Skip to main content

News Corp may hold a mirror to newsagents

While hacking may have put Rupert Murdoch into an unpleasant spotlight last month, the analysis of the direction of his business empire offers some uncomfortable truths for independent retailers who sell newspapers - which is most local shop owners in the grocery market.

Mr Murdoch has been very successful and retailers need to acknowledge that over the past 40 years he has made them a lot of money, particularly in the UK, through his investment in and vision for national newspapers. A chart in the FT provided an interesting commentary on the development of Mr Murdoch's company. In 1980, newspapers and magazines accounted for 90 per cent of his revenues. In 1990, they accounted for 71 per cent. In 2000, they accounted for 45 per cent. In 2010, 11 per cent.

In part, the decline is explained by the expansion of his companies into broadcast TV, cable networks and films. In 1990 they were worth 1 per cent, 0 per cent and 8 per cent of his business respectively. In 2000, they were worth 39 per cent, 4 per cent and 7 per cent. In 2010 they were worth 5 per cent, 48 per cent and 29 per cent.

Print is the bedrock upon which the business was developed but the skills he learned in publishing newspapers were applied to audience development on TV and movie screens around the world. The newspapers funded the growth of the business and are still contributing to the group, even if the outlook is less rosy.

The news-based local shop has been the most successful across the same period of time. In the 1980s, just selling newspapers and magazines was the bedrock of a successful retail operation. In the 1990s, snacks and soft drinks and alcohol needed to be added. By the 2000s, if was full scale conveninence.

Unlike News Corporation, most local shops are not scalable businesses. However, collectively independent retailers have had to change their mix to attract the audience of local shoppers. But this does not mean that you need to throw away the business model you started with.

I visited one shop in the Midlands recently and observed the fantastic fruit and vegetable display at the back. This looks fantastic, I said. Yes, said the owner, it is where my dad started out and he loves making it look good. It still contributes to the bottom line too!

It is easy to get carried away with fashion statements. Sometimes you need to ditch yesterday's lines. Sometimes you need to retain them - as long as there is sufficient shopper demand. To use the language of the City, newspapers are still a hold.

Comments

  1. Another interesting post. You are spot on about an individual retailer lacking the scope to leverage their business, but collectively the newspaper based channel has moved both in size of store and variety of offer. Newspapers still remain a corner stone of our business, but the transition continues.

    ReplyDelete

Post a Comment

Popular posts from this blog

Three secrets of great merchandising

Look at the ceiling and top wall of this McDonalds restaurant. There is a picture of two good looking healthy people having fun and some bright primary colours. Ask yourself what is the purpose of this picture? In the latest issue of Retail Newsagent in a feature on merchandising, Andrew Knight of RI tells its independent readers that they need to think about using sharp pictures of non-packaged products linked to people consuming goods. Perhaps this has been taken to the next level by the fast food chain - that is selling the feeling of being happy and healthy rather than the products. A second, related tip from the same feature is made by most contributors - it is vital to keep windows clean and clear of clutter. "I believe that less is more," says Roli Ranger, a retailer from Ascot, Berkshire. He has posters for promotions in between the windows that are regularly updated and discreet signs in the windows. Third, a highly visible well-stocked promotion at the entranc...

Busy street, empty shop, missed profits

True in part to my New Year resolution, I held a business meeting in an independent coffee shop today just next door to a Starbucks. The cafe was presented well and four staff were busy preparing for the lunchtime rush, at 11am. As my guests were late, I had a half hour overview of footfall on the street outside and in the restaurant. Six customers. Barely enough to form the queue in Starbucks or Pret-a-Manger just down the road. Plus one Italian girl who dropped off her CV. Some people stopped to look at the posters in the window and moved on. The owners seemed quite happy. When I left just after 1215, they were doing brisk trade. However, I have the impression that the business is not working hard enough. It could easily have managed 120 customers between 11 and 12, instead of 12. This is lost profit as the fixed overheads and staff costs are already in place. The owners are clearly busy - perhaps too busy to take time to look at the potential that their cafe has. What shou...

Sticks and stones do hurt

My 17 year-old son returned from a rock festival this week wearing a wristband proudly declaring him 0ver 18. He explained how easy it had been to use someone else's ID to get the identification and said it was ironic that he had not needed to show the over 18 band when buying alcohol. Today, Scottish retailer Abdul Qadar is complaining that public authorities are asking people to lie about their age when making test purchases. What trading standards officers may be forgetting is that the fact that retailers invest in a business premises and trade consistently from it make their job much, much easier. The alternative, a world of markets and itinerant traders, will be far harder to police. Mr Qadar's sense of injustice is fair. Those retailers, like Mr Qadar, who value their investment will seek to trade legally and will not sell alcohol to people under the age of 18. Asking children to lie about their age to local traders is a slander on all retailers.