A blog on issues affecting Australia's newsagents, media and small business generally.
Newsagency management

Suppliers of fixed price / margin products to newsagents need to look at our rising labour costs

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.

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  1. Graeme Day

    Ooops! more like 2.5 cents if the Gross Profit Margin is 12.5 percent.
    The big problem is the sales fall with every increase and cutomer disatisfaction grows against the News reseller and the print media.

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  2. Mark Fletcher

    Not everyone is on the same percentage. many I know are on 8%.

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    • Graeme Day

      Correct. Those that have a Distribution contract of old along with a retail rellers agreement recieve 8.5% for their Delivery Sales plus delivey if RCTI customer of News and/or NINE and 12.5% for reselling.
      The individual resllers agreement is 12.5% cast in stone.
      The new arrangement for contracts are a resellers agreement NOT a newsagent any more and the Distribution Agreement -for those that still deliver under their own care of. These Distribution agents onle get 8.5% with some cases supplying themselves as a reseller only get 8.5% This totals 21% for both. Current invoices will provide this plus NINE now don’t show on their RCTI invoice the Home Delivery rate. They do for Sub-Agents however they show the Credits as Commission payments.
      Both Publishers are demonstrating (what you have noted many times) and that is we are no longer News-Agents one word or two doesn’t matter we have been told.
      The current Distribution contract is not one that is sold by the individual.It needs the approval of te Principal as in Principal and agents contracts whereas the new Resellers agreement has not the same ownership.
      If this doesn’t encourage the current newsagent to “give up” their Distribution I don’t know what would. Even though they could be making money now -they are on a hiding to nowhere -especially with Cover Price rises.
      On this subject even 8.5% or 8% as you say some are on the sum of 5% of the 20cents increase is 1 cent 8.5% is 1.7cents. Hardly anything as stated.

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