Newsagents increase magazine sales in December quarter

The October – December 2013 newsagency sales benchmark study is the first in years to report more newsagents achieving growth in magazine sales than declining. This is great news. Digging deeper into the data I think the growth is in part due to engagement with magazines and in part due to these businesses attracting shoppers for a strong gift or card or plus (or a mix of all) offering.

Whereas in the past newsagencies have attracted shoppers for magazines, newspapers, lotteries and cards, newsagencies today that attract shoppers for gifts, plush and cards first are more likely to achieve a deeper and more valuable basket and this different shopper engagement flows on especially to magazines.

In this newsagency sales benchmark study more than any in recent years I can see more newsagents changing their businesses, pursuing new opportunities and achieving measurable results.

Here are the results of the benchmark study:

Customer traffic. 59% of newsagents recorded an average decline of 2.9% in transactions.  11% reported no change and the rest an average growth of 3.8%.

Overall newsagency sales decline.  61% reported an average revenue decline of 8%. Of those reporting growth, the average was 7.2%.

Basket depth. 54% reported a decrease in basket size (items in the basket) with an average decrease was 1.9%. 8% showed no change. The rest achieved 2.3% growth.

Basket value. 32% of newsagents reported an average increase in basket value of 2.6%.

Discounting. 14% of respondents engaged in significant discounting.

The gap between growing and contracting newsagencies is bigger than ever. This presents an extraordinary problem for the channel as growth and decline separate newsagents and their businesses from each other.

Benchmark results by key departments:

1. Magazines.  41% of newsagents reported an average decline (in units) of magazine sales of 8.2%. 7% reported no change and 52% reported year on year magazine sales growth.  The average growth was 6%.  This is the headline –NEWSAGENTS GROW MAGAZINE SALES.The newsagents achieving growth saw this in Women’s Weeklies, Children’s, Home & Lifestyle and partworks. It’s a thrill to finally be able to report more newsagents from the benchmark pool growing magazine sales than declining.
2. Newspapers.  87% of newsagents reported an average decline of 4.9% in over the counter newspaper sales.  More regional newspapers saw declines than usual.
3. Greeting cards.

57% of newsagents reported average growth of 3.9%. Of those reporting a decline, the average was 5.3% – in line with a growing gap between growth and decline. Everyday counter cards were strong through this quarter with some newsagencies reporting double-digit growth.

4. Stationery.  63% of newsagents reported an average decline of 2.4%. This continues a trend in newsagencies in relation to stationery.
5. Ink.  46% of stores report ink separately. Of these, 65% reported growth of 7%.
6. Gifts.  71% of the newsagents have a separate gift department. Of these, 89% reported average growth of 10%.  In ten stores, gift revenue exceeded card revenue.
7. Plush. 9% of newsagencies report on plush sales separately.  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 25%.
8. Tobacco. 86% of stores with tobacco reported an average decline of 11%.
9. Confectionery. 58% of stores reported an average decline of 14%.
10. Toys. 45% of stores with the department reporting growth of just 12%.

It is clear from the data in this study that successful newsagencies are changing more rapidly than the not so successful newsagencies and that the changes themselves are significant. It is a thrill to see newsagents chasing more traffic, better overall GP and deeper baskets.

Newsagencies continue to be good businesses to own. They respond to attention.  More than any benchmark study in the last three years, this study supports this belief. That so many newsagents are reporting growth is magazines sales is a testament to the active engagement of those newsagents and their employees in this traffic-critical category.

The best type of newsagency to own is the one where you have the most control over what you sell and where you generate traffic for several product categories where average gross profit is 50% or higher.

The most important advice I have for newsagents is: Run your business today as if today is your pay day. Too many newsagents continue to run their businesses as if their pay day is when they sell. This will not happen.

Newsagents: look at your business, your sources of traffic, your average GP. Your success will come from many small steps.

Suppliers: Get smart in your engagement with newsagents. Trust them. Treat them with respect. Share their mission to grow traffic and GP and basket value. Give newsagents complete control over what they sell of your products.