Based on my research into the cash-flow performance of magazines in newsagencies, the top five categories in order are: Women’s Weeklies, Partworks, Women’s Interests, Crosswords & Puzzles, and Teenager. While sales are stronger in other categories, longer shelf life and a lower sell through rate lead to a significant (detrimental) cash-flow impact.
The Special Interest, Sport & Leisure, Children’s, Motoring and Adult categories are all cash-flow negative. Special Interest is the worst performer and within that, the Travel & Tourism and Other segments are in trouble. Other is a catch-all segment that includes such seriously cash-flow negative titles as: New Dawn, Irish Echo, and Adbusters. These titles are not alone in causing the cash-flow problem: 90% of titles in the Other segment of Special Interest are cash-flow negative.
Special Interest is the category delivering the worst cash-flow impact, yet newsagents see many of these titles central to their point of difference. Few understand the cash drain on their business caused by this commitment.
Special Interest titles were once the point of difference for newsagents. This point of difference is costing money. In an average newsagency, Special Interest titles account for a negative cash-flow impact of $4,000 to $13,000.
In half of the newsagencies assessed, eliminating the cash-flow impact of around 25% of Special Interest titles would create a cash-flow positive situation for magazines. Considered another way, Special Interest titles cost newsagents more than the cash gain from the top two magazine titles – usually Woman’s Day and New Idea.
In a shopping centre newsagency every pocket needs to generate at least $7.00 per month to cover the costs of real-estate and labour. For an $8.95 title, this means three sales. However, with a scale-out of 20 copies of a title requiring, say, three pockets, the monthly break even point for the newsagent in a shopping centre becomes nine.
While Coles, Safeway and others focus on the top 50 or top 100 titles, newsagents and the magazine distributors are participating in a supply model which is, while supporting a unique range, is loss making.