Newsagents

David Adams, Scottish president of the National Federation of Retail Newsagents, estimates that less than 50 per cent of Scotland’s independent newsagents now do home delivery and that number is falling all the time due to a variety of reasons.

Increasing levels of legislation to ensure that delivery boys and girls are safe while out on their rounds is another factor threatening to make home delivery an untenable option for newsagents. Recent legislation to protect child workers dictates that on a school day no child will be employed for more than two hours, a minimum of one hour being between 7 am and 8:30 am and the remainder between 4:30pm and 7pm. The newsagent also has to apply to the local authority to get a licence for the child, in which a risk assessment of their round must be included. If the LA is satisfied, an employment permit will be granted. Then the newsagent is responsible for ensuring that the paperboy’s or girl’s bike is in good working order, it has lights that work, they have adequate clothing to complete the round and so on.

“The increasing weight of newspapers due to more supplements and advertising material being included is a big threat to home delivery,” says Adams. “At the weekend, paperboys and girls are having to have three goes at doing a round that from a Monday to a Friday takes them about 40 minutes, because of the increased weight of newspapers. They cannot carry them all in one go. So we have some big weight issues that need to be looked at.

“Legislation is also a huge threat to home news delivery. We have to get a licence from the local authority and do risk assessments. But the kids cannot leave their houses before 7 am to start their round, which is a difficulty because it means they cannot get their round done and then get the bus to school.

“I would say less than 50 per cent of newsagents now do home delivery. Some newsagents have vast rounds with 30-odd boys and girls. It is a mammoth task to organise that every day because you have to cover for when kids are off ill so you need a back-up team.”

Desmond Barr, who charges 14p per day for home delivery from his small shop in Paisley, says: “I have 35 paperboys, but nobody really classifies a paperboy as an employee, but that is exactly what they are. You have 35 paperboys and you have 35 different sets of problems to face every day at 6 am. All the legislation makes us responsible for them as employees and we have to check that they have batteries for their lights and spare batteries, the right clothes and so on.

“I charge about £1 a week for home delivery, which just covers my costs. But calculations have been done which show that we are all losing a fortune on home news delivery, but the thing is that it is a guaranteed sale. Everything is disadvantageous for home news delivery; weight factors, reduced prices, reduced margins and loose-leaf inserts, but I could not survive without home delivery.”

While newspaper publishers often turn their heads from such problems, a significant fall in home news delivery ultimately means fewer guaranteed newspaper sales every day and with circulations falling at the rate they are then that is something few publishers, and even fewer newsagents, can afford.

Another aspect newspaper publishers can ill afford is to see independent local newsagents continuing to go out of business. Although most supermarket chains now play an important part in newspaper retail sales, the small corner shop is still at the heart of most communities and continues to make a telling contribution to newspaper circulations.

Adams says: “Because of the opening up of the markets, and also because of the reduction in terms by publishers, many newsagents are coming under threat and are closing down. The Federation has lost several hundred members in recent years. When I joined the Federation there were about 3,000 Scottish members. That fell to around 2,500 and sat there for a while, but in the last four years we have seen that number tumble. A lot of our members have just closed their doors and gone out of business. For the small newsagents on the corner, if they are solely what we call CTN (confectionery, cigarettes and news) then it is getting increasingly hard for them to survive.

“I believe the high number of newsagents closing down is a contributing factor to falling newspaper circulation in general. That, plus the number of newsagents who are not now prepared to take on home delivery or extend their home delivery service because of the constraints put on them.”

Another factor affecting the weight of newspapers and magazines is the amount of loose inserts now being placed. Out of just seven single magazines Barr removed 15 different promotional inserts for companies such as BUPA, Norwich Union and Optical Express.

He says: “I am sure someone in the advertising industry has done some research to show that this works, but I wonder who looks at all this stuff? If it falls out of the magazine when they are buying it in the shop people just ask me to put it in the bin.”

This has led to the Federation setting up a limited company, called Hard Copy Media, which aims to offer advertisers a more targeted approach to loose inserts. Although the company has not traded yet, and is still some way off being in such a position, the service would enable newsagents to place loose inserts for advertisers into titles being delivered to people living in areas of their target market.

Adams says: “The coverage at the moment is blanket. I believe you have to target the sectors more accurately with these sorts of promotions. The cost of wastage in magazines is running at 30 per cent at the moment. We see the waste in our shops. I think such a company would be a good proposition for advertisers. We have to do something while we all sit going under. I don’t think the publishers would like it though.”

