Achi news desk-
Retail newsagents in Western Australia earn 7.8% gross profit on sale of weekend edition of TAustralian Financial Review while East Coast retail newsagents earn 10.6% for the same product. Here is the evidence. First, the WA message:
Now, pay attention to the East Coast:
Both of these comments come from Paul Munro, director, sales release and operations at Nine Circulation, based in Sydney.
They value Western Australian retail newsagents less than their east coast counterparts, but labor and occupancy costs in WA are the same as elsewhere.
And then there’s the wider question of whether it’s worth keeping the AFR in stock for every retail newsagent. Until you unpack the product, count what you got, put it in the store and incur additional overhead, 10% does not cover costs and that doesn’t even consider theft, which the retailer is responsible for.
Maybe the newsagents who no longer sell newspapers made the right move.
In the past when I raised a margin with newspaper and magazine publishers and mentioned supermarkets, they said supermarkets get the same margin. When challenged, a couple pointed out that there are other fees paid to supermarkets for stall placement or, in the past, guaranteed pocket placement at checkout. I am not sure if Nine Media has such an arrangement for supermarkets.
An older retail worker who works at a newsstand on Saturday is paid $36 an hour or more. Assuming 7-day-a-week trading and considering average occupancy costs outside of a shopping center, the daily rent and associated costs for an average-sized retail newsagent would be $250.00 or more. So at just these two cost points, a retail newsagent has to cover costs of $538.00. Based on the industry average GP% range of 28% – 32%, they need $1,793 in sales to cover costs.
But it is not accurate as it is based on average GP score. A product like AFR at the weekend drags the average GP down. Newsagents who sell it rely on higher margin products, such as cards that achieve 60% GP and above, and similar performing gifts, to subsidize lower margin products, such as newspapers and magazines.
Publishers created the Australian News Agency channel in the 1800s. They ruled us for decades. Then, they abandoned us. Today they underestimate us by a tiny margin. They make it worse with outdated methods that waste time and make us uncompetitive.
They price their product as if it has other benefits, such as attracting buyers. This may have been the case ten or more years ago, not today in 2024. The newspapers are offered as a service, a losing service.
I suspect publishers treat newsagents this way because they know newsagents won’t do anything about the situation.
