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

2019 vs. 2018 newsagency sales benchmark study results

Growth opportunities on show in 2019 vs. 2018 full year newsagency sales benchmark study results.

SUMMARY
Newsagency businesses in the benchmark study data pool focussed on new traffic generators fared well in 2019 compared to the performance of traditional newsagency businesses. 4 of the 5 traditional categories experienced year on year declines while all of the new product categories delivered growth.

Newsagencies focussed on change through new product categories are the future of the channel. New product categories usually offer a significantly better margin, better sell-through rate and better basket efficiency compared to traditional newsagency lines.

New product categories will evolve, too. What is strong today will be challenged by another category tomorrow. Change, substantial change is the new normal in retail.

THE DATASET
This newsagency sales benchmark study represents a comparison of sales data from 161 newsagency businesses for the 2018 and 2019 calendar years. These businesses are representative: city and country, high street and mall, banner groups and independent. The only thing connecting the businesses is that they use the Tower newsagency software. Note: Each data point below is the average, mean, of all data for the data point.

OVERALL PERFORMANCE METRICS.

  • Transaction count. Down 3.5%.
  • Sales revenue. Down 5%.
  • Basket depth. Down 3%.
  • Basket dollar value. Down 3%.

CORE PRODUCTS.

  • Newspapers. Over the counter unit sales. Down 10.5%.
  • Magazines. Over the counter unit sales. Down 12.5%.
  • Greeting cards. Revenue. Down 3.5%.
  • Stationery. Revenue. Down 9%.
  • Lotteries. Revenue. Up 23%.
  • Tobacco. Revenue. Down 19%.
  • Agency. Parcels, gift cards, betting account top-up. Down 4%.

SPECIALTY PRODUCTS.

  • Gifts. Revenue. Up 11%.
  • Toys. Revenue. Up 7%. Includes puzzles.
  • Plush. Revenue. Up 6%.
  • Collectibles. Revenue. Up 5%.
  • Craft. Revenue. Up 3%.
  • Coffee. Revenue. Up 17%.
  • Books. Revenue. Up 6%.
  • Calendars. Revenue. Up 6%.

Despite there being plenty of bad news at the department and category level, this latest study reveals plenty of good news. It encourages confidence around pursuing change, embracing new product categories and leveraging these to help redefine the focus of the business.

While the newsagency shingle remains for many businesses in our channel, movement away from what that shingle has stood for is key to the future.

Print media is a problem.
With margins slim – 25% for magazines and around 12% for papers for many – the impact of the continuing decline in sales is significant. The only to make papers and magazines work is to reduce costs associated switch carrying these products – retail space and labour. Changes here can encourage further decline. This is why more newsagents are wondering when they might quit print. 

Unless there is a change to margin percentage and an improvement in magazine cover prices, I suspect more in newsagents will exit print, unfortunately.

The growth categories.
Looking at the product categories for which there was growth – gifts, toys, plush, collectibles, craft, coffee – less than half the businesses in the dataset offered more than two of these. Even with the easy category of gift, more than a 25% of those reporting do not offer gifts, which shocks me.

City vs. Country.
Regional and rural businesses continue to perform better. This is across the board. It has always been thus. I think this is due in part to a lower retail space cost, stronger local shopper support and less competition.

Upside opportunities.
Toys, crafts, coffee, gifts, books and plush offer upside, as has been the case for several years. The best success comes from dealing with suppliers who do not usually supply the newsagency channel. That said, what each of these category labels mean varies significantly between businesses.

The role of online.
While there has been growth in the contribution of online, in an average business it accounts for less than 4% of non lottery revenue. There are some achieving more than 10% but they are small in number. Too many newsagents and missing out on the online opportunity.

Is a newsagency a good investment? 
My answer to this question continues to be yes. There is traffic value remaining in core products and opportunity to leverage this in other product categories.

The success of any newsagency business is more reliant on the retailer than on the channel itself. A poor retailer will run a poor newsagency. A good retailer will run a more successful newsagency.

