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FIRE SALE: Newsagents struggle with $30,000 lotto changes

STRUGGLING newsagents have their backs against the wall facing an impossible decision; fork out $30,000 or risk losing their business.

In Ipswich four newsagents have quit the industry in the past few months while across Queensland and NSW about 80 newsagencies are up for sale.

Industry commentators are predicting 400 newsagencies will close across the country this year with traditional services offered by newsagencies, such as paper and magazines sales, being slowly taken over by big business.

The latest blow, which for some has been the nail in the coffin, is the Golden Casket Generation One image upgrade which newsagents have to pay for out of their own pockets, as part of their contract.

It costs about $30,000, depending on the size of the store.

Some agents said the re-fit has been positive and are "incredibly happy with the new look", while others have no idea how to pay for it.

Failure to install the 'new look' equipment by the individual deadline will see that agent issued with a breach notice.

Golden Casket then has the power to remove its products and terminate its agreement with the newsagent, a measure it will take to protect its image.

Agents were told the new re-fit, which includes replacing the counter tops and installing new screens, would be due in 2016-2017.

Golden Casket said it first advised agents in August 2010 and rolling deadlines have been running since June 2013.

Yet some have struggled to secure bank loans and simply aren't profitable enough to pay themselves.

One Ipswich newsagent, who asked not to be named, made the decision to walk away rather than pay for the refit, which came just 10 years after the previous one.

The QT has spoken to a dozen agents across the state, all of which have asked not to be named.

A south-east Queensland agent admitted they were forced into a 'fire sale' situation after being issued with a breach notice for failing to upgrade to the new Generation One image in time.

"You're forced into a fire sale rather than having to close the store down," the agent said.

"We were issued a breach and had to sell - that's why so many have collapsed in Queensland, the only way out is to fire sell it.

"I feel like I've just wasted years of my life working in excess of 100 hours a week and for what?

'I will walk away with nothing."

One ad for an Ipswich newsagency stated the listing price as $30,000, reduced from $400,000.

In Townsville at least three newsagencies have changed hands with one reduced to just $20,000 down from $170,000.

One north Queensland agent moved to a smaller store, so the re-fit would cost less, and cut back staff.

If it weren't for that decision, the pricy Golden Casket re-fit would have forced that newsagent to shut too.

"It was the most stressed I've ever seen the owner," a worker at the newsagency said.

"Our lotto sales have increased since the move. People are spending more money on gambling. Everyone wants to win a million, they're desperate up here."

A different north Queensland agent said they had already installed the re-fit and were "incredibly happy with the result".

"We knew it was coming, so we budgeted for it. We're really happy with it. It's fresh, it looks good and the customers are happy with it too."

According to Mark Fletcher, a newsagent, owner of a newsagency software company and a director at newsagency marketing group newsXpress, at least 400 retail newsagencies will close in 2017.

In an online blog, Mr Fletcher said newsagents that can't change the perception of their business will struggle.

"Chase change like your life depends on it," he wrote last week.

"A decaying retail newsagency harms the many others who are transitioning their business.

"A decaying newsagency is taking some revenue from the rest who are here for the long-term and could benefit from a brighter future."

While Golden Casket didn't offer any financial assistance for the re-fit, it did offer a $1000 incentive, a spokesperson said.

It warned newsagents of the upcoming changes and in September 2015 informed 144 retailers they had until November 2017 to install the new equipment.

"Golden Casket is committed to working with their retailers," a spokesperson said.

"However, if Golden Casket retailers do not meet the requirement of maintaining their image in outlets, a notice of breach of their franchise agreement is issued. If the breach is not rectified, their franchise agreement with Gold Casket may be terminated."

Topics:  business ipswich newsagents queensland



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