I have heard that 7 Eleven expects to open 200 new locations in Australia this year. I am not sure if this includes their take over off the Mobil footprint. Regardless, the growing convenience channel is a considerable challenge for newsagents – a challenge that I suspect many are not aware of.
I understand for some newsagent suppliers, particularly in the circulation space, that convenience is the fastest growing retail channel. I can certainly see this at the top end of the market.
The risk, of course, is that convenience grabs growth in top selling titles, resulting in fading sales newsagencies of non top selling titles due to the migration of the traditional newsagency customer from newsagency to convenience. This has been a consequence of publishers going direct into supermarkets fifteen years ago.
The magazine model in newsagencies depends on browsers. Top selling titles and other very popular product categories (lotteries, transport tickets and newspapers) generate the browser traffic we need. More top selling magazines in more convenience stores will likely result in less traffic for newsagencies. The result will be an even more challenged magazine distribution model. Suppliers helping convenience grow need to understand the consequences of their actions.
While there are some newsagents playing well in the convenience space, their numbers are few.
Overseas, there is significant growth in convenience store numbers.
Mark,
My distribution only newsagency is for sale.
Once I have sold, I have been considering what sort of business I should enter next. I have not done a lot of research yet as I am waiting until the business is sold or at least under offer, but 2 ideas I have are retail only newsagency and a convenience store (or a mixture of both).
I was wondering if you had any thoughts regarding which direction I should look at, or perhaps something different.
I have worked retail all my life, both at the shop front and also behind the scenes as an accountant at head office, so I imagine I will stay in retail in one way or another all my life.
A great question Dean, I too am interested in the answer.
I have some ideas but will make it a separate post. Hopefully later in the week.
It’s 200 inclusive of their Mobil takeovers which are around the 160 sites that will be converted. A number of mobile sites above this will be closed or sold off too as they’re deemed to be unprofitable, unsustainable or unsuitable for 7/11s locations strategy and stand alone stores may be opened instead in their place in a more beneficial local location.
Dean, I feel I’m qualified to answer as I’ve owned a newsagency and worked for 7-Eleven in previous life. I would lean towards a 7-Eleven franchise (or other food franchise like Subway) as there will be no such thing as a newsagency in 10 years time. The current model is bein squeezed in every direction.It took me two years to sell mine and in five years nw buyers will be even harder to find. It pains me to say it but DO NOT buy a newsagency.
Former,
there was a time when 7 Elevens were considered past their use by date and dead and buried. Newsagents need to reinvent their business constantly and steay relevent. Those who do will survive and thrive, those who don’t would probably go under in most businesses that are not in a protected market. We have great foor traffic and need to leverage that while we develpoe our businesses into an up to date model.
Brendan,
Gifts, ink, books, etc don’t work for everyone.
Those “traditional” newsagents selling mags, papers, cards/wrap, stationery, confect, drinks and cigs are dying a death of a thousand cuts.
When rent, wages, electricity and petrol continue to rise each year and the Daily Telegraph stays at $1 for the past 10 it’s a very simple equation.
Those in markets that cannot differentiate or with too many competitive pressures should get out now. No one will buy your newsagency in 7-10 years time (if you haven’t gone arse up in the mean time).
I don’t like contributing posts like this but people have to be realistic. Even Mark knows in his heart of hearts that the ‘standard definition’ newsagncy has no future. The publishers and suppliers certainly know it – they will chase new distribution points and squeeze newsagents until the the NBN kills the entire category in the next 10 years.
Former
Former,
Mark will say what he knows thanks.
It is alarmist to say what you have said and how you have said it. Last year and the year before I ran a series of presentations on the Newsagency of the Future. I will offer a significantly updated version soon. This puts the future into context and lays out a road map. While it may draw similar conclusions to what you say, it offers and has offered, an action plan which is more easily digested and more reasonably acted upon.
