The convenience model is one some Australian newsagents have embraced and one I know others are considering.
By convenience I mean a shop offering tobacco, candy, ready to eat food, lotteries, newspapers, top selling magazines and other high traffic everyday items people purchase locally or on the go.
Convenience businesses are strong in Australia. IBISWorld says there are 8,000 outlets although I am not sure what criteria sees a business counted by them.
I am not a fan of the convenience model as a model to be adopted by newsagents for the whole of the business for these reasons:
- Coles and Woolworths have several small footprint convenience models under way – showing their interest in this retail segment, following tremendous success from UK supermarkets. I am certain they will expand including on to the high street.
- 7-Eleven, City Convenience and On The Run are well established convenience models.
- SPAR is expanding in Australia.
- BP is expanding its presence in Australia.
- I cannot see any situation where a newsagents operating individually or through a newsagency group could buy better than their much bigger and centrally managed competitors.
- Newsagents cannot compete on advertising.
- Traffic is driven by location, brand awareness and price. I can’t see a newsagency business competing on these and surviving.
- Convenience customers are fickle – put a more convenient offer in front of them and you lose them as a customer.
Bottom line: newsagency businesses are too small and too under-resourced to compete with the players already well established in the convenience space. I am certain newsagents cannot win against the power of the slurpee and the might of Coles and Woolworths.
Another point to make is convenience relies on traffic for transport tickets, lotteries and tobacco. The first two and migrating online and the third is in stead decline.
There are far more opportunities through which to evolve our businesses where the competition is less powerful, less organised.
While I acknowledge there are newsagency businesses successfully trading under a convenience model and others will successfully enter this segment. The purpose of this post is to speak more broadly to the consideration and to encourage those considering it to be careful and thorough in their considerations.
Convenience is the business model most preferred by newsagents in the UK. However, walk down the high street of a town and you could see three or more convenience outlets from a supermarket group all competing with the local newsagent. That’s a battle an individual un-aligned newsagent will struggle to win.
What you do in your business is 100% up to you. You have to own your decisions as much as you have to own your position. My opinion should not matter to you any more than one person;s opinion to go into the mix of all you take on as you consider the future model of your business.
I have written about convenience today because it is big decision. You have to commit big time. It would be expensive to retreat.