Newspaper and magazine wholesaler Smiths News has been accused of “profiteering” after it raised its Carriage Service Charges (CSCs) to newsagents by 4.78%, an average increase to retailers of £1.42 a week.
The rise is the second time the supply chain has squeezed retailers’ margins in less than a month, following the Daily Star’s cover price drop which reduced newsagents’ return to less than 5p a copy.
Retailers say the rises are unjustified and would harm small shops. “Smiths have announced that they expect £6m of annualised cost savings from the former Dawsons depots, with £3m to be delivered this year,” said John Lennon of the Association of News Retailers. “In addition to this new business savings, £1m of annualised cost savings are being driven out of the old Smith depots.”
He said the rise would hasten the demise of many community retailers, which was “clearly damaging to the public interest”.
“Publishers should step up and meet their OFT obligation to prevent this damaging increase being applied to retailers,” Lennon added. “If they do nothing it will further prove their impotence in preventing wholesalers’ profiteering and will be yet another reason for the OFT to refer the industry for a full market investigation.”
Smiths News chief executive Mark Cashmore responded: “The increase is our first for two years, reflecting cost rises over that period. We are always mindful of the impact on our customers and have limited the charges accordingly, and we remain committed to investing in and improving our service offer to all our customers.”
The Star's cover price dropped further to 10p in the Carlton TV region on July 5, with the retailer's margin remaining at 4.84p.