Key to achieving the best possible gross profit for a newsagency is balancing the reasons shoppers visit your retail business, balancing the products that attract them.
By balancing I mean making sure you attract shoppers across a range of products and product categories and not relying on one or two. Relying on one or two such as magazines, transport tickets or lotteries means you suffer more if they suffer.
Also, the more shoppers visiting for low margin agency and circulation product lines the harder it will be to reach above the average gross profit range of 28% to 32%.
If, on the other hand, you can attract shopper traffic for higher margin lines like gifts, greeting cards, plush and stationery then you’re better positioned reach above the gross profit average. Attracting shoppers for more products and categories, too, balances your business and insulates you against a downturn in one category.
The question is how do you do this, how do you attract new shoppers for the destination items? It does not happen by putting some of these higher margin products on the shelves or a floor display unit. No, you need to make a statement, you need to show off your business as being a specialist in the area. This is achieved with range, in-window or front of store display and external marketing.
Reach outside your comfort zone with what you sell and out of your shop in promoting this – to reach new customers and thereby drive a better gross profit outcome for your business. Be guided by the gross profit you want to achieve. The current industry average of 28% to 32% is too low. Our entry point target should be 40% but with magazines at 25% and newspapers often at below 20%, we need traffic for gifts (55%+, plush 55%+, stationery 50% and cards 60%+ to get to the overall 40%.
While I see this as basic retail management, to some newsagents it will seem like hard work – getting the products, displaying them to attract new shoppers and promoting outside your four walls.
Achieving above average gross product requires above average effort. It’s worth it.
Why does this matter? Traffic for low margin traditional newsagency lines is falling, what are you doing about it?