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

Author: Mark Fletcher

Is Bauer considering closing and or replacing the Connections program?

Rumours are dangerous things as they come without firm evidence. Hence, they need to be treated with care.

A rumour put to me over the weekend is that management at Bauer is actively considering closing the Connections newsagent promotional campaign and replacing it with something promoted as better and more relevant to today but which would have a cost to Bauer that is a fraction of what Connections costs today.

The cost of Connections on the Bauer P&L is considerable. Without a satisfactory measureable income benefit it would be understandable the company is looking at either changing, closing or replacing the program.

Remember, the CEO of Bauer last week the magazine distribution sand sale process had to change.

“Magazines and newspapers have a great future, they have a very important social future, but for both newspaper and magazine companies, the model under which they operate doesn’t work anymore.

Changing Connections could be part of that.

As the impact of staff changes is felt through the Bauer company, the known history of Connections diminishes, along with the known history of dealing with the newsagency channel. This will bring the performance numbers of Connections into greater focus.

In my own opinion, it is time for a fresh approach to driving retailer engagement as posters, power end displays and the like are not appropriate for driving incremental purchases of magazines. Just as Bauer is looking to approach magazines differently, newsagents need to as well. This includes how we engage with promotions, where we locate the department and how we leverage other foot traffic to get the magazine add-on.

These are challenging considerations that we need to have in our businesses and in the networks to which we belong where such strategy matters are discussed.

I have not published here everything put to me about Connections as I don’t think the other points in the rumour are relevant to the core question about the future of Connections.

Comparing Connections to the Pacific nexus program, Connections is more one-way whereas nexus has considerable regular activity run by Pacific to drive traffic in-store, activity that is sent under the name of newsagency businesses. The two serve different purposes. The two have served newsagents well.

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magazine distribution

Burn, newspapers

This ad from Sydney University kind of makes fun or mocks newspapers to sell its courses with the headline unlearn truth placed on top of a stack of newspapers.

I noticed it today because of the newspapers in the image. I guess it worked at getting my attention. I say burn as it’s a modern slang term that I think reflects what has been done here.

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Newspapers

Newsagency management tip: how to quit stock quickly

If you want to quit stock, quit it, quickly. Quickly means different things to different people. I think it means 7 days … gone and out of the shop in 7 days from when you decide to quit the products. Of course, this will vary based on your own local circumstances.

The easiest way to quit stock is for your shoppers to understand the deal. Understanding the deal starts with how you brand the sale.

A sign with SALE on it could mean anything. Do NOT use this. There are too many around, each meaning a different thing.

A sign with, say, 50% off could be confusing as they don’t know the starting price and some may not understand percentages.

Sign with HALF PRICE is more easily understood but they still do not know the starting price.

If you really want to quit stock, I suggest you have tables or dump bins at price points: $1, $2, $5 – or that ever is appropriate to you.

I tried a $9.99 priced at 50% off, half price and $5.00. The $5.00 pricing worked the best, by far.

This is my recommendation on quickly quitting stock: get the price messaging right.

If your price messaging is hard to understand or if there are too many different price messages you could be creating a barrier and this could stop you achieving the sales outcome you want.

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Management tip

Newsagency marketing tip: don’t promote competitor businesses

I don’t understand why newsagents share on their Facebook page a post from another newsagent’s Facebook page where they have no commercial or group relationship with the other newsagent.

If you like what they have done and you have the product in your shop too, write about it yourself.

Sharing can be lazy posting. It is okay sometimes, but often not.

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marketing

newsXpress TVC is driving in-store traffic

It has been hard for Foxtel’s 2.2 million subscribers to miss the newsXpress TV commercial running over the last week. Funded by newsXpress and supported with a strong social media campaign as well as in-store marketing, the TV campaign has been successful at driving net new traffic.

Basket data indicate valuable engagement beyond the basic buy 2 get 1 free pitch. Plenty are buying more of the promoted Beanie Boo product. Plenty are buying other products while in-store.

Landing new shoppers in-store is tough work. newsXpress is doing this at a national level for its 243 retail locations and doing it through a product that historically was a toy shop and national retailer product. The campaign is part of a long-term and integrated strategy that has recast the focus of newsXpress to new traffic areas while not disrespecting traditional newsagency shopper traffic.

To those who say the buy 2 get 1 free deal is nothing special – you’re entitled to your view. This is the second year running this promotion for a reason.

To those who may want to mock Beanie Boos, a country town newsagency with a population of 5,000 selling $23,000 in Boos in a year and achieving the best return on floorspace of all products in-store from Beanie Boos is one example of many success stories. In the city and country, Beanie Boo and associated exclusive products are an excellent new new traffic driver product.

To those who want to criticise newsXpress for any reason, that is your right. However, criticise with facts. The facts here are, this campaign is a terrific commercial and new traffic success.

To those who may say not all newsXpress members participated, yes, that is true. I think those who chose to not participate are dills.

To the other marketing groups who say I should not write about newsXpress here, remember, there is an open invitation for you to share your success stories here.

Note: I am a Director of newsXpress.

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marketing

Now is the time to promote the AWW health Diary

Right now, right away, is the time for newsagents to promote the Australian Women’s Weekly Health Diary. This is an ideal title to pitch on social media as well as pitching in-store, in a prominent position where more eyeballs see it than in its usual location.

Toing hard now is vital if you want to win sales that may go to other retailers. Approach this as a speed to market competitive situation.

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magazines

Why is Tatts competing with Lotterywest in Western Australia?

