Retailer's move to seek ad space criticised

A supermarket chain in the United Kingdom is seeking advertising space in magazines they are selling through their outlets.

This has received a strong reaction from the publishers demanding a withdrawal of any such move, while the market in the UAE feels it's not mature enough for such manoeuvres.

Asda, a UK supermarket chain owned by Wal-Mart Stores, is intending to use its retail muscle to demand changes to distribution deals with magazine publishers, including a request for free space in magazines.

An e-mail sent out to magazine distributors sought two pages of editorial or advertising space each month in titles to be chosen by Asda.

The e-mail was apparently leaked to The Guardian and caused a media furore, leading Asda to backtrack on some of its proposals, according to industry sources.

Asda managers held a meeting later with more than 50 distributors, wholesalers and publishers to discuss the suggested alterations to their distribution deals.

Other Asda demands, as reported in the UK press from the leaked e-mail, included a $20,000 annual fee for shelf space in the supermarket, plus an extra $5,000 fee per title for each new Asda store and a "set up" charge of $5,000 for each new title distributed in its stores.

Asda may have scaled down its proposals after they became publicly known, but the supermarket giant – the No2 chain in the UK behind Tesco – is still looking to significantly improve its deals with distributors.

The market in the UAE is, however, apprehensive about the feasibility of any such move here.

"We do not see such a large sale through supermarkets here. So publishers won't be able to accommodate this additional burden," said Asad Kaq from one of the leading distributors in Dubai.

"The financials are fairly complex between the publishers, supermarkets and the distributors and it will not be possible to define who is to take the financial burden of additional costs for inserting free ads for supermarkets," he said.

Speaking for the supermarkets, Bejoy Thomas, marketing and advertising manager for Abu Dhabi CoOperative Society, said: "In the absence of accurate data regarding distribution and sale of publications through various outlets, this formula may not be applicable in this part of the world.

"Perhaps, at gas stations, the sale of publications may justify the additional costs to be incurred, but in supermarkets that is not the case."

In the UK, an Asda spokesman declined to comment on the details, but the chain has issued a statement saying: "The e-mail sets out a number of proposals aimed as a starting point to begin discussions. As with any negotiation, both parties have a wish list which will quickly change as middle ground is sought and an agreement that suits both parties is found."

The company statement continued: "Many issues were discussed and resolved. We would add that the use of 'editorial' was a mistake and should never have been included and has been removed from all further conversations."

Asda described its meeting earlier this week with key distributors and publishers as "positive".