New traffic, better margin, genuine growth in business valuations all come from focussing on products not recently traditionally aligned with our channel.

I own three newsagencies. I am glad I do. I am pleased with their performance.

Finally, I am grateful to all newsagents who shared their data for inclusion in this study.

Mark Fletcher.
Email: mark@towersystems.com.au  Website: www.towersystems.com.au  Blog: www.newsagencyblog.com.au
M | 0418 321 338

29 likes
Newsagency benchmark

Impressive Bookshop by WH Smith

Bookshop by WH Smith at Gatwick airport is impressive. While the product mix, table fixtures and shelving are not that different to the usual book retail in airports, the colour, signage and lighting choices give Bookshop a fresh and noticeable look.

Book retail in transit locations is strong. Range and ease of shopping are key. Giving an experience that takes you out of the usual airport rush and noise is important.

I like Bookshop. What they have done with this is fresh compared to the traditional high street retail we see from WH Smith.

Here are some photos that illustrate these points.

7 likes
Book retailing

Lottoland still active

While politicians have patted themselves on their backs for ‘fixing’ the Lottoland betting model, Lottoland is still in business as this Super Bowl promotional email shows. This must be frustrating to lottery retailers given how Lottoland mocked them in their TV commercials.

I can’t help but think this issue would have been resolved had all newsagent associations followed the ALNA strategy that led to the initial legislation being passed.

3 likes
Ethics

Coronavirus to impact the supply chain

Few suppliers at the Melbourne Gift Fair talked about the impact on the supply chain of the Coronavirus when, in reality, the impact is already being felt with factories in China remaining closed for two weeks longer than at this New Year time of the year.

There is talk that the Chinese government may extend the restart following Chinese New Year for a third time. The impact is not only  the finished goods factories but also those making components for them.

Once the factories do start, there will be logistical challenges with freight capacity finite.

Beyond the factory closures, there will be other impacts as governments deal with broader aspects of the virus. At borders, for example, there is discussion of new checks – based on what gift and related importers I deal with are saying.

I am also aware that major tech companies have announced hardware supply delays as a result of the impact of the virus on production plans.

Kudos to suppliers being transparent about the impact. Shame on any talking preorders and prepayments (or deposits) for product that will be impacted.

Retailers relying on locally made products will be less impacted.

7 likes
Social responsibility

Taking a look at experiential retail

The experience in the physical retail store matters more today than ever before thanks to smarter and more engaging online experiences. By experience, I mean more than professional service with a smile, accurate transacting and a neat and stoppable store layout.

The experience that matters today is what your store offers that is so interesting and memorable that people will tell others.

With some newsXpress colleagues I visited several interesting stores in Atlanta and New York when in the US for the Atlanta Gift Fair buying for newsXpress. Here is a 30 minute video of some of the stores we visited that we found interesting. There were others, and more insights too. This video reflects highlights.

The video is another example of one for of the many insights newsXpress offers its members – not suggesting they copy these retailers but, rather, to be aware of how retail is evolving in a range of specialty niches.

12 likes
retail

Refreshing Saturdays in the newsagency

Saturdays used to be big in retail newsagencies, back when there were fewer lottery draws, little or no Sunday trading and less late night shopping. We need to refresh Saturdays if the day is to be commercially valuable. Here are some suggestions:

  • Host events. Saturday specific. Fun. Engaging. Based around products people would not expect you to stock.
  • Host a local activities club – knitting, crochet, book, wine. Bring them and help them find new members.
  • Use the day for unpacking new product and get known for Saturdays as being the day for new product.
  • Free cake. Everyone loves cake. Partner with a local cake shop.
  • Draw prizes. If you do a lottery second chance draw, draw it on a Saturday with a bonus for the winner if they are in-store.
  • New displays. Make it a day of major change, noticeable change, in the shop.
  • Promote Saturday deals.

