Newsagency sales benchmark results

Analysing the newsagency sales benchmark data for the April – June quarter has been difficult because of the greater than usual difference in numbers between newsagencies.

This difference indicates that it risky to present data to speak for the whole channel. For example, where many newsagents are tracking a decline in magazine sales of 8% and more for the quarter, there is an equal number tracking growth of 6% and more for the same period compared against their performance a year earlier.

The group of newsagents delivering the most challenged results are those in capital city shopping centres. Shopping malls appear to be feeling the pain of retail, just talk to fashion retailers and look at recent news reports.  Those experiencing the best numbers are newsagencies located in regional centres.

I am upbeat about the future as this benchmark study and other indicators are that newsagents who take an entrepreneurial approach to their businesses will reap rewards in sales.   Being average is a mugs game.  Working the conveyor belt will not lift your business.

Here are the headline benchmark numbers:

• Magazines. Magazine sales fell, on average, 2% (in unit sales) in the April through June 2011 quarter over the same period last year. Just on half newsagents reported a decline in magazine sales. Looking just at April and May, just about all newsagents reported sales growth. June was a very tough month, wiping out many of the gains of the previous two months.  The newsagencies delivering growth are more engaged with the category.
• Greeting cards. Greeting card sales grew, on average, 2% (unit sales) in the quarter. 70% of newsagents reported growth. I’d say that such of this growth is due to product innovation. Sound cards continue to do well.  Lifestyle appears quite challenged in some areas.
• Stationery. 60% of newsagents reported a decline in stationery revenue (not including ink) with the average decline 1%.  While I’d need to research this more, I’d say that most newsagents could turn stationery around by getting serious about managing the category. Average does not cut it in this markeplace.
• Ink. 45% of stores participating in the study have a separate ink department. 90% of these stores reported growth in ink revenue of 3%.
• Gifts. 55% of the stores in this study have a gift department. 60% of these reported an average sales increase of 3% in gift revenue. Those with a gift department almost the same value as stationery (8% of stores in the benchmark study) reported growth of 10% and more.
• Newspapers. 80% of participants report an average newspaper sales growth of 2%. This could be due to promotions as they are often bundled in the newspaper dept.
• Basket size. Basket size did not measurably change.
• Traffic. 30% of newsagents served 2% more customers than in the 2010 period.

Parallel to this study I have looked at magazine sell through rates. In the first six months of this year they have declined yet newsagent invoices from magazine distributors have not declined. This is a core problem for newsagents and magazine publishers. In the face of evidence of sales challenges, Gotch and Network are not acting responding responsibly.

The performance data is from the Tower Systems Sales Benchmark Study. With 1,752 newsagents currently using the Tower newsagency software, Tower Systems is well positioned to undertake these studies on behalf of newsagents. This three month study is based on sales data from 103 newsagencies, trading under four different banners plus independents, businesses in capital city regional and rural situations.