Australian Newsagency Blog

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FY2018/19 newsagency sales benchmark results

Mark Fletcher
October 4th, 2019 · 30 Comments

Traditional newsagency businesses have no future if you consider the trajectory represented in the year on year comparison in FY 2018/19 financial year compared to the 2017/18 financial year newsagency fsasleds benchmark study just completed.

The study represents data from 157 newsagency businesses – city and country, high street and mall, banner groups and independent. Note: Each data point below is the average, mean, of all data for the data point.

OVERALL BUSINESS PERFORMANCE METRICS.

  • Customer traffic. Down 2.5%.
  • Overall sales. Down 2%.
  • Basket depth. Down 5%.
  • Basket dollar value. Down 3%.

CORE PRODUCTS.

  • Newspapers. Over the counter unit sales. Down 13.5%.
  • Magazines. Over the counter unit sales. Down 12.5%.
  • Greeting cards. Revenue. Down 4%.
  • Stationery. Revenue. Down 12%
  • Lotteries. Revenue. Up 4%
  • Tobacco. Revenue. Down 17%.
  • Agency. Parcels, gift cards, betting account top-up. Down 8%.

SPECIALTY PRODUCTS.

  • Gifts. Revenue. Up 7%.
  • Toys. Revenue. Up 4%.
  • Plush. Revenue. Up 4%.
  • Collectibles. Revenue. Up 7%.
  • Craft. Revenue. Up 4%.
  • Coffee. Revenue. Up 15%.
  • Books. Revenue. Up 6%.
  • Calendars. Revenue. Up 7%.

This year on year comparison is worse than we have seen in recent quarter analyses. This is in part due to a broader correction businesses. There is no one dominant group represented or one dominant type of business.

I have assessed each product category in isolation so as to not be distracted by businesses that are dominant in one and not another.

Print media.
Terminal decline. Publishers won’t like that representation. However, it is true if you look at the data from the last five years. There is no coming back from the eventual outcome, an outcome by the way I wish was not the case. In the meantime, we need to support the category and make the most of it, as the publishers themselves are doing.

Growth.
Less than 50% of the businesses that provided data had sales in the categories for which there was growth. This is a problem. There continue to be too many traditional newsagency businesses. That pure traditional model has no future.

There is plenty of good news. Look at Gifts. The average growth is 7%. There are many stores at 15%+ in growth. This is driving up the average. Typically, these are businesses in year two or three of their transition away from traditional newsagency operation and, often, focused on gift categories far removed from what you’d see in 98% of newsagency businesses.

City vs. Country.
Regional and rural businesses continue to perform better. This is across the board. Even when comparing pure traditional newsagency businesses this is true. Location does matter, at the moment. The difference will not last.

Upside opportunities.
Toys, crafts, coffee, books and plush offer update. However, in the traditional category of stationery there is upside too if you engage in a fresh way compared to what has been done in the past. Success requires the retailer being entrepreneurial.

The role of online.
Online should be accounting for at least 4% of revenue now. This is rare. However, I have seen it.

Is a newsagency a good investment? Can you make money?
Yes and yes, if you are good, engaged and focussed retailer. If you want a business that runs itself and ticks over, a newsagency is not for you. If you pine for a  newsagency from the past, a traditional business, it has no future.

New traffic, better margin, genuine growth in business valuations all come from focussing on products not recently traditionally aligned with our channel.

I own three newsagencies. I am glad I do. I am pleased with their performance.

As to your situation, that is what matters more thank any benchmark. You are your most important competitor and your most important benchmark.

Mark Fletcher.
Email: mark@towersystems.com.au  Website: www.towersystems.com.au  Blog: www.newsagencyblog.com.au
M | 0418 321 338

22 likes

Category: Newsagency benchmark · Newsagency management · Newsagency opportunities

30 responses so far ↓

  • 1 Steve Bloom // Oct 4, 2019 at 6:44 AM

    aint good, ha ha ha
    steve.bloom@gmx.com

    0 likes

  • 2 Graeme Day // Oct 4, 2019 at 11:05 AM

    A very considerable report and one that I believe from our own surveys typical of the cross section you have acquired the information from.
    More newsagents are contacing us today re selling than in the past 12 months.
    In the main it is as you say,newsagents that have not repositioned their Business Model to suit their environment and the “new” World of transitioning Retail with On Line, are not performing.
    there are many reasons for this,
    1.is the lack of Capital to invest,
    2.is the lack of knowledge of what to new product or service fits their operation.
    3. is the knowledge of how to implement, service and promote this new venture.
    And ofcourse there is the situatuion of it’s too late to turn the store around for all of the above reasons and the because of the inactivity the customer base has moved on.
    The Survey should act as a “wake up” call for those that wish to survive and not be used as justification for not going forward as it is the “economy stupid” and therefore nothing to do with them.

