OPINION: Wholesalers are leaving news retailers high and dry

For the first time in my memory inflation has fallen to zero, everywhere you look prices are lower and we should all be feeling a little richer…apart from news retailers.

With the recent big reductions in petrol and diesel prices, with newspaper and magazine circulations continuing to fall and now with zero inflation, it wouldn’t be unreasonable for news wholesalers to act by passing on their cost savings to their retail customers by dropping their carriage charges.

Sadly, that’s not the case. Instead they are leaving news retailers high and dry by hiding behind the excuse of their annual reviews.

What is inexplicable about this move is that not so long ago and, indeed, in reaction to soaring fuel prices, these same wholesalers imposed an interim carriage charge increase, without waiting for the outcome of their annual reviews.

Carriage charges are pernicious and deny retailers a large slice of the margin they should receive from selling newspapers and magazines. I know of no other industry where retailers have to pay a delivery charge on a fixed price product. To make matters worse, these carriage charges are no longer the “small contribution from retailers towards the cost of serving retailers in remote and rural areas that would otherwise be uneconomic to supply” but are the main, if not only, source of profit for wholesalers and a major drain on the viability of small retailers. It’s no secret that a substantial number of independent retailers are failing to break even when selling newspapers and magazines.

It is also puzzling that these charges continue to increase each year when wholesalers have dramatically reduced their overheads by closing depots and reducing their staff numbers while the volumes of news products they continue to deliver declines.

What is particularly galling is that it has recently come to my attention that contract drivers employed by wholesalers have been asked to take pay cuts as a result of the drop in fuel prices.

I have now written to all news wholesaler managing directors asking why the fuel reductions have not been passed on through immediate reductions in carriage charges and to ensure there are no increases in costs when the annual reviews are announced later this year.

Should the responses not be satisfactory, the Federation’s next step will have to be a word with the new Competition Markets Authority.