WARNING: In this post I reference newsXpress as I draw on experience gained through my role with newsXpress. I issuing the warning to get it out of the way. If you don’t want to read about a newsXpress initiative, stop right here.
350 newsagencies will close in Australia this year.
Most newsagency closures will be suburban newsagencies, high street newsagencies in cities and towns across Australia, usually in strip situations with only a few supporting retailers in the strip.
If you wonder where I get the 350 number from, it is from several major national suppliers to our channel. The number is similar to the closures last year and lower than the number some anticipate for next year.
I don’t want 350 newsagencies to close, but they will. Many don’t need to.
For many newsagencies, being able to open the door each day is a struggle. These businesses are at the front line of the combined challenges of declining newspaper and magazine sales, the decline in tobacco product sales, the migration of lottery sales online, the encroaching on traditional newsagency lines by supermarkets, national retailers and discount variety stores and the resurgence of Officeworks – in an environment of oversupply of major and regional shopping centre space, ever increasing labour and lease costs and tough banking conditions.
While some have confronted these challenges by diversifying, many have not. This is where most of the closures are occurring, in traditional newsagencies relying on papers, magazines, lotteries, stationery and not much else.
I understand the challenge of change and that for someone who got into their newsagency business twenty or more years ago they may not see themselves as a retailer, preferring to be an agent. I saw this recently, in non newsXpress store, in country New South Wales. I have known the newsagent since the late 1980s. While the business was always well presented, clean and tidy, it was only ever a traditional newsagency. Competition passed them by. They knew they had to change. Instead, they faded and, recently, closed.
I would speak with this newsagent at trade shows and they would acknowledge the need for change yet they stood still. That is their decision to make.
Not all high street city and country newsagencies can be transformed. Space, location, capital and other factors could get in the way. My advice is to at least have a go for you know the trajectory of doing nothing whereas doing something could be better, even if capital is limited.
This brings me to the key point of this post, the opportunity of transformation through the focus of one business, newsXpress Bell Park. This is a high street newsagency in the small suburb on the outskirts of Geelong in Victoria. To understand the situation of this business, take a look at this photo:
I have known the business and its owners for twenty-five years. They have run a good business, but a traditional business. That started to change two years ago when they joined newsXpress. What they have done and are doing is an example of transformation that can occur in a high street situation.
By reducing overheads for declining products, changing the shop floor without using a shopfitter, introducing new, traffic generating, product and promoting the business outside the business with stories of new products to uncover people who may never have visited before.
Last Saturday I was in the business for a special event to mark the twenty-fifth business anniversary and to launch a new range of exclusive collectible products sourced through newsXpress. The event was a testament to what can be achieved in a high street situation.
Having the owners point out new faces to the business was a thrill. Watching customers happily spend hundreds of dollars in a single purchase was also a thrill. Having customers say the shop looks nothing like a newsagency was wonderful.
Andrew and Jill, the owners of the business, have made many small moved in the business over the two years. Each step is a venture into a new area, in pursuit of a new future beyond what it might have been for a traditional newsagency. How they have done what they have done would not be obvious if you walk into the business. This is good as it is a local competitive advantage.
New traffic generation has been a key goal along with greater shopper value. Both strategies are complimentary yet different. They involve buying, location, merchandising, loyalty and marketing. They require you to work on your business differently, not as a high street newsagent.
What they have done and are doing is an example of what a currently traditional newsagency can do.
I get to see plenty of newsagencies like newsXpress Bell Park, including some non newsXpress businesses, that are transforming or have transformed from the dying traditional newsagency into a more relevant retail business that in parts of the business respects some long-standing newsagency lines but for the most part is this new exciting business offering locally what shoppers might have driven to a city to purchase.
There are opportunities for high street newsagents who want to grow to redefine their businesses outside the traditional newsagency model. But time is short. It starts with being committed to change. This is why newsagencies close, because the owner procrastinates and they drown by being traditional.
I will wrap up with some photos from the event last Saturday. I was busy talking to people and did not get photos at the peak busy time.
Absolutely ! Spot on !
I would also add to your list of challenges “the landlord”. They also must embrace change, especially where they dominate ownership.. Sometimes they need to step back from their rent demands and entice a new breed of retailer. Keeping properties empty to maintain an artificial market rent level will deter the best and most ambitious.
Well done Andrew & Jill
Part of the problem is that the rent on a retail property factors into certain calculations of how much a property is worth (including the calculations used by banks and other lenders) so if the landlord lowers the rent to get tenants, the value the banks/lenders use will drop and that could lead to the banks/lenders taking some sort of action.
agree rent can’t just increase double by end of the lease. there are so many shops are closing in shopping centres and landlords are short sighting chasing for temporary tenants who are not there in few years time and they don’t care about mix tenants for benefit of the centre. iam sick running retail in shopping centre which runs by abunch of idiots
Mark,
Just out of curiosity do you have any figures on how many of the 350 newsagencies that closed in the last 12 months actually embraced change but still failed to keep their doors open and what were the main causes for their failures
Ken I don’t have data on enough of all to state as fact. What I have is knowledge of around 100 based on direct knowledge, supplier comment and newsagent comment. I am working on a separate post about this.
There is no doubt that traditional newsagencies are more likely to close than those that have tried and / or embraced change outside the traditional.
Jonathan @ 2 you are right.
A consultant told us a couple of months ago that if rent decreases so does the property value, hence a landlord may throw thousands of dollars at you to put toward a fitout, but not lower their rent.
This obviously does not help the bottom line of a business, and the excessive rents are why there are so many vacant premises, not just newsagencies.
To make a shopping centre look full they put in pop up shops at low rents and no outgoings costs. These don’t go on the balance sheet for leases but through a different process.
Congratulations Andrew and Jill, your store looks fantastic and is an inspiration to others like us in a similar retail environment.
Great to see a positive story and one that I’ve found more than a little inspirational as someone who has started moving a traditional newsagency in a new direction over the last couple of years.
I will say, and this will undoubtedly annoy some readers, that when I looked at marketing groups (and I’m not a member of any) NewsXpress was the only one that seemed to offer something non traditional and a way forward, so hats off to both the owners of the business in following the guidance and to the group for assisting people willing to change their futures. It is making me think more of my own future and changes again (so perhaps your post has worked Mark ! 😉 )
We have had 2 newsagent subagents close this year, one in a shopping centre and 1 in a strip. Another one in a different shopping centre closed a few years ago, twice in under 12 months under 2 different owners
Why is that an important omission ?
I’m also an LPO.
Many LPOs are also struggling as much as newsagancies due to mismanagement by AP and some of their business practices.
I didn’t write about it because it didn’t cross my mind. Having been in the shop, understood the business, its journey and the numbers, it is not relevant to what I wrote and the significant achievements of the business.