The speculation about the possibility of News Ltd moving to a free newspaper model sent me back to data gathered for the Q1 2009 Newsagent Sales Benchmark Study last week. I wanted to check in with how important newspapers were to the average newsagency – from a gtraffic and a financial perspective.
Across all participating newsagencies, newspaper sales account for between 3% and 27% of retail (non agency -lotteries etc) revenue. The difference between newsagencies is considerable.
Newsagencies with 15% or more revenue coming from newspapers, would be most concerned at the prospect of newspapers moving to a free model or pushing their product into more retail outlets. Typically, these are newsagencies which are not being managed for change. I am not critical of these newsagents, just concerned for them – that they are yet to embrace change.
For years, newspaper publishers have been saying it is business as usual. Retail sales and home delivery activity suggests this is true. That said, publisher financial performance tells a different story. Plunging ad revenue, higher distribution costs and alternative distribution platforms mean that change is inevitable – at some point in the next couple of years.
Smart newsagents are running their businesses as if the model has changed today. These are the newsagents with newspaper revenue accounting for less than 10% of retail sales.
Considering the data I have analysed, my view is that newspaper revenue ought to be below 10% of overall newsagency retail revenue. This would mean that the business is relying on higher margin lines such as gifts, stationery, greeting cards and service – over most of which the business owner has more control on range, merchandising and other business decisions.
Diversifying in this way need not negatively impact newspaper sales. It is a matter of adjusting the business away from the traditional approach to newspapers and, most likely, magazines so that it has scope to play in the newer (for newsagents) categories of gifts and related areas.
There are some in the newsagency channel who say that I am preaching doom and gloom when I write about these challenges or deliver a speech at a conference on similar themes. That would be true if all I did was talk about this in a negative way. I see many positives ahead, certainly many opportunities.
I see the changes coming in the newspaper distribution model as an opportunity for entrepreneurial newsagents to reinvent their businesses, to become more relevant for today’s circumstances. This is what many of the newsagents with a lower reliance on newspaper revenue are doing. It is what I have seen in the latest benchmark study – where newsagents have gone from deriving 20% and more of their revenue from newspapers to 15% without cutting actual newspaper revenue.
Sitting on the floor, cross-legged and tucked into the magazine fixture, this browser worked her way through a range of women’s magazines for more than half an hour. I don’t mind browsers (I do actually but I am usually able to remind myself that browsers can be customers if you give them time) – I have never put up signs saying this is not a library or told customers to move on for browsing for too long. What I saw last week went too far, it made it difficult for others looking at magazines in the same area, especially some of our otlder customers in walking frames.
