“Unfair” Newspaper Give-away

news-agent-1024x768 The Waitrose chain has come to Oundle, and brought with it a variety of sales techniques and principles. The two are certainly interconnected. For example, the Waitrose Way, a close system of bespoke relations with farmers and suppliers, a general awareness of the (frequently British) origins of their food sales, a policy of equity and fairness towards customers, and a policy of responsible environmental handling, earns the supermarket chain clear recognition in the Big Tick Award in the Sustainable Supply Chain category of the Responsible Business Awards 2013. Clearly, then, the major supermarkets of the UK are able to access a sphere of goodwill, where moves towards a socially aware business ensure recognition and prestige, and ultimately increase the likelihood of future profit. This is a virtuous circle, where the benefits are sometimes assured.

The store is also able to manage a customer-friendly sales process on the micrological level. Their various loyalty schemes include the myWaitrose card, whereby anyone making a purchase over £5 can obtain a free newspaper, even including the cost of the newspaper itself. This comprises part of a deal made with three national newspapers. This is standard practice at Waitrose shops, and might be reasoned to be an attractive incentive for customer loyalty.

But in fact the economic science is much more complex. According to Retail Newsagent magazine editor Chris Gamm, industry insiders have said that “the threshold for a free paper will need to rise to £15-20 if the deal is to continue”, because it is “too easy” for a customer regularly to spend £5.

Mr Gamm identifies various inadequacies in the scheme – why should the promotion be effective unless “£5 is spent on groceries excluding the paper”? And he asks why the distribution of free newspapers is necessarily beneficial simply because it “has brought new readers”, as the Audit Bureau of Circulations (ANC) suggests. He expresses rather the concern that the positive work done for circulation of national newspapers might be subverted by the deal.

But a problem easily identifiable here in Oundle is the potential that the scheme has for undermining sales of newsagents. Oundle has one newsagent, Oundle News, owned by Chris Cant, whose average newspaper sales have declined by 30% since the card’s introduction, with many weekend sales cancelled in favour of the free collection at Waitrose. Waitrose also advertised their arrival in Oundle by a marketing promotional stall at the Farmers’ Market on Saturday 12th October, only a few yards from Mr Cant’s premises, specifically advertising the myWaitrose scheme. They did not vacate the spot even when asked to move.

Mr Cant notified the branch manager at Waitrose Oundle by letter of the unwelcome situation, and also contacted Andy Sawford, MP for Corby and East Northamptonshire, and Chris Heaton-Harris, MP for Daventry. Mr Cant received a prompt reply from both MPs.

Mr Sawford undertook to write to the Chief Executive of Waitrose, Mark Price, in which he revealed his concerns, noting the significant disparity between the cost of the promotion to Waitrose and the loss of sales to Oundle News: “The impact of these lost sales is potentially catastrophic”. He warned Mr Price that its campaign “poses a serious threat to both small businesses in my constituency and to Waitrose’s local reputation”.

Mr Heaton-Harris also replied, but since he is not MP for Oundle, he explained that he was not in a position to act, instead forwarding the correspondence to the Conservative Parliamentary Candidate for Corby and East Northamptonshire, Thomas Pursglove, who wrote an encouraging reply, exhorting Mr Cant to “keep up the good fight”.

Mr Cant’s reply from Waitrose came from Nigel Keen, Director of Property and Development at Waitrose. Mr Keen apologised for the insensitive marketing activity, but not for the myWaitrose card loyalty scheme. Waitrose said: “Most businesses offer their customers loyalty schemes”, asserting that the deal was “designed as a way of rewarding [its] loyal Waitrose customers”.

Mr Keen stated the benefits of Waitrose’s presence in the community, saying that a “crucial … [part of Waitrose’s] planning consent” was the need to address the trend of Oundle inhabitants shopping outside the town, and stating that as such, Waitrose undertook community benefit schemes, such as Community Matters, and Partner Volunteering. Mr Keen asserted that Waitrose would “donate £12,000 and 250 staff working hours to local causes”, and that the community-minded actions of the supermarket had already allowed Partners of Waitrose to “paint some parts of the Queen Victoria Hall”. In addition, Mr Keen offered to place promotional material for Oundle News’ delivery service in shopping bags when delivering direct to homes.

Mr Cant acknowledged the “reconciliatory tone” of Mr Keen’s letter, but noted that the Waitrose deal was “massaging newspaper circulation figures”, and he expressed discontent at the lack of response to his complaints at the Press Complaints Commission and the Press Distribution, saying that he felt “hung out to dry by [his] trade partners”. He reiterated the statement that the loyalty card scheme constitutes unfair competition, and demanded that Waitrose recognise this.

Mr Sawford described the reply sent to him from Mr Price, as “wholly inadequate” and “[failing] to respond to the points made to them”. The reply had reiterated that Waitrose was doing “nothing new” in offering its customers loyalty schemes, and cited a study in Wellington which suggested that closure of the Waitrose outlet there actually had a detrimental effect on sales in local coffee shops and newsagents.

Waitrose’s replies are characterised by a reasoned tone, yet the company does not appear to acknowledge the direct detrimental effect that it is having in undercutting local sales. The results of a study in Wellington can do nothing to mitigate the facts of Mr Cant’s sales losses, and the scheme certainly appears likely to have this natural effect.

Certainly it is quite clear to residents that any closure of Oundle News would be detrimental to the town. Resident Rod Cousins says that a closure would be a “social issue”, and observes that the Oundle News paper delivery service offers to Oundle’s senior citizens, and to those who live in the surrounding villages, a “very important contact and stimulus for keeping in touch with the outside world”. He expressed concern about “the erosion of what is not a particularly strong market” for newsagents and questioned why Waitrose would promote a scheme of this nature.

The aforementioned article in Retail Newsagent appears to have a suggestion. Although, in Mr Gamm’s words, “to everyone but the ABC it’s a free paper”, the ABC itself records these transactions as sales. Technically they are. The store records the value of the purchase, and then deducts the cost of the newspaper from the total. This explains why the offer still applies even if the value of purchases minus the newspaper is less than £5.

Mr Gamm’s article, then, appears to corroborate Mr Cant’s assertion that the deal is designed to “massage circulation figures”. This may very well be true, and if so, it would certainly be unfortunate if the lack of interest in the press or a lack of response from the press complaints bureau were the result of a perceived need to maintain newspaper circulation at misleadingly high levels.

Waitrose was not originally conceived as a small-town chain, and presumably when Waitrose is by the side of a motorway its loyalty schemes are invaluable capitalisation on a definite market. The motorist market is a sure market, undiluted by consideration for other retail outlets.

But in Oundle, the supermarket’s policies seem liable to mount, if not unfair, then unwelcome competition to a high street which is an integral part of the healthy character of the town. It would be a shame if the environs of our war memorial could no longer be said to a focus for the obsequies of the living, as well as of the fallen.

By Richard Taylor