A blog on issues affecting Australia's newsagents, media and small business generally. More ...

Author: Mark Fletcher

Squishies doing better than fidget spinners in the newsagency

Squishies have been performing well for months. While sales to regular shoppers are excellent, their attraction of new traffic is even better.

This high-margin category is already outperforming fidget spinners in terms of full year bottom-line value to the business.

What you see in the lease line display is low in stock weight. Squishies turn fast: 4+ times in two months.

The display attracts kids, who pull in parents. The typical basket has two squishies and several other items from the business. This is where there is terrific value on the category for the business.

I also like that squishies fit with our broader toy and games pitch, enabling us to even better serve those shoppers.

I expect the opportunity with squishies to continue to Christmas and at least early into the 2019 holiday season. It is the direct imported products that are performing best for us as our range is competitive with Smiggle, K-Mart, Target and others in range and price.

This post is about more than squishies. It is about being opportunistic, early to engage with a trend, sourcing outside slower supplier channels, and, promoting widely outside the business to leverage the new traffic opportunities.

This is retail today – playing outside tradition, leveraging high margin and reaching out for new customers who might otherwise pass the business by.

Squishies are easy to dismiss as a cheap toy. In my experience and the experience of retailers who have been in this space for over a year, they are much more than a toy. They are a genuine opportunity for our businesses.

Footnote: to any trolls planning to comment here to seek to distract from the insights shared and the optimism of the opportunity, go on, knock yourselves out. The efforts three or four people are going to in comments here to distract from positive posts is extraordinary. You can see the strength off their concision by their anonymity.

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Gifts

Shop local data attracts kudos

Staff on the road for my newsagency software company Tower Systems have been provided a branded t-shirt with this image on the back. The reaction has been terrific, with people commenting positively about the data shared.

I had the infographic designed as an alternative to the a-frames I see used by small business retailers. I figured that facts could be leveraged to pitch the importance of small businesses in our economy.

Politicians only appear interested in small businesses at election time and event then their interest feels, to me at least, ignorant.

The small business community in Australia is important and valuable. I think we need to embrace every opportunity possible to pitch the facts of this.

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Small Business

Lottoland’s Tuesday jackpot looks very much like OzLotto

Check out Tuesday Jackpot from Lottoland. As a correspondent pointed out to me, this betting product looks and feels like OzLotto. Here is what they said:

Just wanted to tell you about Lottoland’s newest lottery, the “Tuesday Jackpot” (https://www.lottoland.com.au/tuejackpot)
It looks ridiculously similar to the Oz Lotto. You know – similar logo, you pick 7 numbers from 1-45, the same odds and drawn at the same time as shown here (https://www.lottoland.com.au/tuejackpot/help). The only differences are that it has a minimum jackpot of $8 million and it costs $2/line.
I thought your viewers might be interested to see how Lottoland is clearly trying to get around the betting ban on domestic lotteries.

See for yourself, here are the details from the Lottoland pitch:

Cost per Game & How to Bet on Tuesday Jackpot

Betting on Tuesday Jackpot only costs just $2 per standard game.

Pick 7 numbers from 1 to 45. Each Tuesday night, 7 regular and 2 supplementary numbers are drawn from the Swiss Loto Express. Match all 7 regular winning numbers to hit the jackpot. Check our TUE Jackpot FAQ for more info.

The current jackpot isn’t big enough? Just use Lottoland®’s special Double Jackpot feature at the top of the bet slip to bet for double the jackpot amount!

Don’t want to share the jackpot? The NumberShield option protects your Division 1 winnings – just activate this feature for selected fields or for your entire bet slip.

Never Miss a Jackpot with Subscriptions

A way to bet on Tuesday Jackpot with your favourite numbers for upcoming draws is to setup a subscription. Your bets will automatically renew for all the upcoming draws until you decide to cancel. No need to put in your numbers for every draw plus you won’t miss a big jackpot!

