My Views on What the Proposed GNS Management Buy-Out Means for Australian Newsagents
Newsagents are already dealing with changing customer habits. Pressures on traditional stationery lines are one of them. Now GNS Wholesale's proposed sale of its operating business and assets to a company associated with its chief executive, Paul Yardley, raises another question: what does GNS's proposed change mean for the future of the news agency? Here is my personal view:
I think GNS wants to be more than just a newsagent; stationery isn't dead.
Key takeaways
- The GNS Board announced it had agreed to sell its operating business and assets to a company associated with CEO Paul Yardley.
- The sale needs shareholder approval.
- Completion is expected soon.
- GNS's revenue has stayed at about $70 million a year since 2020.
- Demand for stationery has not vanished.
- Australians spent 24.1% more on stationery online, according to the Australia Post.
- Newsagents need to cut back weak, basic lines.
- Newsagents should not depend on any line on one supplier.
- If you are a GNS shareholder, you should ask about the price and valuation before you decide.
What is the proposed buy-out?
GNS Wholesale is an unlisted public company that describes itself as owned by newsagents and run for their benefit.
The proposed GNS management buy-out is a plan for GNS's operating business and assets to be sold to a company associated with its CEO, Paul Yardley. The sale still needs shareholder approval. The Board's statement is that the stationery and office supplies market has been changing structurally for several years because digital tools reduce demand, and GNS's current company structure limits its access to new capital. Clearly the acquisition is a proposed change in the ownership and governance of a wholesaler whose history, shareholders and original purpose have been closely tied to newsagents.
GNS's shift is not new.
The proposed buyout does not mean GNS has suddenly discovered customers beyond newsagents. The trend has been going on for years. In 2021, GNS said commercial sales made up around half of GNS's turnover of about $70 million, and since then it has acquired several stationery businesses with little to do with news agencies. I noticed that its October announcement refers to independent retailers and commercial resellers, but does not mention the word "newsagent".
In my view, the proposed buy-out may not create a new direction. It may make it official and speed up a direction that has been developing for years.
For a newsagent, the question is simple: based on current trends, how secure are your stationery supplies, pricing and service levels?
Why the newsagent supply is under pressure
Traditional news agency stationery is under pressure because I think of several factors:
Fewer newsagents. Fewer stores mean fewer news agency accounts. This situation does not necessarily mean that the news agency closed down; if a news agency reinvents itself as something else, then it's no longer a news agency.
Less room for basic lines. Many newsagents are allocating more floor space to higher-margin items, such as gifts and cards, because these products generate more profit, while spending on stationery has decreased.
Other suppliers' online sales. Other suppliers' online sales of stationery are up, as are majors like OfficeWorks.
Other supply routes. Newsagents are today buying more from other stationery wholesalers; as such, GNS is seeing less of their business.
The lesson is not that stationery is dead. It is that the GNS distribution model built around traditional news agency supply is under pressure.
Paul Yardley, CEO of GNS Wholesale, has previously discussed competitiveness and supply-chain strategy within the newsagency channel in this interview: Paul Yardley talks about being competitive.
What private ownership could change
I think that private ownership could give GNS management more freedom to pursue customers, categories and changes beyond the traditional newsagency network.
A privately owned GNS could have more freedom to:
- Raise or direct capital towards ranges, customers, and logistics that have better growth prospects, which the Board has identified as a problem.
- Pursue more commercial customers.
- Review distribution paths. (This is a real worry to newsagents.)
- Make decisions more quickly, as it does not have the same shareholder processes.
To me, this is all very logical thinking from GNS management.
The risk for newsagents is equally clear. A supplier that once existed mainly to serve them will increasingly move away from them.
What shareholders should ask
If you are a GNS shareholder, I think you need to separate your holdings from your shop's needs. When the chief executive is the prospective buyer, you are entitled to independent advice and full disclosure before you vote.
Questions worth asking yourself:
- Do you have an independent valuation?
- What price is being offered, and how does it compare with the value of the independent valuation?
- While you still have a chance, ask about the supply terms, pricing or rebates for newsagents changing after the sale.
I am not a lawyer or a financial adviser. Shareholders should read the documents they are sent and get independent advice before they vote.
Why supplier diversification matters
This case shows what I have always said: that any retailer needs diversification of supply. Such diversification protects a retailer from service failures, price rises, range cuts or ownership changes like this when one major supplier changes.
Take a look now at your shop. For each department, ask yourself:
- Who supplies it?
- What happens if that supplier changes its range, pricing or service?
- Which lines could I buy from someone else?
Audit your stationery category.
Look beyond total sales; use your POS System Reports to measure profit per square metre as well as total profit. Our POS system does that.
Imagine, hypothetically, that a metre of pens earns $300 in gross profit a year, while the same space could earn $900 as a card display. Now why are you handling pens?
The lesson for newsagents
The proposed sale is not evidence that stationery has lost its place in Australian retail; it shows that tomorrow is different from today.
GNS appears to be preparing for a new future. Newsagents need to do the same.
Written by:
Bernard Zimmermann is the founding director at POS Solutions, a leading point-of-sale system company with 45 years of industry experience. He consults to various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.
