The ABC fact checker ought to listen to the ABC 702 program discussion earlier this week on newsagents. The first problem is the claim there were 7,000 newsagents 10 years ago. This was never the case. 10 years ago, the number was around 4,500. Today, that number is 3,000.
It would have been good for more thorough research to have been done on this prior to the discussion.
The discussion abut the challenges was equally frustrating. While the decline in print is a factor, so is the expanded reach by supermarkets, the ever increasing lease costs, online and the blurring of what specialty retail is. Today, chemists sell what many newsagents sold. To balance, many of us newsagents sell what other retail channels sold.
They talked about magazines toward the end of the discussion saying, shock horror, that between 40% and 50% of magazines sent to us are unsold. Seriously? The number is higher for most titles. There was no real comment on this when it ought to be a headline.
There appeared to be little interest in talking about positive stories and what many of us are doing to build strong businesses. There appeared to be a preference to talk it down.
The only upside was the discussion was that abut branding and the failure of the shingle newsagent to be relevant.
I know plenty of newsagents achieving double digit growth.
On the comments about the problems coming when supermarkets get lotteries, this need not be the case. Newsagents should run their businesses as if they do not have lotteries as that will focus the owners on gross profit. there is no upside in lotteries. There ought to be no surprise when supermarkets do get lotteries.
Smart newsagents have a good future in their businesses if they embrace change. Here is a video I shot recently for newsXpress. I post it here as it speaks to growth opportunities available to every newsagent. It is a good news story about one very specific business – based on their most recent benchmark results.
While our newsagent associations run awards and promote those they say are the best of the best, there are newsagents out there who do not ever the awards and, instead, reap the most important rewards for themselves by being smart and embracing change.
A problem with the discussion was that it gave the impression that the high returns is a result of falling sales. The truth is that massive oversupply has always been a curse on the magazine industry even in its hay day. The question has always been why is it a benefit to publishers to overproduce. We know it digs deep, very deep, into newsagents’ cash flow and boost that of the distributors and/or the publishers. The maintenance of maximum cash flow at the expense of newsagents is the real reason behind the MPA desire for a code of conduct that would bar early returns and thereby maximise a cheap loan to pay their bills and leaves the newsagents scraping to pay his.
It is particularly galling paying magazine accounts knowing that in doing so you are, in effect, giving an interest-free loan to the payee.
I agree wholeheartedly Harry. It will be interesting to see the changes that Gotch makes when they are the sole main player (IPS doesn’t really count because they generally have magazines that are marginal at best and no one wants to deal with them because of the way their processes work).
As mark alluded to in another of his posts it will be interesting to see if G&G finally allows us to take more charge of our allocations and what we get.
As a novice in the industry and from a financial background, I will risk ridicule and propose that cash flow is not the aim of the distributors but the result of the model we endure . From my perspective, the returns issue is more likely linked to advertising spend which in turn is linked to sales volume.
The system is imbalanced and newsagents suffer as a result.
For example. I struggle to stock the Economist, we sell few copies but every time sales dip, the quantities supplied are cut and we sell out….it is a magazine supported by cover price. Whereas magazines supported primarily by advertising, continue to arrive in quantity irrespective of whether we sell them or not. And have been known to move in the opposite direction of actual sales !! The cover price is irrelevant to the publishers of these magazines.
Fire away.
Spot on Colin