At the trade shows I have attended recently – Melbourne Gift Fair and GNS Market Fairs in Melbourne, Sydney and Perth – conversations with newsagents invariably turn to the anticipated health of retail and newsagencies in particular. I have heard mixed expectations of what Christmas 2010 might bring for our channel.
What are your expectations for Christmas sales this year?
I must say that at the moment I am feeling pessimistic about Christmas 2010. The stimulus money has long gone, consumer credit is tight, jobs are under pressure, other retailers are moving more into the traditional newsagency offer, some traditional newsagency suppliers are focusing attention away from our channel, more shopping centres are opening than warranted by population growth and the magazine distribution model has not adjusted for the double digit decline in magazine sales over the last year.
Newsagent suppliers tell me that Christmas orders are down on last year.
So, what are your expectations for Christmas sales this year?
I think without a doubt that xmas in 2010 will be as flat as a lizard. I thought back in 2008 that we would come out of the GFC by xmas 2010 in a very positive manner, but all indications domestically and from around the globe are that this phantom recession we are experiencing will take 18months to 2 years to wash out of the system.
If what i hear coming out of the USA is half true then the rest of the world better brace itself.
The US debt, when all liabilities are taken into account, is approx. 200 Trillion dollars. Thats alot of candy!
The value of the US dollar is going to be trashed, and therefore the US consumer will be dealt even more pain, thereby affecting Chinese exports and by extension hurting the recovery of economies around the world. Hate to sound pessimistic, but we are precariously balanced, and RBA needs to quickly adjust the rates down 2 percentage points to give the consumer a breather from all the rises in living expenses.
Small business desperately needs a rate relief as well, and in our industry’s case, we need structural reform to boost the survival of our cash flow!
Cheers
Chris
reservoir
I’ve just had a look at the GNS xmas offer and if this is it then we are in for a rough one. We look as if we are competing in the Crazy Clarke space of cheap crap not lifting our sights to the better quality.
On the positive side our Father’s day sales are up about 30% on last yr so all we can do is source our own product mix and stand out from the crowd.
I agree with Chris , but the RBA is living in a surreal world, believes in unreliable stastics.
Mark you made a good comment about being over-retailed as compared to population, i speak to few friends that are sales reps, they say the same thing, what is hurting a lot of businesses is the perpetual discounting/sale signs which is good for the consumer but not so good for us.
I work in the Northern Suburbs in the space of 15km we have 4 decents size shopping areas about 30+ plus shops.
But this xmas i suspect will be quite until confidence and certainty is gained by the customer.
Have a look at Harvey Norman offering not 12,24 but 42 months interest free terms.
Cheers and good trading.
we re doomed next year , our ‘GFC’ is yet to come
ABOUT NDD HOW DO WE GET OUR MONEY THEY OWE US?SHOULD THEY SEND IT TO US EVERY MTH WELL SHOULD BUT NO THEY WANT TO GIVE IT TO US AT THE END OF RETURNES. WE HAD TO PAY EVERY MTH ON TIME SO YOU HAVE TO RING AND ASK FOR THEM TO SEND IT HOW DOES THAT SEEM FAR WE NEEDED TO TRUST THEM TILL THE END?
I really appreciate your honesty Mark. No one wants to sound pessimistic all the time but on the other hand, we are sick and tired of hearing baloney from government bodies and other retailers about how “great” everything is! Let’s face it – its not! Small business is copping it. The health of newsagencies as you put it Mark, is very worrying. And the big suppliers aren’t helping us. We’ve just found out today that a small “Lucky 7” mixed business located only TWO doors up from us, has applied to Nationwide to be supplied with papers. That means, as its our territory, Nationwide expects us to supply this mixed business. We are talking about a strip of 9 shops in a quiet suburb. We are the newsagent with our core business being newspapers. And Nationwide expect us to supply another shop located only two doors away, with papers also. Every day we seem to be facing a new fight of some kind. Is it really worth it?
Jacki, the sooner the subagents system is scrapped the better. All retailers should have direct supply, so that we don’t have to deal with dinosaurs such as yourself.
Jacki, Thanks for the comment. This discussion about Christmas and beyond is ery important not only for newsagents but also for suppliers. As you note, some suppliers do not understand the role they have played and are playing in pushing newsagent traffic elsewhere.
I’m sick and tired hearing about “high interest rates”. If governments around the world had increased rates years ago and pricked the real estate and speculative bubbles we would not be facing financial armageddon. High interest rates are a normal part of the economic cycle.The longer you put it off the greater the pain.
Scott what kind of business do you have ?
My business at Christmas changed when weekend shopping happened 300k down a brand new sealed road. Toys sales dropped alarmingly but I now have steady sales for birthdays all year round and purchase monthly with a similar annual turnover.I look after customers all year and make sure I have all the little items they want to pick up in between trips south. I concentrate on back to school and servicing business houses with stationary all year. A steady all year income can be achieved and be as profitable as the big Christmas push. We just have to think outside the traditionl newsagency square.
Spot on Peter lower rates by the RBA will not make Banks lower their rates for the Banks are short of money (to lend) and the marginal difference is too tight between interest on deposit funds and lending rates as it is. If the RBA does reduce rates it will only affect the exchange rate and international trading NOT household debt.
We can only take the view that what is, is going to stay and possibly deteriorate over the years therefore we must be positive on the trading position and look for more out of the special occasions aas well as the everyday running of our businesses.
Graeme,
I have to disagree with you on the RBA. When rates are reduced then that enables banks to borrow at a lower rate and consequently offer lower rates to its customer base. The fiscal powers of the RBA are one of the most powerful tools of a capitalist economy. You are way off the mark if you think that the Reserve bank has no influence over the retail rates offered to consumers. It is a powerful lever that determines alot of things within our economy including the fluctuation of our dollar.