Former,
Its funny you should say look at a 7/11 as someone I know who owned a site currently being converted to a 7/11 looked into what was involved and said he would never own one in a million years. His thoughts were that the profit share was unreasonable and was one reason why you were only likely to see a certain type of owner in 95% of the franchised sites as you would be lucky to make any reasonable amount of return on your investment in the short to mid term. One 7/11 store that I was aware of was on the market for some time was showing a a much lower ROI than what I’m getting now where I am.
I spent about 3 years looking at various businesses before buying a newsagency/post office and they all have their pros and cons and even successful franchises have “dud” stores so you do have to be careful no matter what. Even the “Golden Arches” franchises aren’t the absolute cash cow they were at one stage for the most part and a few of them have even struggled in recent times.
The way many retail businesses are currently operating is going to change dramatically in the coming 10 years, just look at old Gerry Harvey admiting this by opening his own online presence, but it doesn’t have to mean that the world is going to come to an end for all just because of this. You may be right in that the “traditional” newsagency may be on it’s way out but be smart in what you do and how you operate and theres great potential to do well in nearly any business.
How about a fun newsagency?
One less like a traditional newsagency and one that is like…. for example, layed out like a house.
Bathroom mags in the bathroom, car mags in the garage. kids mags in a kids room (with display bed and toys), kitchen/cooking mags in the kitchen area (with stove, oven, the lot)
maybe even a small backyard area (green carpeting) so you have somewhere to put the gardening mags.
Seems more fun than a 7/11
almost 99% of newsagencies on sale remain unsold because the asking price is just too much. I dont understand how you can ask million dollar for the business when the figures hardly show any profit..
Can anyone explain the on what basis the business price is set…
Aaron, i like your idea. I think you might be onto something there. There is a lot of titles we could put in the WC room……..
It seems to me that newsagents and 7/11 are the same style of business as far as the consumer is concerned. We are both convenience shops, sure we offer the odd different category be it books, ink or gifts but I have seen these things in some 7/11 stores.
What we need to get our head around is that over time we have lost everything that was exclusive to us ie lotto, mags, papers, greeting cards and what we need to do is start being better retailers. Stop excepting the crap suppliers push onto us be it bad trading terms, low margins or the garbage no other shop wants to sell except the discount stores and start being picky about what we stock. We need to pick an area no matter what it is and do it really well because if we continue to try and be a jack of all trades then like the saying goes we will be the master of none.
As far as buying a newsagency I only tell people to talk to more then one newsagent and get to know the area you are moving into as each of us are different depending on our customer base.
We are all not dead yet, but it has been a few years since we have danced the jig at the end of the week.
A customer, who just happens to be a liquidator, told us this morning that, in our area, confirming our suspicions (no shit, Sherlock) that too many businesses on the coast are either broke, or fast going that way. Of course, that’s not the ones that have already gone under, having used up all resources available, or just walked away. It’s a really scary situation, which will be dominant for a year or two yet.
As he said, you’re doing really well, if your doors are still open, and you’re still ticking over.
Franchise-style convenience stores included.
bot, newsagencies, like any business, are worth as much as someone is willing to pay. Newsagencies which the market demonstrates are overpriced by not selling are not really on the market.
“Whether you think you can or think you can’t, either way you’re right”
Former, you seem to fit the think you can’t group.
While some newsagents, as with many other small businesses types, will find they are in an unsustainable situation, others can and will thrive by changing their business model and will ultimately be the stronger for it. Product we already sell can be improved and are of much greater value to us than some of the low margin items you include in your post. Cards and stationery can be the basis for a very strong business and the natural co-product for cards are gifts and toys while computer products such as inks are an extension to stationery lines. Those who take positive act have a positive future and those who don’t probably have a good business for a good operator tho purchase AT THE RIGHT PRICE as an improver.
An issue with 7/11 is the extremely high crime rate. Google armed robbery and 7/11 7-eleven etc and you will be godsmacked as to the results. Our neighbourhood loves the local newsagent and is running a campaign to ensure they stay in business after the new 7/11 opens up next door. They are unwelcome category killers in my view.