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

Chasing value in the newsagency

Value matters in any retail business, and and retailers have more control over value than they often think they have.

Today, I want to address value in retail in the context of product value.

The value of a product depends on the gross profit for that product, what you sell it for less what you paid for it. The real value of a product is the gross profit less the labour, and retail space costs for the product. The value of a product over a year is these things times the quantity of the product sold.

If you sell a gift for $250 with a GP% of 50%, you make $125.00. That’s the same as the GP you would make from around 380 newspapers, 85 magazines or 100 or so lottery tickets.

The challenge is to have the right higher price point items that sell at good volume to deliver more bankable margin dollars than you will make from lower margin legacy products.

This is where an engaged marketing group like my newsXpress helps its members grow profit, and through this cultivate greater value for their businesses, and from that flows enjoyment.

Can anyone sell items worth $250 or more? In my experience, yes!

But, value is about more than the ticket price of an item. Other factors include:

  • Buy price.
  • Stock turn.
  • Shrinkage.
  • Differentiation.

Too often, retailers focus only on the buy price, thinking that buying better is what matters. It’s only part of it. You can’t bank a percentage. You can only bank gross profit dollars. hence, the importance of turn.

So, buying at the right price is important as is the right product that will turn quickly, ideally, faster than items it replaces on the shop floor – thereby driving more value from that allocated space in your shop.

I see plenty of retailers restricting what they can achieve in their business by deciding what won’t work, without even trying it. I’ll try just abut anything and let my customers tell me if it works or not. Now, of course, there are some constraints on that approach – space, capital and relevance to the overall business. But, I will certainly try products outside what is immediately assumed to be relevant.

That approach of trying things, in pursuit of growing value, has revealed plenty of opportunities I’d not have considered under the more traditional paradigm of retail. business management.

This is one of the benefits of Covid, we have permission to be more experimental in what we sell, how we sell, when we sell and where we sell. Embracing those opportunities, in pursuit of driving business value, will land rewards.

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Newsagency management

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