I know of a couple of newsagents who are keen to see a discussion in the channel about the ratio of labour costs per hour to sales per hour. The figure for sales should be product sales plus agency commission.
With labour being usually the second highest business cost, after lease costs, it is appropriate that we share information in an effort to drive efficiency within the newsagency channel.
I was talking with a couple of newsagents yesterday about this and we compared rostered hours for the same one day from a couple of weeks back. The difference across the three similar-sized newsagencies five and a half hours or around $120.00. The cheapest business had cleverly managed the roster while the most expensive had not touched the roster in ages.
Play the $120 a day difference across the year and the more expensive business, in terms of rostered hours, faces $31,200 in additional costs just for the weekdays. That’s $100,000 in sales at least.
For ease of comparison, calculate it back at wages per $1,000 in sales. Include your time in the calculation too.
For this week averaged out it looks like $123 per $1000 in sales, incl one owners drawings.
Sounds poor to me but there it is.
To make this more meaningful maybe the owners wage should be assumed the same for anyone participating. Maybe $1000 for a week divided by the number of opening hours per week.
Difficult to work out as we’re combined with LPO, worked it out at $133 per $1000 in sales, but that’s not counting the post office revenue, which can vary widely day to day.
Interesting benchmark. Including Lotto commission we averaged a labour cost of $156 per $1,000 retail sales. If super costs are added then the figure is $168 per $1,000 sales. However if we reduce the effort that retail staff put into returns for the distribution part of the business the retail benchmark becomes $144 per $1,000 sales before super added.
We are running now at $113 per $1000, I would note that, unusally, we have two young staff on full time at this stage and that this figure is unusual in that context.
We are averaging $112 per $1000.
It’s amazing to see it in this perspective. Let’s say a GP on magazine of 33%, books of 35-50%, stationery and gifts of 50-75%; then, at the end of the day, with low profit margins, it’s fascinating to see a huge chunk of income put towards staff.
With back to school happening at the moment, the figures may be a bit skewed, compared to say Feb or March.
Mal, where do you get 33% for mags or am I missing something as we have been on 25% for most of our mags for years. That extra 8% on calculations could be huge depending on volume. If I’m wrong well and good but that 8% miss calculation blows out on the bottom line (20k per month @ 8% = 19K short per yr).
Again if I’m wrong then ignore me, I;m just saying check your margins.
I’m in NZ, even though we too deal with Gordon and Gotch, Netlink e.t.c, we get 33%. Yes, there is a difference with Aus an NZ margins, but to what I remember, Woolies also gets 33%…
Bloody hell, maybe I should move, good on NZ. Have a good one Mal.
cheers.
Mal as it happens I am in NZ today – Auckland.
Mark, that’s brilliant. Enjoy our sun today we haven’t got much of it in the last month. I’m just on the balcony at the University of Auckland, and it’s just brilliant here.
I did a sales per hour study from 1pm – 5pm Saturday and from 1pm-4pm Sunday over year and found that despite making $150000 in lotto sales at 7% commision we are actually running at a loss mainly on wages alone.Lotto needs to look at this if they want us to stay open in these hours as if we shut we will save money and they will lose significantly
Cannot agree more pat. You “look” busy and there is heaps of cash going in and out of the tills but at the end of the day all that is yours is the commission, take wages out esp. on weekends and it does not look so good. All this needs to be factored in. We moved our lotto counter so that it is now part of our main counter as we could no longer justify a full wage simply for lotto, but I see a lot of agents that still have it at the back of the shop. By doing this we save about $50k per year in wages, almost 2 full time positions which is good for my bottom line as we have lost no more sales because of it.