The NFRN statement says: “Whilst the Guardian announced today (15 September) that it was increasing the price of its Saturday copy from £1.90 to £2.10 from 17th September 2011 with retailer percentage terms remaining pro rata, plaudits turned to jeers as retailers were united in their anger that the Guardian is breaking with pro rata terms on the Monday to Friday copy which is increasing from £1 to £1.20, but retailer percentage margins are being reduced from 25% to 24%.
Whilst the Guardian says that it still provides one of the highest margins in the industry, retailers argue that given its relative position in the market it needs to if it is to command retailer support alongside its main competitors. In effect, by reducing the retailer percentage margin on the Monday to Friday copy to 24% this equates to a loss of 1.2p on every copy sold compared with the pro rata 25% margin, denying income to retailers of more than £750,000 per year.
Kieran McDonnell (pictured), National President of the National Federation of Retail Newsagents said: “This action from the Guardian, following margin cuts from the Express and Mail earlier this year, is totally unacceptable. The timing is also incredible given that the Office of Fair Trading will shortly decide whether to undertake a further review of the news industry.” Mr McDonnell adds: “This may be the last year that publishers own the power to control prices and manipulate margins. If they lose it, then they will only have themselves to blame.”
Shane Brennan, ACS Public Affairs Director, speaking on behalf of the Association of News Retailing said: "The OFT must not continue to sanction a broken market where publishers are free to make summary changes to terms and retailers have no choice but to accept them. The OFT is due to conduct an update review, this is the latest in a series of compelling reasons why they should take action"
Retailers complain that in a climate where sales are in long term decline (including those of the Guardian) they find themselves trapped in a vicious triangle where publishers control prices and nibble at margins on one side, inadequate service from monopoly wholesalers costs retailers financially on the second, and ever-escalating carriage charges hits retailers on the third, all combining to create a financial squeeze on retailers that simply cannot continue.
For a title that needs retailer support to maintain prime display space with its rivals, this move by the Guardian will be viewed by many as ill-judged and potentially suicidal.”
