across national borders.
The report is based on three pools of analysis:
• Wessenden Marketing’s own estimates of current newspaper and magazine sales trends in 69 countries.
• A survey of 188 Distripress members in 49 countries.
• A more detailed analysis of 11 key markets.
