(8) Richard Desmond boosts Daily Star sales with price cut

Links: http://www.theguardian.com/media/2015/oct/07/richard-desmond-boosts-daily-star-sales-with-price-cut

Summary:

Richard Desmond’s move to spark a tabloid war by slashing the price of the Daily Star to 20p resulted in a UK sales boost of 23,000 copies on Monday. But the move did not hurt sales of rivals the Sun and Daily Mirror. The move by Northern & Shell, which cut the price of the Daily Star weekday, Saturday and Sunday editions by 50%, has been positioned as an attempt to “inject some overdue sales and excitement” into the tabloid market. While the Daily Star put on extra sales the move did not have an impact on rivals.“If nothing changes in terms of the scale of uplift of the Daily Star’s sales I’d give it a week or two before the price is put back up,” said a second newspaper industry executive. Retailers and newsagents were certainly led to believe this is a permanent change. “If nothing changes in terms of the scale of uplift of the Daily Star’s sales I’d give it a week or two before the price is put back up,” said a second newspaper industry executive.

Key data/statistical information:

• Unofficial figures for the first day of sales of the price war indicate that the Daily Star put on about 23,000 copies and grew UK sales by about 7% week-on-week.

• The Daily Star’s overall sales figures put the circulation increase at 5.6%, however this includes Ireland where the price cut has not been introduced so is not a true reflection of the impact.

• The Sun is thought to have seen sales rise about 3% on Monday, about a 50,000 rise, in part thanks to a Tesco token collect promotion. And the Daily Mirror is thought to have risen marginally, perhaps 1%.

• Northern & Shell will need time to evaluate the impact of the price change – the 50% loss on cover price revenue could cost it as much as £400,000 a week depending upon how many additional sales were notched up.

• Trade body the National Federation of Retail Newsagents was outraged by the move, with about 50 deciding to stop stocking the Daily Star in protest at their margins per copy sold being cut in half by the move.

What's my view?

The fact that the Daily Star costs now 20p and yet it didn't hurt the sales of rivals The Sun and Daily Mirror shows that it isn't as popular as the two other newspaper. However, since it has increased sales in the UK, the change could potentially be beneficial in a long run.