Safeway joins Tesco in magazine dispute

Safeway, the UK's fourth-ranked supermarket group, is set to back Tesco in its continuing dispute with magazine publishers by signing a distribution deal with WH Smith.

Safeway, the UK's fourth-ranked supermarket group, is set to back Tesco in its continuing dispute with magazine publishers by signing a distribution deal with WH Smith.

Tesco, headed by Carlos Criado Perez, has been at loggerheads with the magazine industry for months following its decision to switch from its existing regional distribution network to a new system with WH Smith as the sole supplier to its 659 UK outlets.

Now Safeway has waded into the debate by declaring its intention to sign an exclusive supply contract with WH Smith.

Kevin Hawkin, Safeway's communications director, said: "We share many of the sources of dissatisfaction that [Tesco] has identified with the existing system... We believe that moving from a regional network to a national one would enable retailers and distributors to better match supply and demand."

The retailers claim that the traditional structure, under which publishers appoint wholesalers with exclusive distribution rights for their titles in a geographic region, is inefficient and not in the best interests of its customers. They say that supermarkets lose up to £36m a year in missed sales opportunities because they are unable to obtain sufficient copies of some titles.

At the same time, they say, publishers are wasting about £160m a year because one-third of all magazines printed are returned for pulping by stores who experience over-supply.

But magazine publishers, while accepting that improvements could be made, have warned that the so-called "diktat" by Tesco, which will lead to more than 50 per cent of all magazine distribution being handled by WH Smith, could put up to 10,000 small retailers out of business.

A meeting of representatives from the two groups last week resulted in a commitment to adopt a "consensual approach" to resolving the dispute and setting up a better system. It is expected that other supermarket groups, including Waitrose, will join Tesco and Safeway in signing up to the WH Smith deal.