Australian Newsagency Blog

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

Newsagency business analysis for a small country town newsagency

Mark Fletcher
May 7th, 2014 · No Comments

Here is a newsagency business performance analysis I did a few days ago for a small country town newsagency. The challenges they face are similar to what newsagencies in country towns across Australia face:

I’ve taken a separate look at your business and have some comments for you that I hope are helpful. Being in a small country town you have the challenges of limited traffic and competing with nearby big towns.

The challenges are reflected in your headline numbers of a decline in traffic of 14% and sales of 13%. The challenges are compounded by a decline in average number of items per sale and average item value.

The biggest challenge is that more than 40% of your revenue comes from newspapers and magazines. This anchors you in a 25% gross profit position for close to half of what you sell, challenging your gross profit potential. Digging deeper, though, I can see that the core of your magazine department is challenged. Overall unit sales are down 10% year on year. Weeklies account for only 10.65% of magazine sales. Where are people in your town purchasing their weeklies? They must be buying them from somewhere since weeklies, on average, account for 40% of magazines sold in a newsagency.

If this were my business, I’d be working on winning back the weekly magazine shopper. Either through a loyalty program or some other promotion that seeks to attract and lock in that weekly shopper. For without weekly shoppers many other product categories in a newsagency are challenged.

What is interesting is that special interest titles account for more magazine sales -15.05%. While these, too, have been hit by a decline – 6% – special interest customers are valuable. So whatever you are doing to serve them, keep doing it.

20.12% of your revenue comes from newspapers yet unit sales are down 2% year on year. Thankfully, price rises have blunted the impact of this down to a 6% decline in sales revenue from newspapers.

Outside of magazines and newspapers, stationery is the next big category for you, accounting for 21.36% of revenue. The bad news is the decline of 29% in revenue from stationery. With locals clearly seeing you as a stationery destination, I think it is worth asking what you could do with this category – expanding the range, tweaking prices to deliver a better GP, promoting outside the store to grow sales further. Stationery is in your top three and this means you could expect more from it.

Card sales are down 12% year on year. This is dreadful. When was your last re-plan? Are cards in the best location? Are you actively managing the department or leaving it up to your card supplier(s)? With cards generating 7.68% of your sales you need to do something. Your target should be that cards deliver at least 25% of your revenue.

Gifts sales falling 27% is not good news. based on your card sales, your gift revenue should be close to double what it is today. Being in a country town your opportunity is to offer a gift department that people love so much they travel less outside the town for gifts. I have seen newsagents achieve this in your type of situation.

While I understand the challenges of a country town main street situation, I’d encourage you to create a fresh look for your business from the window in. I;’d give less space to newspapers and magazines in front of your shop and in your window. Instead, I;d suggest compelling displays that make locals stop and see your business differently. I am not suggesting that you ignore papers and magazines, just that you take a more unique approach with how you market your shop inn your front window.

Country town newsagency businesses have the best opportunity for growth in my view. You are not encumbered with a restrictive lease about what you can sell. You have a shop front through which to define your business. You are more locally connected. And you have amore regular customer base on which to build your business.

Your data indicates opportunities. For example, craft & hobbies and home & lifestyle titles account for 25% of magazines sold. In these two categories is inspiration for gifts you could sell – to purchasers of these magazines.

It’s important for your business investment that you are not reporting a decline a year from now. hence my encouragement for you to actively engage in changing the focus of the business. Chase traffic, gross profit and shopper loyalty.

I post some of the reports I do for newsagents on this blog where I think the comments offer broader appeal and interest. The goal is to encourage all newsagents to take a more critical view of their business.

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Category: Newsagency challenges · Newsagency management · newsagency of the future · Newsagency opportunities

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