Cards, magazines, stationery suffer in newsagency sales downturn

Retail sales declined 4% in the Australian newsagency channel in the April through June 2010 quarter compared to the same period in 2009.

Magazines and greeting cards lead the decline with many newsagencies reporting a double-digit decline in sales in both key product categories.

The latest newsagent performance data is from the Tower Systems Sales Benchmark Study. Tower Systems undertakes these studies on behalf of newsagents. This Q2 2010 study is based on sales data from 120 newsagencies, trading under four different banners plus independents, businesses in capital city regional and rural situations.

Here are the headline numbers:

• Overall sales. 71% of newsagencies reported a decline in sales for the quarter compared to the same period a year earlier. The average decline was 8%. Of the 29% reporting an increase in sales, the average increase was 2%.
• Basket size. 42% of newsagents reported a decline in average shopping basket size, 26% reported no change and 32% reported an average increase of 1%. The average shopping basket size for the quarter is 1.48 items. Rural and regional newsagencies report a 20% deeper basket than capital city newsagencies.
• Greeting cards. 76% of newsagents reported a decline in greeting card sales with the average decline 9%. On the 24% reporting an increase in greeting card sales, the average increase was 2%.
• Stationery. 62% of newsagents reported a decline in stationery sales with the average decline 9%. On the 38% reporting an increase in stationery sales, the average increase was 3%.
• Newspapers. 25% of newsagents reported a decline in newspaper sales with an average decline of just under 2%. 35% reported no change and 40% reported an increase of, on average, 1%.
• Magazines. 75% of newsagents reported a decline in magazine sales with an average decline of 10%. The brunt of the decline appears to have been felt in special interest, teen, motoring and craft. Food was the stand out category with most newsagencies reporting growth – that is the Master Chef effect. Women’s weeklies reported a decline lower than the overall department average.

The key newsagent departments of magazines and newspapers are reporting concerning declines – especially on the back of declines in 2009 over 2008.

The green shoots which were evident in the last benchmark study are not reflected in this new data except in some stores. For example, I have seen excellent growth for ink, books and gifts in some stores, but not across the channel.

Suppliers and industry leaders who care about a healthy newsagency channel will engage on the issues reflected in these benchmark numbers.  Those who do not engage will ignore the challenges at their peril.

The performance of the channel and the tough trading conditions many are experiencing ought to be the top priority topic at any conference, meeting or other newsagent channel gathering. The issues reflected in the numbers I have been looking at for the past week go to the heart of the future of the channel.

Besides the decline in core product categories and the overall sales decline, I am most concerned about our inefficient basket size.  Our basket performance is worse than our competitors: petrol, convenience, supermarkets, Australia Post, stationery businesses … yet no one appears worried.

The benchmark analysis process is time-consuming.  History has shown it to be accurate. I collect data for all sales for the periods being compared and analyse these in terms of unit sales (magazines, cards and newspapers) and revenue. Only data from stores adhering to industry IT standards is used.

I will publish a more complete report in the next couple of days.