Author: Mark Fletcher

Two newsagents have advised their colleagues in a public forum in the past week that they are shutting up shop. Increased rents and operating expenses in a business with fixed prices and margins are among the reasons cited.  While diversification can help address these challenges, for many newsagents it is not an option in their location.

I’d like to see newsagent suppliers, industry associations and others invest serious effort into this challenge of newsagents closing their doors and exiting the channel.

The shrinking of the newsagency channel was a predicted outcome of the decision by the Federal Government in 1999 to deregulate the distribution of newspapers and magazines. The government reduced the viability of newsagencies with their decision yet did not offer any financial support for families – to allow them to exit with dignity.

The Federal Government put around $65,000 on the table for each pharmacy which closed as a result of their competition based decisions in the 1990s. Nothing for newsagents. They stump up cash for auto workers, farmers and others when circumstances make life tough. Nothing for newsagents.

There are newsagent families doing it tough because of the circumstances created and permitted by the government in 1999. While they deregulated the newsagent side of the channel, they did not address the supplier side. Newsagents continue to be treated as if in a regulated environment. The compliance costs are high with no genuine reward for above and beyond effort. In other competitive markets there is reward for effort, not here. This is one example of how deregulation has not served newsagents fairly.  There are plenty of others.

I am not against deregulation.  I accept that it was necessary.  However, I would like to see it implemented fairly.  I would like to see newsagents be given greater competitive opportunities.  I’d like to see them permitted to use their collective assets to cut operating costs as their suppliers have done.

Newsagencies face rental increases of 5% a year, labour increases of around the same. Unless we can negotiate terms which provide business like flexibility and have mechanisms through which we can cut costs from the supply chain of core products like magazines and newspapers, more will reduce their commitment or exit altogether.

Suppliers ought to take notice of the stories of those exiting the channel. There are lessons to learn, for the future.  An open debate about these issues is essential to our collective viability.

We have decided to put a price on the Forest Hill business.  After a few months of it being listed we have found that people are reluctant to look at the numbers and make an offer.  They prefer a price as a starting point.  This says something about how newsagencies are purchased.  It also says something about tradition I guess.

I am considering the acquisition of a software company (not in the newsagency space) and in my research I found that many software companies for sale were not listed with a sale price.  Prospective purchasers are expected to review the numbers and make an offer.  This is the approach I expetced to follow for the newsagency, to let the market find its level

Corie and Tammy Schwarzl have started a blog recording their side of the challenges they have had with Supanews.