Newsagency business performance analysis: new owners
Here’s a brief analysis I did recently for a business under the control of new owners:
Thanks for providing your July – September 2013 versus 2012 Sales Comparison Report. In addition to considering this for the benchmark study I have looked at your data separately.
As new owners you have an opportunity to refresh the business, to put your own stamp on the business without being handcuffed to history. Here is what I can see in the data in terms of headline change opportunities.
Cards. Cards account for 5.96% of your total sales. revenue is down 13% year on year. I suggest you meet with your major card suppliers to review performance and to develop a plan for pursuing growth. I do wonder whether you have too many card suppliers to the business and whether this dilutes your caption coverage.
Gifts. Sales are down 13% off of $45,751 between July and September 2012. While this is against trend in the newsagency channel, the business you have just taken over has been strong in gifts for many years. So, the challenge is to reinstate growth. This is hard work but can be achieved by by careful management of the entire category.
Magazines. While your year on year decline of 10% in unit sales is not too far from the channel average, the 17% decline in weeklies is most concerning given this accounts for 18.32% of your sales. I suspect this is related to your 10% decline in sales (traffic). You need to act to arrest your magazine decline since magazines account for 10.27% of your sales and generate good traffic for the business. I’d suggest a relay and a fresh approach to magazines.
Stationery. The 16% decline in revenue demands attention as it’s a decline outside of the overall traffic decline.I could comment on more departments but I don’t see value in that since you’re still settling into the business. If you’ve not done so already, I think you need to think about the business and undertake some planning. Where do you want to take it in the next year, two years? It may be that you need to undo some of what is in place today before you pursue your own goals for the business.
The data suggests that you need to pursue change, maybe cutting back on some traditional lines and pursuing more new lines. You certainly don’t want the current trend of decline across the board to continue. If it were my business I would be driven by traffic and margin. I’d focus attention of any traffic generating product category while at the same time working on margin products – products delivering north of 50% gross profit.
In thinking about change, I’d also consider what the business stands for. Right now the business is broadly based. The data does not reflect specialisation. I’d pay more attention to this and develop a strong specialisation in several areas to strengthen your traffic pull.
I hope the comments are helpful. I’d be happy to discuss them at any time in-store.
