The Federation of Independent Retailers has expressed dismay at the Smiths News announcement that it will raise carriage charges by 2.9 per cent from 28 August.
The Fed confirmed that the news wholesaler’s customers were receiving letters advising of their new charge today (15 July).
“While Smiths News’ action is not surprising – in fact, its CEO Jon Bunting alluded to it at our April national council meeting – as the cost of living continues to bite and our bills go ever upward, we are dismayed,” Jason Birks, national president of the Fed, said.
“Also, there is no guarantee from Smiths News as to how or even if, this new income from carriage charges will be reinvested into its business. If that were to be the case, at least members would see some service improvements. Currently, for too many of our members, the service levels they are receiving remain unsatisfactory.”
The trade body noted that retailers supplied by Smiths News will find themselves paying more than £63 per week for their news and magazines to be delivered as a result of the increase.
The move follows similar increases in carriage charges by Menzies Distribution and News UK earlier in the year. Menzies customers saw their carriage charges rise by 3.5 per cent, while News UK Direct to Retail announced a 3 per cent increase.
Birks warned that retailers would be unable to absorb this latest increase. He said: “Sadly, our members will have no option but to pass on these costs to their home delivery customers, which in turn could put this service at risk. Some consumers purchasing in store may also pay more for their newspapers and magazines come August 28, as retailers could look to over-sticker the printed cover price to help recover their ever-increasing operating costs.”
However, he acknowledged that with inflation, national wage contributions and fuel prices all soaring, that the news wholesaler had taken some steps toward lessening the impact of the increase on news retailers.
Birks said: “As part of our closer working relationship with Smiths News, it has kept us appraised of its possible actions, advising us of the new rates 24 hours before letters were due to arrive in members’ stores. This gave us a chance to air our concerns and had Smiths News used its old template for calculating the increase, we are well aware that the rises would have been much higher – and possibly into two digits.”
However, he renewed calls for the newspaper industry to look at alternatives to carriage charges.
“It is disappointing, that year in year out, newspaper wholesalers just look to adjusting the carriage charge rates without ever considering or implementing any alternatives. It is apparent that there remains a real reluctance among some of our supply chain partners to change the carriage charge model.”
Birks added: “The news supply chain – with its absolute territory protection and private publisher agreements – is outdated and in need of an overhaul. Unless something happens soon, newspapers and magazines run the clear risk of losing the powerhouse status they enjoy at retail.
“Added to this is the risk that more retailers will turn to sub retailing for their supplies, while others will exit the category completely.”