Recent news flowing from the 3.5% increase to award wages has highlighted the concerns of some retailers. There has been news flowing from the Fair Work Commission’s 3.5% increase in award wages. It’s understandable that any cost increase can be unsettling, particularly for businesses operating on tight margins or at a break-even point.
We can either complain or act. It’s only by acting that we can work on our own businesses. While complaining may make us feel good, it achieves nothing, and it can have us looking at the matter selfishly when, in fact, we benefit from those on award wages having more money in their pocket to spend.
Many businesses operate under lease agreements that stipulate annual increases exceeding this wage adjustment. Why accept one guaranteed annual cost increase without complaint, yet complain over another that is often lower and less predictable?
In retail, people are an invaluable asset. A 3.5% wage increase in our current economy can be seen as a modest adjustment for such a vital component of any successful retail operation. For many local newsagencies, the direct impact of this increase on labour costs is likely to be under $100.
Instead of focusing on the challenge, let’s explore proactive strategies to not only absorb this cost but also enhance your business’s overall profitability. This isn’t about “poor me” – it’s about smart, adaptive retailing.
Here are some actionable ideas to consider:
- Rethink your pricing strategy: Embrace the value of local convenience. For categories like stationery, consider a mark-up of at least 110%. While many newsagents currently apply a 100% mark-up, a slight increase to 120% is unlikely to deter sales and will significantly boost your margins.
- Maximise counter sales: Strategically place high-margin, easy-to-purchase impulse items at your sales counter. Focus on products not readily available in convenience stores or supermarkets. As a fun and engaging touch, feature two of your funniest greeting cards, rotating them weekly to keep things fresh.
- Optimise your shop layout: Dedicate the front three metres of your store to products with strong profit margins. Minimise the presence of low-margin (under 50% gross profit) items in this prime retail space.
- Curate an engaging window display: Your front window is a powerful marketing tool. Make it “awesome” and unique every single week to capture attention and draw new customers in.
- Explore new product categories: Think outside the box! Can you introduce a product category that feels unexpected for your shop but has the potential to attract a new customer base? Innovation can lead to exciting discoveries.
- Drive productivity gains: Foster an environment that encourages productivity from everyone in the business, including yourself. Small efficiencies can add up to significant savings and increased output.
- Leverage your card department: Your greeting card section can be a hidden gem. By analysing your own sales data and working strategically with your card supplier, you can identify opportunities for easy wins. I’ve seen businesses boost card revenue by as much as 20% through targeted actions in this area.
This isn’t rocket science. In every retail business, there are straightforward adjustments that can generate that extra $100 or more. It simply requires a bit of focused time and attention.
I am confident that a review of any newsagency business could find the funds needed to cover the additional labour cost.
While it’s easy to express dissatisfaction, energy is better spent on proactive solutions. Prices naturally fluctuate, and rather than being surprised, local small business retailers have an opportunity to engage with these changes in a smarter, more strategic way.