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If you are concerned about the 3.75% wage increase, what’s your view on 5% rent increase?

There are plenty of stories in the news these past few days quoting retailers and some other business owners complaining about the 3.75% increase in award wages as determined by the Fair Work Commission.

While I understand retailers with break even or loss making businesses being unhappy at a cost increase, it’s likely these same retailers have a lease for their premises that locks in an annual increase that is higher than what the Fair Work Commission has just decided.

My point here is why contract for one guaranteed annual increase and complain about another, lower and often less consistent increase?

People are often an important asset in any retail business, at least they should be. A 3.75% increase is modest in this economy, and modest for an important asset for the business.

I suspect the cost of the 3.75% will be under $100 for most retail newsagencies. Here are some ways you can cover the cost:

  • Mark-up what you sell to reflect the convenience of local shopping. Stationery, for example, should be marked-up 105% at least. The majority of newsagents mark it up 100%. Moving to 120% will not hurt sales, and you’ll make more money.
  • Pitch good margin easy to purchase impulse items at the counter. These should be items not found in convenience stores or supermarkets. Include 2 of your funniest cards – but change them every week.
  • Configure the front 3 metres of your shop with good margin winners. Have as little as possible of low margin (less than 50% GP) product here.
  • Make your front window awesome and different every week.
  • Fine a new product category you can carry, something you’d never expect to see in your shop that could attract new shoppers.
  • Lead to achieve a productivity gain from mall who work in the business, including yourself.
  • Work in your card department. Depending on your card supplier, there could be some easy wins here using your own business data to better manage your card supplier actions. I have seen newsagencies boost card revenue 20% by taking the action I suggest here.

This is not rocket science. In every retail business there are easy moves you can make to make that extra $100 or so. All it takes is a bit of time and focus.

Complaining and saying poor me is easy. I think it’s a waste of energy and not a reflection of being a good retailer.

Prices go up. It’s not a surprise. I think local small business retailers can be smarter in terms of how we engage with this.

If you’d like to discuss this or any suggestions I’ve made, you can reach me at mark@towersystems.com.au.

Newsagency management

Join the discussion

  1. Rick

    My first reaction is that you’re wrong on this. The wage rise will be tough for many businesses. But you make a good point about rent. Mine is 5% a year or CPI if it is higher. So your point is well made about agreeing with that and then not agreeing with the wage rise.


  2. Jonathan Wilson

    I don’t get why businesses complain so much about wages going up yet they don’t really complain about rents going up or energy costs going up or any of their other costs going up…


  3. Jeff

    It’s uncomfortable but good commentary. The problem is media outlets only have complainers on and they are given a free run without any challenge about other costs going up.


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