FEATURE 

Home delivery – does it matter anymore?

At a time when big retailers are embracing home grocery delivery, why is home news delivery in such a mess? Is it a coincidence that the fall in newspaper circulations has coincided with the decline of HND. Daily Mail circulation director Neil Jagger believes that HND must be resuscitated, but that it needs an industry wide effort to achieve it.

By Neil Jagger

"Home delivery of newspapers is declining every year." "People’s lifestyles are changing and they don’t want home delivery anymore." "There is no future for home delivery of newspapers."

Anyone who has worked in the UK newspaper industry in recent years will be familiar with comments such as these, and although everyone would agree with some of the points, there is a growing number who believe all of them. But does it actually matter? Is the decline of home delivery a symptom or even the cause of declining circulations of most national dailies or are the two areas completely unrelated?

In this article, I will explain how I believe that a healthy and strong home delivery network can be achieved and why doing so is vital to the future health of our industry, not just from the perspective of the retail network, but also because how we reach our consumers can often define our products in the modern marketplace.

Let me deal with my second point first. Does it matter that our readers get their newspapers delivered to their door? Well, a delivered customer is a guaranteed sale and this obviously has benefits in terms of managing supplies and waste, but it also goes much further than that.

First to market

When marketers speak about their products, they will often highlight the importance of being "first to market" and gaining "first-mover advantage". As it clearly implies, this means that with any new product if you can get your product to the consumer before anyone else reaches them, you have an excellent opportunity to lock that consumer into your product. You can then build a relationship with your consumer through your product – and service – that ties them to you and ensures their continued business.

As we all know, news is a daily product and, as such, each day represents a "new" marketplace. Efficient and timely home delivery of newspapers allows our product to be first to market each day. A consumer who wakes each morning to their newspaper on their doormat will build a bond with that product and it will become part of the daily routine. However, if the newspaper is late, or not delivered at all, that bond will inevitably be broken.

The scourge of marketers worldwide is when a consumer is heard to say "I couldn’t get my usual product today, so I tried something else and it was really good. I think I’ll buy that in the future." In that instant where the consumer has not received their newspaper, the bond is broken. We lose first-mover advantage in the daily market and opportunities are created for other media to take our place or diminish our importance. In today’s world many different media sources are vying for their share of our consumers’ news appetite – newspapers, radio, terrestrial and satellite television, internet – to name but a few. When we can place our product in our readers’ hands as soon as their day begins, our product has value. When the newspaper falls behind other media as the main daily source of information, our value diminishes and the bonds with the consumer weaken. Although the weakening is barely discernable at first, over time it becomes highly visible and is represented in the falling sales that we are all faced with today.

Breaking the emotional link

In addition, we should not forget that, to the consumer, the relationship with a product is more than transactional, it becomes emotional. As a marketer at Mail Newspapers, I have lost count of the people who have told me "I love your paper" or "I have to read it every day". To a consumer who has become used to regular, on-time, home delivery, any failure of the newspaper to arrive when expected through the letterbox is more than a mere inconvenience; it is often a major annoyance. It can break people’s routines, cause lateness to commuters who have to stop en route to the station to get their newspaper, it can encourage our consumers to try competitors’ titles, or worst of all, it can drive our readers to seek alternative news sources, from which they may not return.

So what does this all mean? We live in a society that is becoming increasingly convenience driven to suit "time-poor" consumers. Almost every aspect of the UK retail and service industries recognise that the UK consumer is busier than they have ever been. Government figures show employment is at record levels – the current numbers unemployed being the lowest since 1975 (source: National Statistics). Other indicators support this trend, the Guardian reporting (May 2003) that money spent on take-away food had increased by 40% since 1980. How has the marketplace adapted to this trend? In most consumer-focused industries, the response has been to offer longer opening hours and trading conditions that are more convenient to the consumer.

Home grocery delivery

If we take this a step further, since the 1990s, major grocers have been experimenting at various levels with an exciting new development. Iceland was the first on a major scale, but very quickly other retailers joined in. Now this development has become a core part of the retailer offering – indeed in the case of Ocado it is the only offering. What is this trend? Exactly right, it is home delivery. How can it be that just as the UK’s major food retailers are embracing home delivery and seeing it as a central part of their strategies for growth, the news industry in general and retailers in particular are still debating whether or not home delivery is a core area any more?

