James Lowman: ACS in action

All posts from: October 2012

Monopoly rules

Posted by: James Lowman Thu, 11 Oct 2012

Two significant developments have focused the trade’s attention on the news and magazine category last week. The first was the hearing in the case brought by ourselves and the National Federation of Retail Newsagents against the Office of Fair Trading for its attempt to wash its hands of the unresolved issues in the news and magazine industry. We’ve also had the decision by Menzies Distribution to impose an £8.50 per store weekly surcharge on all their customers who will now be receiving News International titles from them rather than direct from the publisher.

Menzies’ actions are a great example of why so many retailers tear their hair out in frustration at the way they are treated by monopoly suppliers. Many retailers I speak to feel powerless to control this important part of their business. In this case the decision to impose a surcharge defies the wholesaler’s own imposed delivery charge template and follows year after year of inflation-busting increases, variable service standards, and increased wholesalers’ profits.

We didn’t take the decision to pursue a legal case on this issue lightly, but something radical has to happen to break the negative attitudes and behaviours afflicting the market. After decades of intransigence only regulatory intervention will change the attitudes of the vested interests determined to cling on to the status quo, even if it leads to perpetual decline.

Selling newspapers and magazines is increasingly viewed by retailers as a subsidised community service, rather a sustainable part of their business. This is not the way it has to be. News can be better integrated, better managed in store and can perform better in terms of sales and profit, but where is the incentive for retailers to invest and grow sales?

This will only change when retailers feel they have genuine influence and the opportunity to innovate as they do in other categories.

The OFT has tried to give up on this market. I hope their apathy isn’t matched by retailers’.

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