Benchmarks provide business performance data points against which similar businesses can compare their performance.
Here are the recommended benchmarks for newsagencies:
- 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 continues to sit at 28% to 32%. In an engaged newsagency, I think a GP% goal of 45% is appropriate.
- Minimum stock turn. That is, the number of times you sell an item in a year. This is a calculation based on current stock holding against total revenue for a year. Here are suggested stock turn goals by key departments. These numbers are based on what is needed at a minimum for a department to be valuable to you:
- Cards – 3. The average sits at 1.75. This is too low.
- Gifts – 7. This means a tight mix of products turning quickly.
- Toys – 5.
- Plush – 5.
- Ratio of Gift revenue to Card revenue: 100% minimum. The goal ought to be 200% or more. If you do $50K a year in cards, toe goal is to do $100K a year in gifts.
- Revenue per employee – $250 an hour minimum.
- 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.
- Overall revenue mix percentage targets: Cards: 30%; Gifts/toys/plush: 35%; Stat: 10%; magazines/newspapers: 15%; other: 10%.
- Category performance notes:
- Stationery. Pens and writing products should account for more than 30% of revenue.
- Magazines. Crosswords should account for more than 6% of unit sales.
- Lifestyle cards. Should be more than 40% of total card sales. growth should be 12% year on year at least.
- Impulse counter items: (NeeDoh, sensory, putty, world’s smallest) should be more than 10% of toy and related sales.
- FLOORSPACE ALLOCATION: This is very much a store specific thing. That said: Cards: 20%; new traffic lines: 5%; Gifts/toys/plush: 35%; Stat: 8%; magazines/newspapers: 10%; other products: 10%; office/back room / counter: 10%. You don’t make money from your back room.
- Mark-up goals: Stationery: 125%; Gifts 110%; plush: 110%, jewellery 300%.
- 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.
- 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. (See above).
Now, these are goals. I share them here for consideration. You should set your own, based on your own situation. The key is to have goals and understand why they are what they are. That’s the reason I have published this information developed by my POS software company Tower Systems and my newsagency marketing group newsXpress – to offer something of a starting point for individual newsagents to consider.