Newsagent David Maggs recently asked on the Facebook group, Newsagents Helper how many newspapers do we have to sell to make a £50 profit? An interesting and worrying question that got a good number of answers. Clearly the answer involves many variables like the mix of newspapers sold, their cash margin and the wholesaler’s delivery/service charge.
With the current activity by newspaper publishers both at a national and a local level to reduce the gross percentage margin on newspapers, Mr Maggs’ question prompted me to think about how many newspapers a retailer needs to sell to break even.
As I wrote in my 19 July blog to understand our products we need to know the cost of the space that they occupy. Our 1 metre newspaper stand costs us around £35 per week in rent, rates, power, staff etc. With 4 shelves, that’s a little over £8 per shelf or just under £3 for a full face title.
|M-F GP||Adjusted for wholesaler charge||Copies needed for break even per week|
To cover this we need to sell 43 Suns, 24 Daily Mails or 13 Daily Telegraphs per week. We easily do this with the Sun, Mail and Telegraph, but ‘i’ and some of the other newspapers don’t pay their way. There is another question to consider and that is what do these newspaper buyers also buy, what are they worth to our business? When I looked at this back in 2009 I found that Sun customers spent more than Daily Mail buyers.
So what to do, as clearly in a period of falling sales and reducing profitability action is needed? We currently have our newspaper display at the front of our shop and it’s the most prominent display, should we leave it there? Should we reduce the number of full facings to improve our number of break even titles? Or should we follow the advice by Wimbledon retailer Tom Searle and take control of the price/gross profit of the newspapers we sell as we do on almost all the other products we sell?
What do you think?