On one hand, the sales of print products are varying more and more widely from country to country and from sector to sector. On the other hand, the issues and business dynamics of press distribution are becoming increasingly similar: there are common problems (and common solutions) where different countries can learn from each other. It is these kinds of issues which led Distripress to launch a new project, the Distripress Circulation Monitor (DCM).
Topline volume trends
For newspapers, China and India are two massively important engine-rooms of growth, accounting for almost 50% of total global newspaper sales volumes between them. Strip these two influential markets out of the figures and the global newspaper business is in decline, accelerating in 2013 to -4.0% year-on-year.
Magazines have a completely different centre of gravity, with the largest market being the mature and declining Western European, which still accounts for over 40% of global sales volumes, but which dropped by -8.9% in 2013. The topline global picture for magazines shows the decline in 2013 accelerating to -4.6%, as fundamental structural change is really hitting the magazine business, some years after it started to impact on newspapers.
Magazine performance is also seeing much more variance than newspapers from sector to sector and from country to country. In addition, the magazine business model is very varied around the world in terms of such issues as the balance between advertising and circulation revenues and the impact of digital on print products.
The business of cross-border distribution
Looking behind the topline volume trends, the DCM assesses a range of the business issues. These include:
* The scale of the business. International, cross-border sales account for around 6% of the total sales of the 47 countries reviewed in the project – a significant niche in the modern press scene.
* General business performance. A steely realism informs the responses of the international operators involved in the Distripress member survey rather than panic. While the outlook is undeniably tough, with 61% of companies seeing their businesses declining currently, a significant 20% are experiencing growth in their business, with another 19% reporting that they are holding steady.
The publisher dynamics of exporting
Publishers are more positive about the current trends than the wholesaler / distributor sector, but this is because they have more options – print retail (still accounting for almost three quarters of sales, but dropping), print subscriptions (sliding, but more slowly than retail) and digital (growing, but from a small base). Other publisher insights include:
* Profitability. 70% of publishers are running an export operation that makes a profit.
* Promotional budgets. An overwhelming 89% of publishers have some kind of promotional budget for export, but most are using it selectively in key markets. Half of the respondents are cutting back their budgets.
* The drivers of performance. Editorial issues are felt to be the key to driving sales, but the quality of the distribution network and of the local retailers is also important, ahead of competitive cover pricing and local advertising and marketing, which receives a low score from publishers for effectiveness.
Opportunities & barriers to cross-border sales
Respondents gave their views as to what is driving and holding back subscriptions and digital sales, but for retail, the key opportunities are seen to be offering a wider range of titles to meet consumer needs and having more retailers and more space within those retailers, with travel points, non-traditional outlets and independents highlighted for more focus for international products. The key barriers are felt to be the growth of digital and the reduction in retail numbers and retail shelfspace for press products.
Home market dynamics
Distripress members provided their input into two areas in terms of their home market for domestic products: retailing and the supply chain.
The key retail trends are:
* A general reduction in the number of retailers handling press products.
* The erosion of the range of press products handled by the retailers that remain.
* The fluidity of retail types as retailers flex and change their product ranges and consumer offers.
* The growth in the share of the supermarkets.
* 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.
The key supply chain issues are:
* 70% of the countries reviewed are seeing change to their supply chains: 14% with “radical change”.
* The most often-quoted change is consolidation and instability within the wholesale sector. The second key area is in retail - reductions in shop numbers and shelfspace; more aggressive retailer demands in terms of margins and processes; and the ongoing shift from independent to multiple retailers.
* In a ranking of specific issues in terms of their importance to the future health of the industry, protecting display space at retail is a clear leader, followed by copy allocation and creating innovative retail promotions. Data, both wholesaler and retailer EPoS, to drive marketing activity are of secondary importance, with sales based replenishment and scan based trading lagging behind.
So, what are the key messages?
The decline of print copy retail sales is accelerating in the face of massive digital disruption and of a slow, but clear shift from the retail channel into subscriptions. Yet the physical distribution of the international press remains a significant niche in global publishing with a 6% share of total press sales.
The key players in the supply chain have to be much more proactive at the front-end, particularly in protecting and developing retail display space rather than focusing purely on back-end processes or passively managing declining retail universes. Maintaining viable supply chains around the world is essential, but this needs to be done at the same time as stimulating the front-end consumer contact points.
Yet, despite all the challenges, there are some growth markets around the world which offer real opportunities. In addition, in the face of these pressures, the mood of the industry is actually relatively positive: one of steely realism rather than of panic, with 39% of Distripress members seeing growth or stability in their businesses rather than decline.
The conclusion is that it is time for the industry to manage the undoubted turbulence in the market more creatively rather than to be resigned to terminal decline. Also, despite ongoing differences in retail profiles in particular, the major countries are becoming increasingly similar in terms of the challenges and trends in newspaper and magazines. And it all centres on the size and profile of the retail universe with the same question being addressed in different ways in different countries – what is the optimum number of retailers that we need to sell more newspapers and magazines?
About the Report
Distripress commissioned this pilot report as the first step in creating a more robust 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 2012/13 sales trends.
* A survey of 196 Distripress members across 47 countries.
* A more detailed analysis of nine key markets.
Distripress is a non-political and non-profit making trade association created for the promotion of the global circulation and distribution of press products.
Wessenden Marketing is a UK-based marketing consultancy.
