Publishers have been urged to learn from the way Covid-19 acted as “rocket fuel” to show home deliveries are “nowhere near as dead as we thought”.
Newspaper and magazine delivery service Newsteam grew 72% from 24,400 direct customers in March to about 42,000 after an influx of people who wanted newspapers delivered at the start of the Covid-19 lockdown when the most vulnerable were told to isolate for 12 weeks.
Newsteam, which launched in 2014, also makes about 30,000 regular deliveries for third-party partners, mainly publishers, where customer numbers grew by between 20% and 30% during lockdown.
General manager Tom Crawley told Press Gazette the growth was “a pathway that we were already on and Covid has just put rocket fuel in the engine on that journey”.
He said: “We had a lot of younger people setting up orders for elderly relatives and things like that. We spoke to many hundreds of grandchildren.
“We were having people in tears on the phone in relief, especially the younger ones. I had one 18-year-old girl from Liverpool who was just desperate to make her grandad stop going to get his newspaper because she was so scared he was going to catch Covid… she burst into tears that she had found a solution. It was quite humbling. It was a crazy time.”
At the same time as gaining 20,000 new customers and frantically ramping up staff numbers and delivery routes, Newsteam lost all of its commercial work for betting shops, nursing homes, gyms, hotels and restaurants.
“We lost about £30,000 a week worth of business right at the beginning of lockdown and then obviously the home delivery came in very quickly and replaced it,” Crawley said.
“A lot of that still hasn’t come back and a lot of what has come back has now gone again because of this lockdown.
“The difference is that last time we were plunged into significant loss by losing all the commercial work. This time we’ve lost all the commercial work and we haven’t been plunged into loss which shows how much stronger we are now.”
Many national and regional newspapers advertised home delivery offers during the first lockdown to try to retain readers who were no longer going out to the shops, and Crawley said their pleas clearly worked. Several have reinstated free deliveries or voucher offers this month.
Crawley said the events of this year “should teach the publishers that home delivery is nowhere near as dead as we thought it was”.
“As the other industry pressures continue to grow – the falling number of news sales points and falling volumes – all Covid really did is give a snapshot of what the world looks like for our print industry in five to ten years’ time anyway.
“It’s not going to be sustainable for 50,000 shops to be selling newspapers across the country because there won’t be enough newspapers being sold to a) justify all of those shops bothering and b) there won’t be the volumes there to justify the current logistics network, which is going to mean that home delivery is going to become more important to those wanting to remain in print.
“If they [publishers] had given anywhere near as much backing in the last five years to our project as they did in the last six months we would have been in a better position to have mopped up a lot more this year and they’d be in a stronger position going forward as well.”
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Newsteam, which now has a turnover of £33m per year according to its latest run rate, saw a 92% retention of its new lockdown customers by September – well-exceeding hopes of keeping half. Out of the 8% who left, 10-15% subsequently returned for the second national lockdown.
Crawley said the industry needs to “wake up” to the ongoing challenge of many retailers choosing to walk away from home delivery due to either economic reasons or age as “the next generation isn’t there”.
“We’re doing an acquisition in January of about 500 customers. The retailer’s 83 and she’s wanted to be able to sell the business as a going concern for ten years and it’s really profitable and strong but nobody wants it so we’re buying it,” Crawley said.
“Those haven’t gone away. What has gone away for us this year is people giving up for economic reasons because every retailer who does home deliveries has had a boost from Covid.
“When that wears off there’s going to be a catch-up effect because Covid hasn’t stopped the aging process – so in two or three years’ time, the amount of retailers doing home delivery is going to radically decline even if you could fix all the economic pressures, because they’re just getting old and there’s no nice way of saying that. We do as many acquisitions through death as we do for economic reasons.
“The industry needs to wake up to that because in five years’ time there’s only going to be a few of us.”
Crawley warned that outside five or six companies nationwide with a similar set-up to Newsteam, there is a “very precarious distribution network that’s built on a wholesale industry that doesn’t have the volume to hang onto sustainability in my view, retailers who are really getting on, relying on kids whose parents really don’t want them getting up in the morning delivering newspapers in modern times”.