In a few months, people working in newsagencies get a pay rise following the recent decision by Fair Work to increase labour costs under the Retail Award.
The challenge for newsagents is the product we sell over which we have no price or margin control. The impact of the challenge is intensified in businesses that rely more on low margin products like newspapers, magazines and lottery products.
Every time a supplier of fixed price / fixed margin decides to not increase price or margin percentage, they are saying to local small business newsagents to please take this hit for us, please absorb the higher costs in your businesses so that we can profit. Some suppliers go further – and follow our rules for if you don’t there will be commercial penalties … know your place!
The fixed margin and price situation leaves newsagents looking elsewhere for ways to fund the increased labour costs. While the best situation would be an increase in sales, for most, lowering costs elsewhere will be a focus.
Of course, the best situation would be not relying as much on low margin products in the overall revenue mix in your retail business. This is why, for years, I have written here about the need to range inventory focussed on attracting new shoppers to the business. The more you can grow the average GP% achieved in the business through products over which you have price control the better.
The solution lies in being a retailer in control of the business rather than being an agent.
Magazine publishers, newspaper publishers and lottery companies – yes, I am writing this for you.
Now, to any people at Nine Media patting themselves on their back for the 20 cent price rise to their capital city newspapers next week, stop it. The 20 cent cover price increase will give retail newsagents an extra half a cent, which is offensive.