The West Australian cover price increased 50 cents today, to $3.00. It’s a 20% increase. (corrected)
From each sale, a retail newsagent makes 30 cents.
If a customer pays by a card and the shop does not surcharge, what the shop makes gets cut to 29.58 cents but more on that another time.
The shop has to fund theft from the 30 cents. Oh, and the 30 cents has to cover the cost of labour, the retail space, and overheads.
Let’s say a typical newsagency sells 30 of these newspapers a day. Heck, let’s make it 50 a day for this scenario.
That’s $15.00 the newsagent makes, not allowing for payment processing costs.
The time taken to unpack the papers, count them, make off the invoice and put out the stock and take off and count the unsold stock is, say, 10 minutes. That costs the business at least $4.20. If we were being thorough in analysing labour costs we would add a cost for each sale, but let’s not worry about that today.
The newspapers take up a set amount of space. Allowing for average lease costs, average shop space and a typical newspaper placement, it’s reasonable to say the retail space costs between $1.00 and $1.50 a day. For this post, we’ll agree on a $1.00 a day cost.
On average, the cost of theft of newspapers costs newsagents the equivalent of 2% of total newspaper sales in a year. In a shop like our example here it’s like the cost of a paper a day. I’m happy to cut that in half and say the cost of theft averages out to $1.50 a day.
So, from the $15.00 made from papers each day we deduct $4.20 being the labour cost, $1.00 being the cost of the retail space and $1.50 being the cost of theft. This leave $8.30. not allowing for the overheads of running the business and not allowing for opportunity cost – what we could do in that space if we did not have newspapers.
Until around eight years ago, newspaper traffic was valuable for a newsagency with the habit based shopper purchasing enough other products to make being a newspaper destination worth it. With newspapers now everywhere, the habit based shopper is rare, making the value of the newspaper shopper less.
Back to $8.30 the newsagent in my hypothetical makes from selling fifty newspapers. That’s 16.6 cents per sale.
The moment you slice the 50 newspapers a day into half, the numbers are awful as the labour cost and retail space costs are the same and theft will not be far off being the same. At 25 papers a day, the newsagent is left with 80 cents a day to cover the labour cost of selling 25 newspapers.
If you’re not a newsagent and reading this maybe now you can see why more newsagents are choosing to not sell newspapers.
Given the cost of labour retail space and theft, a $3.00 sale of The West Australian should, in my opinion, net a newsagent at least $1.00. That would be closer to being fair.
The current model of compensating retail newsagents for the sale of newspapers does not provide for a living wage. It is unfair. Nine Media, News Corp and other newspaper publishers need to pay a fair commercial rate for the services provided. That’s what a socially responsible business would do.
I’d love to see how the supermarkets are compensated, like completely compensated. I can’t imagine them accepting what newsagents get.
20% increase NOT 8% ……
Is there a point where a newsagent would say “the margins are too small, I am no longer going to carry the newspaper”? Or are newspapers still too important for newsagents?