Bet on Tuesday Jackpot with the Lottoland App

With the official Lottoland Australia App you can bet on the lottery, check results on the go and gain access to even more promotions and discounts. Download the Lottoland App for iPhone or Android today!

Tuesday Jackpot System Bet Prices

System Bets allow you to pick more than the regular 7 numbers, providing you with exponential odds of winning. Refer to our magazine article for more information about System Bets.

System Bets for the TUE Jackpot start at $11.60. For a full list of all System Bets please refer to our TUE Jackpot FAQ page.

Lottoland is clearly not going anywhere. It is developing products and promoting them widely, in pursuit of a profitable future in Australia.

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Competition

Big media news: Fairfax and Nine announce plans to merge

Here is the ASX announcement:

MERGER OF NINE ENTERTAINMENT AND FAIRFAX MEDIA

The recommended transaction:

  • –  Creates Australia’s largest integrated media player
  • –  Enhances position with agencies and advertisers in a consolidating environment
  • –  Enables optimisation of, and incremental investment in, content across FTA, BVOD, SVOD and digital
  • –  Offers data solutions at scale combined with premium content
  • –  Combines Nine’s and Fairfax’s proven brand building capabilities to accelerate Domain’s growth profile

26 July 2018: Nine Entertainment Co. Holdings Limited (Nine) (ASX:NEC) and Fairfax Media Limited (Fairfax) (ASX:FXJ) are pleased to announce that the companies have entered into a Scheme Implementation Agreement under which the companies will merge to establish Nine as one of Australia’s leading independent media companies (Proposed Transaction). The Proposed Transaction will, subject to required approvals, be implemented by Nine acquiring all Fairfax shares under a Scheme of Arrangement (Scheme).

Following completion of the Proposed Transaction, Nine shareholders will own 51.1% of the combined entity with Fairfax shareholders owning the remaining 48.9%. The combined business will be led by Nine’s current Chief Executive Officer, Hugh Marks. Three current Fairfax Directors will be invited to join the Board of the combined business, which will be chaired by Nine Chairman, Peter Costello and include two further current Nine directors.

The combined business will include Nine’s free-to-air television network, a portfolio of high growth digital businesses, including Domain, Stan and 9Now, as well as Fairfax’s mastheads and radio interests through Macquarie Media.

Under the Proposed Transaction, Fairfax shareholders will receive consideration comprising:

  •   0.3627 Nine shares for each Fairfax share held (Scrip Consideration)
  •   $0.025 cash consideration per Fairfax Share (Cash Consideration) together, Aggregate Consideration.

    The Aggregate Consideration implies a:

  •   21.9% premium to Fairfax’s closing price on 25 July 2018 of $0.770
  •   22.6% premium to Fairfax’s one month VWAP to 25 July 2018 of $0.766

    The Directors of Fairfax will unanimously recommend that Fairfax shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to an independent expert concluding that the Proposed Transaction is in the best interest of Fairfax shareholders.

    Commenting on the Proposed Transaction, Nine’s Chairman Peter Costello said: “Both Nine and Fairfax have played an important role in shaping the Australian media landscape over many years. The combination of our businesses and our people best positions us to deliver new opportunities and innovations for our shareholders, staff and all Australians in the years ahead.”

    Fairfax’s Chairman Nick Falloon commented: “The Fairfax Board has carefully considered the Proposed Transaction and believes it represents compelling value for Fairfax shareholders. The structure of the Proposed Transaction provides an exciting opportunity for our shareholders to maintain their exposure to Fairfax’s growing businesses whilst also participating in the combination benefits with Nine.”

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For personal use only

The merger is expected to deliver annualised pro-forma cost savings of at least $50m which will be fully implemented over two years. The Proposed Transaction, on a pro forma basis, reflecting the full benefit of the cost savings, is expected to be earnings per share neutral for Nine shareholders, prior to any consolidation adjustments.

