Australian Newsagency Blog

A blog on issues affecting Australia's newsagents, media and small business generally.

Sunday newsagency management tip: beware category dependence

Mark Fletcher
January 19th, 2014 · No Comments

Given the history of today’s retail newsagency business and the regulation surrounding the supply of several core categories, it is not unexpected that we see some businesses heavily dependent on a small range of product. I think this is unhealthy.  I know newsagents who like this, that half or more of their sales come from a single category like magazines, cards or lotteries.

With the changes we are seeing with print media, how where and when people purchase lottery products and with retail in general, now more than any time in the history of our channel we need to be less dependent on core categories.

As a guide, I would suggest that a single product category should generate no more than 25% of revenue. If we were to use this benchmark, it could guide us to expand what we sell to thereby drive the efficiency of our business and make it less dependent on a smaller range of categories.

I am suggesting a glass is half full approach, not a glass is half empty. By that I mean: say 40% of your sales are magazines – don’t cut magazine sales. Introduce new product categories which will sell to magazine shoppers so in terms of percentage of overall revenue magazines account for less. This is a win win. Yes, it’s hard work – but it’s what smart retailers do.

Newsagents who address the category mix will create for themselves a business that is less buffeted by changes impacting these large for categories. Here are other categories you could consider if you are not in these already: gifts, plush, toys, hardware, garden products, coffee / cafe, party, furniture, pool supplies, specialist printing, locally grown fruit. As this list shows, there are no rules – certainly don’t be bound by the shingle above your door.

I know of newsagencies that closed last year in Australia that relied too much on one or two categories and when those were hit, it was too late for them.  A business closing because of a decline in just one or two product categories is a weak business. You can plan to not be as impacted by this.

I urge newsagents to act on their product mix now, with urgency. Your first steps can be guided by your existing business data.

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Category: Management tip · Newsagency management

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