Newsagents are being put out of business by supermarkets, but how much should we care?

Newsagents are being put out of business by supermarkets, but how much should we care?

A report from the National Federation of Retail Newsagents, which represents ‘independent news and convenience retailers’, says that 510 of its members went bankrupt last year, with similar numbers closing in 2007 and 2006.

Before we rush to condemn the big supermarkets and their monopolistic, bully-boy tactics, it’s worth considering a few points.

Clearly, part of the problem for local newsagents is the decline in newspaper sales. Businesses that depend for their survival on selling news which is now freely available online clearly don’t have the brightest future, however tame the competition.

But another, more significant issue is that the traditional business model of the corner shop relies on charging hefty margins on commonly available goods in return for convenience.

Thousands of local shops have made good money for a while on this basis. Now that shoppers are able to find convenience elsewhere at a lower cost, many have failed to adapt quickly enough to changing conditions.

This is far from inevitable. Where I used to live in northwest London, a convenience store opened around the time everyone was starting to talk about the credit crunch.

Run by Turkish immigrants, the store charged eye-catchingly low prices – at least for the first few weeks of opening. The prices then rose slightly, but never higher than those of the nearby supermarket. (Incidentally, mini-versions of supermarkets in inner-city or suburban areas are not actually that cheap, as anyone who lives near one knows.)

But pricing was only one reason for the shop’s success. It stocked a different range of products to the supermarket, including goods aimed at particular segments of the area’s diverse population: Polish sausage, halal meat, Indian spices and so on. Many brands were unfamiliar, but despite their garish packaging proved just as good as the big names – and cheaper.

Finally, the store was open 24 hours, the staff were friendly (even at four o’clock in the morning), and you could buy things in smaller quantities – one chicken breast, for instance, rather than a pack of four.

Not surprisingly, one nearby newsagent was unable to survive. Too late, it tried to offer its own low-cost promotions, but in the end it gave up the ghost.

On a personal level, you felt sorry for the people who had run the store for years, even if they had overcharged you time after time. But from a business point of view, they had been outclassed, and the local consumer was better off as a result.

There’s no doubt that supermarkets make ruthless competitors. But there’s still room for savvy shop owners to thrive – as long as they follow the simple formula of providing things their customers want at a reasonable price.