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

Author: Mark Fletcher

Some green shoots in December quarter sales data for Australian newsagents.

I have just, finally, completed analysis of the benchmark data provided by newsagents as part of my regular channel business performance study.

The October – December quarter sales data indicate a better result for magazines in Australian newsagencies with the rate of sales decline falling.

Benchmark headline numbers.

  • Magazine unit sales declined 9.5%. What is interesting is the weeklies. The average decline there was 6.9%. This is good news in that the decline has slowed.
  • Greeting card revenue was flat. However, one reported year on year growth of 17% with plenty at close to 10%.
  • Lottery revenue declined 1.6%.
  • Newspaper unit sales declined 12.5%.
  • Gift revenue increased by 15%. This is good news for those strong in gifts.
  • Toy revenue increased by 8%. This is good news for those strong in toys.
  • Plush revenue increased by 11%. This is good news for those strong in plush.
  • Stationery revenue declined 10%.

The above percentages reflect the overall performance of the 168 newsagency businesses in this benchmark study – large small, city country, in groups and solo.

The results for magazines represent the best quarter in the 2017 calendar year.

OVERALL PERFORMANCE DATA.

  • Customer traffic. 72% of newsagents report average decline of 4%.
  • Overall sales. 43% reported an average revenue growth of 3+%.
  • Basket depth. 46% report a 1.8% increase in basket size.
  • Basket dollar value. 49% report a increase in basket value of 4%.

THE MOST IMPORTANT DATA FOR NEWSAGENTS

This benchmark dataset provides newsagents something to compare with. The more important analysis is for newsagents to do your own comparison for their own business for these comparative periods. We are our most important competitor.

If your numbers are not as good as you want, things must change for if they do not change the trajectory will continue.

What is your intention for your business?

I urge you to ask yourself daily, what have I done today to reach a new shopper, someone who does not know we exist? This is what successful businesses in the benchmark study are doing and doing well.

BENCHMARK GOALS

I am often asked for benchmark goals newsagents ought to aim for. Here are some benchmarks I have developed in my work with newsXpress and through Tower Systems:

  1. Gross profit: this is the goal gross profit for all product sales not taking into account any revenue or costs related to any agency business. The traditional newsagency average sits at 28% to 32%. For a newsagency focused on the future, the goal has to be at least 45%.
  1. Ratio of Gift revenue to Card revenue: 50% minimum. The goal ought to be 100% or more. If you do $100K a year in cards, target to do $100K in gifts, or more.
  2. Revenue per employee – $250 an hour minimum not including agency revenue. This is a contentious KPI. If you think it is not for you, work the numbers back and see what your number needs to be based on each labour hour in the business.
  3. Revenue PSQM $4,500 – $8,500 depending on country vs. city / high street to shopping centre and depending of product mix. Higher GP lower revenue required.
  4. Overall revenue mix percentage targets: Cards: 25%; Gifts/toys/plush: 25%; Stat: 10%; magazines/newspapers: 20%; other: 15%.
  5. FLOORSPACE ALLOCATION: Cards: 25%; Gifts/toys/plush: 25%; Stat: 8%; magazines/newspapers: 15%; other products: 15%; office/back room / counter: 12%. It’s rare you make money from an office or store room.
  6. Mark-up goals: Stationery: 125%; Gifts 110%; plush: 110%.
  7. Occupancy cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Location and situation are a big factor in this benchmark. For example, a large shopping centre business will have a higher cost than a high street situation.
  8. Labour cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Labour cost should include fair market costs for all who work in the business. (See above).
20 likes
Newsagency benchmark

Anonymous mail

I have received four pieces of mail over the last two weeks from people asking me to publish material related to entities serving the newsagency channel. Each piece relates to national organisations in the channel.

One piece is highly critical and, I suspect, if published, would be open to legal challenge. The pieces are not related to businesses my businesses compete with.

Those who sent the material, and it may be several people, want this blog to be used to serve their agenda. They should find their own platform.

11 likes
Newsagency management

Pitching to older shoppers

I like this sign I saw in a US clothing store. Through this sign and elsewhere in the business they pitch to the older shopper and those who buy for them, in a fun and disarming way. Their in-store signage approach is more direct and obvious that what we tend to see in Australia.

4 likes
marketing

New faith based cards driving new shopper traffic

We have had several ranges of DaySpring faith based cards in store since prior to Christmas, long enough to get good data to access performance.

In addition to being added to baskets of existing shoppers, the DaySpring cards are helping us attract new shoppers to the business. We are doing this through a thoughtfully crafted social media campaign that seeks to reach people we think could purchase these cards.

Customer feedback has been wonderful.

DaySpring is a Hallmark subsidiary. These cards have never been available in newsagencies or regular card shops in Australia before. It is new ground we are grateful to have the opportunity to tread.

