Overall business Gross Profit growth is the key answer to every major challenge retail newsagents face today.
A higher than average overall business gross profit can help you address:
- Falling shop traffic.
- Declining print media revenue.
- Increased rent.
- Increased labour costs.
A higher than average overall business gross profit helps you trade through these and other challenges.
The average overall business gross profit for a traditional newsagency currently sits at 28%. There has been little movement for years in these traditional businesses. A business with a reasonable but average range of gifts can expect this to increase to 32%.
32% overall business gross profit is insufficient in today’s marketplace. My recommendation is a ramping-up target. Target 40% today and once you are close, shift your target to 45%.
No one outside the business will fix this for you, not in the way it needs to be fixed. Here is my advice on growing overall business GP:
- Reset what you sell. You can only achieve higher overall GP if your product mix supports it a higher overall GP. This means more products with a GP above our target. It starts with your buying. However, before you can embrace this new buying you will need to break what you currently do.
- Focus on long term GP beneficial products. It is easy to source cheap China product with high GP. That may not be a sustainable answer in that much of the cheap gifts product does not work for the long term in most newsagency situations. For those products you get it, sell through and get out. No, the best higher GP products are those people will seek your shop out for and will attract return business from the same shoppers. These types of products are efficient as well as delivering higher GP.
- Reset your shop floor. Guide shoppers to a higher overall GP basket value. Use high traffic locations in-store to pitch high GP items to leverage the opportunity. The result of such shop floor moves will be that your business no longer looks like a traditional newsagency.
- Reset your out of store marketing. Higher GP items are more likely to be non-traditional.l Use these to reset shopper expectations about your business.
I appreciate these points are high level and lacking in detail. The reality is specific moves will depend on the USP you are targeting for your business and your specific location.
If you are successful and achieve a GP shift for the business while maintaining or growing revenue your business will be more able to withstand the challenges around traffic, print media declines and other difficulties in the marketplace.
Can you radically shift your overall business gross profit? Yes, absolutely.