Australian small business Newsagents had a tough December quarter according to the latest newsagency sales benchmark study. Key performance indicators show traffic and revenue are down for many businesses in the channel.
Long-term core traffic drivers of magazines, newspapers and tobacco are challenges for newsagents. They can be lifted but it takes newsagents breaking free from the past.
Newer categories of gifts, toys and ink are growing for many.
The good news is the continuing trend – some newsagencies are growing faster than many retail businesses.
Here are the headline numbers:
- Customer traffic. 65% of newsagents recorded an average traffic decline of 2.9%.
- Overall newsagency sales decline. 67% reported an average revenue decline of 4.6%.
- Basket depth. 52% reported a decrease in basket size (items in the basket) of 2.6%.
- Basket dollar value. 18% of newsagents an average increase in basket value of 3.1%.
- Discounting. Is increasing with 21% of respondents using a structured loyalty offer.
- Circulation product sales. Newspaper and magazine sales continue to decline.
Now more than ever, newsagency businesses are not all the same. The gap between those in decline and those growing is greater than ever. Newsagents make choices every day that can help a business grow or hold it back.
It would be wrong to make a common statement about how they (we) are doing as there is no common situation.
Benchmark results by key departments:
- Magazines. 80.4% of newsagents reported an average decline (in units) of magazine sales of 6.75%. 19.6% reported average growth of 3.2%. The weeklies lead decline.
- Newspapers. 83.6% reported average decline of 3.4% in unit sales.
- Greeting cards.6% of newsagents reported average growth of 3.8%.
- Stationery. 72.3% of newsagents reported an average decline of 4.3%.
- Ink. 41% of stores report ink separately. Of these, 51% reported growth of 2%.
- Gifts. Surprisingly, 12.2% of newsagencies do not sell gifts. Of those with gifts, 86.2% reported average growth of 9.8% and 13.8% reported an average 6.3%.
- Tobacco. 38% of newsagencies in the study group do not sell tobacco products. This is a decline of 30% over a year ago. Of those with tobacco, 72% reported an average decline of 4.3% while 28% reported an average increase in sales of 3.6%.
- Confectionery. 62% of stores reported an average decline of 3.5%.
- Toys. 32% of stores reported toys separately. Of these 72% reported growth of 4.7%.
The strong are getting stronger and the weak are getting weaker. There is no geographic or demographic trend to this.
Product mix shift. The shift in product mix I have seen over the last two quarters is continuing. Within the expanding gift categories I can see some newsagents selling more expensive gifts. It is fascinating seeing these changes taking place.
I have not included my newsagency in this study. Here’s why: My numbers are outside the average and I did not want them to skew the results. I don’t mean this to sound arrogant.
My numbers all off a good base, are: Cards up 16% with Everyday Counter up 21% and it accounting for 32.02% of all sales, Diaries up 83%, Gifts up 69%, Magazines up 2%, Women’s Weeklies magazines (New Idea, Who, Woman’s Day, Famous etc) up 9%, Plush up 6% and accounting for 8.2% of overall sales and Toys up 42%. This business does not have lotteries and does not sell tobacco products.
Traffic is up 6%. Average sale value – up 8%. Average items per sale – up 3%. Overall average GP – up 14%. Each of these measurement points compounds on the other, delivering a very strong result for the business.
This growth is as a result of careful planning and pursuing what we stand for. This newsagency is in an outer suburban Westfield centre in Melbourne with around 300 stores including majors, another newsagency, two Coles supermarkets, Wild, Typo, several large independent card shops and twelve gifts shops. Competition is strong.
I include my own data here for comparison and to illustrate that I walk the walk with newsagents. When I encourage newsagents to try things it is because I do so my own business. I put my money where my mouth is.
What we do in this business any newsagent can do. Growth is achievable.
Newsagencies are good businesses to own. It would be wrong to say that the declines reported in this study reflect badly on the future of the channel. I think the results reflect badly on some operators, newsagents not chasing change.
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 has not changed: 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.
This year on year same-store newsagency sales benchmark study is an analysis of basket data from 167 newsagencies: city and country, shopping centre and high street, banner groups (Newspower, Nextra, newsXpress) and independent. To be included, a newsagency must have been using the industry standard Tower Systems newsagency software for both analysis periods and be compliant with industry data standards. NOTE: I have done these benchmark studies for many years, drawing on my experience with the Tower newsagent community. Around 63% of newsagents with a computer system use Tower. I have eliminated data from businesses where I knew that unique local factors impacted on the sales data.
