Country town newsagency business performance analysis
Yesterday I completed another newsagency performance analysis, this time for a regional newsagency. It’s an interesting business with some terrific innovation (coffee, old style lollies) helping yet traditional products (stationery, magazines, newspapers) pulling them down.
The challenge is breaking free from a traditional and externally controlled past and creating your own future. It’s a common challenge newsagents face.
Here are my thoughts:
Thanks for giving me the opportunity to comment on your figures. I’ve done some research to ensure I have context and can see your local population is 2,500 and you’re almost 700k from the capital. I can see from Google street view that you’re in a high street situation with windows ion the street. The images suggest that heritage is important in the area.
I can see in your data comparing June through August 2013 with 2012 that business is tough.
- Overall revenue. Down 8%.
- Customer traffic. Down 7% or 2122 sales over the period. This is the biggest concern in the data. Traffic is the lifeblood of a broadly bases regional newsagency. What are you doing outside your business to bring new shoppers in?
- Cards. You sold 973 cards over the three months, an increase of 15%. While this is good, the changing nature of traffic generation for newsagencies means you need more from cards. When was the last time you refreshed your range? I can’t tell too much about what’s happening since most of your card sales are in unknown category – meaning the software has not been told how to allocate stock you bring in. This can be easily fixed.
- Cigarettes. Sales are down 13% and you’re doing around $2,500 a week in sales. Are you managing stock carefully? i,e, are you recording based on sales using the reorder report. It’s easy to do.
- Confectionery. Your 71% increase in revenue to well over $1,000 a week on the back of your old style lollies is working a treat. I also love your 339% increase in coffee sales to 1,160 units in the three months. These are two excellent moves you need to continue to drive harder. They are points of difference for you in your area – what are you doing to promote to passers-by on the street?
- Lotto. 27% increase in sales. Excellent result. Keep up with what you are doing – having fun and providing a good shopping experience (I can tell from your Facebook page).
- Magazines. Even though your sales are down 8%, your numbers are line ball with the average. What makes it hared to assess any further is that you don;t appear to be bringing in invoices electronically. This dumps all magazine sales into one category. It can be easily fixed so that there is more meaningful data for you to use. magazine sales data can guide plenty of other business decisions.
- Stationery. Sales are down 10%. Based on your sales your total stationery stock holding should be around $10,000. If you;re higher then either sales need to increase or your stock holding needs to decrease.
- Toys & Gifts. This is a break out success story with an 85% increase in revenue to over $500 a week. Note: I;d separate reporting of toys and gifts into separate departments. By not using meaningful categories I can’t comment too much more other than to note that based on your card sales I think you could grow gift sales by more than 100%. You can do this by using your =card category sales data to guide gift buying opportunities.
I’ve also looked at the full year on year comparison report you sent. I can see that revenue including lottery commission is around $680,000. Once I take into account your agency business (bus tickets, visa cards, postage etc), I estimate that your overall gross profit is between 27% and 30%. This is not enough.
Sometimes a business with less revenue but a considerably higher GP is more valuable.
If I were you I would sort out the data issues and get products into meaningful categories. I would then assess sales at the category level with a view to increasing gifts, toys, plush and stationery. At the same time I would also review my pricing policy and charge as much as I could for what I sell. You’re a remote business meaning you have a cost of doing business that should be reflected in your pricing. I would also make bold strong use of the shop window. Plus I would work to find a way to letterbox all homes within easy access to the shop to send flyers every two weeks promoting the business – especially coffee, confectionery and gifts.
It can be hard in a small town with a small business and limited financial resources. I have a graphic design person full time in my software company and would be happy to create flyers free for your use to help you market the business. The rest comes down to good product selection and hitting the footpath promoting the business.
In considering what to sell you do need to look at who is nearby you that you may hurt with expanding your range. I think you need to look at them thinking that it’s more important for you to survive than them.
I hope the comments help. I apologise for being blunt. Let me know what you think and send through any photos for specific display or other suggestions.
Many newsagents are in businesses that are being impacted by changing economic conditions as well as changing conditions around products being sold. It is important we chase change ahead of the wave. This business is doing that in several areas and while this work is delivering results, they need more.
We’re in an economy and retail channel that require is to be more vigilant than ever. We have to be the change agents in our newsagency businesses. No one else will do this for us as valuably as we can do it for ourselves.
Participating in GNS Market Fair seminars
I’m participating in workshops being run on each day of the GNS Market Fairs. I’ll be sharing the latest newsagency sales benchmark insights and covering how newsagents can grow their businesses – providing some specific tips they can action right away. The seminar schedule for each day of the fair is:
10:00am Retail Leasing – Retail tenancy legislation, what is it and how does it protect newsagents? Michael Cuda – ANF
11:00am How to make your Newsagency worth more using Point of Sale software Mark Fletcher – Tower Systems
12:00pm GNS Alex Stewart – GNS CEO
1:00pm Creative Publishing – Kids Licensed Products learn about the Australian mum and her life and how to unlock the sales potential in your store.
2:00pm Nexus – How to use this marketing tool and why you should use it. Jane McIllhatton – Pacific Magazines
3:00pm Connect – a new set of products & services exclusive for Newsagencies David McLean – HUBBED CEO & Matt Handbury – HUBBED Chairman
April – June 2013 Newsagency sales benchmark study results
Overall newsagency sales decline. 57% of participating newsagencies reported a decline in revenue. This is an improvement on the previous quarter. Of those reporting a decline, the average was 4% – also an improvement. Of those reporting growth, the average was 3%.
Traffic. Customer traffic was down for 54% of newsagents recording an average decline of 3% in the number of transactions.
Basket depth. 52% of newsagents reported a decrease in basket size (items in the basket) with an average decrease was 1.4%.
Basket value. 42% of newsagents reported an increase in basket value – with an average of 3.1%. While newsagents are selling fewer items, they are selling more expensive items.
Product mix. Traditional newsagency lines – newspapers and magazines – suffered the most, again.
Discounting. The decline in discounting identified in the last two quarters has continued with only 18% of newsagents undertaking discounting of any significance.
