Updated newsagency performance benchmarks

Further to a discussion here, I decided to publish updated newsagency performance benchmark targets, to reflect the rapidly changing nature of our channel. These are some of the benchmarks I have provided to newsXpress members, but not all.

I say rapidly changing nature of our channel because that is what we are seeing. The traffic mix is changing as is the mix of what successful newsagents sell.

The benchmarks below are guidelines. They are subject to change as the suggested business model evolves.

It is important to have a goal, a target and that is what these benchmarks represent in my view:

1. Gross profit: this is the goal gross profit for all product sales not taking into account any revenue or costs related to any agency business. The traditional newsagency average is 28% to 32% as shown through the Newsagency benchmark Studies. I think the goal today has to be at least 45%.
2. Ratio of Gift revenue to Card revenue: 50% minimum. The goal ought to be 100% or more. If you do $100K a year in cards, target to do $100K in gifts, or more. NOTE: Gift is gift, not toy, collectible or other items. They have their own benchmarks.
3. Revenue per employee – $250 an hour minimum.
4. Revenue PSQM $4,500 – $8,500 depending on country versus city / high street to shopping centre and depending of the product mix. Higher GP lower revenue required.
5. Overall revenue mix percentage targets: Cards: 25%; Gifts/toys/plush: 25%; Stat: 10%; magazines/newspapers: 20%; other: 15%.
6. FLOORSPACE ALLOCATION: Cards: 25%; Gifts: 25%; Stat: 8%; magazines/newspapers: 15%; other products: 15%; office/back room / counter: 12%. It’s rare you make money from an office or store room.
7. Mark-up goals: Stationery: 125%; Gifts 110%.
8. Occupancy cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Location and situation are a big factor in this benchmark. For example, a large shopping centre business will have a higher cost than a high street situation. NOTE: It is easy to say the landlord is responsible for this ratio. As the retailer you are responsible for margin and revenue.
9. Labour cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Labour cost should include fair market costs for all who work in the business.

These benchmark figures don’t all need to be considered together. You can pick one, measure, work on it, measure and adjust as the numbers indicate. The goal is to continually improve to pass the benchmark and work on the next.

I acknowledge these benchmarks are not close to what newsagent associations have recommended or would recommend. My focus is on the future whereas their focus tends to be on old-school products and services. Success in the future comes from diverging dramatically from the past including past benchmarks.

If you have any questions about any benchmark, please contact me. I’d be glad to help.