The strong might be getting stronger and the weak weaker, but the real question is what portion of the herd falls into what category. The above figures indicate that a large majority of the herd currently fall into the weaker category.
Newsagency industry stats as per the NView publication show that in the five years 2006 to 2011, one newsagent closed every two weeks, in the three years since 2011, seven newsagents are closing per week. Thats alarming.
I agree with all you say about controlling what happens in your store, but in reality the numbers suggest that even some very good retailers in the channel aint going to make it. Just like some very good independent hardware store owners didnt make it.
Has there been any quarter when newsagents have been jumping for joy. Every time I read this blog there is a lot of complaining and navel gazing. Just get out and start a new life that may provide less stress and more enjoyment. I did and I am so glad I bit the bullet.
I made a valid comment that obviously touched a nerve with someone and the comment was deleted. WTF!
Andrew, no, your comment was not deleted. It was never published as the blogging website saw you as a first time commenter. It though this because you used a different name. You have recently commented as Andrew t, Andrew j and Andrew L. Also the email address you enter changes.
When the blogging platform thinks you are a first time commenter, your first comment is moderated as I have said here before.
I have not been able to approve your comments sooner as I have been on a flight to Perth for four hours.
Now, to your point. I have published many benchmark studies with good news, including this one. There are newsagents reinventing and loving their businesses, newsagents making money.
Thanks for keeping on visiting.
James, I first spoke out publicly about the need for newsagents to control their businesses and embrace change in 1999, at the time of deregulation. I’ve written and spoken about it many times since.
Sure people can do what they want in their own businesses. However, I was right 16 years ago and I am right today. We can all build more valuable, more profitable and more enjoyable businesses. Let’s do that.
I appreciate this comment sounds arrogant. I don’t mean it to be. Some days I wonder how many times newsagents need to hear the embrace change message before they really do embrace.
I run a few businesses and they all face challenges like the disruption newsagents face. We embraced change early and are benefiting as a result.
Retail is constant change. In some ways I don’t see my business any different to running a clothing store. Seasons, trends micro seasons etc. Our centre has suffered major foot traffic decline due to the opening of a new supermarket in our area. On top of this a landlord that has no concept of marketing and no experience with shopping centres. I do what I can to challenge them however if sat around waiting for it to pick up I’d go broke.
My point is that retail is hard work and often has external forces outside our control but gosh it can be fun too. I’m so glad we rolled the dice and took the risk to change as I now love our store again. We have turned a declining business around and we steer our own ship now. The marketing is crap in our centre so now I do my own marketing (there are plenty of options without spending huge $$$) My store is now a destination and at the risk of sounding arrogant, people are chasing me instead of the other way around. Do I still have to work on my business? Yes, but it’s not work when you enjoy what your doing. If your business is declining then change. Not next week,next month….tomorrow.
Great comments Stacey.
Just on Stacey’s comments. Is there a centre where a retailer doesn’t think the marketing is crap? Please answer.
I pay about $400 a month which I see as extra rent. My marketing levy is not an investment. I’ve had meetings with other retailers in my centre, then took our collective ideas to the marketing manager who nodded, agreed and said all the right things. In the end it was just lip service and nothing has changed, that was 5 years ago.
So, like Stacey, I just get on and do my own marketing (with help from a marketing group) to the best of my ability.
Sorry to get off topic.
Every small business is a challenge. Everybody has a piece of what used to be somebody else`s pie (us Newsagents included). We can sit around and moan and complain or we can grab the bull by the horns and go along for a great (if not a little bumpy) ride. Our decisions and strategies are ours to own. Our businesses are ours to grow and prosper.
“Proactive” is a term that gets thrown around a little too much but it really is the proactive business people that are surviving. Yes there has been some very good businesses that have been forced to close (probably because of greedy Landlords and some other external factors) but there is also a great number of people who have challenged themselves and their colleagues to reach new heights in growing their businesses.
It`s not all doom & gloom.
We just need to take ownership of our future, relying on others (read associations & governments) to hold our hand is always going to end badly.
Those that know me know I belong to newsXpress (no, this is not an ad for nXp). Whilst I love being a part of this group and what they help me achieve in my business I will still only get out of it what I am prepared to put into it. If you are part of a marketing group or are thinking of joining any of the groups my advice would be to embrace it with all of the enthusiasm you can. If you are wanting somebody to hold your hand you are not going to achieve the results but if you put your hand up and want to take the advice on board then you will reap the results. Become active, get involved, own the opportunity….success will come.
