Retailers send message: flip, or else flop; retailers demand more widespread use of method to convey price changes

Folio: The Magazine for Magazine Management, May, 1990 by Susan Hovey

NEW YORK City-When it comes to the problem of handling cover price changes for magazines, more and more industry members are flip-flopping on the issue.

And that may be good news.

Recently, national distributor Warner Publisher Services implemented a system whereby all of its publisher clients would flip-flop" between two manufacturing codes when changing cover prices, allowing the retail scanner to catch price changes instantly.

The Universal Product Code (UPC) for magazines is composed of two parts: a five-digit manufacturer's code on the left and a five-digit BIPAD number on the right. The BIPAD is analogous to a social security number for individual magazines-it does not change.

Since the industry began using the UPC back in the mid 1970s, retailers have faced the problem of updating their computers to reflect cover price changes accurately as the magazines go on display.

"It's impossible to put up the new magazines and take down the old ones at the same instant that you make the change in the computer," notes George Erhart, owner of Santa Barbara News Agency. "There has to be some way to tell the computer that there is a difference between the two magazines being scanned."

Under the flip-flop" plan, a magazine with a new cover price is printed with a different manufacturer's code. This allows the store's computer to differentiate between any new and old issues of the magazine. If that same magazine were to change its cover price again, the publisher would then switch back to the old manufacturer's code.

The plan not only simplifies things at the retail end, but prevents havoc for the wholesaler, which suffers from inaccuracies and delays in the billing process on unsold units at the old price.

"The key is for the publisher to give the national distributor plenty of advance notice," says UPC expert George Wright, who notes that distributors need time to inform wholesalers, which, in turn, must inform retailers. "Sometimes the first time a wholesaler knows of a price change is when the magazine comes in the door. "

Although the flip-flop procedure has been used by a number of larger publishers over the past decade, it has never been implemented on an industry-wide basis. But last fall, at the Marketplace 89 conference, Erhart issued a warning that unless publishers took action, they would find more and more of their titles being dropped from stores.

"The reason this issue hasn't come to the forefront sooner is that there weren't that many retailers scanning magazines," says Bob Matthiessen, executive vice president of Warner's magazine division. But now more and more retailers are fining wholesalers for incorrect or incomplete information on price changes. Meijer's, a chain in Grand Rapids, Michigan, is charging wholesalers $1,000 for each error.

Weis Markets, a chain that serves the Mid-Atlantic states, no longer scans magazines because the process is simply "too much work," according to one official.

Wright admits that adoption of the flip-flop method "is going to be an administrative headache of major proportions" for all parties involved. But he also stresses that those kinds of headaches will help to prevent bigger ones down the line.