Overall newsagency sales decline. 57% of participating newsagencies reported a decline in revenue. This is an improvement on the previous quarter. Of those reporting a decline, the average was 4% – also an improvement. Of those reporting growth, the average was 3%.
Traffic. Customer traffic was down for 54% of newsagents recording an average decline of 3% in the number of transactions.
Basket depth. 52% of newsagents reported a decrease in basket size (items in the basket) with an average decrease was 1.4%.
Basket value. 42% of newsagents reported an increase in basket value – with an average of 3.1%. While newsagents are selling fewer items, they are selling more expensive items.
Product mix. Traditional newsagency lines – newspapers and magazines – suffered the most, again.
Discounting. The decline in discounting identified in the last two quarters has continued with only 18% of newsagents undertaking discounting of any significance.
The gap between the performance of the traditional newsagency and one chasing change growing. The traditional newsagency is the type of business reporting the most significant decline whereas the newsagency pursuing new lines is the type of business reporting growth.
This newsagency sales benchmark study is based on an analysis of sales basket data from more than 150 newsagencies – city and country, shopping centre and high street, banner groups (various) and independent.
Benchmark results by key departments:
1. Magazines. 71% of newsagents reported an average decline (in units) of magazine sales of 9.1%.
Women’s Weeklies is the category reporting decline in more stores with 83% of all newsagencies in negative. The average unit sales decline for the category was 9.6%. Women’s Weeklies accounting for, on average, 25% of all magazines sold in a newsagency. What are newsagents doing about this? Not enough from where I sit.
I expect weekly sales to be even more challenged in the second half of the year as a consequence of the change in magazine distribution days. I think this will drive more people to get their magazines from supermarkets. I don’t want this to happen but I worry it will because newsagents will not fight to win retail let alone win magazine shoppers.
Magazine categories doing okay are: special interest, sport & leisure, craft & hobbies, home & living and partworks.
The number of newsagencies reporting declines above 25% is most concerning.
2. Newspapers. 81% of newsagents reported an average decline of 5.3% in newspaper sales. Regional newspapers did not suffer as much.
3. Greeting cards. 55% of newsagents reported average growth of 3.2%. Of those reporting a decline, the average was 3.8% with some as high as 18%.
4. Stationery. 62% of newsagents reported an average decline of 2.3%. This continues a trend in newsagencies in relation to stationery. What are you doing about it?!
5. Ink. 49% of stores participating in the study separate ink sales data allowing further analysis. 41% of these stores reported ink sales growth of 3%.
6. Gifts. 61% of the newsagents in the study have a separate gift department. Of these, 53% reported average year on year growth of 4%. This shows a slowing of gift sales growth. The way to arrest this is better buying and better in-store engagement. Standalone gift shops are vulnerable and we can take more business from them.
7. Plush. 7% of newsagencies report on plush sales in a separate department. I recommend this. A reasonable sales benchmark for plush is revenue equal to 25% of card revenue. In stores reporting on plush, sales are up on average 26%.
8. Tobacco. 62% of stores with tobacco products reported a decline.
9. Confectionery. 59% of store reported an average decline of 8%. This category is in trouble in our channel.
10. Toys. 838% of stores with the department reporting growth of just 3%.
Newsagencies continue to be good businesses to own. They respond to attention. There is good evidence of this in individual store data I have seen. The average newsagency with a retail model 10, 20 and 30 years old is the type of business in trouble. It’s unlikely to be doing anything to insulate against the changes we see impacting traditional lines.
Newsagents need to understand that growth comes from management and shop floor attention to products more so than agency lines. If the benchmark data I see evidence of local store engagement driving better outcomes. This is why I say newsagents need to decide if they are going to be agents or retailers.
The best type of newsagency to own continues to be the one where you have the most control over what you sell.
We create our own luck, now more than ever.
This benchmark study is not a piece of fiction. It’s from a broad cross-section of newsagency businesses. It reflects what is happening in newsagencies. For what it’s worth I think we need to:
- Fix magazines so we own the category again. Too many newsagents are doing the bare minimum and their sales are suffering. The declines I am seeing need not be as bad.
- Take stationery more seriously by mounting a challenge against the majors. I think too many newsagents have become lazy while others have taken this business from us.
- Refresh greeting cards to grow beyond our 30% (or thereabouts) of all card sales. Card companies live engaged newsagents.
- Run our gift department as if it was the only revenue you have got. You are competing with gift shops with little or nothing else. They are usually tough competitors. Unless you match them they will win.
- Use plush to attract shoppers who will buy other items. I own newsagencies that will top $80,000 in plush sales this year. I know what I’m talking abut.
Too many newsagents are waiting to be told what to do. It’s your business, your money at stake. Engage as if your future depends on it!
Thanks Mark for the effort you put into benchmarking Newsagencies.
