In his latest Observer column, former Guardian editor Peter Preston states the Star halving its cover price “might just work” in winning new value-conscious readers from the Mirror and The Sun and sending shock waves to publishers about the importance of price to consumers.
However, I believe he is off the mark for two reasons. First is his assumption that newsagents will “wail” about their margin cut and then accept their lot, as has historically been the case.
But this was pre-PayPoint Pay Fair, whose campaign showed that, by working together, retailers can instigate change in even the most powerful boardroom.
PayPoint’s terms may not have changed, but I have little doubt that having a supply chain in revolt, coupled with Yodel being consistently named among Britain’s very worst parcel services, was a major factor in Amazon taking its Collect+ contract elsewhere.
Similarly, I have heard from dozens of retailers in the past few days who, by delisting the Star, are showing that they won’t simply sit back and watch their news profits disappear.
Coupled with carriage charge increases, falling sales and shrinking margins, retailers will be putting their news bill earnings under the microscope
Second is Mr Preston’s out-of-hand dismissal that the impact will simply be a small readership switch. While this may be good news for Richard Desmond, it is terrible news for retailers, who could face a collective £14.7m hit to their profits, or £294 per store per year.
But more worrying is the long-term damage it could cause to the trade. Coupled with carriage charge increases, falling sales, shrinking margins and pressure from other categories, retailers will be putting their news bill earnings under the microscope.
They need to be sent a strong message from the industry that the category is still worth investing in. If the sums stop adding up, the risk is that retailers will walk away all together. This message from the Star isn’t it.