Let me take this argument still further. Since de-regulation of the newspaper industry, it has never been more simple to buy a newspaper. In any conurbation, you rarely have to walk more than 200 metres before you have the opportunity to buy. Why hasn’t circulation growth followed?

The greatest area of growth for many titles in recent years has been the supermarket sector. There are many factors driving this, not least the huge increase in footfall that supermarkets have enjoyed through both organic growth and aggressive acquisition strategies that have taken them into the convenience and forecourt sectors. However, from experience, I can tell you that grocery home delivery is not a good thing for newspapers. Very few, if any consumers, elect to have a newspaper delivered with their weekly shop. The timescales from ordering to delivery and consumer habits just do not tie-up.

Industry wide solution needed

Clearly I, and Mail Newspapers, believe that home delivery represents one of the key arteries without which our industry’s health will rapidly subside. Martin Ashford, Financial Times circulation director (InCirculation, Sep/Oct 2004), went into detail to discuss areas of interest for home delivery. I will try and avoid repeating his words as there were many areas that he outlined with which I wholeheartedly concur.

There does need to be a greater emphasis on service throughout the entire supply chain. Offering home delivery to the consumer must mean that they are guaranteed to get their copy before they leave their homes – particularly challenging in the London commuter belts – every day, not just "most" or "some" days. If this means favouring HND retailers with copy, then so be it. This is certainly an area that has been under review at the Mail for some time.

Unfortunately for the industry, whilst FT Direct is a genuinely innovative and effective service, it is – quite rightly – geared to the needs of the FT and its consumers. It is not, in my view, a model that is replicable for the rest of the marketplace. Instead, I believe that the problem can only be addressed by an industry supported initiative based upon sound financials and guaranteed service levels.

Transplanting roundsmen

To achieve this, Mail Newspapers has experimented with transplanting "roundsmen" into areas without a home delivery service. The concept is fundamentally simple and the operation of the roundsmen is no different to that of existing home delivery agents. We then target the area extensively to create demand for the service, using leafleting, sampling and telephone canvassing to market to the consumers.

This approach has met with some success, and has also generated some essential learnings too. The three key areas are:

* Consumers respond best to sampling the newspaper in their home. What better way to market your home delivery service than to allow your target consumers to trial it?
* No newspaper can create this environment alone. No single daily title has the strength of readership to establish a coherent delivery territory with sufficient volume. Developing a home delivery offering where none currently exists depends upon the industry as a whole creating the right package of support for a delivery agent to generate business.
* Consumers will pay for the right service. In trials, we have charged consumers up to £2.50 per week for their daily deliveries. That is an additional 64% service charge on top of cover price. We are not aware of consumers who have been tele-canvassed citing the service charge as a reason not to respond. Instead, we have focused on ensuring delivery before 7.30am.

Commercial service charges

Service charges clearly remain a key issue within the home delivery debate. However, we have shown in trials that the marketplace will stand a higher charge if the quality of service matches. This has massive implications for the industry as a whole, for financial considerations remain a major factor in the decline in home delivery retailers and therefore home delivered consumers. The issues concerning child deliverers have been much debated, and will not be explored here. Adult deliverers must be the future of home delivery – retired people, shift workers or any adult with a spare few hours in the mornings. If the consumer pays a realistic service charge, the retailer can employ adult staff and reap the benefits of doing so. The retailer can offer higher service levels and still make greater profits for themselves. Retailers will only embrace home delivery again when the profits outweigh the pitfalls for them; in business most arguments are ultimately financial.

Let us be absolutely clear here. Home delivery services based upon the 1970’s will no longer work. 30-50p per week for seven days delivery cannot be sustainable. Consumers will pay £5 to Tesco Direct for a delivery, or 27p to post a letter. They do not expect to have their newspaper delivered for only 5p per day! At the same time, no publisher can address the issues of home delivery alone. There needs to be a co-ordinated campaign to support existing home delivery agents with guaranteed supplies and delivery times, canvassing support to bring in new customers and business development support to help make the service more profitable to the agent. At the same time, the publishers also need to co-ordinate attempts to fill "black-holes" as going it alone is simply prohibitive financially and insufficient to create the required volumes.

So, in conclusion, does home delivery matter anymore? I believe it does, and I believe a continued decline will represent the decline of the wider industry. Certainly it seems to matter to the fastest growing UK industries, so it must matter to us, who have one of the most established networks in the country. It can be fixed, but the patient requires a team of dedicated specialists to carry out a long, focused procedure – it won’t happen overnight, or in isolation.