Australian Newsagency Blog

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

The challenge of convenience retail for newsagents considering the switch

Mark Fletcher
April 7th, 2014 · 3 Comments

colesxpNewsagents contemplating transitioning their business to a convenience model need to thoroughly research the range of convenience retail offerings in Australia, and not just those nearby, before changing their business focus.

Convenience is about more than convenient hours or location. 7-Eleven, Coles and Woolworths have made it about value with every location every day offering nationally recognised products at discount prices.

The photo, taken a couple of weeks ago, shows a Coles Express outlet in Melbourne. Click on the image to see the clarity of their pitch on price. Count how many offers being pitched and the consistency of their marketing collateral – from the Coles express shingle to each of the posters and signs.  The strength of their value proposition – it is obvious from far away. They are leveraging the nationally recognised Coles brand and their down down advertising campaign that focuses on price.

This is what newsagents who transition to a convenience offer need to compete with to be noticed – they will need to consistently make a professional and understandable pitch on price from outside the business to attract shoppers.

Attracting shoppers is important because convenience shoppers are fickle. There may be some customers who shop with you regularly because they walk past every day or catch public transport nearby but the majority of convenience business is new or infrequent visitors shopping with you.

The Coles pitch is clever, designed to get you thinking that everything is discounted when it’s not. But enough is discounted to support the value proposition once inside. Their goal is basket depth with fuel used as the anchor product.

The other aspect of the push over the last few years by 7-Eleven, Coles and Woolworths into fuel is that they are taking more convenience business from stand alone retailers, retailers without fuel like the old mill bars and delis. This is driving a change in shopper behaviour with people walking to one of the new style fuel outlets for what they would have purchased from the local milk bar or newsagency.

While CBD convenience outlets like City Convenience focus on being convenient (and certainly not price) as their point of difference, the convenience competitors most newsagents face will be a mixture of the price focused giants: 7-Eleven, Coles and Woolworths.

Newsagents wanting to play in the convenience need to thoroughly research their competitors and develop a model that is sustainable for a locally owned independent business. They need to make any move knowing what they will be up against in terms of the better supply terms and the consistent and professional marketing pitch of the majors.

6 likes

Category: Convenience retail · Impulse lines · marketing · Newsagency challenges · Newsagency management · newsagency marketing · newsagency of the future · Newsagency opportunities · Newsagent representation · Optimism

3 responses so far ↓

  • 1 Cris // Apr 8, 2014 at 8:41 PM

    Hi Mark, you have mentioned this channel on numerous times, if anyone was considering moving to convenience based model, they need to consider the following.
    Are you prepared to forfeit margin to remain competitive and have these low margin specials represent around 30% of sales, Tobacco related products at a similar low margin making up the next 30%, the last 40% being immediate consumption items that aren’t already on special, different pack sizes, hot food, coffee etc, immediate consumption being the operative words, convenience is perfectly matched with fuel(at little margin), its quick, easy. On the plus side to run a good convenience business you need to have stock turns at around 26, achieve an average margin of around 28%, be prepared to re-merchandise all displays every two weeks as a minimum, Have a business that has no noise, and efficiencies that the newsagent industry just doesn’t have, i.e. imagine all of your deliveries coming in between 11pm and 2am and being merchandised before 5am- all whilst being open and only using 1 staff member. Major planogram and store relays using a space to sales approach at least every 6 months. Better trading terms that only really count because of the stock turns and you can sell everything 2 times before you pay for it. The basic business principles of ROI, stock turns, GMROI etc all come in to play, plus going against 2 majors both with loyalty programs that are extremely well advanced and targeted to their audience. Thats just a snapshot of this channel, newsagents are a long way from being anywhere near this type of model, that is one of the real challenges we all face, inefficient and time heavy products that demand disproportionate space allocations, we have one real advantage- Lotto, we should be doing everything in our power to protect this as it is our traffic driver, our unique convenience opportunity,and lets us compete in what is an already crowded market. We need to reinforce our ownership of magazines and learn to compete in new markets, be they digital or traditional.
    Just my .02c worth

    9 likes

  • 2 Mark Fletcher // Apr 9, 2014 at 12:07 AM

    Cris thanks for this contribution. My concern is that I hear newsagents say they want to transition to convenience when they have not thought it through. Your contribution provides valuable insights for those folk.

    1 likes

  • 3 June // Apr 9, 2014 at 3:16 PM

    I have a family member who runs a SS/convenience store for a 24/7 company
    and they are very very time efficient.
    I couldn’t put it any better than Cris and
    it is true that we are a long way from this
    sort of efficacy.

    0 likes

Leave a Comment

Powered by sweet Captcha