The war is on and no one knows yet what the outcome will be. Some of Britain's biggest publishers are at loggerheads with their biggest distributor. But whatever the eventual fallout, it is becoming increasingly clear that there will definitely be one loser—the Patels, the expat Indian business community which has excelled in London with their ‘corner shops'.
The tussle between giant distributor W.H. Smith and the publishers of The Daily Mail seems only the beginning of a shake-up in the distribution world of Britain's publications. W.H. Smith are moving to take control of retail as well as distribution, tying up with supermarket chains for alternative circuits of sale and also providing for online distribution networking.
The impending change threatens the good old newsagent, who is most likely to be a Patel than anyone else. A study conducted by Prof Paul Dobson of Loughborough University says that W.H. Smith's moves are likely to close down the businesses of an estimated 12,000 newsagents. Of these, more than 10,000 are Indians, the majority among them being Patels.
W.H. Smith attempted to allay fears by declaring that the new system pertains only to magazine distribution. But many publishers feel newspapers will not be far behind in their scheme of things. The Daily Mail has sacked W.H. Smith as their distributors. The Telegraph group says it is taking "another look" at keeping W.H. Smith. Ostensibly, the newspapers are backing the Patels against W.H. Smith.
The trouble is that the existing system is no better and the change will only render a bad situation even worse for the Patels. "I have sold five of my own outlets in the last few months," says Shirish Patel from the National Federation of Retail Newsagents. "I had begun to pay from my pocket, forget sustaining a profitable business."
Indeed, the new system of W.H. Smith will chase the Patels out of business. The distribution of magazines in Britain is carved up among W.H. Smith (50 per cent of the country), Menzies (30 per cent) and Dawson (20 per cent). Under the existing system, W.H. Smith has to retail magazines in a Dawson area through Dawson even if it holds the distribution rights for the same publications in areas neighbouring its own. W.H. Smith now wants to take control of the distribution and the wholesale and retail links in the chain for magazine distribution all over Britain. "The old distribution system was costly and inefficient," a spokeswoman for W.H. Smith told Outlook. "The retailers have nothing to fear, we want a new system that will give them more control."
But the retailers believe it will only give W.H. Smith more control. "Don't let this fool you," says Shirish Patel. "This is a fight for control where we don't matter. In the last 25 years, I've never seen the small newsagent being consulted when such changes are made and I don't see it happening now."
Newsagents are in a situation where they are going under, and fast. Thousands of Patel families are staring at what is expected to be an imminent collpase of their business. "The Patels can stop London if they unite and take action," says Vinod Nakarja from the Newsagents Action Group. But there are no immediate signs of the Patels stirring to life and taking to the streets. "All this is now too much," Nakarja says. "Our people can't take it on, they're just selling and quitting."
Patel newsagents are trying to look into the future and see nothing there for themselves in this business. First, the expansion of supermarket chains all over Britain and their 24-hour stores outpriced them.Now it's the newsagent part of the corner-store business that is slipping away.
But given the way W.H. Smith is taking distribution, you won't be able to walk around the corner to buy your newspaper or magazine any more. The Patels will be gone, and nobody knows where. n