Business performance analysis for a traditional newsagency

I was asked to look at the performance data for what I’d call a traditional newsagency recently. As the following brief report shows, this is an older-style newsagency dominated by lottery sales. The sales mix is very concerning as too higher a percentage of income is coming from one source.

I have looked at your Monthly Sales Comparison Report for April through July 2013 compared to the same period in 2012.

I can see from the data that the business is struggling. Your main traffic generator is lotteries, accounting for 61.76% of your traffic. As lottery sales migrate online your situation puts you at risk as you’re not generating traffic for any other significant product line.

You need to act urgently to repurpose the business. The easy route would be to play in the convenience / agency space. The problem with this is that it’s nothing special and nothing you control as your own. With Australia Post nearby and offering high tech solutions in parcels, bill payment and other areas, I can’t see how you can compete with their mature and nationally marketed offer.

Once I strip out lotteries, dry cleaning classified ads and instant scratch ticket sales, you’re at $5,550 in sales. If I take out low margin and falling (at 16% YOY) tobacco sales you’re well below $5,000 a week.

I think you would be better off creating a pint of difference around other opportunities. For example, your data shows several opportunities I’d be interested in if I were you:

1. Magazines. Motoring titles account for 13.28% of sales and sport at 6.9%. So, your shop has a reasonable male shopper skew. What gifts do you offer for males? I can’t tell because your gift sales data does not provide this detail. Women’s Weeklies magazines account for 23.8% of total magazine sales. Are you catering to women in your gift offer?
2. Stationery. You’re doing $250 a week in stationery sales. If you have more than $3,000 invested in stationery stock then you;re grossly under-performing in this space.

Your business, in the data, looks like an old style newsagency, one that was built i the day of regulation and tradition. It’s time for you to break free and be a retailer exerting control over the business. You have to stand for something other than lotteries and magazines, something extra to generate net new traffic for you. the question is what is that? What can you offer that will bring shoppers to your business?

I can see you dabbling in gifts at $150 a week in sales. What’s working, what are the expansion opportunities.

You will do far better attracting shoppers for gifts and other items at 50% and more GP than if you focus on agent type business that earns you far less and relies on others to generate traffic for you.

The biggest challenge is whether you want to take control of the business, to break free from being a shopkeeper and becoming a retailer with a business plan. It’s hard work. I’ve seen it succeed in the most unlikely situations. The key is to engage aggressively targeting your goals and not what others say your goals should be.

Your data suggests that you need to act with urgency.

While I’d rather write a more positive report, this could become positive if the owner recasts the business to generate traffic for themselves, from their own initiatives and in pursuit of better margin. I understand how hard this is and that such a change takes cash and time. However the challenges of today’s newsagency are not unexpected.

For decades our channel was protected and we could get away with being average and with others generating traffic for us. Today’s reality is that our further in each of our businesses is 100% up to us.