Tower Systems newsagency benchmark performance results help newsagents

This study is based on data from 161 newsagencies in city and country, high street and shopping centre situations, newsagencies in different groups and trading alone.

Overall, Q2 2016 delivered better results than Q1. There is good news in these benchmark results, especially for newsagents who are working their business as retailers.

  • Customer traffic. 57% of newsagents report average decline of 1.4%.
  • Overall sales. 59% reported an average revenue decline of 2.2%.
  • Basket depth. 64% report a 1.9% decrease in basket size.
  • Basket dollar value. 61% report a decrease in basket value of 1.1%.
  • Discounting. 35% of respondents use a structured loyalty offer such as points or some other discount.

Benchmark results by key departments:

  1. Magazines.  78% of report an average decline in unit sales of 7%. The average decline in weeklies was 8.4%. 20% report an increase in unit sales.
  2. Newspapers.  77% report average decline in over the counter unit sales of 6.1%.
  3. Greeting cards.  56% of report average revenue increase of 2.9%.
  4. Lotteries. 68% of those with lotteries report average decline of 5.5% in transactions.
  5. Stationery.  77% of newsagents report a decline, with an average of 1.7%.
  6. Ink.  23% of stores report ink separately. Of these, 51% reported increase of 2%.
  7. Gifts. Of the 78% with gifts, 61% report average growth of 5.1%. Note: for the purposes of this analysis I roll gift related departments such as plush, collectibles, homewares and gifts into one.
  8. Tobacco. Of the 45% with tobacco, 73% report an average decline of 17%.
  9. Confectionery. 66% of stores reported an average decline of 3%.
  10. Toys. Of the 25% with toys, 70% report growth of 4.5%.

Here are some insights from analysis of the data:

  • High street and regional newsagencies were among the best performers.
  • The traditional newsagencies: papers / magazines / lotteries / cards / stationery and little or no gifts fared the worst.
  • Newsagencies with a strong gift department performed better with cards.
  • Newsagencies selling higher value gifts did better than those at the low (under $20) end.
  • Newsagencies in a group usually, but not always, perform better than those not.
  • In the successful group, the ratio of gift to card revenue continues to grow.
  • The most significant growth year on year is in the businesses where significant shop floor change has been undertaken. i.e. increasing gifts, shifting to higher price point products, introducing homewares and / or introducing toys – but not the usual low end toys we see in newsagencies.

I say the results this quarter are better than last because there is evidence of the value of embracing change. While there is no doubt that print media continues to challenge as does tobacco and lotteries, newsagents acting as retailers can achieve gains as the results show.

HOW TO USE THESE RESULTS
Look at your own situation. Compare your year on year results with those detailed here. If you are doing worse, act. If you are doing better, celebrate briefly and then get back to it.

There is no time to lose. We are in a period of extraordinary change and challenge on many fronts and the best way to confront change and challenge is to lean in and bring it on.

The business owners of any newsagency are the single most important influence on their results.

WHY I DO THIS STUDY
My interest in the study is as a newsagent and as a supplier to the channel through Tower Systems and through newsagency marketing group newsXpress. I want the channel to grow for selfish reasons and because it has been my life since 1981. I am invested.

BENCHMARK GOALS
I am often asked for benchmark goals newsagents ought to aim for. Here are some benchmarks I have developed in my work with newsXpress and through Tower Systems:

  1. Gross profit: this is the goal gross profit for all product sales not taking into account any revenue or costs related to any agency business. The traditional newsagency average sits at 28% to 32%. For a newsagency focused on the future, the goal has to be at least 45%.
  2. Ratio of Gift revenue to Card revenue: 50% minimum. The goal ought to be 100% or more. If you do $100K a year in cards, target to do $100K in gifts, or more.
  3. Revenue per employee – $250 an hour minimum not including agency revenue.
  4. Revenue PSQM $4,500 – $8,500 depending on country vs. city / high street to shopping centre and depending of product mix. Higher GP lower revenue required.
  5. Overall revenue mix percentage targets: Cards: 25%; Gifts/toys/plush: 25%; Stat: 10%; magazines/newspapers: 20%; other: 15%.
  6. Floorspace allocation: Cards: 25%; Gifts/toys/plush: 25%; Stat: 8%; magazines/newspapers: 15%; other products: 15%; office/back room / counter: 12%. It’s rare you make money from an office or store room.
  7. Mark-up goals: Stationery: 125%; Gifts 110%; plush: 110%.
  8. Occupancy cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Location and situation are a big factor in this benchmark. For example, a large shopping centre business will have a higher cost than a high street situation.
  9. Labour cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Labour cost should include fair market costs for all who work in the business. (See above).

If you want help transforming your newsagency business reach out for help to people you trust. The earlier you reach out the better.

Here are my contact details: Mobile – 0418 321 338; email – mark@towersystems.com.au. I will help as much as I am able.

Tower Systems serves in excess of 1,750+ newsagents with newsagency software. newsXpress has 220 newsagency businesses as members.

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