Importantly, the combination unlocks the potential for significant value creation by combining the content, brands, audience reach and data across the respective businesses, including majority owned group companies Domain and Macquarie Media. After completing the Proposed Transaction, Nine will review the scope and breadth of the combined business, to align with its strategic objectives and its digital future.

Nine Chief Executive Officer Hugh Marks commented: “Nine’s strong operating momentum has allowed us to invest in the future of our business through each of 9Now, Digital Publishing and of course, Stan. This merger with Fairfax will add another dimension, creating a unique, all-platform, media business that will reach more than half of Australia each day through television, online, print and radio.

For our audiences and employees, this means we will continue to be able to invest in premium local content across news, sport, entertainment and lifestyle. For our agency partners and advertisers, we will provide an expanded marketing platform with even greater advertising solutions underpinned by a significantly enhanced data proposition. For our shareholders, the merged business will generate an increasing percentage of its earnings from high growth digital businesses that provide a compelling opportunity to generate both incremental value and cash flow into the future.”

Fairfax Chief Executive Officer Greg Hywood said: “The Proposed Transaction for Fairfax reflects the success of Fairfax’s transformation strategy which has created value for shareholders through targeted investment in high growth businesses, such as Domain and Stan, and prudent management of our media assets. The combination with Nine provides an exciting opportunity to continue to drive incremental value well into the future.”

“We are confident that the strength of the combined management team and staff will ensure the continuation of our quality journalism.”

For the year to June 2018, Nine is expecting to report Group EBITDA at the upper end of the previously announced range of $250-260m, and to declare a second half dividend of $0.05 per share, fully franked. Fairfax is expecting to report Group operating EBITDA of $272–275m which is in line with analysts’ consensus, and to declare a second half dividend of $0.018 per share (franked at $0.0083 per share). In both cases, these declared dividends will not be affected by the Proposed Transaction.

Scheme Implementation Agreement (SIA)

Fairfax and Nine have entered into the attached SIA, which contains the customary terms and conditions on which Fairfax and Nine will now implement the merger. The SIA includes a number of customary clauses, and is subject to conditions precedent including Fairfax Shareholder approval, court approval and no regulatory intervention.

Timetable and next steps

Fairfax shareholders do not need to take any action in relation to the Proposed Transaction at this stage. A Scheme Booklet containing information in relation to the Proposed Transaction, reasons for the Fairfax Directors’ recommendation, an Independent Expert’s Report and details of the Scheme will be sent to shareholders in the coming weeks.

It is anticipated that the Proposed Transaction will complete before the end of this calendar year.

Nine is being advised by Jefferies as financial adviser, and Ashurst as legal counsel.

Fairfax is being advised by Macquarie Capital as financial adviser, and King & Wood Mallesons as legal counsel.

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Media disruption

More pen options help us sell more pens

For some newsagents, the future of stationery is when we stop pitching pens, pencils and other stationery lines as stationery and start pitching pens, pencils and other stationery lines as quirky gifts, gifts for all sorts of occasions. I mean pens, pencils and other stationery lines purchased specifically for this purpose, different to what you have in the stationery aisle today.

This can help us sell to people beyond the stationery shopper as it is stationery not sold as stationery.

It is exactly what Typo, Smiggle and even Kikki.k to an extent do. We can do it.

With more gift suppliers additions stationery related items to their product mix in Australia, more retailers see this as an option. It has been a trend at overseas fairs for several years and has taken a wile to achieve wider acceptance here from suppliers.

I mention this today as in the pen and pencil space these items are a bridge item, they bridge between traditional stationery and gift and I figured that may interest newsagents looking to do this, newsagents confronted by challenges with traditional stationery sales and wondering about tradition steps.

If you are coming to the Melbourne gift fair, keep a look out for stationery themed gifts as I expect more suppliers to offer these.

In today’s marketplace, the best customers for pens and those not being them for traditional function.

