Australian Newsagency Blog

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Why three of four newsagencies in one suburb closed

Mark Fletcher
September 14th, 2016 · 3 Comments

I was in a small suburb recently where three of the four newsagencies serving the suburb had closed over a relatively short period of time. I wanted to find out why as part of a broader project to understand why newsagencies close and to determine if this is a good or bad thing.

This suburb is middle class, quintessentially Australian with average unemployment and, for decades served by four strong newsagencies.

The suburb is also served by several good supermarkets, an Officeworks, a stationery business an gift shops.

The four newsagencies in question were within a few minutes walking distance from each other. That is the way newsagency businesses were located years ago, when newspaper home delivery was the core service of the business. The distribution territory determined the location of the shop.

Back in 1999, when newsagents lost their territorial exclusivity, no strategic work was done to rationalise the locations of newsagencies, except in Victoria where News Corp forced rationalisation of retail locations in areas with dense penetration. That tough work years ago left the Victorian newsagency channel stronger than other states. Victorian newsagents continue to benefit today to what was done back then.

In New South Wales and Queensland suburbs continues to be over serviced with newsagencies in this highly competitive marketplace where convenience stores, petrol outlets supermarkets and other retailers offer the traffic generating products and some services on which the traditional newsagency business relies.

But back to this suburb where three of the four long-term newsagencies closed.

One closed because the owner was tired, wanted out and could not sell because the business had no perceived value. The closure was more of a retirement.

The other two newsagencies closed because they were losing money and appeared unable to make the changes necessary to replace income lost to supermarkets, c-stores and petrol outlets. Small and shrinking distribution businesses did not save them.

All three newsagencies closed because they had not changed, they had not adapted. Yes, it is as simple as that. They watched newspaper, magazine and stationery revenue decline and had not changed the business in any way to replace the foot traffic and associated income.

The newsagency that remained had changed their focus, they introduced a gift department that has evolved and continues to evolve. They introduced toys, too, making the business more appealing. In introducing these they reduced the space in-store allocated to lower margin products, reducing the overheads of those categories on the business.

That newsagency has not stood still to benefit from the three closures. They continue to change, further from what is traditional for a newsagency.

Could the suburb have supported four newsagencies? I think so if the newsagents acted as retailers, if they offered a unique selling proposition through products that are sought after in the area, if they pitched themselves differently to each other. Ion that world, where all four remain, the four businesses would look different, they would not obviously be newsagencies, just as the one remaining business is not obviously a newsagency

In this suburb, the cause of closure is inaction by old school newsagents. While there will be variations to this store elsewhere, I think the single most common reason for newsagency closures is the failure of the business owner to be a retailer. Sure, it is hard work – it takes continuous investment of time and money. The result is a business of value rather than a business you close.

The traditional newsagency – newspapers, magazines, stationery, lotteries and cards – has no future except in the most exceptional circumstances.

If that traditional model is your business, my advice is to confront the challenge of inevitable decline with fast and focused action. You can turn things around but work on that needs to start right away.

Too many families in our channel are losing their investment because of ignorance. this has to change.

18 likes

Category: Competition · Newsagency challenges · Newsagency management · newsagency of the future

3 responses so far ↓

  • 1 MARK RICHARDSON // Sep 14, 2016 at 10:17 AM

    JB HIFI has risen from 1 store in Melbourne to become a retail powerhouse.
    Operating in a very competitive market JB is a good example of a business which continues to evolve

    1 likes

  • 2 Lance // Sep 14, 2016 at 6:35 PM

    ….and JB have just got bigger after spending $870m to take over The Good Guys.

    http://www.abc.net.au/news/2016-09-13/jb-hi-fi-announces-870m-good-guys-takeover/7837922

    Diversification does work if it’s thought through and done right. Many huge businesses have done it, that said, it doesn’t work in every case.
    Don’t be scared to get some solid advice from ppl with experience in your industry.
    They are out there, use them and keep growing.
    Yep, you CAN do it 🙂

    0 likes

  • 3 Colin // Sep 14, 2016 at 9:45 PM

    Maybe the suburb could support 4 diversified newsagencies, but how diversified would they need to be. Diversified from each other, unrecognisable as newsagents and each by using very different strategies ?. If so, why would they be thought of as newsagencies that survived ? They would be businesses that survived perhaps, but not as newsagencies.

    To survive we need to diversify and embrace change with a vision of where you are going. Mine is a gift / card shop. Being a diversified newsagent is not my aim, it is my route to get there. My newsagency will not survive, if it does, I will have failed.

    7 likes

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