Wal-Mart Bids to Call Magazine Shots

Apr 02, 2002

Wal-Mart’s plan for reconfiguring the magazine distribution channel in its stores adds a new twist to the struggle to reinvent the newsstand system. Its plan would establish direct financial relationships with publishers, based on a scan-based trading (SBT)/pay-on-scan (POS) model.

Wal-Mart is testing issue-code-reading scanners in its newer stores and plans to roll out SBT for magazines throughout its stores by fall. (The retail chain would provide publishers with daily access to by-store sales data.) Under Wal-Mart’s plan, it would control merchandising and continue to select its own magazine distributors, but pay them for delivery and/or merchandising services on a cost-to-serve (CTS) basis.

Time Inc. had discussed its own CTS/SBT-based plan with Wal-Mart for months. The retailer came back with a plan that incorporated the basic elements of Time’s proposal, plus gives Wal-Mart greater control. Time’s plan, also based on a financial relationship between the ND and the retailer, calls for the ND to select and contract with distributors on a CTS basis.

Publishers, NDs and distributors were already trying to sort out and compare the pros and cons of Time’s proposal as well as a different plan created by the Hearst/Conde Nast distribution arm, Comag Marketing Group (CMG).

Moderator Comment: Does Wal-Mart’s clout with suppliers concern you?

Imagine a world where all the shots are called from Bentonville, Ark. Scary! [George Anderson – Moderator]

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