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Stationery

Don’t deny yourself revenue and new traffic

Talking with a newsagent on the weekend they commented that they could not sell a particular item in their shop as their population was the wrong demographic for it.

I was talking with them because they asked for help dealing with being in a regional location with challenges. In the conversation we explored a range of options and each was not suitable to them for different reasons.

The main concern expressed to me in the call was that their locals would not buy this or that.

I hear this often, a clear statement that locals would not buy certain items.

The only way to find out if locals will buy something, within reason, is to try it, or to at least investigate it throughly.

Investigating is what I did with the newsagent I spoke with in relation to one product category. It is a category I now well and for which I have excellent online sales data. I was able to tell the newsagent that from in their town $450.00 worth of the items had been purchased through one website in the last two months and that if I expand the reach to within an hour of their business the amount passes $1,500.00.

The newsagent was shocked. The evidence resulted in them asking questions and wondering what else locals buy that they think they would not buy.

My core point here is – don’t assume what locals will buy, as doing this could deny you certain revenue and certain new traffic for the business. Don’t contain your perspective of what works and what will work to only what you know from the past.

You can do this by working with others, talking with people outside your area, those with online experiences and other insights that could get you stepping outside what has been usual in your product mix. If you know people at the local post office that could be a good step as their insights into p-arcel delivery is often fascinating.

Tradition is out the window in retail today, especially newsagency retail. Stick with tradition and you stick with the traditional performance. Maybe traditional performance is okay for your business. If so, terrific! If not, do something.

I have written about this today with consent of the newsagent I talked to, even though I have not identified them.

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Newsagency challenges

Lottery betting businesses form a new association

As reported last week at CalvinAyre.com, lottery being sites have formed a new trade association to educate (lobby) regulators. This is an interesting move. Here is the report in full. It is important lottery retailers read this to understand that the fight will continue.

Online lottery betting operators have formed a new umbrella group to defend their business model from overzealous gaming regulators and protectionist lottery monopolies.

The European Lotto Betting Association (ELBA) is a new trade body comprised of Lottoland, Multilotto, myLotto24, Lottogo and Legacy8. ELBA spokesperson Lena Patel, myLotto24’s head of corporate affairs, told iGaming Business that the new body’s stated goal is to “dispel myths” about the lottery betting business.

Lottery betting operators are under fire in multiple markets, having been banned outright in Australialast month, while the UK has imposed new restrictions on operators’ ability to offer betting markets on non-UK EuroMillions lottery draws.

Patel noted that the “general tone and language about lottery betting in the media is negative,” despite the ELBA’s view that a lot of this talk “has not been backed up by evidence.” Patel said the “collective voice of the industry hasn’t been strong enough” and the ELBA aimed to inform the public that lottery betting operators are “legitimate” and “we do give back to good causes.”

The ELBA is currently drafting a code of conduct for existing and future members that will “provide definite levels of standards to make sure we’re in line with each other.” This code is expected to be released any day now.

Patel told eGaming Review that the ELBA wanted to “foster a closer working relationship with regulators” to ensure “coherent, strong, sustainable and fair” oversight of the lottery betting sector that doesn’t “unfairly penalize millions of customers who want to take part in lottery betting.”

For the time being, Patel says the ELBA is focusing its efforts on improving lottery betting’s image with European regulators, specifically those markets where “regulation is changing” and “parties with vested interests” are baying for lottery betting operators to be dragged to the woodshed.

The ELBA isn’t the first lottery betting group to attempt to fend off disaster. The Lotto Betting Group, whose ranks include Lottoland and Multilotto, has battled the UK government over its lottery betting restrictions.

Lottery retailers will have to choose who they support. If it is the regulator pure lottery games, then they will need to support ALNA to continue to lobby and work on their behalf as ALNA, like any association, can only be as strong as its members support it to be.

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Ethics

Marketing tip: visual merchandising for stationery

The best way for people to see your business and what you sell in a different light is to show them through your visual merchandising. Here are four inspiring examples from the many I saw last week.

