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Changes in the GP% mix in newsagency businesses

I have been asked twice in the last month for basket analysis data for different types of newsagencies, to look at how they compare specifically in the percentage mix of products sold – using the basket and other data I have from the newsagency benchmark studies I do.

In each case, the request came from a party undertaking research into the current performance of the newsagency channel, to feed into projections they were developing to plot an expected future of the different types of newsagency businesses.

In my own analysis I group retail newsagencies in to three types. Here is one table of the top level analysis I shared on these three types of businesses:

Screen Shot 2016-12-08 at 10.13.28 PM

The purpose of this table is to show the difference in revenue contribution across key product categories for each of the three groupings of newsagency businesses as I see them.

While these groupings of mine are arbitrary, I have developed them after years of work in this area, looking at data from many newsagencies.

The results are what is happening, not what might happen but what is happening.

The traditional newsagency is the old-school business, the one reliant on papers, magazines, stationery, cards and tobacco. Oh, and probably lotteries in there too. However I did not include lotteries in this table as it is not relevant to the physical product based retail assessment I was looking at.

The transitioning newsagency is the one playing outside of what has been traditional. You will see a reasonable gift department and a retail focus more on seeking out new customers.

The advanced transitioning ‘newsagency’ is a business relying on non traditional newsagency lines for key traffic and selling traditional newsagency lines as the add on. There are not significant numbers of retail businesses in this group, yet. However, this group is rapidly growing.

This table surprises some suppliers, especially old-school newsagency suppliers as their model relies on the traditional and they wonder how to connect with those businesses that have eft the traditional model.

There is now doubt the newsagency channel is undergoing extraordinary change at a rapid pace. The purpose of this post is to share publicly there difference in terms of revenue breakdown percentages between the three broad groups as I define them in the hope it encourages newsagents to see where they sit and to consider further changes they can make.

Change is our friend. We need to embrace it in every part of our businesses, urgently.

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Newsagency challenges

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  1. John Fitzpatrick

    Mark,

    The advanced transitional newsagency has effectively given up on stationery and let Officeworks, Coles, Kmart and Big W/Woolworths have the market share?

    It would seem to be area where Newsagencies should be growing not halving.

    John

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  2. Mark Fletcher

    Not necessarily John. In many cases, the % fall for stationery is more a reflection of the extraordinary growth in other categories.

    In terms of the position of stationery in the channel, the biggest issue is supply to newsagents.

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  3. Jim

    Really nice piece of analysis Mark. It is staggering to think that there is still a large core group of traditional newsagent generating no revenue from gifts, homewares and children’s categories, when others that are transforming their businesses now generate half of their revenue from these lines.

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  4. Cuddles

    Mark what percentage make up each group?
    eg. What percentage of Australian Newsagents do you classify as Traditional?

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  5. Mark Fletcher

    Cuddles the only hard evidence I have is from the benchmark dataset, which is a group that varies in size quarter to quarter from 150 to 220 retail businesses. This group includes all banner groups except TLC. The anecdotal evidence I add to that is from what I see in stores and that group includes all banner groups.

    Here is my best guess breakdown of the percentage of all retail newsagency businesses for the three types of businesses:

    Traditional: 62%.
    Transitioning: 26%.
    Advanced Transitioning: 12%.

    However, these percentages change. I was in one newsagency eight weeks ago, a Traditional newsagency. I was back there this week and it is well into being a Transitioning business, hurtling to Advanced Transitioning.

    A retailer who sees the light can move from one group to another quickly.

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  6. Mark Fletcher

    Thanks Jim. I know of newsagents who say they are in gifts but by my assessment are not. Gifts itself is a category undergoing extraordinary rapid change, you only have to look at the most successful ‘gift’ stores in Australia to see it.

    This is why I do not like most agency business as it is too restrictive for retail today. Every retailer needs to be able to move quickly and without hindering obligation to a supplier.

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  7. Mark Richardson

    John as a Ancol board member you would see the decline in stationery sales to Newsagents.

    There are a number of reasons for this suppliers such as Ancol have to take some responsibility for the decline, price is a major factor and poor range of stock is another.

    Just as “traditional” Newsagents have no future neither do “traditional” suppliers have a future.

    In SA what complicates market even further is Ancol supplying stationey direct to schools and students via online sales and their own reps
    It was Newsagents who helped build up Ancols
    business now Ancol uses that advantage to compete against its own members ,other than yourself no other board member has the courage to post on this site and explain their actions.

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  8. Peter B

    I can hear the traditionalists saying it will be a Gift shop and not a newsagency.

    My question to them is was it your lifelong dream to be specifically a newsagent, or are you in business to be your own boss and have a profitable business?

    It would be best if we let the traditional newsagents be called newsagents, and those of us that have transitioned, to disassociate from the newsagency shingle completely.

    Who knows, one day we might be writing on the Australian Big Gift Blog!

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  9. Stacey

    Great bit of data, thanks Mark!
    Completely agree Peter B. I don’t classify us as a newsagent anymore as most of my suppliers wouldn’t deal with me if I did. We where a very traditional newsagent and now my gift percentages average 30-40% although it’s currently well over that for the Christmas season.
    I cannot wrap my head around this “but I’m a newsagent ” mentality. There is nothing I won’t sell if it makes me money. Business is business at the end of the day.

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  10. Colin

    How many transitioned newsagents are there?. Many are not transitioned but are now former newsagents. Nobody is opening advanced or transitioned or former newsagents.

    The term Newsagency, be it traditional, transitioning or advanced only has relevance for the legacy suppliers/associations who are desperate to hold onto their customers/members.

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