The relationship between Scottish newsagents and the Scottish newspaper publishers has not run particularly smoothly in recent years, as many publishers have looked for ways to increase revenue by cutting the amount they pay to newsagents for each copy sold. Fallouts between publishers and Federation members have seen all-out war declared, with newsagents refusing to promote various titles when they feel they have been unjustly treated by publishers.

One example in August 1999 saw the Daily Record cut their terms by 1.5 per cent. That move instantly took more than £1m out of the pockets of newsagents and kept it in the pockets of Trinity Mirror. The cut saw a campaign launched by newsagents to boycott promoting the Daily Record and, according to Adams, that is still going on today, though he is looking for ways to build bridges.

“The campaign we ran against the Daily Record was enormous. We had Daily Record signs taken down outside shops, promotional material was not displayed and the papers were not situated well in the shop. At the last Scottish council meeting I put it to 40 members that it was time to start building bridges with the Record, because after all it is still the biggest selling daily newspaper in Scotland and they want to do promotions with us, but the answer came back that unless they got a board director coming up to Scotland to discuss the terms issue then it is no. Newsagents have been very loyal to the Record over the years, but when they cut our terms they upset a lot of people.”

Falling newspaper circulations are not good news for anybody involved in the industry and price-cutting strategies are fast becoming the norm for publishers looking for a quick fix. But Adams believes that many of the circulation problems being faced by the industry stem from Rupert Murdoch’s 10p price-cutting tactics for the Sun.

He says: “The big damage was done by Rupert Murdoch several years ago when he started advertising the Sun for 10p. What that did was cheapen the whole newspaper market in the eyes of the readers. We now get complaints if the price of a newspaper rises by 2p, which is ironic because if you were walking down the street and you saw a 2p coin on the ground most of us wouldn’t bother to pick it up. The industry itself has forced that attitude on to readers and made them very price sensitive. That has got to change. We are seeing falling circulations and falling advertising revenues, but publishers have got to rationalise and maybe increase their cover prices in order to get real quality back into their products.”

While newsagents are at the mercy of publishers with regard to their terms, they are also beholden to the wholesaler, John Menzies, from which all their news and magazines come on a daily basis. Wholesale carriage charges are another bone of contention and in January newsagents are set to have their delivery charges hiked again by Menzies to £32 per week, which may not sound like a fortune, but over the course of a year it is £384 that they have no way of claiming back from their customers, because newspapers are in the unique position of having their price printed on the front of them. This is an aspect that again means the newsagents cannot pass the rising costs onto the end user – the paying customer.

“There is an argument that the price should be taken off newspapers,” says Adams. “In fact, the last time the OFT sat they said it was recommended price, so in effect I could score out 30p and put 40p, but I just wonder how many I would sell if I did? I believe that is what happens in Australia where those newsagents in more remote areas have got to cover the costs of getting the newspapers there.”

So, what of the future for the local independent newspaper trade? Adams says that the outlook at the moment is pretty bleak. “The future for Scottish newsagents is not good. It is diversification where possible. That’s what the Federation has been spending a lot of time, money and resources on.

“When my wife and I got our first shop about 13 years ago our news and magazines accounted for 56 per cent of our sales. Now news and magazines only accounts for 17 per cent of sales. I am not saying news and magazines have fallen away massively, but other things have come to the fore. It has changed totally and we are now a general store really.”

However, the problems with diversification are many, as Desmond Barr explains: “Most newsagents have just a small shop so to diversify they would have to relocate to bigger premises. But if you relocate you are losing your core customers. I like news and newspapers and maybe the Federation is ultimately fighting a losing battle and we just have to accept what is happening in the industry. You could accept it if all things were fair between publishers, wholesalers and newsagents. I am sure the wholesaler would say that they have sky-high costs, but they can hit us with that by upping their carriage charges. We cannot pass that hit on. I suppose we could put up the price of home news delivery, but then nobody would want it.”

So, there are no easy answers to the challenges that face independent newsagents today. Whether the day will ever come that the corner shop cannot afford to sell newspapers is doubtful, but the day you cannot walk down the stairs and pick your newspaper up off the doormat in a morning may well be in sight.

Whether it actually arrives is perhaps for newsagents and newspaper and magazine publishers to decide. Perhaps it is time they sat around the table and appreciated the challenges each of the others has to face, because all will founder if newspaper sales continue to fall.