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