What ever you do it has to be about your business as it is the commercial outcomes you are looking for. I mention this so you can focus on what you need rather than what a local group may need / want ahead of you.

7 likes
Newsagency management

Herald Sun front page coronavirus headline is offensive

The headline, Chinese virus pandamonium (sic) on the front page of the Herald Sun yesterday was, in my opinion, racist and unnecessary.

I wish I had been at the shop because had I been and had I seen this I would not have put the newspaper out for sale.

Yes, I get that such a move is editorial in itself. However, in my shop I get to choose what I sell. This issue of the Herald Sun is not something I’d want to knowingly sell.

Back in mid 1996, a few months after I bought my first newsagency, we made the decision to stop selling cigarettes. We turned err back soon $2,000+ a week in retail sales. This was a decision based on what we felt was right for the business, for what it represented. It was the right decision.

Click here for more on this from Mumbrella, which was also the source of the image.

Footnote: now, before people say this is News Corp. bashing. I don’t care. I did not decide to run the headline in the Herald Sun. What I did do is label it racist. However, I think any reasonable person would reach this conclusion. News Corp. needs to be responsible for these race based and shrill editorial decisions.

24 likes
Ethics

Newsagents and what we sell

More and more newsagents are being referenced on social media and it’s not always how we might like.

5 likes
Newsagency challenges

WARNING: If you are running Windows 7

The Windows 7 operating system, from Microsoft is about to go unsupported.

What this means is that Microsoft will no longer develop and release updates for Windows 7, putting the users of this operating system at a security risk. There is an industry in the shadows filled with people who seek to exploit security flaws. The security flaws that work best for them are those for which patches are not released – like Windows 7 soon.

If you are running a computer with Windows 7, the best practice advice is that you upgrade your operating system as a matter of urgency. 

If you think your insurance will cover you for the costs of recovery, it may not if you have ignored advice to take reasonable steps to protect your business data.

4 likes
Newsagency management

The joy of jigsaws and the opportunity for newsagents

Nine newspapers ran an opinion piece, The joy of jigsaws, and why you should start them in your 20s, Tuesday. It was a terrific read.

Regulars here would know that I think jigsaws are a good fit for evolving newsagency businesses. Some may recall that newsxpress has been running a successful January is jigsaw month promotion for five years now. It continues to run because it is commercially successful.

The Nine opinion piece reinforces the health value of jigsaws.

Jigsaws can be effective stress relievers (assuming there are no pieces missing) but the range of health benefits to be gleaned from tackling the tiles can be far wider. The simple genius of the jigsaw is that it works both sides of the brain, analytical and creative, and also stimulates the production of both acetylcholine, crucial when you need to pay attention, and dopamine, the chemical that plays a key part not just in memory but the sense of feeling rewarded, too.

As you move into your 40s, the number of neurotransmitters in the brain begins to decline and while that doesn’t really alter the brain’s storage capacity, it does affect our ability to retrieve and process information.

This makes them a good gift a good purchase for oneself and a good product to have open for in-store engagement and use.

What I like about jigsaws is their efficiency as a product. What I mean by efficiency is…

  • Jigsaws can be purchased by shoppers for multiple reasons.
  • Jigsaws appeal across multiple age groups.
  • Jigsaws appeal across cultures.
  • Jigsaws are easily pitched on social media.
  • Jigsaws work as an in-store engagement opportunity.
  • Jigsaws offer good margin.

There are few product categories that are as diverse in their appeal as jigsaws. It’s why I have a permanent department of jigsaws in my shops and why they are regularly promoted front of store as well as on social media. They are an all year round gift opportunity, delivering a good return on space, labour and inventory investment.

From a newsXpress perspective, members are provided detailed strategic information they can use to successfully engage with the category. One insight from this that I will share here is – crossword shoppers are more likely to buy jigsaws and the crossword magazine segment is a key piece of good news in magazine sales based on the latest benchmark data.

