The announcement today by Fairfax to make cuts is the only decision available to the newspaper publisher. More changes will be essential if the company is to weather the changes it is having to deal with. Fairfax is not alone, all newspaper publishers are seeing a shift reader engagement and a shift in revenue … on the back of considerable cost pressures.
While I feel for those losing their jobs from today’s announcement and the announcements to come, the company has no choice but to reconfigure its operation in response to today’s marketplace.
Newsagents need to be making similar moves, changing the core of our businesses to make them more responsive to today’s marketplace. If we were making the tough decisions like Fairfax management has just made we would:
- Cut the magazine department in our retail stores to something between 700 and 900 titles in all but a few newsagencies.
- Set the terms for which magazines can be supplied to our businesses.
- Quit home delivery.
- Cut all stationery lines which are not cash flow positive.
- Remove full time managers from newsagencies with retail sales (outside of lotteries) of less than $1M a year.
- Expand into new product categories which fit with the traditional newsagent customer.
- Start making business decisions based on real numbers.
There is more I could add to this list. What I have written is a start.
Like the folks at Fairfax have discovered, now is the time for some tough decisions in newsagencies across Australia. The opportunities are tremendous if we seize them.
Mark, I know you have mentioned this before in regards to cutting home delivery. I live in a country town – I get papers Tues/Wed/Fri and Sunday (6 papers all up). More often than not I don’t go into town on these days. If I did not have home delivery, would I be buying the papers, prob not (1-2 only). So is it better to loose sales altogether?
A lot of good points , Mark.
As I sit here at 4 am, again waiting for late magazines and newspapers – apparently delayed by stop work meetings – I am provoked by your comment in regard to home delivery.
We have reasonable scale in our delivery operations – around 3500 papers per week day and 5500 on Saturdays. We make some money out of it but it’s certainly not our most profitable area.
More importantly we like doing home delivery. Its fun. There is great camaraderie in our team and there is something quite uniquely satsifying about throwing the latest news onto someone’s front lawn everyday.
The real issue is the lack of equitabilty that we as newsagents, and our employees, have as a share of the supply chain revenue.
At the end of the chain we are totally accountable to the customer. On every aspect of customer satisfaction the pressure is on us. We take great pride in our customer service levels and the processes of improving them.
Yet, as you move back through the supply chain all you do is encounter increasing levels of complacency and self interest. The transport companies are lackadaisical in their approach and seemingly over paid for what they provide. Also, it is sickening to hear what employees in the newspaper plants get paid and comparing that with the relevant pittance we pay to our wrappers & drivers.
If the publishers want to secure the future of home delivery they really need to re assess what Newsagents get out of it. We critically need to get back to full margin on every paper we deliver and be able to charge delivery fees that adequately compensate us for our delivery costs.
The special home delivery subscription deals that publishers so frequently offer (to keep their circulations up) need to be funded by themselves. They need to find cost savings in their own organisations to fund these. If we’re expected to get people to come out at 2am to earn $25.30 an hour they should be able to as well.
The fat is well truly excised from the newsagency channel. It is time to start work on the unionised fat cats in the newspaper plants and transport companies. And redistribute revenue according to who really serves the customer.
Andrew, my point about newspaper home delivery is to say get rid of it – to get newsagents to seriously look at the economics (beyond raw sales) and to assess for themselves. To try and jog them into at least considering their position.
KMc, good points. I agree that there are some newsagents who do well out of home delivery. It is important to know that there is no upside, it will not get better. Publishers will continue to make decisions which make it more challenging.
The opportunity for newsagents is to structure in such a way that the distribution channel can leverage its collective strength to make some contractual gains.
all very good points but the last is the big one, when do we collectively say no to unfair contracts & demand a better deal. the time is now.
Andrew, You’d not be the only one not to bother. Especially if you’re ‘online’.
Profits-to-labour is woeful in our store, so we’d not really miss those sales. We have restrucured our layour accordingly.