LONDON (FNS) -- British supermarkets are eyeing newspapers and magazines as their next untapped market.
Sir Ian MacLaurin, chairman of the United Kingdon's largest food retailer, Tesco here, recently called for an end to British restrictions on the supply of newspapers and magazines.
"The existing systems give each wholesaler a virtual monopoly," MacLaurin said in an address to the British Society of Magazine Editors. "We have had to work with old restrictions that have outlived their purpose."
According to a report by Reuters news service late last month, Tesco has threatened to bypass the existing system of wholesalers and buy magazines direct from publishers to cut costs and avoid supply restrictions it said were caused by the current system.
Newspaper and magazine distribution in the United Kingdom is dominated by W.H. Smith and John Menzies -- also the country's two largest chains of news agents. Their dominance represents a significant market advantage, since 85% of all magazines sold in Britain are sold at the newsstand.
The Tesco executive criticized the current system that supplies a fixed number of newspapers and magazines to retailers, rather than operating on a supply-as-you-sell basis. His criticisms were echoed by Sir Alistair Grant, chairman of Argyll Group here, which owns Safeway.
Both executives said their companies offer significant sales potential to publishers, which must press for changes in the supply system. MacLaurin did not say whether Tesco would begin discounting newspapers and magazines, however.
Tesco has begun discussions with all aspects of the publishing business to determine ways the current system can be improved. Its push follows the pressure the supermarkets exerted on book publishers earlier this year, which resulted in the collapse of the recommended retail price system for books.