Read this story from Editors weblog. It quotes Laurent Rich Fine, respected newspaper analyst at Merrill Lynch & Co. This story supports why I see newsagent revenue per home delivered product falling, why publishers want their products in as many retail outlets as possible and, why retail newsagents need to revisit capital investment in print media product. Here’s a taste of the article:
“Interest in news is greater today than it’s ever been,” said Fine. Yet newspaper companies shouldn’t cling to profit margins and models that don’t work anymore. “There’s no way to go back to where the industry has come from,” she added.
So don’t waste time in nostalgic reminiscence, especially as newspapers are experimenting with online features that are proving to draw readers and money.
Fine does believe that large newspapers will continue to strive, as well as local ones. “I think there’s an enormous, unsated appetite for really local news,” she said. Thus the overlying uncertainty concerns midsize metropolitan dailies.
According to her, newspapers can’t operate on the same business model, can’t expect similar profit margins, and should expect their print products to lose in importance.
Newsagents can’t operate on the same business model, can’t expect similar profit margins, and should expect print products to lose in importance.
Mark,
Clearly magazines and newspapers have some challenges and newsagents will no doubt consider the appropriateness of the display they give this traditional part of their business…although I’m not sure what they will replace it with without making their store look like any other card/gift shop.
On a related matter, what do you see as the future for soft gambling in newsagents? Due to the fact Tattslotto have spread availability of their products to many more outlets, the threat of soft gambling on-line, and the possible introduction of scratchies to supermarkets, will you be reviewing the location and amount of space your store devotes to this product? I’ve always felt that the space allocated to Tattslotto is not proportionate to it’s importance to the business. My local newsagent is always complaining about the display demands and expense he is up for with Tatts although I have no idea what return he has from this product.
Ted, The gross return for lotteries would be around 7%.
Newsagents can evolve their stores based on local needs. I reckon it’s best to focus on habit based product such as craft, art supplies, recharge product and even service such as copying, binding and the like.
The most crucial next step for newsagents is that they make business decisions – rather than waiting for suppliers to make the decisions for them.
Mark