2017 has already been a tough year so far. That message comes across loudly and clearly in this year’s Distripress Circulation Monitor (DCM). Few of the underlying pressures which have been building in the supply chain are new, but this is the year when they seem to be coming to the surface, with significant consolidation taking place in a number of countries: acquisitions, mergers, closures and partnerships. They are taking place on a scale and at a speed not seen before.
A key part of the DCM project is a survey of Distripress members from around the world and in every link of the supply chain. This year the views of 119 companies in 43 countries in every continent were polled. The overwhelming view is that structural change in the supply chain is increasing rapidly. 77% are seeing some kind of change (significantly up on the 67% seen in last year’s survey) with 30% describing it as “radical change” (up from 25% a year ago).
The challenge of change
So, what does this change look like? Consolidation is the big theme. While it is most obviously hitting Wholesalers & Distributors, it can also be seen among Publishers. Yet it is among the “middlemen” where the stresses are emerging most obviously currently.
Consolidation does have some upsides in a cold Darwinian way. “We have grown our market share due to the closure of a major competitor” is the simple comment of one distributor. The companies who survive the stress test are usually better placed than they were before. However, the survivors must also face up to the brutal truth that consolidation often simply buys people time rather than providing permanent solutions: that is unless some more strategic thinking and restructuring takes place.
There are two other associated themes behind the consolidation. The first is cost-cutting which is a key focus in most operations. This too has positives and negatives:
- On the downside….. “We are finding it difficult to continue to decrease costs in line with the falls in revenue. We are having to work much harder, produce more and save costs to maintain performance.”….. “We are now heavily understaffed.”
- On the upside….. “The fall in revenues has made us look much more creatively at how we run our business and we have become more efficient and profitable as a result.”
The second theme is diversification. Publishers have been doing that for some time with content being delivered on an increasing range of platforms, both print and digital. Yet it is among Wholesalers & Distributors where some creative and lateral thinking has been taking place most recently. For them, this means providing a wider range of distribution, marketing and logistics services both for publishers and for other non-publishing clients.
Linked to all this is concern about supply chain processes (are they as efficient as they could be?), the role of the middlemen (could they be cut out completely or their role – and cost – reduced?) and the need to invest in IT to release the full power of the data that is being collected. The other big theme is the growing pressure at retail.
However, there are some real positives that Distripress members can also see shining through the very real challenges ahead. These are driven by confidence levels which are down on last year, but still very robust given the market conditions.
The opportunities in change
In terms of opportunities, there are two dominant themes. Firstly, a firm belief in the improving quality of the editorial products on offer – a view that is shared equally among Publishers and Wholesalers & Distributors. There are specific comments on:
- Specialist magazines and premium products such as bookazines.
- The need to have a constant flow of new launches.
- The quality and authority of press brands in a “fake news” world
Equally important, is seeing the clear opportunities that are still felt to be available in developing the retail channel – a view that is held more strongly among Wholesalers & Distributors than Publishers. This falls into a number of distinct, but overlapping areas:
- Bringing more retailers on stream. This includes non-traditional outlets and pop-up shops, but also extends to increasing the number of established press outlet types, especially travel points and in shopping centres.
- Creating a more high profile in-store presence. This embraces both stronger promotional bursts of activity and longer-term fixturing, such as dedicated stands, checkout pockets and retailer loyalty schemes
A third factor, well behind the first two, but still important, is driving improvements to the current supply chain (e.g. faster delivery times, more creative thinking from the local wholesaler/distributor, more efficient routes to market rather than following the traditional supply chain, etc.).
A fourth factor is the opportunity to develop the sales of digital products. Interestingly, this is felt more strongly among Wholesales & Distributors than among Publishers. Some Wholesalers & Distributors see an opportunity to take on a role in the digital supply chain.
In addition, a range of other factors are mentioned. These include developing the subscription route to market, expanding into new geographical markets and using data to drive smarter copy allocations, thereby increasing sales and reducing waste.
The full DCM report provides much more detail on a whole range of issues…..the opportunities and challenges facing the industry; how Distripress members are managing change; what their priority list of “things to do next” looks like; how different territories around the world are performing; what the hot magazine categories are; what a good News & Magazine retailer looks like.
So, what does all this mean? In 2015, the mood of the global press distribution industry was very mixed. It was a year when panic and gloom were jumbled up with a steely determination to face up to the multiple threats out in the marketplace. 2016 was a year when confidence increased as companies started to experiment with new business models and to get more used to the flexing supply chain.
There is no doubt that 2017 is turning out to be a tough year: tougher than 2016 in terms of actual business performance. Yet those companies surviving the stress test are looking more creatively and positively at their businesses. They want to share more experiences and case study insights more openly than ever before in a desire to learn and improve. And they see Distripress as the prime forum where they can do that.
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