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

retail margin

What AI found in one shop’s sales file

I have been testing the newly announced newsXpress AI business performance analysis service with a few different shops and it is fascinating what it discovers, that the retailers love.

In each case, the retailer invested a few minutes to run a report and answer a couple of quick questions. The skilled and carefully prompted AI did the rest of the work.

What the retailer got back was immediately actionable, quickly money making.

One retailer found a new product category they had never considered, something they can trial for monomial cost but that, if it works as expected will be a game changer, that’s what they called it, a game changer.

Another retailer retail was direct: this is the kick up the arse I needed.

Another retailer didn’t believe the insights and advice. Two days later they came back saying they had done their own research and \had to apologise because the report was right. How could it know?, they asked. That’s the secret sauce here – discovering the unknown about local retail businesses and helping them make good decisions quickly.

Another retailer was amazed at the ToDo list. This would have taken me days to research and put together. That was weeks ago. The made half the changes and are already making more money as a result.

These are true stories that have come from the AI services that newsXpress is now offering to other retailers, not just newsagents.

This has changed how I see my business was the response from the most skeptical retailer we worked with. They thought AI was a gimmick and only became involved in the trial reluctantly..

None of this is magic, and none of it required new software. The numbers were sitting in the POS all along, the way they are sitting in yours right now. Every shop’s system quietly records what sells, when, at what margin, alongside what does not sell at all. What has been missing is not the data. It is the time and the tools to ask the data anything useful. AI has made the asking fast and cheap, if you know how to ask.

Teaching retailers how to ask is exactly what the AI training packs do, on your data, live and one on one. The snapshot is the free taste of it.

The offer stands this month: send a sales extract from your POS, any POS, and one page comes back showing what AI can see in your numbers. No charge, no obligation, and most owners are surprised by something on the page.

Start here: help@newsxpress.com.au.

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AI

Making your newsagency worth buying

Fourth in the succession and exit series. Having faced your valuation, this post is the practical how-to: the multi-year project of lifting value before you list, so you sell the business you built rather than the one you happened to have.

From what I have seen, most owners decide to sell, then list the business as it is. That is backwards. The work that makes a business saleable happens in the two or three years before it goes on the market, not the week after.

A saleable business is not the same as a business that trades. Plenty of shops trade day to day but would never attract a buyer. Closing that gap is the most valuable project an owner nearing exit can take on.

Start early

You cannot fix a business on the way out the door. Value is built slowly, in the years before you sell.

The owners who exit well start preparing early, often three years out. That runway lets you lift profit, clean up the accounts and reduce how much the business leans on you. Leave it to the last minute and you sell whatever you happen to have, which is usually worth less than it could be.

Reduce the dependence on you

The single biggest thing that kills value is a business that only works because you are in it.

A buyer looking at a shop run entirely out of the owner’s head sees risk. They know the goodwill walks out the door with you. Every routine you carry in your memory, every supplier relationship only you hold, every decision only you can make lowers the price.

The fix is the same discipline as running under management. Document the systems. Train staff to run departments. Build relationships that survive your departure. A business that can run without you is a business someone else can imagine owning.

Lift the profit that counts

Buyers pay a multiple of sustainable profit, so every dollar of real profit you add is worth several dollars of sale price.

Rework the range for margin. Cut the dead stock that ties up cash and shelf space. Grow the gift, card and stationery lines that a buyer values, rather than leaning on thin-margin agency income. Lift the average sale. These are good things to do anyway, and near an exit they pay twice.

Sort the lease

A short or uncertain lease frightens buyers more than almost anything. Nobody wants to buy a business that might lose its premises in eighteen months.

Well before you list, talk to your landlord about the term. A solid lease with a decent run left, and clear assignment rights, makes the business far easier to sell. This is often the quiet difference between a deal that closes and one that falls over.

Clean up the accounts

A buyer cannot value what they cannot see. Messy books, cash that never quite reconciles, and personal expenses tangled through the business all create doubt, and doubt lowers offers.

Get two to three years of clean, clear financials together with your accountant. Separate your genuine business costs from owner perks. A buyer who can see the real profit at a glance will pay for it. One who has to guess will discount for the risk.

The point

You do not sell the business you have. You sell the business you spend the last few years building into something worth buying.

Reduce how much it depends on you, lift the profit that counts, sort the lease and clean the books. Start early enough and you turn a shop that merely trades into one a buyer actually wants.

