Further to my post about the editorial in the Australian Financial Review bagging newsagents as a result of their reaction to reports of newspapers moving into McDonalds. It’s time everyone got back to business.
If newsagents achieve incremental sales beyond the average for a newspaper title then the channel has control. Publishers want sales and the best performing channel will be the channel the publisher focuses on.
Newsagents should react to the AFR editorial and the possibility of newspapers going into McDonalds by pursuing newspaper sales growth in every possible way. This commences with understanding basket penetration, comparing the last three months with the same period a year earlier and learning from the change. Analysing basket penetration will uncover opportunities and show newsagents what where they can focus attention to achieve greater sales from existing foot traffic.
Newsagencies have exceptional foot traffic, we’re the second most visited retail channel in Australia every week. Yet we do not leverage sales which respect the traffic. This is in part because of rules suppliers have imposed on our channel over the year and the refusal of various suppliers to work with each other so that we might present a cohesive retail story. This is where we need to focus attention.
If newsagents achieve significant incremental sales News Corp, Fairfax and other publishers will not need to place product elsewhere. So, not only to they get the professional sell in a newsagency, they achieve the growth they so desperately need.
One reason newsagents become jaded about chasing growth, though, is the margin. Consider a $1.00 newspaper. Of the $1.00 cover price, 13 cents goes in rent, 12 cents in wages, 6 cents in operational overheads and 3 cents in theft. That’s 34 cents. Newsagents make 25 cents commission from selling the $1.00 title. As costs have risen over the years, title prices have, in the main remained static. So, it’s not hard to understand why newsagents are not as motivated to pursue sales growth when the newspapers are a loss leader. Not all newsagents think that way though.
If one could control Australia’s 4,600 newsagents an immediate campaign pursuing newspaper sales growth would be the start in responding to the AFR editorial.
Strong newspaper sales growth in the newsagency channel is the best response possible. It would give newsagents undeniable bargaining strength.