    3 likes

  • 3 Colin // Oct 4, 2019 at 9:41 PM

    Mark,

    There is s something amiss with 2nd para under growth. If those achieving good growth do so by differentiating and selling what 98% do not sell. Then only 2% are achieving good growth.
    Surely not true.

    0 likes

  • 4 Graeme Day // Oct 5, 2019 at 6:22 AM

    Interesting, Colin I read into the info that whilst those who had transitioned into a new business model were doing well This left a great deal of newsagencies doing part transition and they have been included in the 98%
    You have refocused me.

    0 likes

  • 5 Mark Fletcher // Oct 5, 2019 at 9:40 AM

    Colin I should have defined what I consider to be good growth.

    Good growth to me is growth new to the channel, revenue from new traffic, traffic that is sustainable and has upside in product offers.

    There are those achieving growth in traditional areas, which is good.However, there is a question about sustainability.

    0 likes

  • 6 Gary // Oct 5, 2019 at 12:10 PM

    The elephant in the room in this report is lotteries, up 4%. From what parallel universe did Fletch get his data. Or maybe I’m in a parallel universe, but there are a lot of others with me if I am. My YoY lotto revenue (lotto and scratchies) is up 20%. Lotto plays a major role in my business so this has boosted my overall YoY gross to 16% increase. Changed my greeting cards form Hallmark to Henderson and they are up 15% YoY. Gifts up 4% from a solid base. Mags flat and papers up 5%. Stationery the only fly in the ointment, down 10%.
    And for customer traffic, with the run of lotto jackpots you would have to be doing something drastically wrong not to have a substantial increase.
    Come on Mark, don’t treat us like nongs. Put your rose coloured glasses on tell the truth.

    0 likes

  • 7 Mark Fletcher // Oct 5, 2019 at 12:17 PM

    Gary, while you are entitled to your view, it is unfortunate you attack.

    The data is the data.

    I have data from a business for the same two year comparison, provided this morning: stationery up 10%, mags up 1%, papers down 7%, gifts up 20%, lotteries up 5%, toys up 25%, collectibles up 70%.

    Party of what we are seeing in this benchmark study is less ability for a channel wide view, because the channel itself is disappearing – in a good way – as business diversify.

    0 likes

  • 8 Gary // Oct 5, 2019 at 12:51 PM

    Attack, attack, what attack. I thought we were having a constructive debate. As with your data, just a matter of interpretation. A wise old statistician once told me, “torture the data and it will confess to anything.”

    1 likes

  • 9 Mark Fletcher // Oct 5, 2019 at 1:41 PM

    From what parallel universe did Fletch get his data.

    Come on Mark, don’t treat us like nongs. Put your rose coloured glasses on tell the truth.

    0 likes

  • 10 Gary // Oct 5, 2019 at 3:45 PM

    Yes, yes Mark, we know you’re a sensitive sausage who doesn’t like being “attacked”. The issue we are debating is misrepresentation of data, re 4% lotteries revenue. Lets get back on track. How do you explain the constant parade of lotto jackpots and only a 4% increase in revenue?

    2 likes

  • 11 Graeme Day // Oct 5, 2019 at 5:06 PM

    our basic increase in Lottery commisions is from minimum 14% to 28%

    0 likes

  • 12 Graeme Day // Oct 5, 2019 at 5:10 PM

    I meant our basic survey of Lottery commissions ranges from Min 14% to 28% increase over June past 12 months and even higher over actual 12 months ending September- PLUS extra Omni Channel increases add a further 10% for Green

    0 likes

  • 13 Mark Fletcher // Oct 5, 2019 at 6:41 PM

    Thanks, again Gary. The results I have reported are accurate. I don’t care if you believe me.

    Note, the data is to June 30, 2019.