The gap between the performance of the traditional newsagency and one chasing change growing. The traditional newsagency is the type of business reporting the most significant decline whereas the newsagency pursuing new lines is the type of business reporting growth.
This newsagency sales benchmark study is based on an analysis of sales basket data from more than 150 newsagencies – city and country, shopping centre and high street, banner groups (various) and independent.
Benchmark results by key departments:
1. Magazines. 71% of newsagents reported an average decline (in units) of magazine sales of 9.1%.
Women’s Weeklies is the category reporting decline in more stores with 83% of all newsagencies in negative. The average unit sales decline for the category was 9.6%. Women’s Weeklies accounting for, on average, 25% of all magazines sold in a newsagency. What are newsagents doing about this? Not enough from where I sit.
I expect weekly sales to be even more challenged in the second half of the year as a consequence of the change in magazine distribution days. I think this will drive more people to get their magazines from supermarkets. I don’t want this to happen but I worry it will because newsagents will not fight to win retail let alone win magazine shoppers.
Magazine categories doing okay are: special interest, sport & leisure, craft & hobbies, home & living and partworks.
The number of newsagencies reporting declines above 25% is most concerning.
2. Newspapers. 81% of newsagents reported an average decline of 5.3% in newspaper sales. Regional newspapers did not suffer as much.
3. Greeting cards. 55% of newsagents reported average growth of 3.2%. Of those reporting a decline, the average was 3.8% with some as high as 18%.
4. Stationery. 62% of newsagents reported an average decline of 2.3%. This continues a trend in newsagencies in relation to stationery. What are you doing about it?!
5. Ink. 49% of stores participating in the study separate ink sales data allowing further analysis. 41% of these stores reported ink sales growth of 3%.
6. Gifts. 61% of the newsagents in the study have a separate gift department. Of these, 53% reported average year on year growth of 4%. This shows a slowing of gift sales growth. The way to arrest this is better buying and better in-store engagement. Standalone gift shops are vulnerable and we can take more business from them.
7. Plush. 7% of newsagencies report on plush sales in a separate department. I recommend this. A reasonable sales benchmark for plush is revenue equal to 25% of card revenue. In stores reporting on plush, sales are up on average 26%.
8. Tobacco. 62% of stores with tobacco products reported a decline.
9. Confectionery. 59% of store reported an average decline of 8%. This category is in trouble in our channel.
10. Toys. 838% of stores with the department reporting growth of just 3%.
Newsagencies continue to be good businesses to own. They respond to attention. There is good evidence of this in individual store data I have seen. The average newsagency with a retail model 10, 20 and 30 years old is the type of business in trouble. It’s unlikely to be doing anything to insulate against the changes we see impacting traditional lines.
Newsagents need to understand that growth comes from management and shop floor attention to products more so than agency lines. If the benchmark data I see evidence of local store engagement driving better outcomes. This is why I say newsagents need to decide if they are going to be agents or retailers.
The best type of newsagency to own continues to be the one where you have the most control over what you sell.
We create our own luck, now more than ever.
This benchmark study is not a piece of fiction. It’s from a broad cross-section of newsagency businesses. It reflects what is happening in newsagencies. For what it’s worth I think we need to:
- Fix magazines so we own the category again. Too many newsagents are doing the bare minimum and their sales are suffering. The declines I am seeing need not be as bad.
- Take stationery more seriously by mounting a challenge against the majors. I think too many newsagents have become lazy while others have taken this business from us.
- Refresh greeting cards to grow beyond our 30% (or thereabouts) of all card sales. Card companies live engaged newsagents.
- Run our gift department as if it was the only revenue you have got. You are competing with gift shops with little or nothing else. They are usually tough competitors. Unless you match them they will win.
- Use plush to attract shoppers who will buy other items. I own newsagencies that will top $80,000 in plush sales this year. I know what I’m talking abut.
Too many newsagents are waiting to be told what to do. It’s your business, your money at stake. Engage as if your future depends on it!
Another newsagency business performance assessment
Here is another newsagency performance assessment I have recently completed. This is an interesting business facing traffic disruption in a high tourism location – challenges faced by many newsagents.
My comments are direct and to the point. My intention is not to offend but to get your better engaged with the management of your newsagency business.
Good data feeds good business decisions. I can see in your Monthly Sales Comparison Report data that you do not scan everything you sell. For example, in the three months I have data for, you sold 546 stationery items without scanning them and 4,248 newspapers without identifying the titles (by scanning them or using a hotkey). It’s important you scan everything.
Now, onto my analysis of sales by each part of the business comparing three months this year to the same period a year ago.
- OVERALL SALES. Number of sales is down 11%. This is worse than the average I am seeing for newsagency businesses.
- REVENUE. This is down by 15%. It is concerning that the fall here is bigger than the fall in the number of sale transactions. The best way to assess this is by looking at GST collected.
- CARDS. Sales are down 3% off a low base. I am not too concerned here. however, I note that you;re doing only $500 a week in cards. Is this an opportunity. While I appreciate you see mainly tourist customers, could you change your card offer to better connect with tourists?
- CIGARETTES. The decline of 18% is considerable. You’re now doing $2,200 a week in sales. You need to check your stock holding as if it is greater than $5,000 you are probably losing money. The other option is to look at your price. Are you making the highest margin you can based on your convenient location.
- GIFTS. Sales are up by 599% off a tiny base. $75 a week in gift sales is hardly earth shattering. Based on your card sales you should be doing at least $200 a week in gifts however I suspect you could do far better than this. The gift category is important since it lifts the overall gross profit of your business.
- INSTANT SCRATCH TICKETS. Your sales are down by 22% and this is worse than the average decline for Queensland. This needs urgent attention.
- LOTTO SALES. Your lotto sales are up 4% and while this is good news, the increase is lower than the average I am seeing for Queensland. Yu need to do better. how are you promoting. If you are only doing what is asked of you it is not enough. Come up with your own ideas for promoting lotto products. A good campaign can draw shoppers from the street.
