12,000 newsagents are under threat

THOUSANDS of small newsagents and village retailers are facing closure under plans to shake up the way magazines are distributed to shops, a leading economist has warned.

Up to 12,000 newsagents would go the way of the village post office if the Office of Fair Trading pushes ahead with proposals to allow the big supermarket chains in on the distribution business, said Professor Paul Dobson of Loughborough University.

A thousand specialist magazine titles could also be driven out of business if the OFT's recommendations become law, he added.

Countryside campaigners fear the changes would be a hammer blow to rural areas already hit by the mass closure of sub-post offices.

The warning comes as the OFT prepares to wind up its consultation on proposals to overhaul the way magazines are distributed to shops around the country. Under the current system, retailers must buy their newspapers and magazines from one regional supplier.

But in its provisional ruling, the OFT concluded that the system is anti-competitive - at least as far as the magazine industry is concerned.

The regional monopolies could remain in place for newspapers, it said, because there was an overriding public interest in making sure people could still buy their paper at their local shop.

But newspaper publishers have now told the OFT that its attempts to 'protect' them are unworkable as the distribution of magazines and newspapers are 'inextricably linked'.

They fear that letting more competitors into the distribution market will dramatically increase the fees charged to isolated rural newsagents.

The supermarkets, which have up to 40% of magazine sales in some categories, will be sorely tempted to use their existing national food distribution systems.

'Currently, the same lorry that delivers newspapers to a local newsagent also carries magazines,' said Steve Oram, chief executive of the Newspaper Publishers' Association.

'If you open it up to competition, there's a serious danger those lorries will suddenly be only half full and cease being economically viable.

'What the OFT is suggesting may seem reasonable at face value. But if you remove one brick from the wall, the whole edifice comes crashing down.'

Similar changes introduced in the U.S. ten years ago resulted in the number of magazine titles falling from 9,311 in 1998 to 5,340 in 2002, while the number of retailers fell by 27%.

The impact here could be devastating for areas where the village shop is the heartbeat of the community.

Hundreds of rural post offices have closed in the last five years. Last year the closure 3,000 urban sub-post offices, most of them in newsagents and corner shops, was announced.

A recent report from the New Economics Foundation, entitled Ghost Town Britain, revealed that 50 small independent shops - bakers, butchers, fishmongers and newsagents - have closed every week over the past five years. The report said that more than one in five corner shops, grocers, post offices and pubs have put up the shutters.

Another survey found that more than 2,000 independent - generally family-run - convenience stores folded in 2004 in the face of aggressive tactics from the big supermarket chains.

That represented a 600% increase in the annual closure rate from the previous year, the Institute of Grocery Distribution said.

The NPA has been lobbying the regulator in conjunction with the Periodical Publishers' Association and the Association of Newspaper and Magazine Wholesalers. The campaign has also received support from consumer groups.

The consultation period is due to end on Friday, with the OFT's final decision expected by September.