Further to my earlier post, I’ve just analysed sales data from another 53 newsagencies covering January 2005 through March 2005. In city/suburban newsagencies 66% of newspapers are sold alone. In rural/regional newsagencies 35% of newspapers are sold alone. In all newsagencies newspapers are the highest selling product category – they are the highest traffic generator.
This success for newspaper sales in newsagencies is no surprise. Our channel was created by the publishers in the 1800s to serve their distribution needs. For over 100 years we have been the outlet to purchase newspapers and magazines from. It’s why there are 4,600 newsagencies across the country – in every town and every suburban high street situation.
Today, though, newsagencies are one of several channel in the publisher distribution strategy. Newspapers are no longer specialist product. They’re a convenience product.
Prior to deregulation in the late 1990s the Melbourne Herald Sun, Australia’s top selling newspaper, sold for $1.00. Newsagents had the retail pretty much sewn up. They did a good job too. Now, with sales not that different to prior to deregulation, you can buy newspapers in petrol outlets, convenience stores, supermarkets, variety stores and even coffee shops. So, newsagents have had significant sales taken from their businesses. Such is the product of deregulation. However, the back end of the operation has not deregulated. Newsagents have been left with deregulation type accounting and supply processes which bog their businesses down in inefficiencies which, I suspect, their retail competitors are not faced with. Ask a newsagent about the in store display rules they have to live with and compare these to newsagent competitors. You’ll soon see an unfair playing field.
The Herald Sun is still $1.00 today. Seven years on. In my store I make as much today as seven years ago yet now pay 35% more rent, 35% more wages, 40% more in operational costs. News Corp. controls my GP on my highest selling item and continues to look for new retail channels to take business from me. Something doesn’t make sense about this situation.
So, newsagents have lost sales to competitors as result of deregulation. They have also absorbed significant labour, lease and operation cost increases. Yet the cover price, which newsagents have no control over, has remained static. This is an appalling situation for newsagents. Unfair at best and economic suicide at worst.
Newsagent competitors are not as concerned since they are getting add on sales they (most at least) did not get previously.
Every new outlet carrying newspapers further erodes traffic to newsagencies and this is a huge risk for this challenged small business channel. Newsagents need strategies which build traffic in the face of further loss of newspaper traffic. They also need publisher agreement for cross promotion of other product with newspaper sales. At present publishers don’t want newsagents to promote other parts of their business to newspaper customers.
Newspaper publishers need to review their cover price to ensure that it reflects the value of the product to the consumer. They also need to agree to a commission for the retailer which reflects the real costs of offering the product in store. Finally, they need to support and encourage cross promotion of other products and services to newspaper customers.
In an ideal world I would buy my newspaper product for 50% less than it costs me today, I’d buy on ‘firm sale’ (i.e. no returns of unsold product) and I would have complete control as to how I display and promote newspaper product in store. I reckon the results would be a nice kick in sales.
This channel the publishers created is being slowly starved and drowned at the same time.
