Several people asked me today about the Magazine distribution report to the ACCC on magazine retailers. Based on its own criteria, the proposed model failed. It does not show that the Magazine Networks, could do a significantly better job of distributing magazines then the existing system based on the model they proposed. It does, however, leave questions. The reason everyone thinks the trial failed was because the control group sales which were similar shops to those in the program which they were measuring did amazing well in selling magazines. The control groups magazine sale dropped only 3%. The current industry average is an 8% drop in magazines while the historical drop of magazine sales based on the report is 6%.
If this control group magazine sales had fallen 6% (historical trend) or 8% (industry average) we would all be saying this trial was a great success.
This brings up the issue that I spoke about from day one about the lack of transparency in this trial. We do not know who the control group are so we cannot determine what is their story.
Let me say this in the stores that we measured with our POS software we found exactly what this reports states that sales of magazines continued to drop within the historical trend but that the workload had dramatically improved with an average saving in cost of handling a magazine department of over $5,000 a year.
If these trials stop, I predict the workload in these shops will go up and the magazine sales will continue their historical drop.
