Smiths News has announced significant changes to how its carriage service charges (CSCs) are calculated, resulting in a reduction for more than one in four retailers working with the wholesaler.

Smiths News sent a letter to stores last week about the changes, which take effect from 2 September, and said a higher proportion of the charge retailers pay will be based on their sales, with the base standing charge for a seven-day service with magazines reduced from £36.22 to £35.

The change means those with larger news bills will pay more, and those with smaller news bills will pay less.

Under the new system, for a full seven-day service, stores will pay the standing charge plus 4% of newspaper sales and 2.5% of magazine sales.

The maximum weekly CSC payable will increase from around £63 to £69.20.

“More than 5,000” of Smiths News’ 24,000 estimated customers will see their CSC decrease.

Chief executive Jon Bunting told Better Retailing: “We feel that, on balance, with an average of a 3.1% increase and with more than a quarter of our retailers receiving a decrease, we have limited the impact of this as much as we can.”

The strategy of reducing the burden on smaller customers follows Smiths News expressing concerns to investors last year that further CSC rises could push smaller news accounts out of the market.

Retailers react

Retailer Omran Awan, who owns Michael’s Superstore in Westerhope, told Better Retailing: “I know that, as it stood, your news bill had to be £550 to break even – mine was £430. I’m just doing it for the pensioners. I haven’t checked the letter, but if it’s gone down, it’ll be a small relief. If they had increased it by a significant amount, I’d be closing my account.”

Dipak Shah, of H&R News in Camberley, told Better Retailing: “We have quite a big drop, so we’re on the maximum increase. There’s no doubt there’ll be a lot of frustration from retailers, but we’ll just increase our delivery charges.

“It makes sense that those selling more pay more, so those selling less can continue to offer newspapers and magazines.”

Ali Awan, who owns H&H Convenience in Felling, Gateshead, will see his weekly CSC fall by 31p per week. He told Better Retailing: “There’s a significant number of stores with low volumes that aren’t breaking even. They’re paying out of their own pockets to provide the service, so I understand why Smiths News has changed the carriage charges like this. But following this letter, there will be many stores working out whether it’s still viable for them to sell newspapers and magazines.”

The Fed, which has long campaigned for CSCs to be abolished, called the system “outdated and unfair”, and called on publishers to intervene and put pressure on wholesalers to drop their CSC increases.

Fed national president Muntazir Dipoti said: “The current system of charges going up and sales going down is unsustainable.

“No longer can publishers hide behind the argument that carriage charges are an issue between wholesaler and retailer only, particularly as they control price and margin. It is high time they took action to ensure that any carriage charge applied is fair and affordable.”

The Fed’s news committee chairman, Vince Malone, added: “Smiths News may claim to have reviewed its carriage-charge template before making this announcement, but to the Fed and its members, this appears to be nothing more than a tick-the-box exercise.”

Smiths defends increases

Smiths News defended the “difficult decision” to carry out the CSC rises by referencing that it had frozen its CSCs in 2021 and carried out increases significantly below the high rates of inflation in the past two years.

Commercial director Simon Gage also outlined steps taken to support retailers, including GPS van tracking to give better delivery updates and times, new and more-accurate paper packing tools, better call and complaint handling, and new time-saving SNapp features.

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