7 likes
crosswords

Knee-jerk reaction by News Corp. Sunshine Coast publisher

As a result of single incident, decades-long newspaper delivery practices in there Sunshine Coast region have been uprooted with delivery drivers being told they cannot enter premises and drop bundles. At a few hours notice newsagents were told to organise locked boxes on the street or to be present for the 2asm (or thereabouts) delivery from tomorrow morning.

Nuts.

5 likes
Newspaper distribution

Dealing with a coronavirus diagnosis in or near a retail business

While the coronavirus situation in Australia is serious, it is not at a level where the government has issued specific operational advice for businesses such as retail. Click here for their current advice. Fears relating to the virus are being expressed in shops and retailers have wondered how they might respond.

Retailers can take some steps to encourage confidence in those entering the business.

  1. Keep the counter clean and tidy.
  2. Wipe the counter down with anti-bacterial wipes several times a day.
  3. Have pump dispensers of anti-bacterial hand sanitiser easily accessible to customers and to team members.
  4. Remind team members to use hand sanitiser regularly.
  5. Ensure that any team members with a cold are not at work.
  6. Do not make jokes about the virus.
  7. Do not comment about customers who are wearing a face mask.
  8. If customers do comment about the virus, have a plan for discussion.
  9. Play cheerful music in-store.
  10. Consider hosting a fun event that plays to your strengths.
  11. Keep abreast of news about the virus.
  12. If any team members have recently returned from China, be aware of the 14 day incubation period and advice for schools that kids returning from China are advised to stay away.
  13. Preserve cash as cash will matter if this gets worse. Saving today by being frugal could be key to your business down the track.

While this list may seem like an over reaction, it is better to be prepared and proactive than needing to be reactive.

The Coronavirus is not something to seek to profit from.

Stay focussed on what your business is known for.

13 likes
Newsagency management

Marketing tip: loving your community this Valentine’s Day

I first shared this idea seven years ago. It is even more relevant today given this bushfire season.

Embrace the love theme of Valentine’s Day but focus on your community. Cut out hundreds of hearts and ask your customers to write what they love about your town / community.

Put the hearts on show – so people can read the messages. Create a display in or on your window or create a tree-shaped frame onto which the hearts can be placed as leaves.

The completed tree or display, hopefully overflowing with heart-shapes with notes of what people love about their community becomes an inspiration for you and everyone who participated and looks at the finished art.

Let your council, chamber of commerce, community groups and schools know. Maybe invite a gold coin donation for each heart for a local charity. Let the local paper know as this is the type of local community story they should love.

There is no commercial goal here. No, this is a marketing idea designed solely to deepen the connection between your business and the local community.

8 likes
marketing

Bauer urges ACCC to approve Pacific Magazines acquisition

The Australian today has the story from Leo Shanahan about Bauer Media asking the ACCC to approve the PacMags acquisition.

Bauer Media boss urges ACCC to permit merger with Pacific
Bauer Media’s Australian boss has pleaded with the ACCC to allow the takeover of Seven’s ­Pacific Magazines in the interest of the struggling industry, pointing to growing unregulated online competition backed by the findings of the watchdog’s own digital platforms inquiry.

The call by Bauer ANZ chief executive Brendon Hill comes in a week that The Australian revealed the German-based media conglomerate lost a private equity suitor after Mercury Capital pulled out of a reported $150m offer to buy the Australian arm of Bauer Media. The buyout would have proceeded only had the Pacific deal gone ahead, but last year the competition watchdog released a discussionpaper outlining several possible barriers to the $40m merger, voicing concerns over possible price rises and declining quality of the titles.

Although the ACCC statement of issues recognised online competition as an issue, Mr Hill said he was dismayed the watchdog viewed competition between Woman’s Day, New Idea, That’s Life and Take 5 as “the market”, given it recently completed a landmark review into the effect of digital platforms of traditional media.

At an industry function last year, just after the proposed acquisition was announced, the CEO of Bauer announced to those attending that no magazine titles would be closed as a result of the acquisition.

