Retail Sales (Sale or Return) - National Newspapers

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Retail Sales (Sale or Return) [Print/Digital]

A copy sold to a retailer, on a sale or return basis, for resale as a single copy to a consumer.

Principles

1. Single copy knowingly paid for by the consumer to the retailer

2. Copies are purchased from the publisher by the retailer, on a sale or return basis, either direct or via the distribution chain (typically distributor and/or wholesaler)

3. It must be clear the price paid by the consumer includes the publication

4. There must be an incentive for unsold copies/net sale to be reported to the publisher

5. If the final net sale is not known then estimates must be made 

Requirements

1. Single copy knowingly paid for by the consumer to the retailer

1. The purchase by the consumer may be in cash or by other means agreed by ABC in writing.
   
   
2. You cannot claim sales of back issues.

Guidance Available

2. Copies are purchased from the publisher by the retailer, on a sale or return basis, either direct or via the distribution chain (typically distributor and/or wholesaler)

1. ‘Sale or Return’ means unsold copies are returned or reported for credit. The copies claimed will therefore be the net sale (copies supplied less credited copies).
   
   
2. Where the publisher is not third party to the retailer then evidence of purchase by the consumer is required.
   For example EPOS reports and retailer revenues.
   
3. You must account for net sales on an issue by issue basis.

Guidance Available

3. It must be clear the price paid by the consumer includes the publication

1. If a voucher from a publisher controlled promotion is used the amount paid by the consumer is deemed to be the total of the cash paid to the retailer and any cash they paid for the voucher.

2. You can ignore the value (or perceived value) of gifts or cover mounts to the consumer. However:

   1. Cash reimbursements to the consumer must be taken into account (excluding limited low chance lottery style promotions).

   2. If the publication is promoted to the consumer as free, then it cannot be claimed as a paid sale.
      
      

3. You must retain details of promotional or special offers during the reporting period.

4. Where you are operating a retail incentive scheme:

   1. You must have appropriate management controls and processes in place to ensure the copies sold under a retail incentive offer are compliant and properly accounted for. This may include:

      • Supporting evidence of relevant process and financial arrangements (including with third party intermediaries where applicable)

      • Instructions to retailers and stores on the operation of the incentive in-store

      • Your own checks of in-store compliance

   2. The quantity of copies should not exceed potential demand by the intended consumers. This should take into account factors such as store size/footfall, non-scheme sales, evidence of returns etc.

   3. You must provide to your auditor on request details of stores currently operating the scheme and those upcoming in order to facilitate planning of in-store checks

Guidance Available

4. There must be an incentive for unsold copies/net sale to be reported to the publisher

1. Copies purchased using vouchers from publisher controlled promotions can be claimed as long as the consumer pays at least the retail margin in cash.

5. If the final net sale is not known then estimates must be made

1. If at the time you submit your circulation claim:

   1. Unsold copies could still be returned or reported, you must make an estimate of final sales.

      You must adjust your claim in the following period to reflect any difference between the estimated net sale and and the actual net sale.

2. In relation to promotional schemes utilising voucher redemption: If you are reporting on a monthly basis and the effect of not making an estimate is judged to be unlikely to affect the figures claimed by more than 2% of the total average circulation then you can account for the vouchers on a wash through basis (i.e. as they are redeemed).

Guidance Available

Reporting

You will report retail sales as follows, which will be broken out on the ABC Certificate (note: the term Full Rate will replace full or Basic Cover Price for reporting purposes):

1. By print copies by geographical type:

1. United Kingdom;
   
   
2. Scotland - as a subset of UK
   
   
3. England, Wales & N. Ireland – as a subset of UK
   
   
4. Republic of Ireland (ROI);

2. By digital copies by geographical type:

1. United Kingdom

2. Republic of Ireland (ROI)

3. By print and digital copies, and by combination with other circulation types

1. Retail sales (sale or return) will be reported combined with single copy sales.

4. By print and digital copies, and by total average circulation over the period

Guidance Available

Guidance

G1. Single copy knowingly paid for by the consumer

1. Cash means legal tender notes and coins, cheque, credit/debit card, wireless payment systems.
   
   
2. This doesn’t preclude a retailer selling more than one copy to a single purchaser (without the publisher’s knowledge).
   

G2. Copies are purchased from the publisher by the retailer, on a sale or return basis, either direct or via the distribution chain (typically distributor and/or wholesaler)

1. You will need to ensure all records required to support the retail sale claim are available for audit. This will include: 

   1. Full details of the exact numbers claimed as unsold or returned copies (including undelivered, lost or stolen copies) for every issue in the audit period.

   2. Full issue by issue details of all financial records and contracts with distributors, wholesalers and retailers, with specific regard to normal and recognised trade terms. These must be reconcilable to the distribution and returns records on an issue specific basis and to the average net retail sales claim.

   3. Details of any change in trading terms from firm sale (if allowed) to sale or return (either temporarily or permanently) or vice versa.

   4. Details of discounts, special offers or restrictions on the return of unsold or undelivered copies.

2. Copies reported using a pay on scan system will be reported in this category. You will need to ensure appropriate records of sales are available for audit. 

3. Retail sales of digital copies via a third party retailer (for example Apple Newsstand, Google, Amazon etc) will be reported in this category.

