The Guardian newspaper in the UK this week increased the price of its weekday edition from £1 to £1.20 and cut its retailer margin at the same time from 25 per cent to 24 per cent. This has resulted in understandable anger among newsagents as reported by the Press Gazette. This is not the first newspaper margin cut in the UK this year. Maybe it’s a (bad) sign of the times.
As in the 1990’s the pressure on publishers is coming from significantly higher news print costs in the UK. I think that this is in part the result of the devaluation of Sterling. (I note the Australian Dollar has improved this year.)
I am now merely an observer of the industry having just sold our business so will not be taking part in any protests. I do make this observation though. Since the last bout of terms reductions in the early 1990’s newsagents have taken many very low margin services in to their portfolio such as Lottery, bill payments and mobile phone top ups. This willing of retailers to work for small reward informs publishers in their decisions on retailer margins.
The UK also (in my opinion) has too many very small news retailers because we have a market that was set up in the mid 1990’s that basically allows anyone to gain a news wholesaler supply account. This again delivers very low actual margin after wholesaler delivery charges are taken into account. And once again this inform publishers of just how little cash retailers are prepared to work for.
I am afraid that it doesn’t matter how much newsagents protest margins are on the way down.
Watch out for an OFT ruling on local press in Kent early next month, it could herald significant change in regional and local press ownership.
Having been a “newsagent” with shops and rounds for many years I now only have a shop.
I am seriously considering changing the hours of opening as I am in a “village” and the other retailers (except for Coles) open at 9 am (some 10 am). We have always opened at 7.45 am to cater for newspapers but the 12.5% margin doesn’t even equate to the wages paid for the early opening so I am moving toward 9am as
the opening time and I am prepared to “sacrifice” a few newspaper sales to Coles supermarkets.
I actually have a problem with the word “agent” as it has connotations of working for little return.
We have bus tickes, Lotto, Ticketek and Newsagency and the % return has to be seriously considered in this retail climate because the GP is simply not standing up to rents paid and the items that do stand up (cards, gifts, stationery etc need to have far more attention than they are currently getting in my business due to the time element etc of dealing with newsagency lines and other agency lines.
Interesting conversation Steve.