What we are finding is that the DaySpring cards have brand appeal, broader than one may think when you loom at the cards and realise that each contains a bible verse related to the sentiment expressed.

I know one newsagent who has the range who sold $165.00 of the cards to one customer in one transaction … yes, the customer was that thrilled to find the range.

The DaySpring shopper is more likely to purchase multiple cards in a single purchase, making them more valuable than the average card shopper.

We have the range in a spinner, which we move to interrupt destination traffic in-store and thereby have more retailers see the range.

Footnote: the DaySpring range is part of the newsXpress product exclusivity project that delivers newsXpress members access to products they are unable to source elsewhere, providing a range advantage. I am a Director of newsXpress.

9 likes
Greeting Cards

Media companies pile-on in the appeal against the Rebel Wilson verdict

ABC, Fairfax Media, News Corp, Seven, Nine, and Macquarie Media and all seeking leave of the court to have a say in the appeal by Bauer Media of the decision granting Rebel Wilson $4.5m in damages following her claim of defamation last year.

My personal view is that defamation payouts should not be held back, that Australian courts should be able to detriment payouts in the millions if they judge the harm to warrant it. The risk of such penalties should / could result in more accurate news reporting by media outlets.

6 likes
Media regulation

Discounted magazines appear here to stay

Look, I don’t get it, I don’t get why retailers continue to stock discounted magazines next to the full price version. Sure, in transit locations maybe, but newsagencies? No, I don’t get it, not for the business I prefer at least.

These bagged offers educate the magazine shoppers we really like – those who buy two or more weeklies a week. They won’t pay full price if they know they can get a deal.

I see my shop as a full service quality outlet. Discounting is only used to quit stock. Sure, there are loyalty offers but they require work, and loyalty, to unlock. The bagged magazine offer is a version of loyalty but really only benefiting the publisher.

Magazine publisher reps have explained the rationale to me in the past. But I still don’t get it.

I’d love to know what others think about these deals.

8 likes
magazines

More on the Powerball changes

I have seen the recent communication from Lotterywest to newsagents in preparation for the Powerball changes. The is much for retailers to communicate to customers, plenty of changes that will cause friction at the counter.

I know from feedback already that customers will have many questions, as will staff and newsagency business owners.

The changes are a challenge, but needed to lift sales if the research touted by Tatts and Lotterywest is accurate. People want bigger jackpots. The only way to get them is with changes like these. The changes come at a labour and customer relationship cost. This is why training and management are key, to mitigate situations that will arise.

While Lottoland has been busy with their marketing, I am yet to see anything that confronts the Powerball changes.

Newsagency suppliers hold ensure their team members are aware that the time around the launch of the new Powerball game will be challenging for newsagents.

3 likes
Lotteries

Good start to Sydney Gift Fair

Feedback from the floor of the Sydney Gift Fair is that optimism was strong among retailers and buying good.

Attendance was up 14% on level 1 and 18% on level 4 on 2017 numbers.

There is no better indicator of business outlook than buying at a major trade show like this.

Suppliers I have had contact with are happy with the first day of trade and sale looking forward to the next four.

My tips for retailers are:

  1. Ensure you know who else near could you get what you are interested in.
  2. Be clear about what is acceptable to you re backorders.
  3. Be clear about delivery timing you require. Some suppliers harvest orders and then order from overseas.
  4. have a budget.
  5. Never spend the full budget.
  6. Remember: you are not your customer.
3 likes
Gifts

Strong digital subs growth for Fairfax

Fairfax this week reported strong growth in digital subscriptions.

In the six months to December 31, The Australian Financial Review, The Sydney Morning Herald and The Age grew their total paid digital subscriber base by close to 50,000, the strongest half in four years, taking total subscribers across Fairfax’s three major titles to more than 283,000. Digital subscription revenue rose 11 per cent in the first half in the metro business.

This is an excellent result for the company, even considering the cost of obtaining and maintaining digital subs. It is a base and it reflects migration from print to digital.

Whereas print newspapers are primarily an advertising delivery medium, digital news platforms have the opportunity to be primarily news and analysis delivery platforms, driven by demonstrated reader interest.

The Fairfax boss said the company has been able to use data to better understand exactly what readers want and give it to them in ways media businesses have traditionally not been able to.

“This feeds into subscriptions. If more of your revenues are dependent upon subscriptions and less on advertising, clearly, you’re going to be saying ‘well, what do our subscribers want?’ So the focus becomes on your core audience rather than a mass audience. This all evolves, we’re always part of an endless learning process.”

Newsagents with business models that rely on print need to read the details of the Fairfax results and contemplate the results in the context of their own businesses. There is much to consider here if your business is reliant on print related revenue.