G3. It must be clear the price paid by the consumer includes the publication

1. As the price paid may be affected by promotional schemes you should keep details of purchases and promotional spends so you can demonstrate copies are purchased and that sales under incentives/offers are classified correctly, or disallowed as necessary. You can contact ABC for confidential advice, supplying copies of the promotional material and offer wording. The information kept may include:

   • Title/s involved
   • Issues involved
   • Duration of promotion
   • Retail outlets involved
   • Wording of the promotion displayed at the retail outlet/s
   • How the resultant copies are claimed
   • How the promotion will be paid for

2. Retail Incentive schemes – Management controls and processes

   • For each scheme the detail and extent of these controls and processes will vary as they should be appropriate to the nature of the promotion, including the scale and associated risk. A list illustrating potential risk factors is included below for information. The list is not exhaustive.

   • These controls and processes are reviewed as part of the audit process and help the auditor determine the level of risk and consequently the type and extent of audit work undertaken.

   • If the auditor judges the controls and checks in place for a particular scheme are not operating sufficiently effectively then they may require changes or, ultimately, decide copies under the scheme are not eligible for inclusion.

   • Risk factors associated with retail incentive schemes include:

   • The total quantity of copies sold under a retail incentive scheme relative to the total ABC claim

   • The details of how the scheme operates and relevant financial arrangements between the publisher, any retail merchandising companies, and the retailer groups involved in the scheme

   • The nature and extent of controls put in place by the publisher and/or retail merchandising company to ensure retailers operate the scheme correctly

   • Whether the scheme allows the consumer a choice of publication or is for a single title

   • Whether the schemes are regular and ongoing or one-off/intermittent at particular outlets

   • The ‘value’ of the incentive to the consumer

G5. If the final net sale is not known then estimates must be made

1. Estimates of final sale
   
   An assessment of likely sales should be based on current and historic information such as:
   
   
   • Current levels of sales and unsold copies
   • Historic data and seasonal trends
   • Promotional activity
   • Print orders
   • Competitor activity
   • Information from sales force

     Particular attention should be given to periods of promotion, re-launch and to non-UK circulation in general in order to arrive at a fair and reasonable representation of the net circulation. You should record the calculations and assumptions used to arrive at the estimated net sale.

2. All unsold copies must be accounted for. This means that all estimates of net sale must be reviewed in the next audit period to establish their accuracy and that claim adjusted to account for any over or under estimate from the previous period. This must be done for each relevant geographical area reported [Note: If the difference for a period is found to be material following an ABC audit or inspection, ABC may amend the Certificate for the period to which the estimate relates).

   View worked example E1

3. In relation to promotional schemes utilising voucher redemption a wash through basis means vouchers are accounted for as they are redeemed. The specific point at which they are treated as redeemed is not prescribed but you should use a reasonable and consistent basis.

G6. Reporting

1. Scottish sales analysis: The analyses of sales in Scotland will be based on net sales to the wholesalers whose address is in Scotland.

Examples

E1. If the final net sale and/or rate classification are not known then estimates must be made

All unsold copies must be accounted for. This means that all estimates of net sale must be reviewed in the next audit period to establish their accuracy and that claim adjusted to account for any over or under estimate from the previous period. This must be done for each relevant geographical area reported [Note: If the difference for a period is found to be material following an ABC audit or inspection, ABC may amend the Certificate for the period to which the estimate relates).

Worked example (assuming 12 issues in a reporting period)

Issue         Total
ID  Supply  Returns Net Sale    Sales%

1    88,500   26,229   62,271        70.36% closed
2    88,500   24,728   63,772        72.06% closed
3    88,250   23,688   64,652        73.26% closed
4    89,630   14,266   75,364        71.08% closed
5    89,820   27,620   62,200        69.25% closed
6    89,650   21,982   67,668        75.48% closed
7    88,500   26,229   62,271        70.36% closed
8    88,500   24,728   63,772        72.06% closed
9    88,250   23,688   64,652        73.26% closed
10  89,630   14,266   75,364        84.08% unclosed
11  89,820   9,655     80,165        89.25% unclosed
12  89,650   465        89,185        99.48% unclosed 

In this example issues 10, 11 and 12 are not yet closed so an estimate of the final net sales figures have to be made using the criteria mentioned above. You will, of course, notice that a proportion of the unsold copies have already been received, but at this stage you should just concentrate on what you think the final net sales will be.

When all the estimates have been made the final figures for your claim may look something like this: -

Issue         Total
ID  Supply  Returns Est. Sale   Sales%
10  89,630   25,096   64,534*     72% Estimated
11  89,820   25,150   64,670*     72% Estimated
12  89,650   24,205   65,445*     73% Estimated 

This means that your estimate of final net sale for these three unclosed issues is 194,649*.

Remember that you must report separate figures for any geographical areas broken out on the Certificate (e.g. UK / Republic of Ireland or overseas).

Adjustment for the estimate
In the next reporting period you would have a report giving you the actual net sales for issues 10, 11 and 12 because by then they would be closed off and complete. For example, the final report may be as follows: 

Issue         Total       Actual
ID  Supply  Returns  Sale       Sales%
10 89,630   25,382   64,248*      71.68%
11 89,820   25,884   63,936*      71.18%
12 89,650   26,312   63,338*      70.65% 

In this example the actual net sales relevant to your estimate is 191,522*.

The difference between your original estimate and the actual figure (i.e. 194,649 minus 191,522) means you have overstimated sales by a total of 3,127 copies over those 3 issues.

The average overestimate of sold copies was therefore 3,127 divided by 12 (total issues in the previous period) = 261.

So you must deduct 261 copies from the average in the current period, to ensure the overestimate from the previous period is accounted for.