Canadian Magazine Industry News
10 October 2008,     TORONTO
Rack removals, fuel taxes and authorized lists: Three things we learned at the CMC Newsstand Seminar

Declining real estate and increasing costs are just two of the many challenges facing the frequently beleaguered newsstand chain in Canada. To discuss these challenges—as well as opportunities—the Circulation Management Association of Canada (CMC) brought together a panel of five experts from the various newsstand playing fields for a seminar: Craig Basnett, national director of sales and marketing for Coast to Coast Newsstand Services Partnership (distributor), Kevin Brannigan, vice president of circulation in Canada for The News Group (wholesaler), Martin McEwen, director of sales and marketing for LMPI (direct to retail distribution), Arlene Shepard, vice president of press management for Gateway Newstands (retailer), and Pat Strangis, director of newsstand sales for Transcontinental Media (publisher). With Scott Bullock, vice president of sales and marketing for CDS Global moderating, discussion was lively and forthright. Here are three things we learned from the session.

1. Rack removal at Loblaws
Removal of checkout racks at Loblaws grocery stores—the number one retailer for single copy sales in Canada—is causing stress for everyone in newsstand chain. Approximately 40 Loblaws stores have already removed checkout racks and the industry anticipates another 100 stores will do the same thing over the next year. Early numbers from The News Group show at least a 35% in-store sales drop when checkout racks are removed. In some cases, it’s much higher, Brannigan added.

Basnett and Brannigan both noted that the checkout removals should not be viewed as “an attack on magazines,” but rather, as part of a general Loblaws rebranding in the wake of increased competition from big box stores such as Costco. Some Loblaws that had removed racks have already replaced them and are experimenting with things like smaller displays. Brannigan, meanwhile, said that early News Group sales figures show that consumers may be buying their magazines elsewhere. 

The esteemed panel members get ready to duke it out.

2. Fuel tax for unsold copies?
Brannigan revealed that The News Group is “working towards” charging for returns. “It’s probably a bad way to put this, but we will tax or punish bad behaviour because of excessive returns in the business. Those unsold copies cost twice the fuel of a sold copy and we don’t get a penny for them.” The News Group saw a $1.45 million increase in fuel costs this year.

Brannigan’s comments provoked a number of responses from audience and panel members. Alexandra Cooper of House & Home Media asked, “Don’t you think if you’re going to tax returns that publishers should be fully in charge of their distribution?” and argued that, because some cover prices are higher than others, the current model is “not on cost to serve. So when you start introducing elements of a cost to serve model but not the whole thing, it unfairly disadvantages different parties in the channel…Higher priced products will carry more of the weight.” Shepard also asked the question about responsibility for copies that go unsold. 

3. Authorized list coming at Chapters/Indigo?

Chapters/Indigo is currently reviewing its title list and may introduce an authorized or restricted list next year, Basnett said. In a follow up interview, Brannigan said he’s hearing the same thing. “They just don’t know that they can sustain the sheer number of titles that they are handling. I think that if not an authorized list, certainly a restricted number of titles may be in Indigo.” 

— M.U.
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