As part of the first in a series of weekly how-to guides, RN looks at the growing opportunity to make – or save money – through sub-retailing agreements for news and magazines.

Carriage charges mean that for many retailers with small newsbills, it’s simply not economical to receive supplies direct from Smiths News or Menzies Distribution because any profit is wiped out.

The NFRN estimates that the current threshold is somewhere around the £140 mark and says that some 5,000 of its members may fall into that bracket.

For those retailers, news and magazines may still be a vital driver of footfall, but are effectively acting as a loss leader.

Others, of course, might opt for a less formal supply contract because of seasonal spikes in sales, like holiday parks for example.

Step 1 – Find a willing partner

The NFRN will assist through its Helpline service or for those who register online and so too will wholesalers, but only where retailers fall below its minimum service value.

In reality, any reasonably sized HND operator should be equipped to supply a store within its delivery patch.

There are a few formalities and both wholesalers request that they are informed of the arrangement and supplied with the shop name and address.

[pull_quote_left]Menzies – We will help retailers to manage unsolds and we would expect there to be a slightly higher rate of returns as a result of a sub-retailing contract[/pull_quote_left]

This is partly to ensure that territorial protection arrangements are not breached by copies from Menzies ending up with retailers who would usually be served by Smiths News.

Secondly, it will allow wholesalers to better manager supplies and levels of returns.

Menzies head of communications Dave Shedden says: “We will help retailers to manage unsolds and we would expect there to be a slightly higher rate of returns as a result of a sub-retailing contract.”

Step 2 – Negotiate your terms

Retailers have a huge amount of flexibility in negotiating terms and conditions.

 <figcaption>Oxfordshire roundsman Robert Schlachter</figcaption>” width=”400″ height=”232″ /> Oxfordshire roundsman Robert Schlachter</figure><p>Oxfordshire roundsman Robert Schlachter serves almost 20 shops from his base in Banbury along with about 2,000 HND customers.</p><p>“It is very simple to run and there are big benefits for my retail customers,” he says.</p><p>“For a start, none of them pays more than £3.50 a week in carriage, regardless of how much copy I supply them with.</p><p>“Compare that to the bottom tier carriage charge from either wholesaler and I believe it’s about 10% of the cost.</p><p>“In terms of margin, I tend to split it down the middle, which means that they earn between 10% and 12.5%, but because of the low carriage charge, they don’t have to sell a huge amount to start earning money.</p><p>“I also don’t adjust anybody’s supplies, meaning they know exactly what they are going to get each day.</p><p>“Without a doubt I’ve seen an increase in retailers wanting to set up a sub-retailing agreement and I think maybe the wholesalers are starting to price themselves out of the market.</p><p>“I find my retail customers very easy to serve.</p><h3>Step 3 – Negotiate return levels with wholesale</h3><p>Mr Schlachter says: “The only major factor is to negotiate returns levels with Smiths News, but it has been very accommodating in respect of the fact that all of the shops might return single copies.”</p><p>[pull_quote_left]Without a doubt I’ve seen an increase in retailers wanting to set up a sub-retailing agreement and I think maybe the wholesalers are starting to price themselves out of the market[/pull_quote_left]</p><h3>Step 4 – Keep an eye out for new opportunities</h3><p>The NFRN sees the provision of sub-retailing services as a major strand of its Store2Door initiative.</p><p>It currently has about 200 members signed up to the scheme to create a national network of professional HND agents under an easily recognisable brand.</p><p>While there is significant scope for members to serve one another, the commercial opportunities for supplying multiple groups potentially offer a much larger revenue streams.</p><p>A trial will begin with The Plunkett Foundation, which runs more than 300 community shops across the UK, to supply news and magazines.</p><p>If that proves a success, it could open up a much bigger opportunity with other retail groups.</p><p>Every increase to carriage charges or every cut to margins, makes sub-retailing a viable option for more retailers, regardless of their size.</p><p> </p></p></div> </div> </div> <div class=

Become a Member to comment

Register to comment and get exclusive content and subscribe to the online and print versions of Retail News.

Become a member