Here’s an analysis I did yesterday for a newsagency in need of reinvention. Before that can be done they need to fix data issues so that they have meaningful data measurement. This is why the analysis is incomplete compared to what I would usually do.
Thanks for giving me the opportunity to look at your sales data for July through September this year compared to last year. The numbers make for sobering reading but I know you understand that from the changes you are already making in the business
Over the thirteen weeks in this period your non agency sales were just below $20,000, or $1,461 a week. Based on the product mix I estimate your current gross profit to be around 28%. This gives you $409 a week out of which to pay wages, rent and operating costs.
A traditional newsagent would try and build off of traditional newsagency lines and while this could work over time, I think the better approach for your business would be to look at the shop as a blank canvass, using this to build a fresh retail offering to serve the needs of your specific area. For example, with the developments going on nearby consider the people purchasing there – if they are families then their interests and needs will be different to if they are retirees.
In your data I can see that magazines currently account for 32.40% of your sales. But at under $500 a week it is very low. Look carefully at the titles selling as this can provide an insight to your customers. While I’d chase magazine growth if I were you, my core focus would be on higher margin lines, lines that can generate their own traffic and for which you can promote your sales.
Newspapers account for 12.84% of your sales. Add newspapers and magazines and you have 45.24% of sales delivering below average gross profit. While newspapers and magazines generate traffic, these products are also available in other retailers near you so they do not offer a major point of difference.
That gifts account for 7.59% of sales is good news. This is an opportunity in your data. Also, considering what is and isn’t nearby, you have an opportunity to be a destination store in the gift / plush / toy space. But developed over time and within a conservative capital expenditure budget.
Today your business would most likely be known as a corner store or a small local old-school newsagency. I think the future for you is to be known for something completely different. A fun shop, somewhere I can find a gift for any occasion. Somewhere I can shop locally for what I might otherwise drive ten of fifteen minutes to find. Convenient gifts, stationery, toys and items likely to sell to these shoppers.
Achieving this requires careful thought on the type of business you want to create. research you can do on this is to look carefully at your card sales – to see what people are buying and why. For example, if kids birthday card sales are strong what can you do to leverage this? Likewise confirmation / christening / baptism cards. While your card sales are low, $207 a week, the data should at least give you an indication for guiding expanding your gift range.
The other department to assess is stationery. What can you see in this? For example, is your stationery business everyday or office related? What’s popular for you? In one newsagency recently a third of their stationery sales were art and craft related products being sold for kids projects. This opened their eyes to opportunities in the kids space that they had not considered as they were looking at stationery sales as adult focused sales. So my question is – what gold can be mined from your stationery sales data. I’d be happy to get someone to help with this if you would like.
The challenge is for you to remove what’s not working and rebuild within budget constraints. I’d do this section by section, from the front of the shop back. Make the front of your business look full and vibrant, reflecting your aspiration to grow into a respected and talked-about local retailer. Nail just one area of the business and then move to the next.
Using your software right is critical. Scan every single thing you sell. If you don’t do this you do not have good data and without good data you cannot make good business decisions.
You can’t turnaround a business in which you are not measuring the performance of what you sell. This business currently is not properly measuring what they sell – to their detriment.
There is no excuse for not measuring, not scanning, everything you sell. You’re in business to get a return on your investment and the only way you will achieve that is if you are efficient and growth focussed. Neither can be achieved without proper measurement.