Australian Newsagency Blog

A blog on issues affecting Australia's newsagents, media and small business generally.

Liking the smaller format newsagency

Mark Fletcher
September 27th, 2010 · 4 Comments

newsxpress-forest-hill1.JPGWe are 13 days into our new temporary location so I figured it is time to provide an update on the downsizing experience so far.

To recap, we have gone from a 330 sq metre shop on level two of Forest Hill Chase, located near a busy entrance, to a 97 sq metre shop on level one, toward the middle of the centre. This move has been brought about because of major construction to level three which is impacting on the tenancy we were in on level two.

We have cut range in some key departments: magazines (range cut by 33%), stationery (80%), party supplies (50%), social stationery (65%), books (50%) and cards (25%).

Looking carefully at the sales data from the last 13 days, numbers for key departments are as follows:

  • Magazines – down 20%.
  • Newspapers – down 10%.
  • Lotteries – down 20%.
  • Cards – up 20%.
  • Stationery – down 33%.
  • Books – down 20%.
  • Ink – the same.

We have had Halloween out for a week and my feeling is that we will do better in this new location than we would have done upstairs. I expect the same for calendars and diaries.

The card number will increase further as the range settles. As part of the move we have had around 10% empty pockets. That is fixed tomorrow. The biggest change with cards was the balance between everyday and lifestyle. We have cut lifestyle by more than 50%.

I expect magazines to increase as well as we finesse the layout and improve the shopper experience.

Our occupancy cost has temporarily been but by 68%. Our labour cost has been cut by 15% and that is expected to fall further as the roster settles.

As regulars to the centre find us (yes we have signs at our old locations as well as elsewhere in the centre) I am confident that magazines will climb back to within 10% of our regular numbers, newspapers back to 100% and lotteries very close to 100%.

One challenge this past week has been the more than 160 boxes of deliveries – diaries, calendars and more Halloween stock. We have had to offload some of this to other stores and get even more creating in how we display stock in our own store.

I like the smaller format store a lot. Sure we are short of space and cannot present as a truly full service newsagency. We have been able to surgically cut stock without killing off the core of the business. The department which has taken the biggest hit is stationery but maybe it needed that given what we are achieving from just 20% of the range.

The smaller store has more of a vibe to it.  Yes it is cramped but everyone is enjoying this with good humour.   The biggest space problem from a customer perspective is shopping trolleys.  We don’t have room to accommodate them and this is costing some business.  I am not a fan given that they block the store, even in the old location.

Best of all, considering the revenue changes, the smaller format has a considerably lower occupancy cost.  This has to be the goal of every newsagency in a shopping centre.

With shopping centre rent per square metre being so high and increasing between 5% and 7% a year regardless of CPI, in future I will prefer newsagencies of 130 sq metres or less. A smaller store in a better location is more valuable. The exception of course would be a newsagency in the perfect high-traffic location in a AAA class shopping centre.

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Category: Newsagency opportunities · retail leases

4 responses so far ↓

  • 1 shaun s // Sep 27, 2010 at 6:03 AM

    sorrry off topic but does anyone know if there is a delivery problem in north Qld for TV week ? no stock at all has arrived

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  • 2 Ian // Sep 27, 2010 at 6:37 AM

    We had a note from the delivery driver saying no TV Week so it must have missed the truck to Nth Qld.

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  • 3 Y&G // Sep 27, 2010 at 8:49 AM

    Sorry to keep off topic, but a very refreshing thing happened just now. Received notice from Farifax that GC deliveries of the Age would be delayed by a couple of hours.
    Not a big thing, but the professional courtesy is very much appreciated.

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  • 4 ERIC // Sep 27, 2010 at 9:45 AM

    in term of per sq will cost more than a 300 sqm shop.
    my shop is 138sqm and it is the 3rd most expensive per sqm in my shopping centre, not including food retailers.
    the way i see it your store 300sqm is too big for a newsagency.

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