I got out of doing back to school around ten years ago, because there was no evidence of it being profitable for my suburban Melbourne newsagency.
Sure, revenue was good. Margin was trimmed to the bone. People bought on price. They were not loyal through the year. So I got out of it.
I talked to people at GNS at the time and disagreed with them on the value of the season, that the traffic generated returns through the year. It’s like the theory of trickle down economics – nice to hear but not reflective of what really happens.
The current Officeworks catalogue is reminder of the challenge of back to school in the open buy space – where you chase business from walk-in shoppers without a specific school endorsement. The page 1 hero product is the 48 page exercise book, priced at 5 cents. This is the cheapest price I can find by far for this. Further in the catalogue are more compelling deals newsagents in this space will be frustrated with.
I can understand parents being price conscious, especially when a comparable product from a local small business retailer is as much as five or ten times the price. The Officeworks advertising on price pays off especially at this time of the year.
But back to school is not lost for the newsagency channel.
I know of many newsagents who do well from back to school. They either have strong local school support, contracts with local schools based on booklists or are located in regional situations.
In capital city suburban situations, newsagents doing well from walk-in (as opposed to the more structured booklist) back to school business is rarer today than a few years ago – thanks to the loss leader pricing of Officeworks and the tremendous competition from K-Mart and similar.
In my own shopping centre based businesses this time of the year while we have stationery, we prefer to focus on other seasonal opportunities. Calendars remain strong as are diaries. Plus, we have another non-traditional season built around full margin product that works a treat in January.
GP is the key for me. We must maintain above a percentage goal for the numbers of the business to work. Gone are the days of years ago of thinking that selling cheap today will drive loyalty and pay for the discount with revenue volume over time.