Yes, the margins are still reasonable (although wholesalers are doing their best to erode them with carriage charges), the volume is most welcome, and as long as customers come into the store to settle their bills – provided, that is, that they do it regularly – you’re guaranteed footfall.
“I can’t imagine life without newspaper delivery, but then newstrade is about 60% of my turnover,” says Dee Sedani, the Convenience Retailing Awards’ News Trader of the Year. “It’s guaranteed sales, provided you can carry the book debt. Mine’s around £12,500 at the moment. If you’re well organised, HND is a nice earner, but saying that, if I opened a store today I don’t think I’d base my business model on it.” So is it worth the effort?
Earlier this year Dave Carter, whose team deliver some 2,000 newspapers a day in Shrewsbury, told C-Store that the category contributed around 25% to his turnover but involved 30 hours a week of his own time; and that’s not an unusual commitment. Giles Morrell, who took over a Spar store in Stourport-on-Severn last year, worked out that, based on average basket spend, if more than 20% of home delivery customers came into the store instead, he’d be better off stopping the paper rounds. Giles did a survey: 36% said they’d come and collect.
“Society has changed – people don’t read newspapers any more,” says Naresh Purohit, national president of the National Federation of Retail Newsagents (NFRN), who has seen demand for delivered copies drop by almost half over the years he’s run rounds from his Kent store. “There’s so much better access to news from television and the internet that it’s only older people who want papers delivered. Is there anything we can do to change that? I think we have to accept that it’s a dying habit and HND is something we’ll have to work very hard to maintain.”
The category is also remarkable in that just when things can’t possibly get any worse, they do. A few weeks ago the Belfast Telegraph, part of Independent News and Media (INM) which owns The Independent, announced it would cut the newsagent out of the supply chain and deliver direct to the customer. Its letter to retailers said that “collectively the agency system is failing and is no longer sustainable.”
INM chief executive Ivan Fallon waded into the already choppy waters and declared delivery through newsagents was “just not practicable in today’s circumstances.” Worse still was INM’s hint that “inadequate delivery services” had affected circulation. News retailers might be forgiven for thinking that’s a bit rich, considering the distribution issues which often see papers supplied short, or printed so late that stores have to send out second delivery rounds. It’s hard to believe that the blame, for example, for The Independent on Sunday’s 14.8% year-on-year fall in circulation to June this year, rests at the newsagents’ door.
It’s by no means new for publishers to look at changing the distribution model. “Some years ago the Financial Times launched FT Direct which now delivers thousands of copies daily directly to letterboxes, bypassing the existing supply chain to the detriment of HND newsagents and roundsmen,” says London retailer and former NFRN chief Peter Wagg. “With The Independent recently joining the FT Direct network, News International has launched its own free direct delivery offer within the M25. However, unlike the FT and The Independent, I understand that News International will be using existing HND newsagents wherever possible, and for this they have my support.”
Ominously, Katie Vanneck, sales and marketing boss at The Times, recently told The Observer that the only surprise with this “long-term, viable and sustainable shift” is that “it's been so long coming”. Publishers haven’t always bent over backwards to look after their distribution partners – their support doesn’t go as far as to raise cover prices and introduce some much-needed revenue into the supply chain, for example. And what these latest moves suggest is that they’re looking for, if perhaps not yet finding, an economic alternative that eliminates the retailer or roundsman altogether.
The publishers may deny this, but Steve Denham of Londis, West Chiltington, in West Sussex is not convinced by their protestations of support. “If they’re serious about supporting HND newsagents for the long term, I have a list of things that they need to achieve to show me they really want to be my partner,” he says.
“Deliver my newspapers by no later than 5am every day; give me 100% availability of all of our top six newspaper titles; and let’s have an enhanced margin and real marketing support for HND. “We should also expect fair payment for insertion work, and for loose advertising inserted by publishers, that reflects our costs to do the job.”
Brian Webb, the often outspoken Cambridgeshire roundsman, takes a similar tack. “There’s too much doom and gloom about the future of the news trade industry. I’m convinced the market will be viable providing the publishers get their act together and work with their partners instead of running a dictatorship,” he says. “The business of publishers moving away from wholesalers and starting their own direct delivery service will certainly backfire – publishers can’t deliver on time to wholesalers’ warehouses now, so what chance has their new idea got of being successful?”
“I was talking to a publisher about this recently,” adds Dee Sedani, “I said, I’ve distributed your papers for 15 years and helped make you the success you are. Now you see a gap in the market and you’re going to screw us over.”
But despite these gathering clouds, home delivery remains robust for now. Barry Cuff of DVS, which operates the Homelink service, says that life without delivery is unthinkable for the majority of newsagents. “I think they’ll die if they don’t make a good living and to do that they absolutely must have HND. It’s their USP and Homelink is one way of reinforcing that.”
Funded by the newspaper publishers, Homelink canvasses households and generates 1,000 leads every week across the country for local newsagents. After an initial four-week half-price offer, it’s up to the retailer to keep each new customer’s business. How successful they are at that is entirely down to the service they offer, Cuff says – retention rates after the four-week trial average about 40%, but can reach 70% if the retailer is on the ball. He agrees, however, that it’s not always the retailer who lets the customer down – it’s notoriously difficult to persuade a wholesaler to increase the allocation of a title to accommodate new customers.
Dee Sedani is more concerned with finding cover for his deliverer’s holidays than any prospect of publishers going direct. He can’t see it working, certainly not in rural areas, and says his customers would stand by him anyway. “It’s not always about money. In the end, it’s just a service that a good community retailer can provide,” he says. “We deliver because that’s what local shops do.”
Like others before it, the present generation of teenagers has calculated how much they would have to be paid to get out of bed and deliver newspapers on a cold morning. Unfortunately, this time they’ve concluded that whatever the newsagent can afford to pay them is not enough. Parents are nervous about letting their children out on the streets in the dark, and are more generous with pocket money than ever before. Then there’s the physical difficulty of carrying larger and larger newspapers. Fewer papers in the bag mean more returns to base and a much longer round. There are also legal implications of employing under 16s. As an employer it is your responsibility to ensure that none of your staff is banned from working with children, and that working hours are adhered to: for school-age kids over 13, that’s no more than 12 hours a week, no more than two hours on a school day, and nothing before 7.00am. Health and safety now requires a risk assessment procedure that involves instructing children about the dangers of entering houses, collecting money and taking shortcuts. There is an alternative. There are plenty of fit, energetic people with time on their hands who would welcome a few quid in their pocket: they’re reliable and polite, understand the value of customer service and don’t need permission to leave the house. And plenty of them can drive. Could the retired be the saviours of home news delivery?