The live question is with such growth in digital subscriptions and continued declines in print, when?

Note: in case the article is now behind a paywall, click here.

0 likes
Media disruption

The challenge of the permitted use clause in shopping centre leases

Major shopping centres can be fierce in their interpretation and regulation of permitted use clauses in leases.

The permitted use clause details what you can sell or offer in your business.

Some newsagents are coming up against permitted use clause challenges when they evolve their businesses in response to market changes. I have and it can be a frustrating and expensive experience.

The ABC recently published a story about a hairdresser who refused a girl a haircut based on gender, because of the permitted use clause in their lease.

Vivien Houston was a regular at Jimmy Rod’s Barber Shop in The Gap Village Shopping Centre.

But when she turned up for a trim recently she was turned away because she was female.

Jimmy Rod’s managing director James O’Brien said women were not able to have haircuts at the shop because of a new lease agreement he had signed with the local shopping centre management.

It is important that anyone signing a lease does so knowing the full implications of the lease and, in particular, the permitted use clause. If I was a hairdresser I would not want my business to be in a position of turning anyone away because of gender.

It is disappointing the landlord sought this type of restriction for the barber shop. However, it is not uncommon for landlords to set permitted use stipulations that look ridiculous and non-commercial  on small businesses. It is a cost of business for those of us who trade in shopping centres so I guess we often suck it up.

We are in a retail world of rapid and considerable change. Legislating borders is out of date with the retail situation of today.

15 likes
Newsagency management

Gotch lets newsagents down with My Little Pony Adventures part series from Eaglemoss

The My Little Pony Colouring Adventures part series launches next week. I expect issue 1 will sell out quickly for some stores while others will have returns.

I say Gotch has let newsagents down because of their typically poor and one size fits all approach.

I have had My Little Pony products from multiple suppliers in store for ages, products that appeal to kids and adult collectors of the licence, yes adults. I also have a permanent unicorn department in-store, which appeals yo MLP shoppers too.

Stores with this level of engagement could do far better with the launch that will permit with its one size fits all approach.

I’d prefer Gotch to:

  1. Invite store engagement months out.
  2. Allow us to set supply quantities, without argument.
  3. Give us a better price for firm sale.
  4. Guarantee replenishment through to issue #12.
  5. Guarantee minimum supply for the run of the series where we have confirmed putaways.
  6. Help newsagents with allied product supplier suggestions. While engaged marketing groups will be onto this, Gotch could too.
  7. Make it very easy for shoppers to find stores.
  8. Provide pre-launch collateral to facilitate preorders.
  9. Provide demographic and other insights to help newsagents understand the broader opportunity. My Little Pony has a broader appeal than as a kids toy or kids character.

Sure Gotch is a magazine distributor. See their website and see their claims of being specialist. A specialist business would do more than they have done in the lead up to the launch of this title. It is not enough in my opinion.

We are going all out as My Little Pony Colouring Adventures will drive traffic in-store. I say this because support for the MLP brand is strong, I do understand the demographic and I am already setup to leverage that into deeper basket opportunities.

To anyone at Gotch rolling their eyes, frustrated, angry or annoyed at this post – all I want is for newsagents to make the maximum amount of money possible. Your poor execution will not see this happen.

Check out a TVC from the UK launch to see why I think this part series will be a bit.

Check out collateral Gotch has shared with the public via their Twitter feed:

10 likes
magazine distribution

XchangeIT failed newsagents on the Gotch data change

XchangeIT claims for itself a key role in data quality when it comes to magazine supply and return data in the newsagency channel. It is the copy, meting out punishment for poor data.

Last week, in the middle of the Gotch data structure change, XchangeIT oversaw faulty data sent to newsagents. data contrary to what newsagents had been told they would receive.

XchangeIT communicated to newsagents through their own software. They did not tell the software companies, the parties to whom newsagents turn for any tech question on matters such as this. They turn to software companies as they are more likely to open hours newsagents are open and are more likely to answer calls when newsagents call.

The help desk team at my software company, Tower Systems, found out about the data problem when newsagents canned. They had to then track it back through XchangeIT. The time wasted could have been avoided had XchangeIT been transparent in a timely manner with those at the front line of helping newsagents through what was for plenty of them a stressful situation.

Poor job XchangeIT.

Footnote: All through last week, help desk call traffic was up every day by more than 300%. This is because of queries, uncertainty and nervousness. By the end of the week things looked good. However, this week, call traffic is up too as there were others who did not do anything and now realised they should have. This is frustrating.

17 likes
Customer Service

Tracking average sale value as a key business performance metric

I track average sale value for my stores when assessing business performance monthly, by day of week, quarterly and annually. It is a valuable metric and a useful target to best over time.