You can choose to display products like a shopkeeper or a retailer. These examples are from retailers. They pitch a different, more engaged, more inspiring narrative than you would see from a shopkeeper.

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Management tip

The story of Lush underpaying staff is a reminder

The news this week of Such underpaying staff in their retail business going back to 2010 is a reminder of the importance of checking and cross checking payroll calculations and processes. Before the Lush story there were the reports abut the Rockpool payroll and entitlements issues and there in hospitality. Prior to that it was 7-Eleven.

My suggestion is that you get someone from outside the business who is not involved in managing your payroll or staff entitlement record keeping to do an audit of your calculations and your processes.

It would be better for you to find and resolve the issues than a regulator to force this on you as a result of a formal complaint.

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Newsagency management

Inspiring words from a newsagent talking about transformation

A newsagent recently shared with me a story about their experience talking at a local service club about their business. Here is the story, if their own words. At their request I am not identifying them or their business. This is inspiring…

Last night I was the keynote speaker at a service club in our regional city. I was asked to speak on my business as a “Newsagent”

I took them through a journey of the history of the newspapers in our state, their rise and the demise of some.

I took them through the journey of the family “newsagency” as it was, newspaper boys, home delivery, mail runs and retail store. I spoke deeply of the work involved behind the scenes of a distribution/retail “Newsagency”

I took them through the journey of the demise of delivery rounds, the amalgamation of rounds and the reasons for closures of some smaller “Newsagencies” in small towns.

I spoke of the distribution Newsagents who cover great territories and how these are the backbone now of paper deliveries in capital cities and large regional areas.

I spoke of the advent of supermarkets and service stations entering the retailing of magazines and newspapers.

I emphasised how “Newsagencies” large or small are still a core business in most cities and towns and this will never change but the structure of “Newsagencies” are changing to meet a  changing social world and shopping trends so you will see “Newsagencies” with a different look.

They were amazed when I talked about the massive number of magazine put aways we have. Over half of these titles never hit the shelves as they are of specialised interest to the customer and the topic range is immense. The modern “Newsagency” are magazine specialists in this way.

The point I want to make now:

From the questions I was asked and in general conversation afterwards people were amazed at what a “Newsageny” was all about and they were now putting our business in a different light and I just felt a rising respect for our core industry. I could feel this overwhelming respect for “Newsagencies” as a business coming through.

It was an eye opener to me how the business of a “Newsagency” was perceived in general even though we are a progressive store.

We somehow have to break the old Newsagency image shingle.

I am inspired more than ever to move forward in a changing world.

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newsagency of the future

Midtown Comics’ success with magazines

Midtown Comics is the destination comic business in New York. Each location is well laid out, with magazines the core offer. There are things they do that we could do even in our non special interest focussed magazine businesses. Here are photos from their store on Fulton Street, in the Financial District, where the common shopper is male, mid 30s to 40s and working in finance.

Their magazine wall is stunning. This photo captures less than half of it.

Note their magazine staff pick pitch. This is just like the card pitch I mentioned at the weekend.

I like that they show what is new this week, last week and two weeks earlier.

Their old issue collectors stock is tidy and well laid out.

They list release dates for plenty of titles.

The pitch to the counter is terrific and organ used, with impulse lines placed appropriately.

Their customer service is excellent with one person always on the shop floor answering questions but not getting in the way of the many who visit too browse and read.

Each time I visit a Midtown Comics I am impressed with the passion of the people working there, the layout of the shop and the overall focus of the specialty retail business. Every visit offers useful takeaways.

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magazines

2019 calendars on sale, and selling

In the US this week I have seen plenty of shops with 2019 calendars on display. Staff tell me they are selling, that people are seeking them out. I have seen them in stationery as well as card and gift shops. The range is usually close to two metres wide and at least a metre high. They have fashion calendars as well as the functional including the family and business planner formats.

