As pleas go, they don't get much more heartfelt than Harish Kapoor's. "Business is down. Newsagents haven't got a choice of suppliers. There is no competition in the market," he says starkly on an online petition site urging the government to safeguard the future of the nation's newsagents. "Standards are going down the drain. Less money is being invested. Please help us out, otherwise most of us will disappear for good."

It's a sobering thought and one many share, judging by the 801 other signatures the petition garnered before its submission last month. It's not hard to see why they feel aggrieved.

At every turn, they are under pressure. Wholesaler Dawson News has lost eight major contracts in the space of a year to rivals Smiths News and Menzies Distribution, prompting fears over the lack of competition in the sector; newsstand and circulation figures continue their seemingly inexorable slide downwards; and to add insult to injury, the government has proposed a tobacco display ban that could force newsagents to place all tobacco products under the counter from 2013. "We have no control over costs and find it harder every day to make ends meet," one newsagent admits. The sector is "at its lowest ebb" says another, who has been a newsagent for 30 years.

The gloom is not surprising given the figures. Newsagents are closing at a rate of more than one a day, claims the National Federation of Retail Newsagents (NRFN). Last year, the number of independent CTNs slipped 4.7% to 2,541 stores, according to The Grocer's Grocery Retail Structure, published in May.

Newsagents claim that one of the major factors in their demise is lack of competition among wholesalers. Newspapers and magazines are currently distributed by three major wholesalers - Smiths News, Menzies Distribution and Dawson News.

The OFT has been investigating the industry for more than five years and in October last year recommended that although the distribution of newspapers worked well, there was scope for further competition for magazines.

But instead of paving the way for more wholesalers to enter the arena, publishers renewed their contracts ahead of schedule to avoid passive selling, and in the process Dawson News started to get pushed out.

The OFT's plan had spectacularly backfired with the upshot that newsagents, who 20 years ago had 1,000 wholesalers to choose from, now have just three - one of which is on its way out. "The demise of Dawson News is sad," says Tony Wright, MD of independent CTN chain Maynews. "It means another major player is out of the picture and there is less competition. We won't be able to negotiate better deals."

The industry is waiting to hear whether the OFT will refer the market to the Competition Commission for a full investigation - something unlikely to happen until the autumn. Dawson News has already admitted autumn will be too late.

"This is an unfortunate situation that does not reflect the quality of service that has been offered by Dawson News, and which has caused real concern through the industry and beyond," Dawson Holdings' CEO Peter Harris told The Grocer before he stepped down on 30 June. "It will be tragic if this situation is not examined before there is no company left with the capacity to compete against the two remaining distribution companies," he said.

The fear is that there will be further upward pressure on carriage charges if three become two. Carriage charges were originally applied to orders after World War I so that newspapers and magazines could be delivered to retailers in remote areas. But the charges have become more expensive in recent years.

Carriage charges vary among the wholesalers. Smiths News, for example, charges retailers £6.14 a day, while News International, which has recently announced plans to deliver direct to retailers, only charges £1.75 a day. "Carriage charges are a thorny issue," admits David Daniel, trade relations manager at the NFRN. "There's a complete lack of transparency and a real suspicion around them. They were historically a low and token amount but since then they have been used and abused. They're a major source of profit for wholesalers and retailers have become a funding mechanism for them."

The charges reduce Maynews' margins by 1.5 percentage points, estimates Wright. While Nigel Mills, MD of independent CTN and c-store chain, Mills Group is not in favour of carriage charges, he admits they are a necessary evil. "They are a bone of contention but it always amazes me how newspapers are printed in the early hours of the morning, delivered two to three hours later to stores and are on people's doorsteps by 7am. There's a clear cost to that."

By asking the OFT for a referral to the Competition Commission, newsagents are hoping they will no longer be tied down to suppliers. At present, they can choose who delivers their magazines but not who supplies their newspapers - with Smiths News largely dominating in the south and Menzies Distribution in the north.

"Newstrade is not helped by the draconian terms of wholesalers," adds John Lennon, MD of the Association of News Retailing. Newsagents complain newspapers delivery times are dictated by wholesalers. They also object to paying for the return of unsold magazines they didn't want in the first place. "They think they know what newsagents need, but 37% of magazines that go into the supply chain are wasted. Retailers are sent the magazines, usually with little say about whether they want them or not, but they have to pay to send them back."

Because carriage charges are paid weekly and consumers tend to pay their newspaper bills monthly, home deliveries are a drain on resources. "Wholesalers ask for their money every Friday, but customers usually pay monthly for their newspaper delivery. This leaves cash tied up in the business and makes home news delivery a real burden for retailers."

There are opportunities, though. According to the NFRN, 60% of all newspaper sales and about 40% of magazine sales are still coming from independent newsagents. And although the major multiples have a stronghold on the top 500 selling magazines, independents have a healthy share of the 3,500 specialist titles. Independents can boost their prospects by seeking help from the likes of the Periodical Publishers Association, which advises independents thorough its Retail Marketing Group.

"The group is working with independent retailers to develop their Shop Save and HND offerings," says a PPA spokeswoman. "Shop Save enables a retailer to order any magazine from the full range of about 3,500 published via its wholesaler, irrespective of whether it is stocked on its shelves. This offering gives independent retailers a real point of difference from the multiple grocers by providing niche and specialist titles that fit their specific customer base. The independent newstrade is very healthy in a number of quarters and if others provide the right choice to their local community through the range in store, we believe that they, too, can flourish."

Independent newsagents should also consider diversifying their offer to attract more footfall, says Mills. His chain has become a c-store network after adding fresh and ambient lines. Later this year, this offer will be expanded to include bakery, meat and poultry. "Independent newsagents should make sure their offer is right for the customer. If it's not, then they should consider diversifying into impulse or grocery," he says. "We are doing very well, but would like to do better. Sales of alcohol, food, soft drinks and tobacco are buoyant."

Wright is equally upbeat. "I've been through three recessions. People still want to read a newspaper, smoke and make impulse purchases like drink and ice cream," he says. "We've opened three new shops in the past three months and I am quite confident about the future."

The long-term prognosis for the sector need not be bleak, agrees Daniel, but newsagents need to take control of their own destinies. "Retailers have to be very, very smart by making sure they are aware of the bestselling lines and that their stock is up to date. Retailers who work at this will be successful."n