I’ve been researching the cash flow implications of magazines in Australian newsagencies for several months. After considering data from many businesses, I am now focusing on six case studies. What is interesting is the monthly labour and real-estate costs for magazines in these stores as shown on this table.
It clearly demonstrates the cost differential between a rural newsagency, #4 and a major shopping centre newsagency, #2. It stands to reason that shopping centre newsagents have more cash flow negative titles and that they will be the first to pull out of carrying the traditional newsagency range of magazines – that is unless the magazine supply model changes to create more economical circumstances for such newsagents.
With newsagent competitors able to easily choose the titles they carry (and thereby focusing on the top 50 of 100 titles), newsagents face the need to signifcantly alter their business model to stay in the game. It can be done as some are demonstrating already. It takes stength in dealing with suppliers and focus on sale and return data.