HWT new distribution model


There is a lot of comments about the latest proposals from HWT called T2020. 

I actually was interviewed extensively about it by the HWT consultants before they wrote their report. Parts of what was being proposed I heard from my clients too.

Many are looking at this proposal and seeing their margin dropping from 25% to 12.5%. That is a big blow to some. Interestingly for some like my client interviewed about it in the daily telegraph here, margin will go up by 2%.

The core of the proposal is that they intend to replace many newsagencies with one newsagency. This agency they propose will deliver 10,000 newspapers a day.

That would be a substantial entity which would need to cover a lot of territory. As a punt depending on the size of the area, probably 10 to 20 staff looking after about 4,000 active customers (so you could double that to 8,000 customers on the books) together with about 200 subagents.

We have a few clients with those sort of figures. To do such a job would require a substantial setup cost, a depot, trucks, plastic wrap machines, a good computer system, etc. Anyone planing to do this would require a lot of money upfront probably the cheapest way to do it would be for many newsagents to voluntarily merge their runs. Much of the equipment these people have will be useless soon anyway.

One problem here is that the mapping of these areas are to be done by HWT. These areas will not follow the existing territories. This means that it will be harder for a voluntary group to be created.

Some other points that I did not like were the areas are assigned by tender, as such there is no-good will. If someone created such an entity, lost the tender the next time it comes around, then they would lose all.

No compensation to people that have existing territories and that are going to find their newspaper margins slashed in half.

Another issue is what is going to happen with Fairfax. It is marginal enough for many newsagencies now to do Farfax with HWT. If the agencies have no HWT to deliver many are just going to drop Fairfax. Many Fairfax subscribers could be left with no deliveries.

One issue I would like to see discussed which is briefly brought up in the FAQ is

Q: Once T2020 is implemented, there doesn’t seem to be much to differentiate a retail newsagent from a sub-agent. What will News Limited to do to distinguish a retail newsagent?

A: We will continue to invest in the branding and in-store merchandising solutions for retail newsagents that differentiate newsagents from other channels.

I suspect that this and other questions are not needed to be worked out as clearly, they have already been decided.