The Federation of Independent Retailers (the Fed) has strongly condemned The Observer’s decision to cut the percentage margin paid to retailers as part of a cover price increase taking effect next month.
From the 13 September issue, The Observer newspaper will increase its cover price by 50p, from £4.50 to £5, while the retailer margin will fall from 22.5% to 21%.
The Fed said it’s consistently called for newspaper retail margins to move back towards the 25% levels that were once commonplace and remain standard for magazines, helping to ensure the category remains affordable and a valuable use of retail space for independent retailers.
Fed national president, Hemanshu Patel, reacted to the change with anger. He said: “The Federation’s policy is clear and has been for a number of years. Retailers can no longer sustain or tolerate further cuts to the margin we receive from selling a publisher’s product.
“This move directly impacts members’ tills. We will lose 8p on every copy of The Observer sold following the margin cut. This may not sound like a lot, but when you take into consideration that Fed members sell approximately 25% of all newspapers on a daily basis, it will soon add up.
“I’m furious The Observer would, firstly, take such a decision which risks further decline of a category we all work very hard to protect and, secondly, do so without any meaningful discussions with the Fed about the potential impact on members.”
Taking action
The announcement comes little over 12 months after the Fed took action against cuts to newspaper retail margins, organising demonstrations outside key News UK sites. The protests helped secure subsequent margin freezes.
Adding to Patel’s comments, chair of the Fed’s news operations committee, Craig Etchells, refused to rule anything out when considering the organisation’s response.
Etchells said: “We will meet as a committee as soon as possible to discuss our options in terms of a response to this news, but my message would be that all options are on the table. Members should be assured that we will put across their anger to The Observer.”
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