It hasn’t encouraged them to make up for increased carriage charges by selling newspapers above cover price; it hasn’t suggested they add a few pence to copies of The Independent to recompense for the lower retailers’ margin on its Monday to Friday editions, or replace it on the shelves with something more profitable; and it absolutely, certainly, hasn’t called for a removal of printed prices on newspapers and magazines.
Behind this apparent lack of activity there is a lot going on. As NFRN national president Naresh Purohit recently told
C-Store, the organisation is forbidden by law from encouraging collective action among its members. “What we can do is make a lot of noise, rally people round an idea, and convince them it’s the way forward,” he said.
Unfortunately, with all the noise, it’s not always easy to hear what’s really being said. So the Federation’s announcements have, perhaps by design, brought the issue of what newsagents can charge on their news stands to the top of the agenda.
“We're reminding retailers that they have the individual right to set the ultimate selling price of newspapers and magazines,” says the NFRN’s Stefan Wojciechowski. “Printed cover prices are a recommended retail price which, according to legal advice, means that retailers are free to set whatever price they like, above, below or at the printed one. Pricing is a personal decision for individual retailers.”
He adds that although the law allows maximum retail pricing, this restriction is not allowed if the ultimate selling price denies retailers the opportunity to make a reasonable profit.
So you can, legally, charge what you want for the papers. But you’ll want to check your contract with your wholesaler – it may include the provision that any newsagent who sells certain titles above the selling price is liable to have their supplies stopped. With the supply chain based on sale or return, publishers would effectively take the risk for your pricing experiments, and there’s not much chance of them standing for that.
And would you really want to charge over the odds? Peterborough newsagent John Green isn’t convinced that there’s any value in opening this particular Pandora’s Box. “Multiple magazine sellers would be able to negotiate even better terms for the volume titles and would cut the prices, and consumers would be confused and assume that other prices are cheaper at the supermarket, which is not always the case,” he says. “Ultimately this policy will lead to an even faster decline in magazine sales in the independent sector, with some of the more specialist magazines disappearing from the shelves, and there would be no real long term benefit to the consumer.”
Putting the buyer at a disadvantage won’t win newsagents any friends either. As West Sussex Londis retailer Steve Denham points out, “The NFRN knows all too well from its lengthy experience with the OFT and Competition Commission that the only group of people they’re interested in is consumers. To campaign on an issue that at its heart will disadvantage the consumer has to be wrong and is bound to fail.”
Others have thrown up their arms at the very idea of straying from cover prices. Newsagent and internet blogger Brian Webb criticised the NFRN National Council for “failing to remove their blinkers by being led into a wilderness of madness, not thinking further than their noses of the implications that will no doubt fall upon them.”
However, Wojciechowski stresses: “There is no desire seek the removal of cover prices – many newsagents do not wish for it and we understand that.” Instead, he suggests that raising the debate will encourage publishers and wholesalers to engage in “meaningful talks” about the impact of their financial decisions on their distribution partners, and that a suitable outcome might be a freeze on, and eventual reduction of, carriage charges.
Nevertheless, with Purohit threatening that NFRN members might well “respond in the way they feel is most appropriate” to The Independent’s margin drop, there is a clear indication that selling over cover price is a course individual retailers should consider. That worries Steve Denham.
“If there is one lesson that can be learnt from the effect of ‘freeing up’ retail pricing, it is the butcher, the baker, the greengrocer, the bookshop and other small shops that have have been the losers to the supermarket juggernaut,” he says.
Not in this case, responds John Lennon of the Association of News Retailing. “I don't believe that this argument carries any weight whatsoever,” he says. “If a supermarket reduced the price, how many of your customers would walk past your store and make a special trip just to get a newspaper because the price has been reduced? If supermarkets thought that reducing the price of a newspaper would increase their footfall, don’t you think they would have done it by now?”
He adds that the fixed cover price, which some see as the guarantee of a level playing field for smaller operators, “is not about protecting retailers – it's about circulation figures and how much money can be made out of advertising rates.”
Lennon believes that retailers should worry less about the possible consequences and stand up for themselves and their businesses – and that means calling for the removal of cover prices.“Publishers are abusing the relationship with retailers – reducing margins, and at best turning a blind eye to obscene carriage charges, or at worst encouraging them,” he says. “Retailers need the ability to make a living from the products they sell, and that includes newspapers.
“If that living is being continually eroded by publishers and wholesalers, then retailers have no choice but to take the initiative and demand the removal of the cover price.”
This one’s going to run and run.