- MAGAZINES. Some good news here. Unit sales declined 8% and sales declined 9% – both lower than your overall store average. That said, your weekly sales total of $1,550 is low. In fact, it could put your accounts at risk. I’d urge you to take a hard look at your magazine department: undertake a full relay, make your magazine layout compelling and enjoyable. Entice shoppers with your placement.Your data shows the convenience nature of the business with women’s weeklies accounting for 19.74% of all sales Your 3% growth here is good. Continue to focus on this category as the hero.
– Women’s Interests magazines account for 12.96% of sales but they are down by 15% year on year. This is where a relay should help.
– Sport magazines account for 15.85% of your magazine sales. Excellent news. However, your sales are down by 23%.
– I am surprised at the small contribution of some categories and would encourage you to work on growing their sales: food, crosswords, motoring and computers & gaming.- NEWSPAPERS. The decline in unit sales of 22% must be of concern to you. That’s a decline of 535 newspapers a week. You have to be asking yourself what are you doing to replace this lost traffic? Now is the time for this question to be asked and an action plan put in place.
- STATIONERY. Revenue is down 22% and stationery sales are down to $700 a week. I’d be looking very carefully at your range and wondering if you have the right mix for your convenience / tourism shoppers.
Your location and product sales mix makes me ask the question: Is it time for you to cease identifying as a newsagency and start trading with a different business identity more attuned to people walking past your business? Give people more reason to walk in and browse your shop than the old newsagency approach that may not be connecting with shoppers in your unique situation.
Your data shows a fundamental shift away from traditional newsagency products and if this is not responded to by the business then a predictable end for the business will be reached. This does not have to be the case. Your data also shows opportunities in terms of the types of customers and what they are buying. Use this data to kick start your business plans.
If it were up to me I’d rebrand as something fresh – after I had reconfigured the business to sell products to the unique people who walk past your shop front every day. I’d look carefully at the successful retail businesses nearby. I’d also look at how I could make shopping with me easier and more enjoyable.
I hope these comments help.
In a follow-up discussion with one of the owners of the business I’ve got an excellent answer for the department sales of stationery – cardboard and paper without barcodes.
Newsagency business performance assessment
I am regularly asked to assess the performance of newsagency businesses and comment on what I see in their data. What follows below is the feedback I provided to one new newsagent earlier this week. I share it here with their permission:
The comments I make below are not intended to offend you however it is possible they will. They are direct, to the point as I have found there is value in calling it as I see it. The comments reflect what I see is the state of your business as represented in the Monthly Sales Comparison Report for April through June 2013 compared to 2012.
Your business data is the best assessment of business performance as it does not lie as long as you use the system to track all sales.
I have broken the assessment down by various parts of the business.
- TRAFFIC. Number of sales is down by 13%. This is very significant, considerably above average for a newsagency. It makes me wonder how you are marketing the business externally – advertising, promotion, offers.
- SALES. Revenue is down by 11%. Also very high and concerning.
- CARDS. You are not arriving stock properly – see unknown category. You should talk with support about getting this sorted out. This could be because you may have changed card companies. The sales decline is on par with the rest of the business.
- CIGARETTES. The decline here is less than for the average for the business. This is good news. However, be careful since there is no upside in tobacco product sales.
- CONFECTIONERY. 22% decline. Worse than the business average. You need to take action here. Look at your product range, your display and your pricing. Something is not working for you. Also look at the value of your sock. If you have more than $1,000 in stock you;re losing money. Act with urgency here.
- GIFTS. You are managing the data poorly. What does assorted gifts mean. Assorted gifts account for 67.72% of your sales. Categories are supposed to guide you meaningful information. I like to see: male, female, teens, kids, babies. Or: home, traditional, retro, funky. Categories should help guide your decisions. Assorted is meaningless. So, get your data right – the help desk can help you with this. In terms of sales, the 7% decline is just below the business average so that is good news.
- LOTTO. 12% up is good news. My question is what are you doing to leverage lotto customer traffic? Are you helping your lotto customer spend on other products you offer? your data suggests not.
- MAGAZINES. Unit sales down 21% and revenue down 18%. Both are bad numbers compared to the rest of your business and the average for the newsagency channel. This situation needs urgent action. When did you last do a full magazine relay? If not in the last six months get to it urgently. Take a fresh approach with magazine location and display. One you get the layout right I’d look at some form of magazine related promotion to reward people who are especially loyal to you.
– Your data shows that Motoring titles are your top performing, accounting for 17.10% of your magazine sales. Wow! This is your hero category for the men’s section. Sport at 9.40% is also doing well.
– Your women’s titles are troubled. Women’s Weeklies are down 22% in unit sales and Women’s Interests down 25%. Has something happened in your newsagency to turn women off? I ask this question seriously. These declines need arresting first followed by rebuilding.
– You are under-performing newsagency channel averages when it comes to Food (2.06% of sales), Crosswords (2.03%), Music (1.84%) and Teenager (0.62%). It would be easy to blame this on your shoppers. Your challenge as a retailer is to look at where you have them placed and how you promote them.- NEWSPAPERS. Unit sales are down 14% and revenue down 9%. The unit sales decline is the real worry as it’s worse than the overall average for the business.
- SCRATCH TICKETS. A 27% decline in sales is dreadful. The traditional decline I am seeing in Queensland is around 15% so your business is performing worse that the statewide trend. The question is what are you doing about this. A shopkeeper will shrug their shoulders. A retailer will work on an action plan and then implement the action plan.
- STATIONERY. This is a good news department. Your sales are down 10%, slightly less than the average for the business. While not good, at least it is close to the average for your business. In this department again you have Assorted as a category. This is useless. It accounts for 41.60% of sales and we can’t further assess this. Pens, Pencils and Markers is the next big category at 11.07% of sales. They declined only 5% and this is excellent news. What are you doing there as it is working better than for other products? You should talk to your GNS rep and ask them to conduct a review of your stationery. They could guide you to relay stationery to tell a better retail story.
