The Metcash story in all the newspapers yesterday, that they are culling 400 jobs and closing a bunch of Campbell’s cash and carry outlets is a further wake up all to Australian newsagents along with all independent retailers.
While Metcash fingers the fight between Coles and Woolworths as the reason for a decline in business from independent retailers, like milk bars, and therefore the need to slash their operation, it is important to look at what is behind the Coles and Woolworths battle.
Retail has fundamentally changed. Coles and Woolworths get this. Indeed, they got it before most retailers in this country.
Whereas in the past we saw them as supermarkets duking it out in a traditional rivalry, the fight is not being waged from the milking shed to the smallest high street and even rural shopping situation.
Beyond the retail trading brands we know today, the two major supermarkets have their eyes firmly set on a greater proportion of retail purchases in Australia. It is the early stages of this causing pain for the traditional Metcash customer and what should be of interest to newsagents.
I’d urge newsagents to go back to yesterday’s newspapers to read the Metcash story carefully, especially the coverage in The Australian Financial Review as this provides the analysis which I think will interest newsagents the most.
The question for us is: how do we respond? We respond by leading our businesses, owning our situation and making our own success. Yes, this is possible. Indeed, I am seeing it in the data newsagents are providing the latest Tower Systems newsagency sales benchmark data I am gathering.
My concern is that not enough newsagents are pursuing their own success.
I talk about this in my Newsagency of the Future series.
Hi Mark,
It is for us… one of the 2 IGA groups referred to is our anchor… Thye spent $3-$5mil upgrading the shop and occupy 2,700sqm. The problem is, they also own one 5Km away, and whilst it is only 60% of the size, it attracts 35% more customers and turnsover 40% more than ours…
I dont know which bucket our IGA will fall into – the close, sell or retain? Whilst the math is clear which way it should go, he longer strategy is different.
This at a time when we are awaiting the QCAT determining valuer to advise our rental…
I have no doubts a number of other regional QLD Newsagents would be feeling the same at the moment.
One of the first thing that can be done is for GNS to repackage its GNS and Sovereign branded stationery to closely match the branded products. Coles/Woolies have done this to great effect and it boosts their profits no end as their products sit next to branded products but are cheaper.
Instead of the two tone blue plain packs now if they were colourful and bright we would be better able to compete on price as well as range. At the moment sovereign has a cheap and nasty look as did the old black and white homebrand products,
It would be an easy first step.
Luke,
The problem with trying to compete on price is that it generally requires large turnover to compensate for low GP margins.
Coles & Woolworths turnover huge amounts of their private label range. It is that large unit turnover that allows them to leverage economies of scale and achieve lower comparable pricing. I think a high quality private label newsagency brand would struggle to achieve lower comparable pricing to major brands.
Re read the post, it was about packaging the current lines to be more appealing to customers in store as coles and woolies do nothing to do with changing the product but I promised Mark I would argue with children any more so go for your life Jarryd.
Re read the post, it was about packaging the current lines to be more appealing to customers in store as coles and woolies do nothing to do with changing the product but I promised Mark I would not argue with children any more so go for your life Jarryd.
Yes Coles and Woolies have large turnover of stock of private label but they are making some very healthy margins on it. It is the suppliers of that private label that are taking the hit.
Isn’t this about the supermarkets slogging it out eg IGA verses coles/woolies This all started with discount bread /milk with the Acc doing nothing and now they want to turn the weekend into day 6 and 7 Anyway metcash were never our friends with prices and terms.
Luke,
Better packaging may, for some products, cost more.
But a very large chunk of the sovreign range is either poor quality or unappealing. Coles and Woolworths did not repackage their home brand products under a new private label. They created new products of comparable quality to the market leaders.
fred,
The closure of campbels outlets is related to the very small independant outlets (small corner stores, milk bars, 7-eleven style stores, petrol stations). Other independant convenience, top-up and supermarket stores pull stock from the IGA>D warehouse.
I believe this offers us all the opportunity to see that the need for us to all band together is now greater than ever.
My daughter works as a rep in pharmacy and during a recent conversation she asked why none of us had banded together to set up a cooperative where we could buy in bulk at a warehouse level and then purchase in smaller qtys at a greatly reduced price.
Would love to hear what you think about this idea a warehouse for newsagencies owned and run by newsagents.
Paul,
It already exists in terms of stationery i.e. GNS. However I would love to see something in the way of gifts, toys, and seasonal products like Haloween, Valentines day etc for those of us that are not in a marketing group.
Paul, all newsagents will never band together commercially. Those days are gone. The best opportunity is through the marketing groups. Some do this already – leverage membership for commercial gain for participating newsagents.
We did have that but the new people comeing in did not support it ,now all you here is not happy with G N S .It was called the shed, we shit in our nest
In reponse to Angelo regarding giftware at very cheap prices we use a company called Sunrise Imports (you can order on line) their website is http://www.sunriseimports.com.au they also have cheap pricing on shop fittings,display stands and some stationary items we use for our bargain bins.