Australian Newsagency Blog

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

Newsagents increase magazine sales in December quarter

Mark Fletcher
February 7th, 2014 · 7 Comments

The October – December 2013 newsagency sales benchmark study is the first in years to report more newsagents achieving growth in magazine sales than declining. This is great news. Digging deeper into the data I think the growth is in part due to engagement with magazines and in part due to these businesses attracting shoppers for a strong gift or card or plus (or a mix of all) offering.

Whereas in the past newsagencies have attracted shoppers for magazines, newspapers, lotteries and cards, newsagencies today that attract shoppers for gifts, plush and cards first are more likely to achieve a deeper and more valuable basket and this different shopper engagement flows on especially to magazines.

In this newsagency sales benchmark study more than any in recent years I can see more newsagents changing their businesses, pursuing new opportunities and achieving measurable results.

Here are the results of the benchmark study:

Customer traffic. 59% of newsagents recorded an average decline of 2.9% in transactions.  11% reported no change and the rest an average growth of 3.8%.

Overall newsagency sales decline.  61% reported an average revenue decline of 8%. Of those reporting growth, the average was 7.2%.

Basket depth. 54% reported a decrease in basket size (items in the basket) with an average decrease was 1.9%. 8% showed no change. The rest achieved 2.3% growth.

Basket value. 32% of newsagents reported an average increase in basket value of 2.6%.

Discounting. 14% of respondents engaged in significant discounting.

The gap between growing and contracting newsagencies is bigger than ever. This presents an extraordinary problem for the channel as growth and decline separate newsagents and their businesses from each other.

Benchmark results by key departments:

  1. Magazines.  41% of newsagents reported an average decline (in units) of magazine sales of 8.2%. 7% reported no change and 52% reported year on year magazine sales growth.  The average growth was 6%.  This is the headline –NEWSAGENTS GROW MAGAZINE SALES.The newsagents achieving growth saw this in Women’s Weeklies, Children’s, Home & Lifestyle and partworks. It’s a thrill to finally be able to report more newsagents from the benchmark pool growing magazine sales than declining.
  2. Newspapers.  87% of newsagents reported an average decline of 4.9% in over the counter newspaper sales.  More regional newspapers saw declines than usual.
  3. Greeting cards.
  4. 57% of newsagents reported average growth of 3.9%. Of those reporting a decline, the average was 5.3% – in line with a growing gap between growth and decline. Everyday counter cards were strong through this quarter with some newsagencies reporting double-digit growth.

  5. Stationery.  63% of newsagents reported an average decline of 2.4%. This continues a trend in newsagencies in relation to stationery.
  6. Ink.  46% of stores report ink separately. Of these, 65% reported growth of 7%.
  7. Gifts.  71% of the newsagents have a separate gift department. Of these, 89% reported average growth of 10%.  In ten stores, gift revenue exceeded card revenue.
  8. Plush. 9% of newsagencies report on plush sales separately.  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 25%.
  9. Tobacco. 86% of stores with tobacco reported an average decline of 11%.
  10. Confectionery. 58% of stores reported an average decline of 14%.
  11. Toys. 45% of stores with the department reporting growth of just 12%.

It is clear from the data in this study that successful newsagencies are changing more rapidly than the not so successful newsagencies and that the changes themselves are significant. It is a thrill to see newsagents chasing more traffic, better overall GP and deeper baskets.

Newsagencies continue to be good businesses to own. They respond to attention.  More than any benchmark study in the last three years, this study supports this belief. That so many newsagents are reporting growth is magazines sales is a testament to the active engagement of those newsagents and their employees in this traffic-critical category.

The best type of newsagency to own is the one where you have the most control over what you sell and where you generate traffic for several product categories where average gross profit is 50% or higher.

The most important advice I have for newsagents is: Run your business today as if today is your pay day. Too many newsagents continue to run their businesses as if their pay day is when they sell. This will not happen.

Newsagents: look at your business, your sources of traffic, your average GP. Your success will come from many small steps.

Suppliers: Get smart in your engagement with newsagents. Trust them. Treat them with respect. Share their mission to grow traffic and GP and basket value. Give newsagents complete control over what they sell of your products.

14 likes

Category: magazines · Management tip · marketing · marketing tip · Newsagency benchmark · Newsagency challenges · Newsagency management · newsagency marketing · newsagency of the future · Newsagency opportunities

7 responses so far ↓

  • 1 allan wickham // Feb 7, 2014 at 8:31 AM

    Thanks for the info Mark.
    Just on the supplier note at the bottom, we are off to the Sydney gift fair next week and have changed our tags to read “retailer” instead of “newsagent”. It will be very interesting to see what change in reaction we get from some suppliers. In past years as “newsagents” we have either been ignored or shown tradional product that some suppliers percieved was for us.
    We are doing this purely as an exercise……..

    6 likes

  • 2 Gary // Feb 7, 2014 at 7:43 PM

    Hi Mark,

    Out of curiosity, did the data show newsagents belonging to a group ie NewsXpress perform better than independents? Obviously performance is tied to the efforts of each individual operators.

    But it would be interesting if the data shows a trend of out-performance to reflect the benefits of joining a group, and certainly convince me to seriously consider joining.

    0 likes

  • 3 Mark Fletcher // Feb 7, 2014 at 8:04 PM

    Gary, first up, the only group not represented in this data set in the lucky charm. They’ll tell you their magazine sales are up because of their loyalty card but they have not published any evidence supporting this.

    There are some individual newsagencies reporting excellent magazine sales growth. More newsXpress newsagencies reported magazine sales growth than any other grouping.

    The real connection between newsagencies growing magazine sales is the other product categories uses to attract new customers. This is the real key. It happens that newsXpress has been driving new traffic for years and it appears to be paying off for engaged stores.

    There is life in the newsagency.

    1 likes

  • 4 Jeff // Feb 8, 2014 at 7:42 AM

    Very useful to have this to compare.

    0 likes

  • 5 Steve // Feb 10, 2014 at 12:31 PM

    Mark,
    I notice that 89% of stores carrying gifts reported sales growth in this category.

    Is there a correlation between stores carrying gifts / size of the gift section and stores reporting overall sales growth?

    Is basket value higher on average in stores carrying a larger range of gifts?

    0 likes

  • 6 Mark Fletcher // Feb 10, 2014 at 12:43 PM

    Steve I don’t have the shop floor size data.

    Gift sales should at the very least be 35% of card sales.

    One of my newsagencies is 135 sq. m. and gifts have 5% of floor space. Gifts account for 10% of sales and are up 25% YOY.

    Basket value is higher in newsagencies with a strong gift department.

    1 likes

  • 7 Steve // Feb 10, 2014 at 12:56 PM

    Mark
    The Steve in comment 5 isn’t this Steve. While I don’t claim copyright on my name it is going to get confusing.

    1 likes

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