One store owner told me that July 1 is their kick-off date for calendars. They said being the start of the last half of the year it made sense that it is the kick-off. When you think of it like that it does.

The challenge in Australia is our retail business overheads are considerably higher. This means we need a faster turn of stock per square metre, thereby meaning we have less capacity for a slow burn for more than six months with calendars.

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Calendars

Is it Snickers or a mood? … it doesn’t matter

Mars is embracing temporary re-naming os Snickers like plenty of other food companies to give shoppers an additional reason to purchase. A Snickers bar labelled as a chocolate bar called Absurd turns the Snickers into a fun gift for someone, thereby expanding the reach of their product.

This is a smart marketing move, not trail-blazing, but certainly smart. Retailers have the promotional product at the counter for impulse purchase.

In our own patch, we have seen Smiggle, Typo and others follow a similar model of getting people to buy more of an item than they would by focussing on product design over function.

The more reasons there can be to purchase an item the better. Emotional reasons are the best as they are more likely to drive impulse purchases.

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confectionary

A fun card pitch broadens the appeal of the newsagency

I have been playing with video software and made this video a few days ago to promote cards and newsXpress businesses as part of my mucking around. The reaction on social media has been terrific. It is the type of post that lends itself to people tagging friends, which extends the reach of the video and the brand it promotes.


I ran this on a few Facebook pages and in each case is resulted in terrific engagement as well as in-store mentions.

With social media content being disposable, I am not overthinking content and always look for easy to create, quick to understand and fun content. Regular fresh new content is the key here.

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Greeting Cards

Not buying from a rep. in-store can be a smart move

Each time a sale rep. steps into your shop to sell you products there is a sales target they need to meet to justify their time. Depending on your location, the sales target cold be for the town or region. This can see their products in competitor stores.

Buying from a business that does not have reps could feed into a point of difference for your shop. It all depends on how the supplier manages retail partner locations.

In my experience, businesses without sales reps tend to have better systems to leverage office based sales. This can see them better manage retail location data, thereby ensuing better local retailer borders.

Buying from a head office online or over the phone costs the supplier business less. If they are smart this is reflected in their pricing.

In another retail channel of which I have knowledge, a mid-size supplier cut all ten of their sales reps, saving the business $1.2M a year in wages, vehicle and on-costs. They invested close to this in the first year in enhanced back office facilities to enable online ordering and stock management. Today, three years on, their customers benefit from the savings through lower prices and this, in turn, is fuelling revenue growth.

While I know many newsagents respect and appreciate the personal contact with sales reps in-store, the costs today are such that the model for many suppliers is not appropriate. We as a channel need to expect fewer reps and to see businesses moving to that model and doing so in a way that can benefit us.

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Newsagency management

This one easy idea could boost your card sales

Pitching staff favourite cards at the counter is easy and it boosts sales. It is also personal, providing customers with an insight into the cards your team members love. I recommend every card retailer try this.

Here is how we pitch this at one of my stores, at the counter:

The capex is minimal as you can see from the photo. Keeping the pitch simple is  important. Let the cards speak for themselves.

I know of one store that started this a year ago and now they keep stock of cards behind the counter to assist fulfilment.

My suggestion is to not manage staff card selection in any way. This ensures you have a broad mix of cards on offer. This is key. Also, have there cards changed weekly as well as the location of each team member in the line-up.

Cards are important in our businesses. They offer excellent margin. We need to leverage every opportunity possible to get people purchasing more cards. On impulse is critical as this is where the card collector, the person who buys a card because they like it rather than to serve a specific near-term need, is good.

At the counter as I write about here, at the exit to the shop and at other high traffic locations – we need to pitch cards to grow our sales and to get more people engaged with the category. This latter point is important as the more people buy and use cards the better for all of us. We can grow engagement by showing off cards people have not entered our shops intending to purchase.

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Greeting Cards
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