Back in 2012 you were being told…

https://www.insideretail.com.au/blog/2012/08/31/and-you-think-you-are-doing-it-tough/

There is arguably no retail sector doing it tougher than newsagents.

These businesses, often family operated, work horrendous hours for starters. It is not unusual to find newsagents at their shops by 4am busy preparing newspapers for delivery including wrapping them in clingfoil, then either delivering them themselves or paying someone to do it for them.

Bear in mind that the publishers pay a pittance for each delivery so newsagents need to subsidise this substantially if they hire someone. Then if they are a distributor, preparing the drops to sub distributors and delivering these by van/trolley to the various locations.

The reward? If a distributor, 25 per cent margin. If a sub distributor, 12.5 per cent.

There is no way that this is profitable. It is just a function of how much the loss is – and getting worse as circulations decline by five to six per cent per annum.

Let’s look at magazines. Not much better. Newsagents receive 25 per cent of cover price and they are responsible for auditing and arranging returns with little say in the number of magazines delivered in the first place. The publishers dump more or less what they want to on the newsagent, regardless of any previous arrangements.

Let’s move on to lotto. This is highly labour intensive and requires a certain amount of inventory plus special insurance. Costing out the labour versus the commission earned will basically reveal the profit or loss. Do not be surprised if the result is a loss.

Now look at bus tickets and phone cards and the administration and labour. Loss and loss.

What is happening is that newsagents are really providing a community service and funding it themselves. Since deregulation a few years ago, the supermarkets and convenience stores have been steadily eating the newsagent’s breakfasts. One can now buy magazines and newspapers at many locations plus get your lotto at a say a 7 Eleven.

Looking forward, the prognosis is not good. The ‘experts’ say that by 2020, 80 per cent of the news media will be digital. There are scenarios where the publishers will give away an iPad if one subscribes to say The Sydney Morning Herald on line for a year. Not that this should be a worry because as we have just said newsagents aren’t making much if anything out of newspaper sales.

So why are newsagents doing this to themselves?

One reason is that they have always done it and it is the only job they know. They see the foundation eroding from under them but they feel helpless. They just work harder and longer hours and do their best to survive. They put up with the areas of the business which are not contributing to profit by rationalising that they bring in traffic. They do most of the labour themselves and do not consider this a cost (which of course it is).  And they never analyse how much of the traffic brought in by newspapers and lotto is translating to other sales. If they did, they would be disappointed.

But the writing is on the wall. Just as it was for milkman many years ago. The job simply died. And garbos were in much the same position.

Well, there are a few ideas and questions that may shed some light on this.

Become a retailer with a newsagency flavour, and not a newsagent with a bit of retail thrown in

1. Look carefully at every section in the business. If it is not contributing to profit and you can’t make it (and remember to cost in your time), then give it the flick. Yes – out with Lotto, out with bus tickets, out with phone cards, and if you are a newspaper distributor, maybe elect to become a sub distributor and take your 12.5 per cent (instead of 25 per cent) and sleep in a little.

2. Take control. At the moment the industry is rife with people telling you what to do. The greeting card suppliers tell you what you should stock as do the magazine publishers. Lotto tells you where their counter will go. The newspapers tell you that you will deliver to homes. It is your business, not theirs. You are not a public service

3. Look carefully at your merchandise mix. What do you really know about retail and about retail buying processes and methods? Do you need help? Is your store layout really good with sensible adjacencies? Where is your profit coming from?

4. Ask yourself, what business am I in? Does your store make any kind of a statement (apart from being a newsagent)? Should it? And if so, what is that statement

5. Bear in mind that doing the same thing the same way means that it is insane to expect a different result. Have you got the energy and resources to reinvent yourself?