WH Smith yields to publishers' demands

Peace has broken out between WH Smith and the group of publishers that have been incensed by the retailer's plans to shake up magazine distribution in the UK.

Peace has broken out between WH Smith and the group of publishers that have been incensed by the retailer's plans to shake up magazine distribution in the UK.

WH Smith had garnered the support of Tesco for the proposed new arrangements, in which it would become the exclusive wholesale supplier of magazines for the supermarket chain's 660 outlets. In June, the plan was condemned by the Periodical Publishers Association (PPA) as "an abuse of market power".

However, the PPA has now agreed to work with WH Smith Retail, its wholesale arm, to modernise the magazine industry's antiquated distribution practices.

A joint statement read: "The PPA and WH Smith Retail agree that fundamental changes need to be made to the current magazine supply chain in order to create a more efficient delivery system."

The statement represents a softening of its line by the PPA, which had previously been an implacable opponent of WH Smith's plans. In return, WH Smith's exclusive agreement with Tesco has been put back from the beginning of October while the two sides try to come to an agreement.

Under the current practices, retailers are given little choice about the number and type of publications they receive. WH Smith Retail's plan was to sign up exclusive deals with supermarkets, a move that provoked howls of outrage from magazine publishers and smaller retailers alike. The dispute intensified in June when Tesco threatened to stop stocking Grüner & Jahr's magazines, including top sellers Prima and Best, unless the publisher knuckled under.

Fuel was poured on the fire after a Loughborough University academic forecast that up to 12,000 newsagents might have to close because it would become uneconomic for wholesalers to supply them.