CASE STUDY: Retailer providing magazines and papers at a loss
Distributors recharging for titles is resulting in retailers paying newspaper groups and distributors for papers they never had the chance to sell, says the CSNA
22 November 2010
One newsagent account that the CSNA is aware of, had in the week ending 03/10, purchased supplies to the value of €476.21 (ex VAT). With returns for these supplies being credited over the next 10 days to the value of €194.67 (ex VAT), and with sales of the products returning €330.51, when the account is taken for stock in hand, the cost of which is €33.83, a return of €82.80, (25.05%) could be suggested. (Figure 1)
However all is not what it seems. A recharge for 32 Sunday Worlds and 12 Sunday Stars that had previously been credited caused an additional charge of €65.29, reducing the profit for the week’s supplies to €17.51. The notion of any profit was further reduced when the carriage charge of €30.02 is put into the equation; causing an actual loss of €12.51 for an outlay of €376.85. (Figure 2)
The recharge of the Sunday newspapers is of interest as it is a classic case of a retailer’s assertion versus that of the carrier. There is a secure place for delivering the papers, and the carrier accepts that he did not deliver into it, but insists that he did make the delivery that morning. Whatever the case, Newspread, the Sunday World and the Star were all paid by the retailer, for papers that the retailer did not have the opportunity to sell.
This retailer can ill-afford to provide newspapers and magazines at a loss. Her store is the only outlet in the village and we have little doubt that she is providing a useful community service, but would obviously need to revisit the viability of newspapers and magazines if her distributor continues to reject her valid claims for non-delivery of product.
Furthermore, the cost of carriage for small accounts must be queried. The retailer is paying €30 per week out of her average profit of €80 per week; reducing her national margin of 25% to 15.6%!
Surely publishers can see that the cost of stocking newspapers and magazines in small, rural and traditional outlets cannot continue to rise. A fairer and more equitable scheme should be pursued, one that will reward all retailers for participating in the provision of the written word.