president, The News Group U.S.
Through its acquisition of Anderson Newsâ€™ assets, the News Group is widely credited with calming the supply chain.
In February 2009, wholesaler Anderson News abruptly shut its doors, blowing a chunk of the supply chain right off the rails and bringing, for several months, magazine distribution to a standstill. About 25 percent of the market was suddenly up for grabs. The event spooked everyoneâ€”from publishers to retailersâ€”and highlighted in stark relief the frailty of the distribution channel.
The News Group quickly stepped into the void and hammered out a deal to purchase what was left of Anderson. That action is widely credited with mending a fatally broken supply chain after Andersonâ€™s implosion.
The News Group picked up 15 of Andersonâ€™s major distribution centers, 60 depots, 1,300 trucks and hired 4,000 employees. â€śWe hammered out the deal in about 48 hours and did the rest in about 60 days,â€ť says Parry.
Now, however, theyâ€™re left with a very different distribution landscape with The News Group commanding a 46 percent market share, according to Parry. That size gives the wholesaler some obvious benefits, but those benefits trickle back to publishers, too, he says.
Along with Andersonâ€™s assets, The News Group took over distribution into 10,225 stores. All told, Parry says The News Group spent in the high seven figures, with investments ongoing in scan-based trading and other infrastructure.
News Groupâ€™s new size and the shock of the near-collapse of the distribution chain helped the wholesaler negotiate more favorable terms with retailers, which have historically been the 800-pound gorilla in the room. Parry says he struck new, multi-year contracts with retailers, and confirms rumors that he shaved a â€ścouple of pointsâ€ť on the terms in his favor.
â€śThe fragmented nature of the business was the biggest point of leverage,â€ť says Parry. â€śThe fragility of our business was our greatest asset to reworking the deals. The retailers had to reconsider the margins they were getting in the category.â€ť
VITAL STATS: Magazine wholesaler The News Group now commands almost 50 percent market share. After buying the Anderson News assets, News Group was able to shave off a couple points in costs with retailers.