Wednesday, July 30, 2008

Oh, and would you wash the manager's
car, too?

[This post has been updated] Wow, you thought things were tough on newsstands on this side of the pond! In Britain, one of the largest supermarket chains is demanding two pages a month of advertising or editorial space in any magazine they carry!

The Guardian has published the text of an e-mail that the Asda chain (which was taken over by Wal-Mart in 1999 and is now the second-largest grocery chain in Britain) sent to all its magazine suppliers. An accompanying story said the grabby retailer has made publishers furious:

Publishers supplying magazines to Asda branded the supermarket's demands "outrageous" and not "economically viable".

However, an Asda spokesman said the email sent to magazine publishers was a starting point for discussion and that the company expected to reach an agreement that suits both sides.

In addition to the free advertising/editorial space, Asda is asking for:
  • a "space contribution" of £10,000 paid to the supermarket chain;
  • a space contribution for each new Asda store opened of £2,500 per magazine title;
  • any new title to pay an "item set up" charge of £2,464;
  • a turnover bonus to the value of 2% of its magazine suppliers' total business to be paid quarterly and backdated to January 1 2008;
  • a "hurdle rate" for new titles carried in stores, so if sales of the magazines are 20% less than forecast the supermarket will be compensated with the difference.
"This comes from an agenda where the supermarket feels magazine publishers are awash with money," said one source. "They [Asda] want to charge sums of money that are totally disproportionate to the number [of magazines] supplied through them."

A spokesman for Asda told "The email sets out a number of proposals aimed as a starting point to begin discussions.

"As with any negotiation, both parties have a wish list which will quickly change as middle ground is sought and an agreement that suits both parties is found."

[UPDATE]Asda has said the demand for editorial space in the magazines it carries was a mistake. According to a report in Campaign magazine:
"Representatives of Asda, magazine distributors and publishers met on Tuesday to discuss the proposals. In the meeting, Asda is understood to have blamed the e-mail on a junior buyer who was naïve and new to the category. Publishers are awaiting new proposals from the supermarket. A spokesman for Asda declined to comment on the seniority of the person who sent the e-mail.


Anonymous Anonymous said...

There's a word for Wal-Mart and its ilk, but this is a polite blog.

6:20 pm  

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