News Corp earlier this week announced it’s latest commission rate for retail newsagents.
Making barely 12% of any product in retail today is nuts. While the year on year increase is 5%, it’s off a low low base and reinforces a fee that is below award rate level, below poverty line level.
An average suburban newsagency will sell, say, fifty papers Monday to Friday. That delivers $10.79 ex GST in margin. Out of that, the store has to fund labour, rent and other business costs. Selling fifty newspapers will take around twenty minutes. Twenty minutes will cost around $6.93 in labour costs. The space taken by papers will cost around $10.95.
Based on these two numbers alone, fifty newspapers sold a day provide a loss for the business. Add to this the labour cost of receiving inventory and managing returns, covering the cost of theft and dealing with other costs associated with newspapers.
This is the problem with newspapers in a retail newsagency today. The numbers do not work.
Some publisher reps say that the traffic generated is beneficial elsewhere in the business. There is no evidence in sales basket data to support this opinion.
No wonder some newsagents are quitting the category.
What would I like to see newspaper publishers do? Simple, be respectful with margin. Double it immediately as a start. This would encourage newsagent engagement. I am confident it would lift sales. This would serve publishers well.
Jason, Agreed it is simple a performance contract is necessary and would show the max results.