The indie view

The quality, range and diversity of magazines available to purchase from newsstands has, hitherto, made British magazine retailing the best in the world. There are some 3,500 titles available to stock on the shelves of 54,000 newsagents, convenience stores, garages and supermarkets and therein lies the problem facing magazine publishers, distributors and wholesalers.

More shops, less space

Over the last ten years, the number of magazine retailing outlets has increased from 45,000 to 54,000 but the number of "range retailing" traditional newsagents has fallen dramatically. While the number of magazine retailers may have increased, the shelf space devoted to displaying magazines in individual outlets has fallen, and competition for that shrinking display space is fierce. Furthermore, competition is now not just between different magazine titles; it is between magazines and other more profitable, less demanding product lines.

Unfortunately, magazine publishers and distributors have spent a decade pandering to the wants, and whims, of the multiple grocers and have been oblivious to the radical transformation taking place within the independent sector, which still accounts for 35% of all magazine sales. While publishers have focussed their attentions on buying space on supermarket shelves it has gone virtually unnoticed that over two thirds of newsagents have reduced their magazine shelf space, and converted their shops to convenience stores (Source: NFRN).

Change of heart

However, there is now a growing awareness among publishers and distributors that it might actually be in their own best interests to more actively support independent magazine retailers. Whether it was the OFT debate over the legality of exclusive distribution contracts that caused the change of heart, or the realisation that the relentless growth of the Tesco juggernaut might not be in the long term interests of magazine publishing; whatever the reason, it is welcome and long overdue.

Welcome as this conversion is, the implementation of the new publisher policy may well be difficult to achieve, at least in the short term. In 2004 some £26.5 million was spent by publishers on in-store promotions, of which only 6% was spent with independents. This, and all the other inequities in our supply chain, will not radically change overnight. The multiple orientated policies of publishers, distributors and wholesalers are entrenched, and even if the will is there, the knowledge and ability to achieve it may well be lacking.

First and foremost, if the exclusive territories for magazine wholesaling are to remain there must be a complete reversal of the perceived responsibility of a wholesaler. Whether retailers are permitted to choose their wholesaler or not, wholesalers must behave as if retailers can change their wholesaler if they are not happy. Publishers’ contracts must reflect, and respect, the primacy of retailers’ requirements to serve their customers, and accommodate the fact that there is not one magazine market, but that every one of the 54,000 magazine retailers has, to a greater or lesser extent, its own unique magazine market.

The role of the magazine wholesaler must evolve from the "humper & dumper" in a "mud-slinging" supply chain, where publishers believe that if they throw enough copy at retailers’ shelves, some of it will sell. Their current role is that of "breakers of bulk" for the distributors’ own macro-market orientated allocation systems where the uniqueness of local markets is ignored, and retailers’ supplies are based on obscure national algorithms. Whereas the primary function of a wholesaler, having been awarded absolute territorial protection, should always be to take on the responsibility, and to be held accountable for, maximising overall magazine sales within their territory, in full partnership and with the total support of all the retailers that they serve.

Questions for the wholesaler

There are fundamental questions that need answering about what wholesalers currently do, and what they are permitted to do, under the terms of their distribution contracts.

* How much do wholesalers actually know about their territories, and the magazine retailers within them when allocating supplies?
* How many hold the detailed demographics of their "patch" against which to plot the retail coverage and availability to the consumer?
* How many are encouraging retailers in poorly served areas to increase their range and services offered to their customers?
* How many hold enough data on their retailers to be able to advise consumers, and publishers, of the geographic spread of home news delivery or magazine shop save retailers within their exclusive territory?
* How many can even answer the basic question of what is the title capacity of the magazine shelving in each of the outlets that they serve?

Sales based replenishment

After a twelve year campaign, wholesalers have, at last, recognised the importance of sales based replenishment and are now implementing SBR systems linked to retailers’ live EPoS data. These systems not only reduce retailer unsolds, they automatically replenish stores where there is high demand increasing overall title availability, while providing buffer stocks for distribution on request to those retailers without EPoS who have sold out of their allocated supply.

However, it would be unfair to put all the blame on wholesalers for the long delay in implementing SBR, since, even though it appeared to be a "no brainer", there has been strong resistance to change from publishers and distributors unwilling to allow any retailer to influence copy supply, no matter how beneficial. Publishers have hitherto been reluctant to change from the supply chain strategy where they produce at least twice as much as they think will actually sell; then to send out every copy to retailers on the first day of sale, even though they can not predict, with any degree of accuracy, how many copies will be sold by each retailer.

Publishers and distributors have been so obsessed with controlling the supply chain that they may have overlooked one of the fundamental principles of retailing. Magazines may be sent to retailers but they will not sell if they are not put on display. With 3,500 titles available, it is obvious that not every title can have a place on every newsagent’s shelves. While it is often said that new titles are the life blood of the industry, over half of retailers return their allocated copies the next day. Very little has been done to persuade independent retailers to add titles to their range, or indeed to give them impartial advice on what their range should be to optimise their magazine sales.

The 5am decision

Publishers might want to consider who actually makes the decision on whether a title is put on the shelves, or returned to the wholesaler the next day. The person who actually makes the decision on whether the title goes on the shelves is not necessarily the owner or manager, it may well be the shop assistant who opens the bundle at 5am in the morning. Publishers and distributors might find it beneficial to give some thought to how best to persuade that shop assistant that a title should go on the shelf, and not straight in the "returns box".

The underlying reason for so many "early returns" has to be the lack of retailer confidence in allocation systems, be they distributor or wholesaler driven. It is difficult to understand how allocation systems can accommodate eight different tiers of Tesco stores, but apparently there is only one classification for independents. The requirement of an independent retailer in central London is not likely to be anything like that of an independent village store in the middle of Norfolk.

Allocation systems are increasingly looking at the national picture while independents are only concerned with what can sell within their own catchment area. Radio Times may well be the top selling magazine nationally but, in many stores, including my own, it does not even appear in the top 50. The volume of the top 100 titles sold in the multiples’ stores grossly distorts the figures and it would be interesting to see a chart of the top 100 titles sold in just independent stores.

For over ten years, publishers have restricted, even managed down, magazine supplies and sales in independents. If I were to recommend just one thing to publishers, that would make a difference to magazine sales in the independent sector, it would be to bring back the wholesalers’ trade counters and to actively encourage retailers to use them.

Lifecycle availability

With a retail network of 54,000 stores, no publisher would want, or could afford, total availability for their title because it would mean a minimum of 54,000 copies returned, unsold, every issue. While publishers and wholesalers have been concentrating their efforts on maintaining the "crude" availability of the multiple grocers, they have done little to improve the "lifecycle" availability of independents. How does it help a publisher if, on the last day of sale, every supermarket in the country still has a full shelf of their title, when thousands of independent retailers had sold out within the first few days of the title’s on-sale period? When it comes to maximising overall sales, the lifecycle availably of all retailers is by far the most important measurement that needs to be monitored, and maximised.

When it comes to the magazine supply chain, allocating supplies and service levels required, one size does not fit all and very little attention seems to have been given to the specific requirements of independents. Understanding the individual requirements of independents, and tailoring the supplies and service levels accordingly, is the only way to win the hearts and minds of this diverse but important magazine retailing sector. The independent magazine retailing sector may be high maintenance, but publishers need to consider what their businesses would be like without them.