“Green shoots” are good news opportunities that are breaking through and otherwise crust of not so good news, a feeling of uncertainty. They are opportunities you might leverage to improve business, or your outlook on business.
To move from a feeling of uncertainty to a clear strategy, you need to look past the bottom-line figure and find the specific areas where growth is still possible in your retail business. That’s what my advice is about today.
Here is a practical checklist to help you review your Profit & Loss (P&L) statement and your sales data to identify those “green shoots” of opportunity.
1. Identify high-margin winners
Review your Gross Profit (GP) by department rather than looking at the total shop average. Which specific categories currently deliver a GP higher than 45%? Can you give these products more prominent floor space or “prime real estate” near the entrance or counter? Are there products related to these that you could place with them. In a newsagency, greeting cards fall into this space yet too many newsagents leave managing cards to the card suppliers, abrogating their responsibility as the business owner.
2. Spot the “quiet” growth
Compare your current year’s sales to the previous year, specifically by category. Is there a niche category (e.g., specific gifts, high-end stationery, or hobby items) that has grown by 10% or more, even if the total volume is currently small? These are your “green shoots.” Consider redirecting a portion of your low-margin stock budget into these growing areas. Lean into growth opportunities.
3. Review labour efficiency
Labour is usually your highest cost. Look at your sales-to-labour ratio across different times of the week. Are there specific hours where the cost of keeping the doors open exceeds the GP generated? History should not dictate when you open, profitability should. Adjust your roster or opening hours slightly. Reinvest those saved hours into “retail” activities, like refreshing displays or managing social media, rather than just standing behind the counter.
4. Isolate “Agent” vs. “Retail” income
Distinguish between the income you receive as an agent (e.g., lotteries, transport cards) and your retail sales (e.g., gifts, cards, magazines). Track what else agency customers purchase when in-store.
What is the actual net profit of your agency services after you subtract the specific labour costs required to run them? If an agency service is barely breaking even, it is “noise.” Focus your energy on the retail side where you have control over the margin and the brand.
5. Audit occupancy costs
Look at your rent and outgoings as a percentage of your total GP. Is your occupancy cost exceeding 20% of your Gross Profit? If it is higher, you must either increase your GP through higher-margin products or prepare to negotiate your lease based on the reality of your data. In a newsagency today, the suggested target occupancy cost is 11%.
6. Search for dead capital
Review your inventory turnover. How much stock has not moved in the last 6 months? This is cash tied up on your shelves. Clear it out, even at or below cost, to provide the funds needed to invest in a new, traffic-generating product category.
Manage by evidence. Be dispassionate about it.
When you look at the data this way, the “fog” often lifts. You stop seeing a failing business and start seeing a collection of assets—some of which are working, and some of which are not.
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Mark Fletcher founded newsagency software company Tower Systems and is the CEO of newsXpress, a marketing group serving innovative newsagents who continuously evolve their businesses to be enjoyable, relevant and successful. You can reach him on mark@newsxpress.com.au or 0418 321 338.