Cirrus@Austlit

NEWSAGENCIES

The first organised newsagency in Australia was created in the 1800s to distribute publications to the Victorian goldfields.

The delivery newsagents soon found themselves delivering multiple publications along particular routes, creating the beginnings of the first newsagency businesses. Over time, delivery routes were organised, providing the newsagent covering a defined route with exclusivity by arrangement with publishers.

In the latter part of the 1800s, some newsagents opened retail shops from which to run their distribution businesses. In addition to selling newspapers and magazines, these early retail newsagency businesses also offered stationery.

A traditional newsagency business model evolved, consisting of a retail outlet, distribution of newspapers and magazines to homes and businesses in a defined territory, and the supply of newspapers and magazines on a wholesale basis to other retail outlets. This model was not national: in South Australia and to a certain extent in Western Australia, the distribution and retail businesses evolved separately, making it rare for one business to operate both a retail shop and a distribution business.

The supply of newspapers and magazines to other retailers, called sub-agents, on a wholesale basis was contentious almost from the outset. Early in the 20th century, newspaper publishers took the lead in controlling who could purchase a newsagency and where one could be opened, opening hours, service levels and even what products could be sold. The lever of control was the Newsagency Council, established in each state and made up of publisher representatives.

Central to the newsagency model was that newsagents were—and are today for some suppliers—agents. This meant that they could exert little control over key aspects of their businesses, such as products supplied, quantity of supply and selling price.

Newspaper publishers micro-managed all aspects of their products in a newsagency business, from the time by which they had to be delivered to homes to their placement in the shops. Newsagents accepted this as a cost of having a monopoly.

It was not uncommon, even as late as the 1980s and early 1990s, for publishers to restrict access to ownership of a newsagency based on race. Magazine distributors exerted similar control on the granting of a trading account.

Newsagents were selected as the preferred retail outlet for lottery products and held this position almost exclusively until the 1980s.

A typical newsagency shop for much of the 20th century would have around 30 per cent of floorspace given over to magazines, 30 per cent to greeting cards, 30 per cent to stationery and 10 per cent to newspapers.

As shopping centres evolved in Australia, more newsagents opened retail newsagency businesses inside them. In 1999, through a process overseen by the Australian Competition and Consumer Commission, newsagents lost their monopoly over the distribution of newspapers and magazines. This resulted in other businesses being able to access direct supply of newspapers and magazines. While some publishers maintained newsagents as the last-mile distributor of products, they no longer controlled the relationship. No compensation was offered or paid to newsagents for the loss of the monopoly.

While the distribution of newspapers and magazines was deregulated, pre-deregulation rules and processes have remained for newsagents in relation to the supply of magazines. This has disadvantaged newsagents. In the years since deregulation, the relationship between newsagents and magazine distributors has prevented newsagents from breaking free of the monopoly-protected business model.

Since 1999, distribution and retail newsagency businesses have evolved. The number of newsagencies with a combined retail, home delivery and sub-agent business has significantly fallen as a result. Whereas up to 1990 newsagencies carried a reasonably consistent range of products across a limited number of core categories, in the 1990s some newsagents branched into new areas.

The pace of change in the newsagency channel increased in the mid-2000s, with many newsagents either selling or giving up their newspaper home delivery and sub-agent distribution businesses. This came about because newspaper publishers refused to allow newsagents to charge a commercial rate for distribution services. Coupled with a static cover price for newspapers, from which newsagents made a margin, this meant the majority of newspaper distribution businesses were loss-making. A limited number of newsagents purchased these businesses, combining them into bigger specialist distribution businesses by leveraging leverage critical mass to make newspaper and magazine distribution profitable.

Since 2011, the pace of change in retail newsagency businesses has increased considerably, driven by declining sales of print media products, increased retail real estate and labour costs, a higher cost of capital and a greater penetration of franchise groups providing newsagents with management and marketing advice.

By 2012, there was a growing separation between distribution newsagencies and retail newsagencies, as well as a growing gulf among retail newsagencies. This was encouraged by News Limited with a trial project called T2020, intended to force newspaper distribution consolidation among newsagents. While T2020 failed to go beyond trial, newspaper publishers continued to encourage newsagents to consolidate to drive operational efficiency.

In 2013, around 7 per cent of retail newsagencies closed, due to a lack of newspaper home delivery revenue and falling newspaper and magazine retail income. Today, while a typical high street newsagency has a floor space similar to that of 30 years ago, the average shopping centre newsagency has a more diverse product offering.

Whereas in 1999 newsagents did not sell printer cartridges, by 2014 they accounted for around 40 per cent of stationery sales. Some product categories, such as toys, have come full circle. Decades ago, newsagents used to dominate in the toys category. This faded from the 1980s; however, since 2013, newsagents have clawed back toy sales and are now a sought- after channel among toy manufacturers.

Market forces are driving newsagents to pursue greater change and develop businesses that are more competitive and with a broader appeal to shoppers. While some suppliers continue to resist this, newsagents expect to finally unshackle their businesses from pre-deregulation anti-competitive practices.

Nowhere is the change confronted by newsagents more evident than in industry representation. In 2003, close to 3000 newsagents were members of the national Australian Newsagents’ Federation industry association or one of its affiliated state associations. By 2014, that number was estimated to be less than 2000, with newsagents relying less on national representation.

REF: Australian Newsagents’ Federation, Newsagents Year Book (2014).

MARK FLETCHER