Media Forum: Is Tesco a magazine threat?

Will its move into consumer titles threaten publishers?

Tesco's clout in the UK retail economy has been well documented. Statistics have indicated that as much as £1 in every £8 spent on the UK high street goes through the supermarket giant's tills.

And, it seems, Tesco's expansion plans now extend to the consumer magazine market. Last week, Campaign revealed that the supermarket is set to launch three magazines on newsstands across its 2,000 UK stores. Titled, variously, Food, Home and Your TV Week, each will have a coverprice and will be produced by the independent publisher CatMags Communications, a joint venture between the customer publisher PSP Rare and Lucid Direct.

Its plans seem likely to put greater pressure on consumer publishers, which, certainly in a sector such as television listings, are battling against declining circulations. Does the move of a retailer that has previously been a partner of the publishers into such a competitive market spell trouble for these publishers? Or is it simply more welcome competition and a sign that consumer magazines are, once again, on the up?

Few at major publishers were keen to talk about Tesco's move, perhaps wary of upsetting such an important retail partner. Off-the-record, though, some will concede that although the launch of the Food and Home titles, with relatively small planned circulations of 50,000, are not a massive cause for concern, the presence of a mass circulation TV listings title with a bargain basement coverprice of 45p appears far more threatening.

So should publishers be worried? Very much so, Mike Soutar, the chief executive of ShortList Media, and a former executive of the UK's largest publisher, IPC Media, argues. He says: "This has not been entirely unexpected, and it's a signal of intent that Tesco is looking to become an aggressive and new player in the world of magazines. It's a very significant move from a retailer that is determined to become a player in the world of publishing. What it really represents is yet another business model for the publishing industry."

However, Soutar believes that publishers might be better off not fighting the move: "Simply, Tesco can change any market it enters into and it is now entering another part of the value chain, competitively pricing its new titles. If I were to pinpoint the real challenger in the market, it would be the TV title. I would expect it to be much more mass market and challenge the existing players in the sector."

Neil Allen, the press trading director at Starcom MediaVest Group, argues that the details of the launches will be all-important: "It's an interesting question of how Tesco is going to position these magazines in-store. There is no issue with Tesco placing their own magazines exactly where they want in their own stores, but for publishers from outside companies, the issue of whether they are that much closer to the tills still exists.

"There is also an issue to how these magazines will be branded, and whether that will cause confusion between the Tesco-branded magazines you get free at the till, or indeed the ones you get free with the mailout of your Tesco Clubcard. It comes down to where you put them and how you sell them."

Eve Samuel-Camps, the head of press at Universal McCann, believes that this is a clear move from Tesco to grab a slice of the advertising market but agrees with Allen that much will come down to how the magazines are marketed in-store: "They have to be marketed in an intelligent, independent way, so the customers don't think of them as just another customer title.

"However, the public will only purchase the titles if they have total editorial independence, and are not confused with the retailer's customer magazines. It has to be about editorial quality if consumers are going to be convinced to buy the product."

Vanessa Clifford, the managing partner at Mindshare, believes that this is a significant move for Tesco that is likely to be successful thanks to its control over its own shelf space: "I think Tesco has already said that the paid-for magazine space, up until recently, is somewhere it doesn't have its own products, and that's true. If you look at all the other ranges Tesco sells, from baked beans to own-brand cornflakes, it really is quite glaring that it doesn't occupy this space. Although I'm sure that the magazines will be subtly branded with the Tesco logo, it's almost as if that doesn't matter as the Tesco brand is so trusted by the general public. You may love it or hate it, but it does have a certain kudos in the retail space."

YES - Mike Soutar, chief executive, ShortList Media

"I'm sure if you were one of the other publishers on the shelves in Tesco, you would be both angry and frightened; you would certainly think that they were trying to eat your lunch."

MAYBE - Neil Allen, press trading director, Starcom MediaVest Group

"The new magazines do seem within the right price range but with what seems like relatively low circulations to start, they will not particularly challenge established rivals in the food, home and TV listings sectors."

YES - Eve Samuel-Camps, head of press, Universal McCann

"Tesco has a powerful inroad if it can take the till points. As this is its prerogative, it's something it can easily achieve. If these magazines are marketed in a certain way, this is a huge plus point in the Tesco portfolio."

YES - Vanessa Clifford, managing partner, Mindshare

"It's a good strategy to launch the TV listings title later in the year, as sales of listings titles spike during this period. I think the food title is equally as important, as Tesco is obviously hugely involved in food, and that gives it permission to publish in this space."

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