In one of my stores, the average sale value for January was $12.35. This is in a  business without lotteries, tobacco and convenience lines, where magazines and papers represent under 20% of revenue.

The $12.25 result is up 11% from the previous year for the same location. This increase is excellent as it records valuable growth before even considering transaction count growth.

Three key metrics to focus on in any retail business are:

  1. Transaction count.
  2. Average sale value.
  3. Overall gross profit percentage – a factor of buying and / or mark-up.

Focus on these and other metrics important to you will be strong.

I like the focus on average sale value as it is a simple metric, easily understood by all in the business and easily targeted for growth.

Product placement, customer service and the sales counter experience all play into maximising the average sale value  achieved.

Thoughtful adjacency placement can drive impulse purchases on the shop floor.

Helpful but not intrusive shop floor engagement can guide purchases to a deeper basket, which lists purchase value.

A cleverly structured range of counter offers backed by helpful over the counter engagement can see items easily and valuably added to the basket at point of purchase.

This is why I like the average sale value metric. It is easy to articulate these things to staff, easy to get them on board and working with you.

Track the value. Note it in a common place. Make it the focus of team meetings. Ensure people are as focussed on growing this as you. Share the goal and rejoice in growth. Work to understand any decline.

Also, know that it will vary by season. This is why year on year comparisons for the same period in the calendar year are important.

12 likes
Newsagency management

Burn!

A supplier at the Toy Fair in New York this week has posters on the outside-facing wall of their large booth inviting comment. This one re Toys R Us had one tough comment.

5 likes
Small Business

Tips on improving cashflow in newsagencies and small business retail

Following on from my post last Thursday, here are tips for improving cashflow, to make it easier to settle supplier accounts on time and thereby improve leverage for better deals and terms.

  1. Set a budget for purchases, focussed on what you can spend and when you can spend it based on accurately anticipated cash flow.
  2. Quit dead stock. This should be a quarterly process based only on what is not selling. Dead stock has no value. Even cents in the dollar realises some value.
  3. Have an employee theft mitigation plan. Employee theft usually costs at least two thirds of theft and total theft in a business like a newsagency usually costs between 3% and 5% of product revenue. Cutting theft can free cash.
  4. Trim your roster. Labour is usually the second or third highest operating cost in a business. Every hour saved is cash released for inventory.
  5. Move work from the back office. If you price goods or manage returns from the back office, shift this work to the shop floor. Sales will improve as a result. This can be done without any increase in costs.
  6. Chase a deeper basket. Increasing average sale value improves shopper efficiency. banking more margin dollars per purchase improves your cash position.
  7. Have a new traffic strategy. Every new customer is valuable. A retail business not pursuing new customers, outside the business, is a dying business.

While some of the tasks on this list will be unappealing, they are key to improving business cash flow and improved business cash flow enables you to pay for stock on time and this helps you run a business that is more appealing to existing and new customers. It feeds into greater success for the business.

17 likes
Newsagency management

More respected brands cross into retail, opening more opportunities for us

Stanley is the latest brand that I have seen cross into a retail offering. If the John Deere experience of a year or two back is anything to go by, Stanley will do very well because of the multi-layered appeal … as a straight out kids product and as a product that an adult who loves and uses the brand will buy for kids to bring them into their world.

It is terrific seeing adult brands leverage brand awareness for products we can sell as part of a toy / craft pitch.

Newsagencies are well placed to leverage opportunities in this area, as the John Deere launch showed. It was great at new traffic generation and shop floor impulse purchases, because of existing brand awareness and respect.

The gift segment of our businesses continues to evolve, which is good for businesses – especially as specialisation is more important than ever. Opportunities abound.

5 likes
Gifts

What do you think of the Powerball changes?

I have been asked by several people to start a topic on the Powerball changes, so they can comment. Here it is. For those unfamiliar, here is a summary of the changes, from an email to retailers from Lotterywest:

More overall winners
We’re improving the odds of winning any prize from 1 in 78 to 1 in 44.

Big Jackpots
Bigger jackpots that customers love.

More Winning Numbers
The new Powerball game will draw 7 Winning Numbers from a barrel of 35 balls (numbered 1–35). The Powerball will still be drawn from a barrel of 20 balls (numbered 1–20).

New Prize Divisions
We’ll be adding a new Division 9 to the game, helping to increase the number of overall winners in every draw.

Pricing update
To help deliver more winners and big prizes, the cost of entry will increase by 25 cents per game (plus retailer commission). 

19 likes
Lotteries
Trending Articles

Fairfax changes approach to TV Guide, disrespects newsagents

Published on April 20, 2011

What do you think of the Powerball changes?

Published on February 16, 2018

IPS releases new magazine contracts

Published on June 21, 2011