My take away from visiting UK newsagents: we risk becoming a ghetto business

I’m leaving the UK concerned at the gulf between what I’d call convenience newsagents and destination newsagents. While there was a time when all newsagents (or the vast majority of them) in the UK were destination newsagents that’s changed and the convenience newsagents dominate the newsagent channel. The losers have been the business owners themselves and suppliers. I’ve been in many of the convenience newsagents and some are close to being ghetto businesses. Limited range, little compliance and clearly selling anything to make money no matter how far it strays from the core you’d expect from a business calling itself “newsagent”.

In Australia we risk developing these ‘ghetto’ newsagencies. We risk it because of suppliers pushing newsagency product lines elsewhere. While that may provide a short term sales kick it does not provide long term sales growth. We risk it because we (newsagents, suppliers, associations) do not well define what a newsagency is. We’ve allowed the politically correct deregulation to overtake what was a valuable channel.

The newsagency retail network in Australia is unique. While there are some compliance challenges, overall the network of 4,600 stores is an asset to suppliers, consumers and indeed the newsagents themselves. Suppliers would be well served building customer driving strategies with newsagents to underpin the network of stores and to ensure their relevance into the future. This will encourage more newsagents to reinvest in their businesses and therefore underpin customer traffic. At the moment one can understand why newsagents balk at reinvestment when they see top selling newspapers and magazines in more and more outlets. Respect newsagents with commitment and newsagents will respond with capital investment. A good win win.

For every magazine, newspaper, greeting card or lottery product purchase made outside the channel we risk losing a customer from the channel and this hurts not just the newsagents but also the suppliers who rely on newsagents to build business. While I appreciate the need for suppliers to have a balance of retail channels offering their product, it is in newsagencies in the newspaper, magazine and greeting card categories where suppliers get strong in store support. K-Mart, Coles, Safeway and Woolworths may sell more product in some categories but they don’t even take a phone call unless a supplier pays them to. Newsagents provide space and over the counter promotion support which is unique. Every sales lost to a non newsagency outlet puts that support at risk and takes us closer to the convenience newsagent model in the UK.

In the UK, out of 25,000 newsagents, you have, I am guessing, around 2,000 who comply and run solid newsagent businesses. The rest fall into the convenience newsagent category. This situation has evolved through, in part, lack of supplier support for the channel and now it is suppliers who complain about the state of the UK channel. It is crucial we do not make that mistake here.

Consumers are happy shopping in newsagencies, we’re conveniently located and operate at convenient hours. There are enough newsagents demonstrating excellent year on year sales growth in magazines, newspapers, lottery products and greeting cards to support by claim that stronger business support for newsagents will reap the sales growth some of these suppliers are seeking outside the newsagency channel. For example, in my newsagency women’s weekly magazine sales (Woman’s Day, New Idea, TV Week etc) sales are up by more than 50% year on year. Reward me for that rather than by helping the petrol and convenience stores near mine take some of the business away from me.

Suppliers could start with rewards based on sales success. As soon as newsagents see they can go beyond the traditional fixed GP on these core categories suppliers will see a higher and more successful level of engagement. It will take newsagents from being ‘agents’ to being business people. And that’s where there is more money for both sides.

While it may sound melodramatic, what I have seen in the UK is a future we could have unless we (all of us, newsagents and suppliers) recommit to strengthening the channel and ensuring we have the tools and incentives necessary to move forward rather than fighting a rear guard action as has been all too often the case since deregulation in 1999.

I didn’t like what I saw in the UK and will work hard to ensure newsagents don’t become ghetto retailers in Australia.