Both the Association of News Retailing (ANR) and National Federation of Retail Newsagents (NFRN) have revealed evidence of the “continued abuse of retailers and of consumer detriment” caused by the current system.
The ANR’s submission to the OFT showed retailers receive only 60% of on-promotion magazines they ordered, while typical retail gross margins amounted to as little as 15.73% after the rising cost of carriage and declining margins were taken into account.
Shane Brennan, ACS public affairs director commenting for ANR, said: “Customers across the UK are losing out as publishers and wholesalers prop up an inefficient and wasteful supply chain that means stores do not have enough stock of leading magazine titles, yet ar flooded with copies of magazines nobody wants to buy.
"This monopoly supply chain is particularly harmful to retailers who, without any choice over where they get their supplies, suffer from unjustified increases in delivery costs and summary reductions in margins.”
The NFRN told the OFT that publishers’ and distributors’ control of copy allocation was starving independents of best-selling titles. It detailed the closure of local shops due to newsagents being financially squeezed out of the market by diminishing margins and escalating carriage charges.
To remedy the situation, the Federation proposes the removal of fixed printed cover prices from newspapers and magazines, the removal of carriage charges imposed by wholesalers, the opportunity for retailers to have more control over their supply, and a legally underpinned and independently-enforced service level agreement.
NFRN president Kieran McDonnell said: “We are now in the lap of the Gods at the OFT and await the outcome.”
The ANR and NFRN are calling on the OFT to refer the industry to the Competition Commission.