I don’t see any public benefit in the ACCC blocking the proposed transaction.

From a newsagent perspective, magazines are not as critical to our future as they were, say, ten years ago and their relevance is fading. They continue toe as important but are no longer critical to the success of many in the channel. This is why I say, from a newsagent perspective, there is no reason to block the acquisition.

I think changes like single day delivery and greater focus on mass retailers like supermarkets (to the detriment of newsagents) will come regardless of the proposed acquisition. I say this considering that supermarkets pay for magazines they sell and not net sales based one sale or return. Newsagents would benefit from such an arrangement. Instead, we have to live with sale or return and ourselves carry the cost of shrinkage. This advantages supermarkets – hence my concerns about an even stronger relationship with them.

5 likes
magazines

Not opening Australia Day holiday

We made the decision to not open today. Historically in many major shopping centres, like where my own shops are located, the Australia Day public holiday is soft, break even at best as people embrace the last holiday before the school year starts.

Since we don’t have the obligation of lotteries we decided to not open. While we have magazines and papers in 2 of my stores, the sales and margin are not sufficient to support the penalty rate cost.

2020 is set to be an exciting year and having a day off like today at the start of the year is beneficial in terms of energy. It is also useful focussing on profitable days as they are far more useful than break even days.

6 likes
Newsagency management

Products we don’t need: Lamington chips

Apropos of nothing, I tried these Lamington chips today. They are disgusting. They are a perfect example of a product the world did not need and would be better off without. However, there must be enough interested for Smith’s to invest in creation and production. FYI I like potato chips. These, however, are truly awful.

4 likes
Ugh!

Talking about convenience retail trends and newsagencies

On Wednesday I shared this video about developments in the Amazon Go counter less, cashless, staffless conveyance retail model. Since sharing, several newsagents have contacted me with questions they did want to put their name to here. I agreed to note them and respond. Scroll down…

What is the estimated cost of the technology per store? My rough guess is around $500K, maybe more but not likely to be less at the moment. The cost will fall.

Do you expect to see this in Australia? Yes. I’d be surprised if operators like Coles and Woolworths are not advanced in planning.

If so, when? This year. If not, 2021.

Is this something an individual retailer could do? It’s not practical on a single store level given the role of data and the benefit of sharing labour cost across multiple close proximity stores.

If not, is there an alternative lower labour cost model we could work on? Yes. This required tighter management of inventory mix. That means less stock. Smaller retail space. A store that is focussed on convenience and not only convenience for part of the shop. It requires configuring the business for speed of shop and speed of transaction – not for part of it but all of it.

Where do newsagents fit in this? In the current c-store space in Australia, not that well because those in the space tend to struggle with letting go of being newsagents at their core.

What is your software company doing in this convenience space? I’ll announce more on that at another time.

7 likes
newsagency of the future

Owner of Papyrus stores in the US files for bankruptcy

In a further challenge to the Papyrus card brand, even though that falls under different ownership, the owner of the Papyrus greeting card shops in the US filed for bankruptcy over night.

Schurman Fine Papers files for protection from creditors, listing assets of as much as $50 million and liabilities of as much as $100 million.

  • Company affiliates include Papyruschain of stationary stores

  • Also operates or holds rights to the NIQUEA.D, Paper Destiny, Carlton Cards and American Greetings retail brands, per website

    • Schurman has said it will close all of its Papyrus stores, Retail Dive reportedlast week

  • The case is Schurman Fine Papers, 20-10135, U.S. Bankruptcy Court District of Delaware

 

4 likes
Greeting Cards

Transparency on bushfire fundraising

As I mentioned here a week or so ago, it is important we are transparent about funds raised in the name of bushfire relief and recovery. We made our donation a two days ago and shared the receipt on social media and in the shop. We chose the Red Cross because they are non denominational and non political.