With non lottery product sales of $300K for the quarter and an average of 3,600 sales transacted each week you have a sound business base. What happens from here is up to you. If this were me I’d be urgently overhauling my approach to key traffic driver categories in the business:Lotto, magazines, stationery and cards. I’d engage with suppliers for help. I’d also develop a series of plans for change in the business to give customers a fresh experience. Once I had that where I wanted it I’d promote the business externally. I can’t stress enough the importance of external promotion of the business.
The best business growth is that achieved over time through a series of small steps: a small bump in traffic, a small bump in the average spend and a small bump in the margin you achieve on the items you price for yourself.
I appreciate you’ve not even been in the business for a year. Since it’s your money invested, the future of the business comes down to you. Get your data right, set your focus on a plan and get cracking on that plan.
Let me know if I can help in any way.
New generation shopper loyalty program breaks free from me-too VIP / loyalty cards
For some time I have thought that points based VIP / loyalty cards offer retailers little differentiation. Besides them being in use in many retail businesses, I have felt there is a real doubt among shoppers as to their genuine value. They are decades old after all.
FlyBys and Everyday Rewards are the market leaders in Australia and they educate shoppers that they need to spend thousands to get even a small reward. No matter how much small business retailers might say their program is different, if it’s points based it will be considered to be the same as these programs and offer similar value.
Shoppers are fatigued by loyalty programs. Some doubt their value. Others are sick of carrying cards. Others don’t like the promotions sent.
Retailers launching a VIP card today rarely offer anything new. Too often they reward shoppers for average behaviour.
It was with this background that I got involved in a very different approach to shopper loyalty. I wanted something that got shoppers behaving above average so that my business performed above average. I am fortunate to have a software company through which I could play with my ideas.
Around a year ago through my software company I started work on creating a front-end approach to shopper loyalty, an approach that did not use points or require shoppers to carry cards.
In February this year I started a secret trial in one of my newsagencies and soon thereafter expanded this to a second newsagency. now, three months later I have an excellent set of data showing shopper behaviour. The data show how the new approach to loyalty, called Discount Vouchers, changes shopper engagement on the shop floor – driving basket depth and margin dollars banked from shoppers.
More important, Discount Vouchers give me a point of difference to the decades-old VIP and loyalty card programs. This point of difference is driving word-of-mouth and generating its won traffic.
I have personally had shoppers tell me how their behaviour has changed because of the Discount Vouchers. In one case, two months in, we won a customer who will spend $1,200 a year solely as a result of this program.
I wanted to trial it in secret as I was not sure how such a radical approach to shopper loyalty would work in a newsagency. Now, three months on, and comparing my own experience to the experiences from trials in three non-newsagency retail businesses, the results are the same. Shoppers love it.
From a retail management perspective I control voucher value and the items on which the value is calculated. I also control what can be purchased using the voucher. I can also change these business levers at any time without a need to retrospectively change past vouchers.
There is no paperwork for shoppers and no paperwork for sales staff. This program is easier that VIP and loyalty cards, it saves time.
When shoppers redeem a voucher we gather details to go in the running for a monthly prize draw – harvesting contact details for future marketing.
Having run a VIP / loyalty card program and other loyalty programs, I am confident that in Discount Vouchers I have a point of difference appropriate to today’s shopper and able to give me a competitive advantage in a world of shopper fatigue with VIP / loyalty cards.
Women’s Weeklies magazines lead magazine sales decline in newsagencies in latest benchmark study
The latest newsagency sales benchmark report delivers mixed news on the performance of the newsagency channel. Traditional products deliver poor news while newer product areas deliver good news. The bad news is that the results are not uniform. The gap between newsagencies continues to widen, making it difficult for suppliers to transact with the channel uniformly.
Here are the results:
Overall newsagency sales decline. 51% of participating newsagencies reported a decline in revenue. This is an improvement on the previous quarter. Of those reporting a decline, the average was 5% – also an improvement. Of those reporting growth, the average was 5%.
Traffic. Customer traffic was down for 50% of newsagents recording an average decline of 2% in the number of transactions.
Basket depth. 48% of newsagents reported a decrease in basket size (items in the basket) with an average increase was 1.8%.
Basket value. 57% of newsagents reported an increase in basket value – with an average of 3.2%. While newsagents are selling fewer items, they are selling more expensive items.
Product mix. Traditional newsagency lines – newspapers and magazines – suffered the most, again. This should be very concerning to newsagents and their suppliers.
Discounting. The decline in discounting identified in the last quarter remains evidence for this quarter with only 27% of participating newsagencies reporting discounting of any significance.
The gap between the performance of the traditional newsagency and one chasing change is more evident than ever. The traditional newsagency is the type of business reporting the most significant decline whereas the newsagency pursuing new lines is the type of business reporting growth.
This newsagency sales benchmark study is based on an analysis of sales basket data from more than 150 newsagencies – city and country, shopping centre and high street, banner group and independent.
Benchmark results by key departments:
Magazines. 83% of newsagents reported an average decline (in units) of magazine sales of 6.3%.
Women’s Weeklies is the category reporting decline in more stores with 89% of all newsagencies in negative. The average unit sales decline for the category was 7.6%. With Women’s Weeklies accounting for, on average, 25% of all magazines sold, the scope of the decline is a concern. We have to ask ourselves: what are we doing about this? While it is easy to blame the products, we must also look at how we treat the category. Maybe doing the same today as what we did ten years ago is part of the problem here.
In the 11% of newsagencies reporting growth I specific categories driving this. For example, in one newsagency, partworks sales are up 300%, delivering 18% of all magazine sales. In another newsagency, craft title sales are up 11% and food titles up 13%. Talking to some participants achieving category specific growth, they put it down to strong local interest and specific attention by the business in this.
In a couple of newsagencies reporting magazine growth undertaking a whole of department magazine relay was put up as the reason for success.
Too many newsagents are bystanders with magazines. They do the bare minimum. While the magazine distribution model to newsagents is unfair and puts us at a competitive disadvantage, there are growth opportunities for newsagents. It takes work. The rewards are worth it.
