The POS Software Blog

News from Tower Systems about locally made POS software for specialty local retailers.

The challenge of economic rationalism in the magazine supply chain


For 24 years my software company has worked with newsagents. For the last nine of those years I’ve owned a newsagency as well. Newsagencies in Australia are the classical small business. Independently owned, very local and each one different. Newsagencies sell around 50% of all magazines.

Since 1999 the sale and distribution of newspapers and magazines has been deregulated. With deregulation has come greater focus by publishers on the supply chain. There is less room to move today, meaning that selling out in a smaller volume store is okay in their eyes – and I understand that. However, a sell our only serves to starve the newsagent.

We have started researching the impact of sell outs on our newsagent clients.

The graph at the top of this post represents the average per day sales on a weekly title for four months in 2005 (black) compared to the same four months in 2004 (red).

Following several months of sell outs in 2004 they achieved a modest supply increase and you can see from the 2005 figures, in black, that the result was more sales earlier in the week. By mid week they only had five of six copies left.

While it is natural for the sales of a seven day title to slow later in its shelf life, if we look at the weeks where they were inadvertently oversupplied we see stronger than average sales on days 5, 6 and 7. This unscientific and preliminary research suggests that there are significant sales to be achieved by at least some newsagents being supplied in sufficient quantities.

Our involvement in this is in pursuit of hard evidence which we hope will help our client base build their businesses. While we help with marketing strategies and the like, we also see value in building cases to take to suppliers in an effort to alter their scale out decisions – such as the approach for weekly magazines.

We’re not there yet but we do have a sense that the mission is valuable for our client base and therefore valuable for us.

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By Mark