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Newsagency management

The newsagencies that still sell

Second in the succession and exit series. Where the opening post explained why goodwill collapsed, this one is the counterpoint: the businesses that still attract buyers, and what they have in common. It sets the target the rest of the series helps you reach.

For all the talk of no buyers, some newsagencies do sell, and sell well. Understanding what they have in common is the most useful thing an owner planning an exit can learn. And I should also note for clarity there are some excellent businesses that do not sell, because of location, timing or some other factor that is likely outside the control of the owner.

The businesses that attract buyers are not luckier or better located. They are different in kind. They stopped being newsagencies in the old sense and became something a buyer can see a future in.

They earn from the right categories

The single clearest marker is the revenue mix. A saleable modern newsagency makes less than 10% of turnover from print, around 30% from lottery commission, and 60% from gifts, homewares, books, toys and similar lines, categories delivering 50% and more gross profit ().

That mix is what a buyer pays for. High-margin, owner-built categories are defensible and growing, unlike thin agency income. When most of your profit comes from gift and specialty retail rather than papers, a buyer sees a retail business with a future.

They are a destination, not a convenience

The shops that sell give customers a reason to come that a phone cannot replace.

They are places people choose to visit for the range, the discovery, the experience of browsing good product. That is very different from the old model, where customers came only for the paper or the lottery ticket and bought nothing else. A destination shop owns its traffic. A convenience shop borrows it from products that are now available everywhere. Buyers pay for owned traffic.

They do not depend on the owner

A saleable business runs on systems, not on one person’s memory and goodwill.

The shops that sell have documented processes, trained staff who run departments, and supplier relationships that survive a change of owner. A buyer can step in and keep it running. The goodwill stays because it lives in the business, not in the departing owner. This is the same discipline that lets a business run under management, and it is no coincidence that the same businesses can do both.

They have clean numbers and a sound lease

The unglamorous foundations matter as much as the shop floor.

The businesses that sell present clean, consistent financials that show real profit, and they trade on a solid lease with a decent term and workable assignment. A buyer can see what they are buying and knows they can keep the premises. Remove the doubt, and the business becomes something a bank will fund and a buyer will commit to.

The lesson for anyone planning to exit

The models that sell are not a separate species. They are the businesses that made the shift the market demanded, and made it early.

If you are years from exit, this is your blueprint. Move your revenue towards high-margin categories. Become a destination. Build systems so the shop does not depend on you. Sort the numbers and the lease. Do that work, and you move your business from the no-buyer column into the one that attracts offers.

The point

Newsagencies still sell when they have earned the right to. Strong margin from gift and specialty categories, owned traffic, independence from the owner, clean books and a sound lease.

None of it is luck. It comes from decisions made years before the sale. The exit you get is largely the exit you built.

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Newsagency management

The price increase you most likely haven’t tried yet

If you are like a ship I visited a few days ago, you are likely sitting on hundreds of well-selling products right now where a 50 cent or one dollar increase would go completely unnoticed by customers but would add real dollars to the bottom line by the end of the year. Not a dramatic margin overhaul — just a quiet, deliberate look at what you’re charging versus what the product is actually worth to the person buying it. That gap exists in almost every shop. The retailers who go looking for it find it.

When did you last put a price up just to see what happened?

Not because a supplier raised their cost. Not because the margin report flagged something. Just because you thought a product might be worth more than what you’re charging for it.

Most newsagents never do this. Prices move when costs move. Margin percentage drifts down without anyone noticing, and the business quietly earns less than it should for years.

The products worth testing are the ones customers want rather than need. A card for a specific occasion. A gift that’s genuinely hard to find locally. A collectible that’s selling faster than you can reorder it. For those products, shoppers will often pay more than the current price suggests — you just haven’t asked yet.

Put one price up. Watch it for a couple of weeks. If it keeps selling at the same rate, you’ve found margin you were leaving behind. If it slows, adjust it. Neither outcome is a problem. One earns you more money. The other tells you something useful about your customers.

The retailers doing this well aren’t testing everything at once. That’s not experimenting, that’s chaos. They pick lines with strong, consistent demand and move carefully. Over time those small experiments add up to a margin position that looks nothing like where they started — without a supplier negotiation or a ranging overhaul in sight.

Your POS data already shows you which products are moving consistently. Start there. Pick something with steady demand, nudge the price, and watch what the data shows over the next few weeks.

The worst that happens is you learn something. The best is that you find margin that’s been sitting there the whole time, waiting for you to notice.

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Newsagency management
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