Publisher Reach cut retailer margins to below 20% on one of its national titles for the first time during this week’s Daily Express price rises.
The decision comes despite senior figures at Reach previously reassuring retailers during previous margin cuts that it would not go below 20%, according to several industry sources.
From 28 March, Monday-to-Friday Scotland and UK Daily Express editions rose 10p to 90p. From 2 April, Saturday editions increase 15p to £1.45.
On both, the retailer margin falls from 20% to 19%. From 3 April, the Sunday Express increases 10p to £2, with retailer margins falling from 20% to 19.5%.
The decision not to maintain retailer percentage terms will deprive stores of an estimated £791,800 per year in annual profit, sparking outrage among retailers already facing rising costs.
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Arif Ahmed, owner of Ahmed Newsagents in Coventry, West Midlands, told Better Retailing: “It’s a disgrace. The Express said it’s because of tough trading conditions – what do they think is going on in stores? I’m having to turn lights off to cut costs, a shop down the road is closing because they can’t afford to stay open.
“When publishers increase the price but choose to keep most of the increase to themselves, it’s nothing more than greed, and retailers know it.”
Jim Mitchell, HND agent in Carlton Colville, Suffolk, said he was concerned this might happen for other titles. “Nobody is happy, and the obvious concern is this is Reach doing this and it has many other titles in its portfolio, so the move to below 20% margin could go further,” he said.
“With this move, they certainly won’t be getting precedence from us and many others, too.”
The NFRN sided with retailers, and expressed its disappointment over Reach PLC’s decision, and said it would probably harm Express readers.
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NFRN national president Narinder Randhawa, said: “Reach has to understand that many retailers will claw back the reduced profit margin by charging their Express readers more for their home-delivered copy. While we understand that publishers have to raise cover prices to counteract increases in their outgoings, such as newsprint, they seem to think retailers have no outgoings to cover.”
A spokesperson for Reach told Better Retailing: “We regularly assess our cover prices and terms to ensure we can responsibly manage any significant cost increases. We’re glad to confirm that following this increase, our newsagent partners will receive more overall per copy.”
Regional Reach titles including the Liverpool Echo, Birmingham Mail, Western Mail and Bristol Post also increased by 10p, but retailer percentage margins were maintained.
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