Just on Dean`s comment, yes centre marketing is crap everywhere. I got some very good advice on that years ago by a very smart man. He told me to think of shopping centre marketing as just extra rent. They either spend it badly or not at all. Just another example of us owning the problem….by dealing with it in a positive mindset.
Anyway I`m off to Fraser Island for a few days of R&R and maybe a few dozen beers (with some very sociable peers) and endless hours of fishing
I am looking for another business to buy at the moment newsagents are not on my list anymore its sad really I just don’t see any upside in owning a newsagent?
Peter you must not have faith in yourself then. Any newsagency is a good business to buy if you are a good retailer and can acquire the business for a fair price. There is plenty of upside for proactive engaged newsagents. You have to look beyond the orders you may have in your mind. Sure, it’s hard work. But it is also personally and financially rewarding.
Peter you must not have faith in yourself then. Any newsagency is a good business to buy if you are a good retailer and can acquire the business for a fair price. There is plenty of upside for proactive engaged newsagents. You have to look beyond the orders you may have in your mind. Sure, it’s hard work. But it is also personally and financially rewarding.
Run Peter!!!! run as fast as you can. If James’s post [response no.1] is correct and there are now 7 newsagencies a week closing then that alone should be a big enough indicator that the newsagency industry is in decline. Whilst there are a lot of very successful and profitable newsagencies out there [good luck and well done to you all] you can rest assured there are equally as many who could not say the same. My suggestion to you or anyone else contemplating buying a newsagency at present is to contact some of those ex newsagents and ask what went wrong in their case. Trust me not all of them have been poor retailers AS HAS BEEN SUGGESTED AT TIMES, a lot would have suffered from circumstances beyond their control. The more obvious to me are: printed media is in decline due to digital, magazines are in decline for the same reason, lotteries are pushing hard for customers to go online also and by engaging in negotiations with the duopolies show where their loyalties are, landlords don’t care about circumstances they just want their rent and newsagency representative bodies have little or no influence and are proving themselves to be out of touch by showing their support of the proposed magazine trial. These are but a few reasons Peter and any investigations on your behalf would unearth many more.Long hours 7 days a week 364 days a year. RUN!!!!!
Ken, we are not seeing seven closures a week. My opinion based on experience and knowledge of closures is that in most cases they are due to poor management decisions. Print media decline is not new. Smart business management can navigate through and around this and find new traffic and revenue elsewhere. Newsagencies can be good businesses to own.
Peter, there are closures in all types of retail. In the newsagency industry there are plenty of newsagents expecting somebody else to take all the risk for them. They want somebody else to fix their problem. These are the ones who are closing or at risk of closing.
Ken is correct with some of his comments, that print media is in decline and Lotteries are looking for other sights. But some of these measure will drive out the newsagents not willing to change there business. In the long run it will get rid of the poor performers and strengthen the better performers.
There are plenty of opportunities to either purchase an established quality and reliable newsagency. Alternatively there are options to take over an agency in decline or which has closed and do better than the previous owner.
My benchmark results for the last few years have been logging the gap between those growing and those not. The gap reflects the value and cost of choices made.
Mark you are measurement and performance management oriented. According to the ANFs own figures as published in the most recent NView annual industry overview report, at the end of 2011 there were 4700 newsagents, at the end of 2014, there were 3663. Thats 1,037 less in 156 weeks. My maths tells me that’s the best part of 7 per week around Australia……gooornnne. Again I state, that’s alarming.
James if the ANF figures are accurate they would be alarming. I doubt their accuracy. Talking with suppliers at my supplier forum a couple of weeks ago, there was consensus that 150 newsagencies closed last year. That is three a week. I think tis is a more accurate figure.
Mark;
It really doesn,t matter if it is 3 a week or 7. EVERY closure weakens the channel and makes the duopolies and other opposition stronger.
Ken I don’t think very closure weakens the channel. A smaller channel of stronger businesses is better than a bigger channel of weaker businesses.
Mark, I cannot speak for the suburban newsagencies but whenever rural shops close and people are forced to the larger centres they will go for the convenient one stop shops like woollies and coles. Get in get out
Ken where there is only one newsagency serving an area, shoppers miss out if it closes. his is why newsagents need to work hard at being profitable enough to remain open.