Newspapers. 83% of newsagents reported an average decline of 6.7% in newspaper sales. Regional newspapers did not suffer as much as the capital city dailies.
Greeting cards. 43% of newsagents reported average growth of 5.1% revenue growth. Of the 57% reporting a decline, the average was 6% with some as high as 22%. If you’re reporting a decline in card sales you need to work on how you display the product, refreshing your offer and engage your staff with the category.
Stationery. 57% of newsagents reported an average decline of 3%. This continues a trend in newsagencies in relation to stationery. It feels like businesses are giving up.
Ink. 44% of stores participating in the study separate ink sales data allowing further analysis. 42% of these stores reported ink sales growth of 5%.
Gifts. 61% of the newsagents in the study have a separate gift department. Of these, 89% reported average year on year growth of 7%. A year ago I suggested that gift revenue should equal around a third of card revenue. Today, I see this as a benchmark, but one that should be passed if you’re more well-established in gifts.
Plush. 10% of newsagencies report on plush sales in a separate department. I recommend this. A reasonable sales benchmark for plush is revenue equal to 25% of card revenue. In stores reporting on plush, sales are up on average 19%.
Tobacco. 73% of stores with tobacco products reported a decline.
Confectionery. 53% of store reported an average decline of 2%.
Toys. 82% of stores with the department reporting growth of 5%.
Newsagencies continue to be good businesses to own. They respond to attention. There is good evidence of this in individual store data I have seen. The average newsagency with a retail model 10, 20 and 30 years old is the type of business in trouble. It’s unlikely to be doing anything to insulate against the changes we see impacting traditional lines.
The best type of newsagency to own continues to be the one where you have the most control over what you sell.
We create our own luck, now more than ever.
ABOUT THIS STUDY. This study is based on sales data collected from more than 146 newsagents across Australia. These newsagents represent five banner groups as well as independent operators. The only common thread among the newsagencies is that they all use the Tower Systems newsagency software. Around 63% of newsagents with a computer system use Tower. I have eliminated data from businesses where I knew that unique local factors impacted on the sales data.
T2020 driving newsagent management decisions
As I talk with newsagents about their October – December sales as part of the latest newsagency sales benchmark study, T2020 is often raised as a driver of change in the business. Newsagents tell me that they are making changes to their shop because of T2020 and the effective break up of the traditional multi layered newsagency business.
This is a good thing, newsagents making conscious business decisions. While I understand the pressure many are feeling as a result of T2020, the motivation to look at the business and to plan for change can only be considered to be good.
Some newsagents are embracing the retail only opportunity with gusto, some are tinkering at the edges and some are waiting.
When you consider the challenges and opportunity in retail this is not a time to wait. Outside of T2020, we retailers need to innovate in terms of products and service. We need to prove our relevance in every transaction. Too much of what we sell, even those of us with diversified products, is available elsewhere.
In the early review of the benchmark data I am seeing some terrific success for newsagents who are innovating. Most growth is in gifts but the term gifts is not appropriate given that this can and does cover a myriad of product categories. As newsagents evolve as retailers it will be interesting to see how far we push into gifts.
In the meantime, T2020 remains an excellent opportunity for newsagents, to take it as encouragement and motivation for significant change in 2013 no matter which course you decide on.
Newsagency businesses perform well in latest sales benchmark study
I’ve completed the analysis of the latest newsagency sales benchmark data covering the July – September quarter compared to the same period last year. The pool of data was from 123 newsagency businesses around Australia and covering a good selection of circumstance.
Here are the newsagency sales benchmark highlights:
Trading remained steady for newsagents in the July – September quarter of 2012 compared to the same period in 2011. Year on year results almost mirrored those of the previous quarter. This is good news.
- Traffic. Customer traffic was up slightly with 61% recording an average increase of 2.1% of transactions.
- Basket depth. 43% recorded an increase in the number of items in a transaction and the average increase was 4%.
- City versus country. City based newsagencies delivered the better results.
- City vs. country. Regional & rural newsagencies are the best performers.
Now for the results by key departments:
- Magazines. 44% of newsagents in the study reported unit sales growth with an average growth of 3.5%. Of the newsagents reporting a decline, the average decline was 5%. 60% reported a sales decline for women’s weeklies – average 6%.
- Greeting cards. 69% of newsagents reported an average 3% revenue growth.
- Stationery. 49% of newsagents reported an average growth of 5%.
- Ink. 55% of stores participating in the study separate ink sales data allowing further analysis. 67% of stores reported ink an average of 5% growth.
- Gifts. 61% reported an average of 6% growth.
- Newspapers. 61% of newsagents reported a decline of 3% in newspaper sales.
- Tobacco. Sales declined. 65% of store with the product reported 11% decline.
- Confectionery. 54% of store reported an average decline of 3%.
That said, there is no doubt that shopping centre newsagencies remain vulnerable. This speaks to the fickle nature of shopping centre traffic performance. While am no economist it could be that they are the first to experience trends.
Newsagencies continue to be good businesses to own. They respond to attention. Retail is not as tough as some keep saying.
For what it’s worth, the best type of newsagency to own today is one where you have the most control over what you sell. This can be in a shopping centre but is more likely to be in a high street and / or regional situation. Ideally, it would be a business where you can ultimately own the building.
We create our own luck, now more than ever.
I appreciate the time given by the newsagents using the Tower Systems newsagency software who shared the sales data that is the basis for this study.
New newsagency benchmark study under way
Newsagents have been invited to submit July – September sales data to me for inclusion in the latest newsagency sales benchmark study. By mid next week I hope to have data from three times this many.
I will publish the results here. The results will give newsagents a set of numbers with which to compare their own businesses. That said, our best competitor is our own business from the same period a year earlier.
Latest newsagency sales benchmark study results
I have reviewed the April – June year on year sales data from 150 newsagencies using the Tower Systems industry standard newsagency software and here is what I found:
Trading improved for newsagents in the final quarter of the 2011/12 financial year with more newsagents reporting sales success in key categories and growth in new categories.
