US distribution giant Handleman was appointed as Tesco’s exclusive distributor of entertainment products almost a year ago, although the deal does not take effect until the end of March. The company replaces longtime Tesco partner E-UK, and it also means Tesco will now be working directly with an increased number of the larger publishers and suppliers.
MCV understands that the publishers who have been contacted to date by Handleman about the new agreement have not reacted positively to proposed new trading terms.
All suppliers to Handleman UK have been presented with details of its ‘fixed cost distribution model’, which will see each supplier being asked for a non-refundable, non-negotiable annual fee ‘in the region of £10,000’.
“And to add insult to injury, that doesn’t even guarantee us business with Tesco,” blasted one supplier.
Unsurprisingly, publishers were reticent to openly criticise Handleman and its charging model – for fear of jeopardising the possibility of a listing in Tesco’s 1,800 stores.
But, whilst remaining anonymous, they were keen to share with MCV their anger at the proposal.
“We’ve been asked for marketing costs before, but this is the first instance I know of where we’ve been asked to pay to have access to a retailer,” one publisher offered.
“Handleman is telling us that they have to cover the cost of the investment they’ve made in taking on the Tesco business – which is pretty outrageous.”
A Tesco spokeperson could only offer “this is not a Tesco-initiated process” when contacted by MCV.