Newsagency business performance assessment

I am regularly asked to assess the performance of newsagency businesses and comment on what I see in their data.  What follows below is the feedback I provided to one new newsagent earlier this week. I share it here with their permission:

The comments I make below are not intended to offend you however it is possible they will. They are direct, to the point as I have found there is value in calling it as I see it. The comments reflect what I see is the state of your business as represented in the Monthly Sales Comparison Report for April through June 2013 compared to 2012.

Your business data is the best assessment of business performance as it does not lie as long as you use the system to track all sales.

I have broken the assessment down by various parts of the business.

1. TRAFFIC. Number of sales is down by 13%. This is very significant, considerably above average for a newsagency. It makes me wonder how you are marketing the business externally – advertising, promotion, offers.
2. SALES. Revenue is down by 11%. Also very high and concerning.
3. CARDS. You are not arriving stock properly – see unknown category. You should talk with support about getting this sorted out. This could be because you may have changed card companies. The sales decline is on par with the rest of the business.
4. CIGARETTES. The decline here is less than for the average for the business. This is good news. However, be careful since there is no upside in tobacco product sales.
5. CONFECTIONERY. 22% decline. Worse than the business average. You need to take action here. Look at your product range, your display and your pricing. Something is not working for you. Also look at the value of your sock. If you have more than $1,000 in stock you;re losing money. Act with urgency here.
6. GIFTS. You are managing the data poorly. What does assorted gifts mean. Assorted gifts account for 67.72% of your sales. Categories are supposed to guide you meaningful information. I like to see: male, female, teens, kids, babies. Or: home, traditional, retro, funky. Categories should help guide your decisions. Assorted is meaningless. So, get your data right – the help desk can help you with this. In terms of sales, the 7% decline is just below the business average so that is good news.
7. LOTTO. 12% up is good news. My question is what are you doing to leverage lotto customer traffic? Are you helping your lotto customer spend on other products you offer? your data suggests not.
8. MAGAZINES. Unit sales down 21% and revenue down 18%. Both are bad numbers compared to the rest of your business and the average for the newsagency channel. This situation needs urgent action. When did you last do a full magazine relay? If not in the last six months get to it urgently. Take a fresh approach with magazine location and display. One you get the layout right I’d look at some form of magazine related promotion to reward people who are especially loyal to you.
   – Your data shows that Motoring titles are your top performing, accounting for 17.10% of your magazine sales. Wow! This is your hero category for the men’s section. Sport at 9.40% is also doing well.
   – Your women’s titles are troubled. Women’s Weeklies are down 22% in unit sales and Women’s Interests down 25%. Has something happened in your newsagency to turn women off? I ask this question seriously. These declines need arresting first followed by rebuilding.
   – You are under-performing newsagency channel averages when it comes to Food (2.06% of sales), Crosswords (2.03%), Music (1.84%) and Teenager (0.62%). It would be easy to blame this on your shoppers. Your challenge as a retailer is to look at where you have them placed and how you promote them.
9. NEWSPAPERS. Unit sales are down 14% and revenue down 9%. The unit sales decline is the real worry as it’s worse than the overall average for the business.
10. SCRATCH TICKETS. A 27% decline in sales is dreadful. The traditional decline I am seeing in Queensland is around 15% so your business is performing worse that the statewide trend. The question is what are you doing about this. A shopkeeper will shrug their shoulders. A retailer will work on an action plan and then implement the action plan.
11. STATIONERY. This is a good news department. Your sales are down 10%, slightly less than the average for the business. While not good, at least it is close to the average for your business. In this department again you have Assorted as a category. This is useless. It accounts for 41.60% of sales and we can’t further assess this. Pens, Pencils and Markers is the next big category at 11.07% of sales. They declined only 5% and this is excellent news. What are you doing there as it is working better than for other products? You should talk to your GNS rep and ask them to conduct a review of your stationery. They could guide you to relay stationery to tell a better retail story.

With non lottery product sales of $300K for the quarter and an average of 3,600 sales transacted each week you have a sound business base. What happens from here is up to you. If this were me I’d be urgently overhauling my approach to key traffic driver categories in the business:Lotto, magazines, stationery and cards. I’d engage with suppliers for help. I’d also develop a series of plans for change in the business to give customers a fresh experience. Once I had that where I wanted it I’d promote the business externally. I can’t stress enough the importance of external promotion of the business.

The best business growth is that achieved over time through a series of small steps: a small bump in traffic, a small bump in the average spend and a small bump in the margin you achieve on the items you price for yourself.

I appreciate you’ve not even been in the business for a year. Since it’s your money invested, the future of the business comes down to you. Get your data right, set your focus on a plan and get cracking on that plan.

Let me know if I can help in any way.