    0 likes

  • 14 Jim // Oct 5, 2019 at 7:15 PM

    I lost confidence in this report some time ago because I could never reconcile the lottery sales with my shop and zone as reported by Tatts. Persistently understates lottery sales growth by circa 10%. Data seems to he massaged to suit the narrative.

    2 likes

  • 15 Mark Fletcher // Oct 5, 2019 at 7:30 PM

    No data massaging Jim. No narrative either. The Tabcorp results published recently show growth of revenue and extraordinary growth in migration online. That is not my narrative but, rather, one set by consumers.

    Now, you, Gary and others can complain all you like about what I write here, the reality has to be on your business.

    I own three shops and are focussed one them. I am happy with their results.

    0 likes

  • 16 Gary // Oct 5, 2019 at 7:37 PM

    “I don’t care if you believe me”. Very mature argument Mark. My concern is the use of data to misrepresent the state of the newsagency channel, even if it’s unintentional. After years of negatively we are finally seeing a turn around and interest in newsagencies again. To talk down the channel through corrupt data is irresponsible. Can’t believe that none of the 157 newsagencies showed the large increase in lotto revenue. Extraordinary.

    0 likes

  • 17 Mark Fletcher // Oct 6, 2019 at 6:08 AM

    Thanks Gary. I am not here to write what you want written or to change data to serve you.

    Of the 19,120 posts I have written at this place, the majority have been ;positive and focussed on positive outcomes for newsagents.

    The data is not corrupt.

    This post only talks down those running a traditional business that is not chasing new traffic. The reality is, as business owners, they can do what they like, as can you, as can I.

    Of the 157, less than 100 reported lotteries. Some because they do not have it and some because they do not track through their software. Of those reporting lotteries in their data, plenty had terrific growth and plenty did not.

    Gary, the most important focus is for your business. Good luck.

    4 likes

  • 18 Jonathan Wilson // Oct 6, 2019 at 9:17 PM

    With the decline in sales and the ever increasing rules and regulations that apply to tobacco sales, I am surprised there are still newsagents that sell cigs.

    In some cases they may get enough from all the sales that come with the purchase of the cigs to make stocking the cigs worthwhile.

    5 likes

  • 19 Graeme Day // Oct 6, 2019 at 11:06 PM

    Depends on the agency ..early morning..packet by packet purchase or discount in bulk which can be rebated.
    More and more are quitting cigarettes it is mainly a price consideration with less purchaesrs paying more to keep their habit. Excuse the pun It is a dying trade

    1 likes

  • 20 Colin // Oct 7, 2019 at 6:19 AM

    For the fans of lottery, and there are plenty, consider and be aware :

    – Australia is already the world’s gambling capital. It is not conceivable that spend can increase significantly

    -watch your demographics, the young are driving the online increases of 75% and even bigger drift to sports betting

    -nothing stigmatizes a business more than a lottery sign. Transitioning to a new business model is nigh on impossible in lottery outlets. It dominates the perception of what you are

    -lottery customers do not make make basket sales

    If you are doing a bundle with lottery all well and good, but where are going ?

    0 likes

  • 21 Graeme Day // Oct 7, 2019 at 8:46 AM

    Colin,
    This is such a definite statement of absolute nonsense. I have listed many and have many other newsagent clients doing exceptional lotto and exceptional Gift Lotto commissions of $250k p.a.Cards g.p of $300k and same shop Gifts of over $300k p.a.
    These stores “work” their clientele just as Mark does state to do here. Every person that comes into a store has someone, a friend, a relative who has a Birthday etc.
    I agree about the lasting and also about the younger people and on line etc however conversion and making money whilst the sun shines is there for the making and the taking.

    0 likes

  • 22 Mark Fletcher // Oct 7, 2019 at 10:13 AM

    This, from the Tabcorp Annual Report, speaks to Colin’s comments: In FY19, the performance of the business was positively impacted by continued game innovation, and upweighted investment in technology and data-led capability. Digital turnover was up a record 73.5%(ii), representing 23.5% (FY18: 16.8%(ii)) of total Lotteries turnover and digital momentum is continuing.

    0 likes

  • 23 Graeme Day // Oct 7, 2019 at 10:44 AM

    Starting with “-nothing stigmatizes a business more than a lottery sign” and continuing make make other such unbased statements is what I have answered.
    I have also answered the incredible growth of over the counter sales whilst appreciatiiiiing the on line growth as well. Knocking major partners does nothing for ongoing relationships and I find it misleadig the general public as well as newsagents who know better.