Whilst I have good growth in key categories I am going to take the challenge of making Magazines sales our own. I have a Woolies in our centre and am quite positive that the change in delivery days will/has had an impact. I am making Mags my focus, I know for a fact that I can do Mags better than any supermarket and am going to set about achieving this. Mags definately have a future with us but am sure we will still need to work hard to make sure this is so.
I love a challenge…..!
We have just had a card rep in to review our sales date and we are up 41% off a strong base last year, but my plush and gift sales do not compare so I am focusing on these areas for the remainder of the year.
Thank you for the post Mark
The much maligned partworks are very important to magazine growth. They greatly help positioning us the magazine specialists but the distributors drop the ball badly with supply. I have finally worked out that if they short supply us (eg 1 copy supplied against 8 orders) then they cut us back to that 1 sold in the next issue thus perpetuating the short supply. A decent system would add back orders to the previous week or twos sales to calculate the following weeks required supply.
Brendan, they both ( Gotch and Network) seem to have extremely primitive computer code written for allocations, has perhaps never been updated since year 2000 of so. Not an area they think worth investing in I guess.
We still support Partworks, for reasons to do with repeat business, and word of mouth, both valuable to us.
Yes, make magazines our own! Will definitely show the boss this. We’re growing in supply in male magazines that we just can’t sell, which is now creeping into our female display, thus losing sales in our female magazines which do sell. The boss is afraid that sending back the male magazines that don’t sell, our subagent will cut back on our regular magazines that sell well.
Alex you’re a sub agent to a newsagent? If so, what’s your weekly magazine sales figure?
Mark, we receive our magazines from our local distributor (who works out of his shed, not a local newsagent) who also delivers our newspapers, as well as to local deli’s and newspaper home delivery. As an employee, I do not have access to the weekly magazine sales figure.
We’re getting a complete card re-plan done in the next few months as its looking a little tired. Cards do well for us.
Planning a strategy using discount vouchers with an added community buy in approach and would like opinions;
have a jar for each of our two local schools and if you don’t want your voucher, put it in the jar as a donation for the school, each month I’ll add them up and give the P and C the amount donated.
What do you think? Will it work to drive sales and customer loyalty? We’re a small country town but people are starting to shop in the next town as their groceries are cheaper than the local IGA. Need to get my shoppers back!
I wonder if Tobacco is still a category its worth it for newsagents to be in, especially given the recent announcement of an increase in cigarette taxes and all the new rules that have been introduced in various states that require the newsagents to put in more compliance effort (e.g. the rules about keeping tobacco products off-display)
Jonathan it comes down to profit. Any product not paying its way ought to be cut.
even tho tobacco is in decline, I still do $200k+ a year so at the moment its worth doing. Im also one of the only 2 retailers open that early in the morning so ciggies are a destination product for me that I can add a paper, drink or lotto product to.
Vicki,
I have thought but not implemented a similar community project. Whilst I have trialled Loyalty vouchers for the past month. Unlike Mark I have not noticed a deliberate attempt to purchase additional product. I have not got the response I was looking for and perhaps set the discount to low. The 30 to 60 c voucher I suspect did not inspire to buy something else. not even a pack of gum. This month I have reset the 5% to 10% on all cards, gifts and stationery and 5% on mags. i am advertising “thanks for your loyalty and support” and indicating the promo is for this month.
I think that anyone asking for sponsorship could be given the vouchers in return for their members support and I would reimburse the voucher value at end of month. 10% of their purchases. That means you help me and I will help you directly and proportionately. My concern with giving all the vouchers to the school is I would be giving away more than I am likely to benefit unless we get an appropriate increase in sales. Please let us know how you go and whether you get the growth you are looking for. I also have schools nearby and could adopt your strategy.
We have only recently implemented the discount vouchers. Have set 2.5% on magazines and Darrell Lea and 5% gifts stationary and cards, increasing % on larger sales.
Not sure if too low but would rather increase % if necessary than go in too high and then decrease.
Set minimum sale for voucher to $7.95.
Am interested on what others are doing and how they are going.
Wally, I’m thinking of setting the parameters at 10% on gifts, cards, toys and stationery. 5% on magazines and no voucher for lotto, papers etc. Minimum spend $5 or maybe $10. Voucher has a 28day expiry and you can’t earn a voucher on account book-ups or account payments.
My aim is to get my locals back shopping local.
The school idea could be changed to a different charity each month.
I guess I view the vouchers as a cost of doing business, like advertising but more focussed. I would anticipate that 80% of them would be used in any case, its just that extra 20% I would usually not need to honour that would then be going to the school or charity.
My intention is to try it for a month with the school idea incorporated as a way to promote it. Have the school component as a ‘this month only’ type of deal and then assess it and see where we want to go from there.
I hope it has the effect I want, but we’ll just have to see. 🙂
Is anyone able to advise the average transaction sale in Australian newsagencies for 2014