If you thought retailing was a tough gig, spare a thought for Australia’s newsagents.
Circulation of newspapers and magazines in print format have been in decline for years, yet make up a significant proportion of sales in a newsagent. Media companies like Fairfax Media (ASX: FXJ) and News Corporation (ASX: NWS) are pruning back their printing facilities, and Fairfax have even acknowledged that print newspapers are unlikely to exist in the not-too-distant future.
Who still needs envelopes, writing pads, stationary and pens, when you can fire off an email in seconds, all from your mobile or tablet?
And then you have companies like Officeworks – owned by Wesfarmers Limited (ASX: WES), that have all those stationery supplies – and more. Add in Coles, Woolworths (ASX: WOW) and petrol stations also selling most of the newsagents’ products and you start to see the sort of pressure they are under.
Combine that with moves to sell lottery tickets online, and the news gets even worse.
Maybe that’s why birthday, get well and other occasion cards cost so much these days?
So where do newsagents hold an advantage over other retailers? Perhaps it’s just the humble scratchy, and a legion of folk who have resisted the move to online who are keeping newsagents in business, but that is more than likely to change in future as well.
The Foolish bottom line
The writing appears to be on the wall for newsagents, and we could see the demise of most, if not all of them, within just a few years. Newsagents will need to adapt to survive, such as diversifying into digital offerings, books and gift lines and parcel delivery, as well as making the most out of their existing customers.
With 4,000 newsagents and 20,000 staff employed by the industry (including newspaper delivery), according to the Australian Newsagents Federation, we certainly hope they can adapt to the structural changes.
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Motley Fool writer/analyst Mike King owns shares in Fairfax and Woolworths. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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