Yesterday we set out the evidence that the traditional newsagency channel has less than ten years left. Today, the quiet money, because this is the part that should stop every newsagent cold.
For years the comforting theory was that even as print declined, lotteries and agency lines would cushion the fall. Look at what the lottery company is actually doing.
The Lottery Corporation restructured this year and now openly describes your counter as a place to sign customers up to digital play, not as the place the sale happens. Digital is already close to half of lottery turnover. And here is the number that matters. On their own figures, a digital sale earns them a margin of around twenty per cent. A sale through your counter earns them eight, because through your counter they pay you a commission. Every one per cent of turnover that shifts from your shop to their app is worth about $6 million a year to them. That is not a company drifting away from retail by accident.
Understand what is really lost when a lottery customer moves to auto-play on an app. The commission was always thin. The real value was the visit. The lottery counter brought someone in twice a week, and while they were there they bought a card, a pen, a bar of chocolate. Lose the visit and you lose every high margin impulse sale that rode along with it.
If you think a big partner would never squeeze a loyal retail network, look at the pubs. Tabcorp raised weekly fees and cut commissions on its betting terminals this month, and country publicans responded by ripping the terminals out. Same logic, same playbook. When digital economics favour it, the partner squeezes the counter. There is no reason to believe lottery retailers are exempt.
Australia Post, the other quiet earner, has a plan on the table to close post offices and reshape its agency network, and its prices rose again in July.
So the two income streams that were meant to carry newsagents across the print decline are being dismantled at the same time. The bridge is being pulled apart while we are standing on it.
There is a practical response to all of this: reduce, deliberately and quickly, the share of your profit that other companies control. Later this week we will show you exactly how to measure that number and drive it down.
Tomorrow: the comfortable answers, and why cheap and convenience are traps.
Website: www.newsxpress.com.au | Find out more: help@newsxpress.com.au | CEO: Mark Fletcher: 0418 321 338