Month: July 2014

Some newsagents had a strong June 2014 quarter while the majority did not. The latest newsagency sales benchmark study shows the gap between newsagency businesses continues to widen. Here are the headline numbers:

• Customer traffic. 68% of newsagents recorded an average decline of 2.6% in transactions. 9% reported no change and the rest an average growth of 2.2%.
• Overall newsagency sales decline. 61% reported an average revenue decline of 5%. Of those reporting growth, the average was 5.4%.
• Basket depth. 58% reported a decrease in basket size (items in the basket) with an average decrease was 3.2%. 3% showed no change. The rest achieved 1.9% growth.
• Basket dollar value. 23% of newsagents an average increase in basket value of 2.4%.
• Discounting. 11% of respondents engaged in discount based loyalty marketing of one form or another.
• Circulation product sales continue to fall for most.

Newsagencies are not one size fits all – some doing very well and others doing poorly.

The gap between those doing well and those doing poorly does not need to be as great. Much of the success, or otherwise, comes down to leadership.

Newsagents make choices every day that can help a business grow or hold it back.

That said, would be wrong to talk about newsagents and make a common statement about how they (we) are doing as there is no common situation.

For the record, I note that the dataset includes independent newsagencies and branded businesses: Nextra, News Extra, Newspower and newsXpress. Of the latter, with which I am connected, there are only four.

Benchmark results by key departments:

1. Magazines. 74% of newsagents reported an average decline (in units) of magazine sales of 7.1%. 5% reported no change and 21% reported average growth of 6.2%. NEWSAGENTS CAN GROW MAGAZINE SALES. In the 21% reporting magazine sales growth, most growth was outside the weeklies. Partworks continued to play an important role in the growth achieved by those achieving growth.
2. Newspapers. 81% reported average decline of 3.8% in over the counter newspaper sales. HOWEVER: Cover price rises continue to account for revenue growth.
3. Greeting cards. 55% of newsagents reported average growth of 2.2%. Of those reporting a decline, the average was 4.1%. NOTE: Everyday counter cards account for between 50% and 60% of all cards sold in most newsagencies – this where we need to focus our attention.
4. Stationery. 56% of newsagents reported an average decline of 2.3%. Of those reporting growth, the average was 4.3%. While over a softer quarter for stationery, the results are not too bad.
5. Ink. 46% of stores report ink separately. Of these, 56% reported growth of 2%.
6. Gifts. 71% of the newsagents in this study have a separate gift department. Of these, 52% reported average growth of 4%. Gifts are down overall on previous benchmark reports – speaking to the importance of careful management of this category.
7. Plush. 4% of newsagencies report on plush sales separately. I recommend this. A reasonable sales benchmark for plush is revenue equal to 25% of card revenue. In stores reporting on plush, sales are up on average 46%.
8. Tobacco. 91% of stores with tobacco reported an average decline of 7%.
9. Confectionery. 58% of stores reported an average decline of 5%.
10. Toys. 51% of stores with the department reporting growth of 4%. However, only 7% of survey participants have a toy department.

The strong are getting stronger and the weak are getting weaker.

There is no geographic or demographic barrier to growth from what I can see. One newsagency in a town with tough economic challenges and competing with several newsagencies achieved excellent year on year growth – by owning their situation and being proactive.

Product mix shift. Embedded in the data I receive is information about unit sale and revenues contribution between all product categories. The shift I saw last quarter is continuing – from the traditional print, lottery, card and stationery mix to a broader appeal by some. It is fascinating seeing the results of deliberate actions on the shop floor to attract more shoppers to a business.

Why my own newsagency is not included in this study: My numbers are significantly outside the average and I did not want them to skew the results. I don’t mean this to be an arrogant statement.

My numbers, all off a good base, are: Art & Craft up 83%, cards up 13% with Everyday Counter up 10% and it accounting for 47.44% of all sales, Gifts up 66%, magazines up 13%, Women’s Weeklies magazines (New Idea, Who, Woman’s Day, Famous etc) up 11%, Party Supplies up 96%, Plush up 47% and Toys up 86%.

This business does not have lotteries and does not sell tobacco products.

Average sales – up 2%. Average sale value – up 15%. Average items per sale – up 5%. Overall average GP – up 11%. Each of these measurement points compounds on the other, delivering a very strong result for the business.

This growth is as a result of a structured approach established in our business plan. This newsagency is in an outer suburban Westfield centre in Melbourne with around 300 stores including majors, another newsagents twelve gifts shops – plenty of nearby and price competitors for cards, gifts, magazines and plush.

It is run 100% under management.

I mention that the numbers are off a good base to provide context. The growth I claim off a low base would not be as good as these results off a good base.

I include my own data here for comparison and to illustrate that I walk the walk with newsagents. When I encourage newsagents to try things it is because I do in my own business. I put my money where my mouth is.

Newsagencies are good businesses to own. This study supports this belief. That many newsagents are reporting growth is magazines sales is a testament to the active engagement of those newsagents and their employees in this traffic-critical category.

The best type of newsagency to own is the one where you have the most control over what you sell and where you generate traffic for several product categories where average gross profit is 50% or higher.

The most important advice I have for newsagents has not changed: Run your business today as if today is your pay day. Too many newsagents continue to run their businesses as if their pay day is when they sell. This will not happen.

Newsagents: look at your business, your sources of traffic, your average GP. Your success will come from many small steps.

Suppliers: Get smart in your engagement with newsagents. Trust them. Treat them with respect. Share their mission to grow traffic and GP and basket value. Give newsagents complete control over what they sell of your products.

This year on year same-store newsagency sales benchmark study is an analysis of basket data from 136 newsagencies: city and country, shopping centre and high street, banner groups (Newspower, Nextra, News Extra, newsXpress and independent) and independent. To be included, a newsagency must have been using the same software for both analysis periods and be compliant with industry data standards.

If a supplier claims a product is selling well, ask for proof. If someone on the phone says they have been told to call you by a colleague, your marketing group or someone else, ask for proof. If a landlord makes a promise, ask for proof – get it in writing. If a salesman makes a claim about being better than a competitor, ask for proof – get it in writing.

Too often in our channel we are too trusting of what we are told. You’ll often find that asking for proof, evidence or documentation of a position put is ignored or declined – meaning it’ open to you to not trust what the have said.

There have been some grand lies told to newsagents, individually and collectively, over the years, lies that have cost individuals and the channel dearly.

Asking for proof is basic due diligence.

It’s healthy to be suspicious and trusting when you are provided appropriate evidence.

This week I am calling out five basic areas of retailing where some newsagents make the rest of us look bad. I am writing about these five areas because in the minds of plenty of Australian shoppers all newsagencies are as bad as the worst one they have visited.

CUSTOMER SERVICE

Even in basic customer service there is a big difference in newsagencies from uniforms and name badges to eating and drinking behind the counter to over the counter service. What one newsagent things is good service another may consider appalling and another may consider too good.

While in banner group businesses with which we compete such as 7-Eleven, Officeworks, Australia Post, Smiggle, supermarkets and others there are guides to drive consistency, in the newsagency channel among independent businesses there are no such minimum standards.

Does this matter? Not so much if we each care about our own businesses. However if we are relying on public perception about our business based on experience with other newsagencies it does matter.

This is why I think we need to be concerned about other businesses trading under the same shingle as us. We all need to do better, to meet minimum good standards for our future.

It is very basic retail management to focus on a consistent professional customer service offering. I think it’s something that we as a channel need to talk about and work on together.