Do we still need newsagencies?

Louis White
March 15, 2015
The Age
For 12 years Richard Worsley has owned The Village Newsagency in Double Bay, but it was just one year into his venture that he realised he needed to change the mix of his business.
“I thought you need to make it as easy for the customer to buy your product, and newspaper sales were, and still are, a big portion of revenue, so I concentrated on home delivery,” Worsley says.
“There is nothing easier than for a customer to open his or her front door and find a newspaper there on their front lawn or doorstep. I started up newspaper rounds and bought rounds that other owners had struggled with so now I am one of the biggest home distributors of newspapers and magazines in the state.”
But Worsley admits that times are getting tougher for all newsagencies around Australia.
Advertisement
“I think before the GFC, newspaper and magazine sales reached a peak, but I would say that in the last 12 years magazine sales have fallen approximately 50 per cent, way more than newspapers,” he says. “That rarely gets talked about.
“I still think there is a future in selling newspapers but as far as pure profit goes, selling lotto tickets and tobacco gives you the greatest margin per square metre.”
Worsley believes newsagents and convenience stores should keep their exclusive rights to sell lottery tickets.
“We should keep the status quo,” he says, noting that the five-year moratorium expires on April 1.
“Allowing other retail outlets to sell lotto tickets, such as a Coles Express for example, doesn’t mean you will get more sales. In fact, it might just be the opposite. You might just cannibalise sales.
“It is also expensive to set up as you have to set up a dedicated internet line and it requires time and effort.”
Newsagencies around Australia are battling hard with falling newspaper and magazine sales, with an IBISWorld industry report, Newsagencies in Australia, released in January this year, revealing incomes have fallen an average of 2.7 per cent every year for the past five years.
Even though revenue is estimated at $2.1 billion in the 2014-15 financial year, it is predicted to fall at 1.5 per cent for the next five years. Furthermore, the report blames decreasing income on “volatility in consumer sentiment and a growing preference by individuals to access products online”. Combined with growth in internet connections and consumer adoption of new technology, this had led to “an increase in online access to news sources, a rise in mobile digital media and growth in direct subscriptions with publishers”.
The IBISWorld report states that from the $2.1 billion in revenue, 25 per cent can be attributed to cards, gifts and party items, 20 per cent to lottery products and magazines, 15 per cent other goods, and 10 per cent newspapers and stationery.
“We have certainly seen an increase in the sales of upmarket cards priced at around $15 and it is not unusual for them to buy four at once,” Alan Hines, director of three newsagencies in the Adelaide Hills region of South Australia, says.
“People are buying cards rather than gifts.”
Hines and her husband bought three newsagencies in 2010 and have managed to increased revenue year-on-year.
“Newsagencies need to think of themselves as a retailer and that is what we have done – expand our product range to include gifts such as baby products, toys and homeware.
“Diversification of products is the key to survival. Newspaper and magazine sales are dropping whereas lotto ticket sales remain stable.”
But while both Worsley and Hines have kept their newsagencies afloat, one leading real estate agent, says most newsagencies aren’t renewing their leases.
“It is common for newsagencies to either seek smaller space or leave the premises entirely when their lease expires,” says the agent, who didn’t want to be named.
“It is a dying industry and unless they find a way to re-invent themselves, I can’t see the traditional newsagent surviving.”
But David Negri, owner of the Clarendon Newsagency in Melbourne, believes newsagencies can survive by combining traditional sales with expanded product range.
“For 10 years I have been in the business and the trend now is move more into the gift business,” he says. “There are higher profits and higher margins.
“While I see a lot of newsagents moving into smaller floor space, most are paying the same amount of rent and still have staff costs to manage, especially on Sundays.”
Negri, like Worsley, is focusing on home delivery.
“I do see supplying the consumer with not only newspapers but say milk and bread as the future of the industry,” Negri says. “If we can be the one-stop shop for their daily products needs then that will keep us alive.
“I also think delivering to businesses with a range of daily products will increase profitability. We need to start thinking what do people in offices need?”
The saying “innovate or die” has never been more appropriate for the future of newsagencies.