Household debt may remain the same but servicing that debt becomes cheaper therefore giving the consumer more expendable income. We only have to go back 12 months to see the impact of lower rates. When the RBA was cutting rates the banks were passing on the cuts to there customer base, as they should. There overall margin remains the same when they drop their rates, and the consumer and business benefit. There is a balancing act to this on behalf of the RBA, and i am sure they can achieve good outcomes without overheating the economy.
cheers
Chris
reservoir
Well Chris you have your view and whilst I agree with most of yours I stikll say the RBA cannot control the Banks interest rate settings and if they do follow the change recommended it’s because the banks can do it and they don’t when they can’t do it. at the moment they can’t reduce rates and if you read all of the banks statements they are saying interest rates will go up rather than down. If of course there is a black swan out there such aas unemployment by the masses or some huge trading collapse then anything could happen.
I have had a couple of calls from newsagent suppliers expressing concerns about forward orders for Christmas.
i think i order too much this year for xmas.
im going to go very strong for xmas, lots of different stock, think we need to generate some confidence, no point wondering if i could have sold more once i run out of stock, most of the items can be sold during the year anyway, worst case is i will have some cash tied up for longer than i planned, kinda like mags really 🙂 but seriously i wont die wondering what might have been, go at it hard and do the best we can, whats the alternative anyway?
Rick
Good on you. I am under the same opinion. I’m not going to die wondering. Bring on Xmas 2010.
As retailers we will have to think outside our comfort zones this xmas, maybe suppliers need to do the same if they want us to commit to orders early.
In order for Harvey norman to stay in front they are offering longer payment options ( not just 30-60 days) and greater discounts, but suppliers to us are offering the same old same old and wonder why we are holding fire until we see what is happening in our communities.
Like it or not if Labor gets in and we get a mining tax or Carbon Tax as the Greens want then there will be less money for xmas this year as people will be less certain about expenses going into 2011 this has shown up in the election as people are not sure who is the better choice.
Coles and Woolies have already indicated that despite increased profits they are about to put prices up on every day items and this all plays on peoples minds when they come into our shops for what are still add on or extra purchases.
I am confident we have made the right choices for our xmas offering in order to top last yr but I will be also looking at our product mix closer to the season maybe even into early December and no amount of pressure from suppliers will make me commit $$$ until I see what is going on here.
After 12 months of hard times up here our cashflow is on life support now and banks are not offering any help so in order to have a business that I can pass down to my kids we need to not only survive this we need to come out of it with cash in the bank in case things change for the worse again. This means minimal orders to start with and then cash ready to do late stock ups, who knows we may get better margins closer to December.
We have to work hard for sales maybe the suppliers should do the same, all I am seeing is the same offers as when times were good but that may just be me.
Luke,
100% right. We have some basics ready to go, the no brainer types but we will not commit to anything until much later in the year.
We have a number of stock lines supplied to us on consignment. Even though the margin may be a little lighter than on other lines, it allows us to carry the variety and quantity of stock to make a good presentation for Christmas and frees cash for must have firm sale stock. Suppliers who are struggling to whole sale stock may be open to supplying stock on either a consignment or SOR basis rather than have it sit in a warehouse. Ask them the question and see what happens.
I do not see it as negative to pose the question about Christmas or to say that you expect it to be tough. I am planning for a slow Christmas. This means buying better and going all out to counter the sentiment I see in my local community, to give people a reason to spend with me. I expect that if I did a regular Christmas it would be awful.
Good topic Mark.
Not expecting a big Xmas holiday period this year.
However quiet times have given us the best opportunity so far, to start changing the shop around, and to at last bite the bullet and make big decisions to alter certain arrangements in favour of keeping our very small shop open.
Introducing expansion of some things, and taking more control of others, has been quite exciting and motivating.
It has also allowed us to work harder on the ambience (charm, in the case of dilapidation :-D) and visibility of the premises. Most of this has been done without great expense. A little thought and patience has meant we have been quite resourceful with the things we’ve already had at our disposal. Don’t discount the old things stored in a garden shed out the back – some little treasures have been put to use, and plans for other stuff is in the works.
The silver lining in this big cloud hanging over us all has been the ability to work some creativity into plans, which feels really good. Adding to our partners (suppliers) for new relationships has also been exciting, as we start planning to get new lines/departments off the ground.
After all it’s our very livelihoods we’re talking about here. Weave some magic with that silver lining! 🙂
I may have missed the train on this topic but find it really interesting. I’ve just finished our marketing plan until mid next year and like Luke said, I have found that when we think out side the box we have great results. I think we just need to be different to pull people in and show them there is a benefit with shopping with us.
For us, these difficult times have tought us alot about business and our suppliers. It has tought us to really evaluate our business and products and suppliers need to come on board with that. It’s tought us to fight with our suppliers for what we want. If they don’t work with us to grow our business and understand what direction we are moving in, they don’t understand our business and they aren’t the best supplier for me.
I can’t control what decisions the banks make or what impact the government has on my business. Except when I go to the polls of course. But I can control my business and work at it.
In regards to Christmas, I really do believe if you think out side of square and offer those points of differences and have customer loyalty then you still have the opportunity to have a great season. We may just have to work a little harder than previous years. But think of the satisfaction you get when your projects work!
Best of luck to everyone though!!!
i just order heaps of toys for xmas from gns. ahhh, i just can’t resist. i may sell them at bargain.
I spent time at the Reed Gift Fair in Sydney at the weekend and talked with plenty of newsagents. They were looking out for innovative products for Christmas. Doing what you suggest Sara – looking for a point of difference for this year.