Retail newsagents in Western Australia make 7.8% gross profit from selling the weekend edition of The Australian Financial Review while east coast retail newsagents make 10.6% for the same product. Here is the evidence. First up, the WA notice:
Now, the east coast notice:
Both of these notes come from Paul Munro, Director, Circulation Sales & Operations Nine Publishing, who is based in Sydney.
They value Western Australian retail newsagents less than their east coast counterparts, yet labour and occupancy costs in WA are the same as elsewhere.
Then there is the broader question of whether stocking the AFR is worth it to any retail newsagent. By the time you unpack the product, count what you have received, place it in-store and do other requisite overhead, 10% does not cover costs and that does not even account for theft, for which the retailer is responsible.
Maybe the newsagents who no longer sell newspapers have made the right move.
In the past when I have raised margin with newspaper and magazine publishers and mentioned supermarkets, they have said supermarkets get the same margin. When challenges, a couple have mentioned that there are other fees paid to supermarkets for stand placement or, back in the day, guaranteed checkout pocket placement. I am not sure if Nine Media has any such arrangement in place for supermarkets.
An adult retail employee working in a newsagency on a Saturday is paid $36 an hour or more. Assuming trading 7 days a week and considering average occupancy costs outside of a shopping centre, the daily rent and related costs for an average size retail newsagency will bet $250.00 or more. So in just these two cost points, a retail newsagency needs to cover $538.00 in costs. Based on the industry average GP% range of 28% – 32%, they need sales of $1,793 to cover costs.
But that’s not accurate as it’s based on average GP%. A product like the AFR on the weekend drags the average GP down. Newsagents selling it rely on better margin products, like cards that achieve 60% GP and more, and gifts that perform similarly, to subsidise poor margin products, like newspapers and magazines.
Publishers created the Australian newsagency channel in the 1800s. They controlled us for decades. Then, they abandoned us. Today, they disrespect us with paltry margins. They make matters worse with out of date practices that waste time and make us uncompetitive.
They price their product as if it has other benefits, like attracting shoppers. That may have been the case ten or more years ago, not today in 2024. Newspapers are offered as a service, a loss making service.
I suspect publishers treat newsagents this way because they know newsagents will not do anything about the situation.
Thanks Mark for bringing this to attention of others. As a WA retailer I am absolutely insulted by this.
The publishers have been chipping away at our margin for years. We are fools for allowing them to do this unchallenged.
This is disgusting by nine media. I sell 4 Fins a day and I lose money on them. I am done with this, especially the second class citizen treatment.
I’m glad you wrote about this Mark. I’m a WA newsagent and had to call my distrubutor yesterday to confirm another price rise but no rise at all for our commission. After he confirmed this I requested to cancel all deliveries to us of the Financial Review and today is the first day without. Good riddance!
Let’s unpack this a bit further. If you are a WA newsagent and sell 5 copies of the Weekend AFR, you are making $2.1320. Unpacking the stock, checking the quantity, placing it for sale, counting returns and filling in returns paperwork will cost between 5 and 10 minutes for the day. That will cost the business around $6.50 in labour. The newsagent selling 5 is already behind. Retail space and product theft puts them further in the red.
For a pro-business newspaper publisher such as Nine Media, their treatment of newsagents represents poor social responsibility, a corporate big business selfishness. but, then, their treatment of small business newsagents does reflect their disdain for labour in some of what they publish.
Just read the FR will stop being distributed in WA as the seven controlled printing press is doubling their costs with no reason why. Bit of karma for a business that does the same to its retailers here in WA.
Had to scoff at their line below
“Seven West Media’s decision to unilaterally double the contract price is also likely to hurt the distributors and retailers downstream.”