Many newsagents reported year on year growth in cards, magazines and stationery – three important product categories in a traditional newsagency business.
However, the latest newsagency sales benchmark study reveals that the gap between newsagency businesses is bigger than in the previous quarter. Some newsagencies are experiencing alarming sales declines.
Here are the newsagency sales benchmark highlights:
- Traffic. Customer traffic was up slightly with 59% recording an average increase of 2.8% of transactions.
- Basket depth. 38% recorded an increase in the number of items in a transaction and the average increase was 6%.
- City versus country. City based newsagencies delivered the better results in this study. This suggests that city areas are recovering faster than rural and regional.
- Shopping centre versus high street. Except for a few of the larger high street newsagencies, shopping centre businesses performed better, more of them were in the grouping with better sales results compared to the year earlier.
Now let’s look at the results by key departments. Note that for some departments I use unit sales and others I use dollar revenue:
1. Magazines. 38% of newsagents in the study reported unit sales growth with an average growth of 3%. NOTE: some reported growth of 15% and more.
Of the 62% of newsagents reporting a decline in magazine sales, the average decline was 5%. NOTE: Some reported declines of 15% and more.
85% of newsagencies reported a sales decline for women’s weeklies. The overall average decline was 7% with, again, a big difference between the best and worst performers. The performance of weeklies in a year on year comparison is hampered by the fact that 2011 has the royal wedding.
One Direction’s impact on magazine sales is evident in the benchmark study, pushing music, teen and children’s titles.
The growth magazine categories (in addition to those noted above) are crosswords, special interest and home & living.
Several newsagents noted that they had undertaken magazine relays – pointing to this as a reason for the growth they had achieved.
Overall, the results for magazines are excellent, much better than expected.
2. Greeting cards. 83% of newsagents reported an average of just under 6% revenue growth. Of those reporting decline, the average decline was 4%. This is another excellent result for cards with some newsagencies reporting double digit growth.
3. Stationery. 61% of newsagents reported an average growth of 5% in stationery revenue. This is excellent news, reversing a concerning trend in the previous benchmark study. Of the 49% reporting a decline in stationery sales, the average decline was 6%.
NOTE: Pens and paper remain at the core category of stationery we sell, accounting, usually, for around 30% of stationery sales. Paper usually accounts for 20% of sales and a vast array of items account for the rest. I suspect that newsagents are not getting a reasonable return on investment in stationery – either because they are over stocked or they are not marketing externally. For a department over which newsagents have complete control, most do not use this.
4. Ink. 52% of stores participating in the study separate ink sales data allowing further analysis. 63% of stores reported ink revenue growth with 4% the average increase. Of those reporting decline, the average decline was 3%.
Ink continues to be an important product category given the habit nature of the product. Win an ink customer on price and or service and you have them for life.
5. Gifts. 64% of the stores in this study have a gift department and reported on this separately. 78% of these reported an average sales increase of 6% in gift revenue. Of those reporting a decline the average was a 5%.
The benchmark reports reflect a diverse gift offer in the newsagency channel. Some stores focus on niches while others are more general. It is the stores focusing in one or two niches which have seen the most significant growth – several off of an already high base.
6. Newspapers. 68% of newsagents reported a decline in newspaper sales. The average decline was 3%. The average increase of those reporting an increase was 2%. Here I can see data for foreign newspapers, sales growth of 5% or more is usual – this remains a valuable newspaper segment for newsagents.
7. Tobacco. Sales declining in more than 80% of stores. Newsagents need to look at stockholding and space cost to assess whether to stay in the space.
8. Confectionery. 65% of store reported an average decline of 6%. It makes me wonder if newsagents have lost their way with confectionery given the growth in some other retail channels in this space.
In the last study it was capital country newsagencies which were most challenged. In this study the differences based on geography are not as strong. That said, there is no doubt that shopping centre newsagencies remain vulnerable. This speaks to the fickle nature of shopping centre traffic performance. While am no economist it could be that they are the first to experience trends.
SUMMARY
My overall take on the data is that newsagencies continue to be good businesses to own. They respond to attention. I know from specific feedback of some study participants that businesses are responding.
The key is that more newsagents need to respond, they need to redraw space allocation in-store.
In the second half of calendar 2012 we will continue to see the strong get stronger and the weak get weaker. Newsagents can move from one group to the other depending on what they and their team invest in the business and invest in marketing the business.
For what it’s worth, the best type of newsagency to own today is one where you have the most control over what you sell. This can be in a shopping centre but is more likely to be in a high street and / or regional situation. Ideally, it would be a business where you can ultimately own the building.
We create our own luck, now more than ever.
Here is a TO DO LIST for newsagents based on the data I have been immersed in as a result of the study. Yes, some of this is not new – but it needs to be restated as it is as relevant today:
- Do a full magazine relay. Every magazine off and rebuild your placement from the ground up. No excuses. I have done it. Sales will increase as a result. Call me if you need advice on this.
- Work on stationery. Know where you make your money, own this. What type of stationery retailer are you: if you carry range as a retailer of last resort price it accordingly. If your focus is volume, then price for this.
- Ink. The best way to achieve growth is to promote externally.
- Get into gifts. They should be at least 30% of card sales.
- Look at your external marketing. Your competitors spend 2% – 5% of sales.
- Allocate more of your time on the shop floor. This is where growth is achieved.
- Look at your basket building strategies and ensure that you leverage foot traffic.
The most important competitor a newsagent has is themselves. This is why regular comparison against past performance is vital to the success of the business.
I appreciate the time given by the newsagents using the Tower Systems newsagency software who shared the sales data that is the basis for this study.
Click here for a full copy of the newsagency sales benchmark report.
New Newsagency benchmark study under way
I have started harvesting sales data from newsagents for the January – March 2012 newsagency sales benchmark study. Plenty of newsagents have already sent their data in. I plan to have the results published by the middle of next week.
This study pulls data from the community of 1,780+ newsagents who have partnered with Tower Systems for their newsagency software.
Latest newsagency sales benchmark study results released
Yesterday I provided the results of the latest newsagency sales benchmark report to participating newsagents.
