Smiths News will be trialling the delivery of greetings cards into convenience stores within “the next few months” as part of efforts to continue bringing in new revenue streams.
In the announcement of the company’s latest financial results, chief executive officer (CEO) Jon Bunting told investors: “Our established expertise fits squarely within the needs of the growing early morning market, and we’re seeking to leverage our existing network and proving capabilities in this space to build out and expand our services. And though it’s early days, we are seeing good progress, with 2 million of country profit generated in the period from these efforts.”
The results themselves highlighted how Smiths News had “expanded the range of our services to national supermarket and convenience store clients with the distribution of books, home entertainment and new products” which has been ongoing over the last two years, but has not yet become available to independent retailers.
Asked by Better Retailing when these new revenues would benefit independent retailers, Bunting said: “We’d be very interested in doing that, if we could find a product range that worked well for our independent customers and our independent customers felt they could have the space to display them effectively.”
He added that the trial of wholesaling greetings cards is set to launch in “the next few months” and will be available to independents, before adding: “We’d certainly be interested in trying to do something in that space. So, yeah, there’s not, there’s no barriers that, as far as we’re concerned, beyond the fact that we started distributing initially to some of our supermarket customers, but we’d love to expand that to our independent customers, if there is demand.”
The results for the 53 weeks ended 31 August 2024 showed revenues were up 1.1% year-on-year, and operating profit is up by 0.8% in the same period.
Smiths News has lost 1,600 customers in the last year– 7% in just 12 months. Bunting told Better Retailing that this was down to “a variety of factors”, but denied that carriage charges were driving stores out of the market.
“There’s the rise of newsagents converting to c-stores, where newspapers and magazines are seen as a less intrinsic part of operations, particularly those that are looking to provide either fresh or hot food, food on the go,” he said. “often, when we call customers to understand why they’re no longer taking news and mags, it’s because they’re they’ve stopped trading themselves, rather than they’re no longer taking the category.”
Bunting added that Smiths has “tried to be really responsible with our carriage service charge increases”, highlighting freezes in 2021 and 2022, as well as the reduction of minimum charges from £36.22 to £35 in 2023.
“It’s not the only contributing factor, margins can be reducing, and our customers have their own labour costs that are going up. We’re certainly always very mindful and have reflected that,” he said.
Asked about the future of magazines through single digital copy sales, which Smiths had previously been exploring in partnership with Love Media, a digital platform which lets stores sell digital single copies of newspapers and magazines. Bunting said: “Our new vision for the business is to be the UK leading provider of end to end supply chain solutions early in the morning, and therefore digital will become less relevant to us going forward.”
He added that there was “an opportunity there for Love Media”, but that it was not something Smiths “will be materially investing in going forward” with “mixed success” in “some retail formats”.
Despite this, Bunting confirmed that “vast majority of our profit still comes from newspapers and magazines, and we’re absolutely committed to it”.
“As far as we’re concerned, news and magazines are at the heart of our strategy going forward,” he said. “We will continue to treasure that business, but we need to build on it, and for all the reasons you’ve articulated yourself, but we’re certainly not going to neglect it.”
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