In various parts of the UK, retailers are stocking a local product that has been shedding buyers for a quarter of a century or more, and which is currently losing sales at the rate of about 10% a year.
To make matters worse, it comes with a gross profit margin that is at least a third less than the average for most of the other products the shop sells.
If this product were a soft drink or a confectionery bar, it would have been removed from the range years ago, but it is a newspaper, and as such it enjoys a special status in neighbourhood stores, forecourt shops, supermarkets and other retail outlets.
I don’t begrudge newspapers their special status, but the quid pro quo for retailers should be fair treatment from the publishers over terms.
The latest terms cut by Newsquest, the UK’s second-largest regional publisher, which has reduced the retail margin on many of its titles to 14.5%, is not only grossly unfair, it’s also insulting.
Newsquest’s retailer terms for its daily papers are so out of kilter with those for similarly priced national dailies, the publisher must think its retailers are mugs.
It beggars belief that the wholesale price of the 80p Swindon Advertiser is 6p a copy more – and therefore attracts a higher carriage charge – than the 80p Monday-to-Friday Daily Mail.
The NFRN has been having periodic battles with the national newspapers over terms cuts since the infamous Robert Maxwell set the ball rolling more than 30 years ago, and although all reductions in percentage discounts are damaging to retailers, I can’t recall any others as grasping as Newsquest’s 14.5%.
To put it in context, it is more than a third less than the lowest percentage retail margin than on any of the national newspapers.
The NFRN described the Newsquest move as “nothing short of disgraceful” and said it showed a “total lack of appreciation for the independent retail sector”.
Subsequently, members of its news committee had a “frank and open discussion” with a senior executive from the company.
A further meeting to discuss the matter is to be held between the publisher and the federation.
It’s important to note that the issue is not about protecting retailers’ sales, it’s rather about achieving a realistic level of profit on those sales.
EXCLUSIVE: Paper shortage could lead to 50% price rise
Terms cuts are invariably presented to most news retailers as a fait accompli. Major retailers may have “discussions” with the publisher, but for independents it’s all done and dusted in the sales manager’s “thank you for your continuing support” letter. Protest is the only option.
Perhaps the NFRN should try a new tactic with Newsquest, and get its retaliation in first.
Tell the publisher that for every 5p cover price increase on its titles, the NFRN wants an additional 1.5% discount for its members, until their terms for the title reach 20% – then we can talk again.
All sections of the newstrade are struggling. Cutting retailers’ terms won’t help and may well turn out to be self-defeating.
Read more of our expert opinion on the independent retail sector