Overall, newsagents had a good end to 2011. The year ended with better numbers over 2010 and 2010 ended over 2009.
I am concerned about the difference between newsagencies. There is no doubt in my mind that the strong are getting stronger. They are achieving growth from specialisation and diversification. This is evident in the sales data.
Even the data itself speaks to the difference between businesses. Newsagencies with well-managed data perform better. I can assess attention to data management in department and category structure and in whether every item sold in the newsagency is being scanned. This is why I am able to say that newsagents who are better at managing data will have more successful businesses.
What is interesting about this is that newsagents have complete control over how data is managed in their businesses.
Here are the newsagency sales benchmark highlight results for type of newsagency:
- Increase in basket depth. What is particularly evident is the increase in basket depth among more newsagents. In short, more newsagents are selling more in each sale. This is vital to our success as retailers. Not enough though, less than half the newsagencies in the study achieved this – at least this is up from just a third a year earlier.
- City versus country. It was harder to separate the results here compared to the last study where country newsagencies clearly performed better. The data indicates to me that city newsagencies ended the year stronger than their country counterparts. There difference was not as obvious. That said, bigger country newsagencies performed better than smaller.
- Shopping centre versus high street. Except for a few of the larger high street newsagencies, shopping centre businesses performed better, more of them were in the grouping with better sales results compared to the year earlier.
- Rural. I looked at the data I had from a group of rural main street newsagencies. They did okay. Some growth, some increased sales efficiency – getting existing shoppers to purchase more. The challenge here appears to be driving more traffic.
Now let’s look at the results by key departments. Note that for some departments I use unit sales and others I use dollar revenue:
- Magazines. 26% of newsagents in the study reported unit sales growth with an average growth of 3%. Of the newsagents reporting unit sales decline, the decline was 7%. NOTE: I have not included data for newsagencies reporting extreme results as this would skew the results. For example, sales in one of my newsagencies are up 45%. This is primarily due to a complete magazine relay, considerable external marketing and store specific opportunities. Rural and regional newsagencies were more likely to report a decline than a city based newsagency. At the MPA category level, women’s weeklies, motoring titles and sports titles were the most challenged, reporting higher declines. Food, crafts, crosswords and special interests continue to be the stand out categories, recording growth.
- Greeting cards. 57% of newsagents reported revenue growth. The average growth from this pool was 3%. Of those reporting decline, the average decline was 4%.
- Stationery. 60% of newsagents reported growth in stationery revenue in a major turnaround from the previous study. The average growth was 3%. The average decline in revenue for stores experiencing decline was 6%.
- Ink. 46% of stores participating in the study separate ink sales data allowing further analysis. 62% of stores reported ink revenue growth with 5% the average increase. Of those reporting decline, the average decline was 3%. Ink continues to be an important product category given the habit nature of the product. Win an ink customer on price and or service and you have them for life.
- Gifts. 52% of the stores in this study have a gift department. 70% of these reported an average sales increase of 8% in gift revenue. Of those reporting a decline the average was 6% which is a concern. The big concern in the gift data is that almost half newsagents do not have a permanent gift department. This is dreadful. A newsagency is a natural fit for gift sales. This is an easy department to move into, one over which you have pricing, ranging and other control. It is a department through which a retailer can shine.
- Newspapers. 40% of newsagents reported an increase in newspaper sales. The average increase was 2%. Of those reporting a decline, the average decline was 8%.
Here are some other stats from the assessment of the data provided:
- Average basket size. There are 1.63 items in the average newsagency basket not including lottery products. This is significantly up on the recent average. More than 50% of newsagents experienced an increase in basket size.
- Customers served. 54% of newsagents experienced an increase in customers presenting at the sales counter. The average increase was 3% – not considerable but welcome nevertheless.
In the last study it was capital city shopping centre newsagencies which were most challenged. In this study they are the ones enjoying the best results. This speaks to the fickle nature of shopping centre sales performance. While am no economist it could be that they are the first to experience trends.
New newsagency sales benchmark study almost complete
I am close to completing the analysis for the latest newsagency sales benchmark study. I have data from more than 170 newsagencies, making it one of the most comprehensive newsagency sales benchmark studies yet. The results so far are interesting – while confirming some trends there is some good news in some categories. I hope to have the analysis completed and published here by Friday.
These studies are quite time consuming as before any analysis can commence I check the data to ensure that it is an accurate reflection of sales for each business. The number of newsagencies being rejected because of poor data is way down this year compared to the study I did for the same period a year earlier.
Latest newsagency sales benchmark report out
Earlier this week I published the latest newsagency sales benchmark report.
The first quarter of the financial year lived up to expectations, delivering challenging sales results for newsagents with key categories reporting sales declines.
There was a considerable difference in results for city versus country newsagents with the latter overall delivering steadier results.
A key take-away from analyzing the data from 143 newsagency businesses is that newsagents who work on their businesses reap rewards. This is reflected in department and category sales data as well as sales efficiency: basket size and sales value. The results speak to the importance of focusing on the three critical aspects of retail: customer traffic, average basket size and, margin.
In the all-important magazine department, there appears to be a greater volatility in sales between categories. This volatility is reflected in two ways:
- Weekly titles. While most newsagents reported declining sales, some locations reported growth – as much as 7% in unit sales. The growth was achieved by these businesses acting in a usual way, in other words – there had not been a store closure or some other unusual event to explain the growth. Eleven percent of the newsagencies in the sales benchmark dataset achieved growth in the Women’s Weeklies category. Their success is something other newsagents need to reflect upon as it shows that growth can be achieved in magazine sales by delivering a sales-focus retail experience.
- Category. The data in this sales benchmark study reflects a shift in shopper interest. Newsagency shoppers deserted Food titles with sales down, on average, 11%. Women’s Interest titles also delivered a sales decline heading toward double digit. Crossword, Home & Living, Men’s Lifestyle and Special Interest all delivered growth in most locations. You can see in the data for some stores the results of categories they like and or focus on. This suggests ready rewards for newsagents who manage magazines for profit rather than as a mandatory product category.
