Country town newsagency business performance analysis

Yesterday I completed another newsagency performance analysis, this time for a regional newsagency. It’s an interesting business with some terrific innovation (coffee, old style lollies) helping yet traditional products (stationery, magazines, newspapers) pulling them down.

The challenge is breaking free from a traditional and externally controlled past and creating your own future. It’s a common challenge newsagents face.

Here are my thoughts:

Thanks for giving me the opportunity to comment on your figures. I’ve done some research to ensure I have context and can see your local population is 2,500 and you’re almost 700k from the capital. I can see from Google street view that you’re in a high street situation with windows ion the street. The images suggest that heritage is important in the area.

I can see in your data comparing June through August 2013 with 2012 that business is tough.

1. Overall revenue. Down 8%.
2. Customer traffic. Down 7% or 2122 sales over the period. This is the biggest concern in the data. Traffic is the lifeblood of a broadly bases regional newsagency. What are you doing outside your business to bring new shoppers in?
3. Cards. You sold 973 cards over the three months, an increase of 15%. While this is good, the changing nature of traffic generation for newsagencies means you need more from cards. When was the last time you refreshed your range? I can’t tell too much about what’s happening since most of your card sales are in unknown category – meaning the software has not been told how to allocate stock you bring in. This can be easily fixed.
4. Cigarettes. Sales are down 13% and you’re doing around $2,500 a week in sales. Are you managing stock carefully? i,e, are you recording based on sales using the reorder report. It’s easy to do.
5. Confectionery. Your 71% increase in revenue to well over $1,000 a week on the back of your old style lollies is working a treat. I also love your 339% increase in coffee sales to 1,160 units in the three months. These are two excellent moves you need to continue to drive harder. They are points of difference for you in your area – what are you doing to promote to passers-by on the street?
6. Lotto. 27% increase in sales. Excellent result. Keep up with what you are doing – having fun and providing a good shopping experience (I can tell from your Facebook page).
7. Magazines. Even though your sales are down 8%, your numbers are line ball with the average. What makes it hared to assess any further is that you don;t appear to be bringing in invoices electronically. This dumps all magazine sales into one category. It can be easily fixed so that there is more meaningful data for you to use. magazine sales data can guide plenty of other business decisions.
8. Stationery. Sales are down 10%. Based on your sales your total stationery stock holding should be around $10,000. If you;re higher then either sales need to increase or your stock holding needs to decrease.
9. Toys & Gifts. This is a break out success story with an 85% increase in revenue to over $500 a week. Note: I;d separate reporting of toys and gifts into separate departments. By not using meaningful categories I can’t comment too much more other than to note that based on your card sales I think you could grow gift sales by more than 100%. You can do this by using your =card category sales data to guide gift buying opportunities.

I’ve also looked at the full year on year comparison report you sent. I can see that revenue including lottery commission is around $680,000. Once I take into account your agency business (bus tickets, visa cards, postage etc), I estimate that your overall gross profit is between 27% and 30%. This is not enough.

Sometimes a business with less revenue but a considerably higher GP is more valuable.

If I were you I would sort out the data issues and get products into meaningful categories. I would then assess sales at the category level with a view to increasing gifts, toys, plush and stationery. At the same time I would also review my pricing policy and charge as much as I could for what I sell. You’re a remote business meaning you have a cost of doing business that should be reflected in your pricing. I would also make bold strong use of the shop window. Plus I would work to find a way to letterbox all homes within easy access to the shop to send flyers every two weeks promoting the business – especially coffee, confectionery and gifts.

It can be hard in a small town with a small business and limited financial resources. I have a graphic design person full time in my software company and would be happy to create flyers free for your use to help you market the business. The rest comes down to good product selection and hitting the footpath promoting the business.

In considering what to sell you do need to look at who is nearby you that you may hurt with expanding your range. I think you need to look at them thinking that it’s more important for you to survive than them.

I hope the comments help. I apologise for being blunt. Let me know what you think and send through any photos for specific display or other suggestions.

Many newsagents are in businesses that are being impacted by changing economic conditions as well as changing conditions around products being sold. It is important we chase change ahead of the wave. This business is doing that in several areas and while this work is delivering results, they need more.

We’re in an economy and retail channel that require is to be more vigilant than ever. We have to be the change agents in our newsagency businesses. No one else will do this for us as valuably as we can do it for ourselves.