dajodo2 said:
Has anyone noticed that on magazines, books and greeting cards they are starting to no longer print both the higher Canadian and lower American prices on them.
Those products destined for Canadian shelves now only show the higher Canadian price. The manufacturers of these products came up with this idea because they felt they no longer wished to "confuse" Canadian shoppers.
Wasn't that considerate of them?
The magazine side had little to do with the publishers (manufacturers).
http://www.cbc.ca/consumer/story/2007/12/14/magazines-parity.html The price holding was done at the request of the wholesalers (
http://www.cmmi.com/ and
http://www.thenewsgroup.com/ ) to keep the pricing as is.
Reducing the cover prices and corresponding margins would have placed the Canadian wholesalers in the same state of affairs as their US counterparts: barely profitable and close to bankruptcy, hence the overall trend of rising cover prices in the US. It wouldn't surprise me in the least to see the US cover prices adopting similar prices to what is seen in Canada over the course of the next couple years.
40% off the cover price may seem great but when the wholesaler ends up giving 20/25 of that to the retailer and has to go back and pick up the unsold product and dispose of it, little is left in terms of profit. Product ends up being handled half a dozen or more times throughout the whole cycle.
The wholesaler community in the US is going to be hard pressed to survive with the small amount of table scraps they end up with after picking, packing, delivering, merchandising (multiple times a week) etc...
In the last 15 years the wholesaler count has dropped from 90 to 4 major players. Only
The Source seems to be turning any sort of profit and majority of that is from their Media division.
The higher overall price in Canada for a magazine better reflects the overall cost of getting the product out to the retailer - transportation costs, higher overall cost of staff - plenty are at provincial minimums or within 20% which is still much higher than the minimums in most states.
Lower magazine prices in Canada would mean less overall selection (wholesalers would chainsaw the 3000 or so titles they handle now down to the top 250 to 500) and shutout all but the major retailers (Chapters, Loblaws etc...).
The wholesalers overall are the bottom feeders of the whole supply chain - expend lot's of resources and get very little return. Publishers on the other hand make the majority of their money upfront (advertisements - really a magazine is just a vehicle for ads). Whether the magazine sells or not doesn't really matter as much to the publisher. If it's on the newsstand chances are good that it is being browsed (ads being seen). Sales are still good but when the industry average is at best 35% sell through (lots of titles are sub 25%) that really tells you where the publisher's concerns are (the ad revenue) regardless of their public stance.
Whether or not the publisher would be willing to guarantee the margins wholesaler get now and lower cover prices is any body's guess - I really have no idea what the costs are on the publisher side (printing, delivering the wholesaler) but I suspect given the lack of concern for a decent sell through and their reluctance for raising cover prices during the last five years, that the 60% likely covers their costs. Keeping the costs as is and the margin as is would eat into their profit.