The overall result for magazines in the benchmark study pool is better than I’d expect to see for the channel as a whole because the data is provided by newsagents who care about and understand data. Newsagents who would not even know how to access their own trading period sales comparison data would, in my view, be less likely to care and therefore manage their businesses for sales success.
The group of newsagents delivering the most challenged results, across the whole business, continues to be those in capital city shopping centres. Based on recent closures, it is fair to say that the lure of shopping malls for newsagency businesses is fading. The benchmark sales data shows that achieving the sales growth necessary to stay ahead of the annual 5% (and more) rent increase is challenging. This is made even more difficult by the fixed margin nature of much of what newsagents sell.
Click to here read on.
More detailed information is being shared with participants.
Q3 newsagency sales benchmark study announced
I invite newsagents to participate in my next newsagency sales benchmark study – covering the third quarter of 2011. For ease of data analysis and consistency of reporting, participation is open to the more than 1,760 newsagents who use the Tower Systems newsagency software. I hope to get between 100 and 130 participating again.
- Please run your Monthly Sales Comparison report This is my favourite report in the software). On the left, select July 1 2011 through September 30, 2011. On the right select July 1 2010 through September 30, 2010.
- Check that the dates are right.
- Tick the category box.
- Do not tick any box about suppliers.
- Once the report is on the screen, save it as a PDF.
- Please email the report to mark@towersystems.com.au.
Thanks in advance for participating in what has become an anticipated benchmark study. The results are useful in comparing your newsagency with others. They also give us a health check on the channel overall. I ensure that the dataset includes a good cross section of newsagencies.
Newsagents told change is coming and you’re on your own by publishers
While I was not at the forum at the ANF Conference in Melbourne this week which featured John Hartigan CEO of News and Greg Hywood CEO of Fairfax, I have heard from several people who were there.
The key message on the future of print and an impact on distribution appears to have been: we will do what is appropriate for our publishing businesses in dealing with change in print media. Feel that rationalisation of distribution is needed. That there will be no compensation for newsagents. Newsagents: you are on your own inn terms of your own businesses.
Some of us have been saying this for quite a while. We need to act in our best interests. What is galling is the restrictions applied by some News Limited outposts on newsagents who do try and act in their interests.
John Hartigan in his opening comments talked about recently being in the US and seeing Apple TV and noted that it is not in Australia. Um, it’s been here for three years.
Kudos to Hartigan and Hywood for fronting the conference.
Newsagency sales benchmark results
Analysing the newsagency sales benchmark data for the April – June quarter has been difficult because of the greater than usual difference in numbers between newsagencies.
This difference indicates that it risky to present data to speak for the whole channel. For example, where many newsagents are tracking a decline in magazine sales of 8% and more for the quarter, there is an equal number tracking growth of 6% and more for the same period compared against their performance a year earlier.
The group of newsagents delivering the most challenged results are those in capital city shopping centres. Shopping malls appear to be feeling the pain of retail, just talk to fashion retailers and look at recent news reports. Those experiencing the best numbers are newsagencies located in regional centres.
I am upbeat about the future as this benchmark study and other indicators are that newsagents who take an entrepreneurial approach to their businesses will reap rewards in sales. Being average is a mugs game. Working the conveyor belt will not lift your business.
Here are the headline benchmark numbers:
- Magazines. Magazine sales fell, on average, 2% (in unit sales) in the April through June 2011 quarter over the same period last year. Just on half newsagents reported a decline in magazine sales. Looking just at April and May, just about all newsagents reported sales growth. June was a very tough month, wiping out many of the gains of the previous two months. The newsagencies delivering growth are more engaged with the category.
- Greeting cards. Greeting card sales grew, on average, 2% (unit sales) in the quarter. 70% of newsagents reported growth. I’d say that such of this growth is due to product innovation. Sound cards continue to do well. Lifestyle appears quite challenged in some areas.
- Stationery. 60% of newsagents reported a decline in stationery revenue (not including ink) with the average decline 1%. While I’d need to research this more, I’d say that most newsagents could turn stationery around by getting serious about managing the category. Average does not cut it in this markeplace.
- Ink. 45% of stores participating in the study have a separate ink department. 90% of these stores reported growth in ink revenue of 3%.
- Gifts. 55% of the stores in this study have a gift department. 60% of these reported an average sales increase of 3% in gift revenue. Those with a gift department almost the same value as stationery (8% of stores in the benchmark study) reported growth of 10% and more.
- Newspapers. 80% of participants report an average newspaper sales growth of 2%. This could be due to promotions as they are often bundled in the newspaper dept.
- Basket size. Basket size did not measurably change.
- Traffic. 30% of newsagents served 2% more customers than in the 2010 period.
Parallel to this study I have looked at magazine sell through rates. In the first six months of this year they have declined yet newsagent invoices from magazine distributors have not declined. This is a core problem for newsagents and magazine publishers. In the face of evidence of sales challenges, Gotch and Network are not acting responding responsibly.
The performance data is from the Tower Systems Sales Benchmark Study. With 1,752 newsagents currently using the Tower newsagency software, Tower Systems is well positioned to undertake these studies on behalf of newsagents. This three month study is based on sales data from 103 newsagencies, trading under four different banners plus independents, businesses in capital city regional and rural situations.
Newsagents waste money on manual stock takes
With stock take season more or less over it was good to see more newsagents use their computer systems in counting and maintaining stock on hand records. That said, too many newsagents still use manual stock takers who do not provide data which can be used to update computer based records.
Such manual and paper based stock takes are a waste of money for newsagents. Other than knowing the value of stock on hand, there is no benefit for the business.
By completing a stock take using your computer system you set your business up for better business decisions, ordering based on accurate sales data and having evidence with which to hold suppliers to account.
The benefits of an accurate on hand count within your computer system are considerable and far-reaching.
I’d urge newsagents to use their computer system for future stock takes, regardless of the system you have. By treading your business data as one of your most valuable business assets you set the business up for considerable flow on benefits beyond the stock count itself.