    1 likes

  • 24 Mark Fletcher // Oct 7, 2019 at 10:50 AM

    Graeme, I’d say that lotteries signage out the front of a business sets significant expectations as to what that business will sell beyond lotteries. The lotteries branding is what the shopper sees first. It is a battle to pitch beyond this. That is not a criticism, but, rather, a statement of what is.

    I think this is especially the case outside of WA for in WA, Lotterywest is far more co-operative with and for retailers.

    Retailers who want to diversify to pursue product sales upside will only truly be able to do this without lotteries. And, no, that is not a statement that they should ditch lotteries for only each retailer can determine what they want for the future their business.

    0 likes

  • 25 Colin // Oct 7, 2019 at 11:10 AM

    Graeme,

    Didn’t expect no push back. Maybe the exchanges were getting too close to your home business.

    Your first post indicates business coming to market for negative performance reasons.

    Still, when they list with 14 to 28% commissions uplift we will all be uplifted.

    We can agree to disagree on lotteries. My personal opinion is lotteries stigmatize in a negative way.

    0 likes

  • 26 Graeme Day // Oct 7, 2019 at 2:31 PM

    Colin, Mark, I disagree.
    in my business we see a lot of Sales and other data from all different areas run by all different retailers -some with great ideas going extremely well others I have explained here that lack Capital, and others lack knowhow. Some lack both.
    Colin your commentary presumes my position is based on what- which business? the brokerage or the Retail consultancy analysis -the Advisory side -not so it’s neither both however give me data that is inconsistent with your rather negative comment re Lotteries.
    Many are making the social contact with their lottery customers work for them resulting in their overall business growing in most categories except Stationery woiuld be consistantly the worst.
    Those have actively pursue sales with an on Line focus are the exception. Newspapers are in the main in decline -given the on line deals this is no wonder. mags are a bit tired and Gifts can excel cards.
    Mark does all this so I really only comment on something that is biased for what I believe to be the wrong reasons given especially when others are creaming their expansion with huge Lotto to boot.
    And Colin peole don’t buy newsagencies just because of Lotto or no lotto thogh it is a given intrinsic quality to have, they buy the bottom line. There are no formulas today -all gone It’s what suits the buyer. Give up jumping to conclusions without proof. It doesn’t work like that retail has become more centric over the years. i.e. Dress Shops selling Gifts and Coffee-flowers as well.
    Bookshops with Lotteries -Fantastic business one of the best businesses I owned -no newspapers -no mags-Cards (big range) Books, Stationery and Lotteries open 7 days 1979-to early 90’s
    i am speaking from personal ownership hands on of a very successful retail business.

    2 likes

  • 27 Steve O’Keefe // Oct 7, 2019 at 5:09 PM

    Mark thank you firstly for putting this info together. Always good to hear where revenue growth opportunities are (both traditional & importantly as you point out non traditional sales lines) Just curious do you also report by quartile band ie top 25%, bottom 25% etc? Do you also provide any data on costs per hour and net earnings? Seems to me any analysis of how we can each increase our earnings per principal hour/per square metre is something to be listened to.

    1 likes

  • 28 Mark Fletcher // Oct 7, 2019 at 9:26 PM

    Thanks Steve. In this study I don’t go to that level because SKU data outside of magazines and papers is flaky.

    I have previously published target benchmarks, which I will look at updating.

    The steps to increasing along the lines of what you seek are simple: broaden the range of products you sell, target 50% and higher GP items, target products with repeat sales opportunities, promote outside your four walls your points of difference, know the hot spots in your shop and leverage them and hire / train / motivate retail sales professionals.

    0 likes

  • 29 Andrew T // Oct 12, 2019 at 10:15 AM

    You probably won’t publish this but whatever.
    Three newsagencies in our area have shut up shop in the last fortnight with another one reducing the floor space by half. This is northern nsw and se QLD.

    0 likes

  • 30 Graeme Day // Oct 12, 2019 at 7:49 PM

    How sad I know a couple of newsagencies on the farNorth Coast that where suffering over the past few years a lot of it had to do with demographic changes. These may not be the same ones however demographics that is aged population is affecting a lot of the Rural community.

    1 likes

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