The social media post itself is simple and appreciative. We followed the same approach with the Black Saturday fire fundraising. Customers appreciated it.

Footnote: Our only frustration is the news Wednesday afternoon that they will bank some donated funds for future disasters. I expect they will be under pressure to review this decision – I have certainly contacted them about this.

3 likes
Bagged magazines

Papyrus closing all US stores

Papyrus announced yesterday that it was closing all of its 260 US stores. Retail Dive has the story.

In a letter to employees, Dominique Schurman, COO of Schurman Retail Group, which owns Papyrus stores, said the company would close its doors. The company has hired liquidation firm Gordon Brothers to assist with the going-out-of-business sales, according to the letter, viewed by Retail Dive.

…

The company acquired the American Greetings and Carlton retail banners from American Greetings Corporation for $6 million plus equity in 2009. As part of the deal, Schurman sold its wholesale business to American Greetings. American Greetings Corporation — which last year was acquired by private equity firm Clayton, Dubilier & Rice — today makes Papyrus and the other brands that fill Schurman’s retail stores.

There is no coverage in press reports so far about what the move may mean, if anything, for the Papyrus card brand. That said, the store closure move will impact the card brand.

4 likes
Greeting Cards

Bauer Media for sale?

Yesterday, The Australian reported that a proposed sale of Bauer Media has fallen through. Before it was put behind a paywall, I accessed the article:

Magazine issues ‘scupper Bauer Media sale’
Private equity firm Mercury Capital is understood to have walked away from its plan to buy Bauer Media.

The decision comes after the competition regulator stymied local magazine consolidation last month.

People familiar situation told The Australian on Wednesday that Mercury is no longer pursuing the deal, although it is unclear what the Australian Competition & Consumer Commission’s part has played in the decision.

Last month, the ACCC raised concerns over Bauer’s proposed $40m acquisition of Seven West Media’s Pacific Magazines business, saying it could expose readers to higher prices or lower quality magazines.

The landmark deal to combine Australia’s largest magazine publishers would see competing titles Woman’s Day and New Idea, as well as Take Five and That’s Life, come under the same roof.

The ACCC’s concerns came on the same day that Seven West’s $64m takeover of Prime Media failed because of resistance from the regional TV broadcasters major shareholders, rival regional media players Antony Catalano and Bruce Gordon.

In a bid to salvage something from the deal, Kerry Stokes-controlled Seven West acquired a 14.9 per cent stake in affiliate partner Prime on the same day, December 19.

This follows a report in the Australian Financial Review from November

Private equity suitor likes the look of Bauer Media’s magazines
The surprise bid comes only three weeks after Bauer signed a $40 million deal to merge its local arm with long-time rival Pacific Magazines, owned by Seven West Media.

Private equity firm Mercury Capital is in advanced talks to buy Bauer Media’s Australian and New Zealand publishing business, which is home to magazines including The Australian Women’s Weekly and was once the backbone of the Packer family’s Australian Consolidated Press.

Street Talk can reveal Mercury Capital is seeking to win Bauer Media’s approval with a $150 million offer, which would end the German media company’s difficult seven-year stint in Australian publishing.

The surprise bid comes only three weeks after Bauer signed a $40 million deal to merge its local arm with long-time rival Pacific Magazines, owned by Seven West Media, in an effort to shore up its future. That deal is scheduled to complete before the end of this year.

Mercury Capital’s offer would value Bauer Media’s publishing business at about six-times annual earnings of $25 million, with the synergies expected to be “material”, lender sources told Street Talk.

Click on the link above for the full story.

4 likes
Media disruption

Taking a gentle approach to Australia Day

With supermarkets and discount variety stores offering cheap imported products – green and gold flags, stubby holders and similar – we are taking a more cerebral approach of celebrating the day with simple collateral that is not jingoistic.

For years, we copied with green and gold but no more. It’s a mugs game.

We have gone for this simple and celebratory message to counter the challenges of recent weeks.

10 likes
Social responsibility
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