At a recent function, I was sitting next to the new CEO of Lotterywest, talking about Lottoland and the announcement at the function by the Premier, Mark McGowan, to act on Lottoland in WA.

I mentioned that Tatts is also a competitor in WA, allowing online purchases via their website and their app. The Lotterywest CEO was surprised.

I grabbed by phone and in a matter of seconds completed a purchase for that night. She was shocked and commented that Tatts is another competitor Lotterywest must face.

The competition from Tatts felt by Lotterywest is the same competition every retailer must feel. Online must be the main game in town for Tatts. They have no option but to drive online purchases. They are more efficient and more profitable.

It is easier to win a new customer through online.

It is easier to get an online purchase converted to a perpetual subscription.

Online also provides Tatts with a direct to consider relationship. As any manufacturer selling online direct to consumers know, this is the most valuable of relationships.

Driving online is smart business for Tatts and Tatts shareholders.

While newsagents can lobby for Tatts to give them a share in online, I don’t see any way that can happen unless you can get Tatts to agree for you to be able to vend tickets online. Not now. The time for that argument was ten or fifteen years ago.

This is one reason I say there is no upside in lotteries for retailers. Unless you can access online sales yourselves, over the counter will continue to decline for most retailers.

In case you have not seen how easy it is to purchase using the Tatts App, check out this video I made a couple of months ago:

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Competition

Are you ready for an ATO audit?

I have heard from four retailers this week who are being audited by the ATO. Each expressed concern about the audit process, the information they are having too provide, the stress it is causing and worries about hat may be discovered.

An audit can be stressful. The extent of this depends on the reason for the audit and the approach of the auditor.

If then audit has been triggered by a report about the business or suspicion from the ATO based on your business against the benchmark for your channel, the auditor is likely to be looking for specific information, with a suspicious mind.

If the audit has been triggered by a random selection, it is likely to be more about your business processes and therefore less stressful. However, if the auditor discovers something of concern to could escalate quickly.

Any audit will be less stressful if you have accurate business records that can be shown to be recorded at the point of activity, without manipulation or intervention on your behalf. The ATO auditors are skilled in how POS software could be used and / or manipulated to hide nefarious activity.

ATO auditors will look for multiple pieces of evidence to support transactions. This includes banking records, POS collated records, supplier invoices, inventory data and even a live stock take done for the audit specifically. The process is robust. In many situations I have observed there is no hiding behaviour designed to hide from tax and other ATO overseen obligations.

To have a smooth audit:

  1. Maintain good, professional and tracked data capture and management practices. record all sales in your POS software, at the item level. Arrive all inventory you sell into your POS software, at the item level. record all products returns through your POS software, k at the item level.
  2. Record all supplier invoices and all income in your accounting software.
  3. Do not manipulate POS software managed data to hide anything.
  4. Do not take cash out of the business.
  5. Do not pay employees in cash or some other way off the record.
  6. Keep your b business records in a structured way, so they are easily accessed.

Know that the ATO has a benchmark against which it compares newsagency businesses. This benchmark is updated.

Saying you run a manual business without computerised records will not stop an audit. The ATO auditors are ready for the many and varied excuses they hear.

I am not on their side. The goal of this advice is to have you think abut your situation, so that you are prepared.

Note: I have no commercial relationship with two of those who contacted me this week.

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Ethics

Bauer CEO says the publisher is not in trouble

From Mumbrella a couple of days ago:

Bauer Media’s new CEO Paul Dykzeul doesn’t care if people think he’s a “prick”. Instead, he says he’s passionate, knows what he is doing, and is here to change the business model.

The former Bauer New Zealand CEO, who joined the Australian arm in late June after the abrupt departure of Nick Chan, tells Mumbrella he hasn’t come to Australia to “manage the status quo”, but instead intends to implement change and “future-proof” the business.

“This business is not in trouble, it’s just having some difficulties, and this is an adjustment process, and it’s going to make the business a hell of a lot better as a result of the adjustments we are making,” he says.

The comments follow Bauer Media’s first major changes under the new CEO last Friday – which included a reshuffle to the publisher’s executive line-up and the closure of custom publishing arm, BauerWorks.

It came the same week Bauer Media was told to pay Australian celebrity Rebel Wilson $4.5m in damages, and German executive and interim CEO prior to Chan, Andreas Schoo left the business.

While Dykzeul admits Friday’s announcement – which sees the removal of two publishers and the promotion of Fiorella di Santo – would lead to some redundancies, making the business more “viable long term” is his focus.

“I’m not here to manage the status quo, I’m here to change things, and that’s what I’ve been pretty successful at over the years and that’s why I am here,” he says.

“I don’t care what people say about me, I know what I’m doing, I know what I want to do, I am very passionate about it, and I’m very single-minded about it.

Click on the link to read more, including about the departure of the well known to newsagents 17 year Bauer (and ACP) veteran Eugene Varricchio.

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magazines

Games a fast growing category in Australia

The games category has achieved double-digit growth on the back of strong numbers in toy, newsagency and game focussed businesses. Stores well established in the games space are doing particularly well this year.

The two key drivers of the growth in the national and international sales data I have seen are game extensions through additional licences for well-known games and a resurgence of interest in game playing. The second point is particularly interesting with younger players drawn to games in good numbers.

If you are not in the games space and are looking to leverage the engagement required dedicated floor space, good product knowledge, current product access and a fresh approach to merchants rising. In other words, don’t put products on the shelf and expect it to sell. Authentic engagement is key – you cannot fudge your engagement.

By authentic engagement, I mean engagement in-store and on social media. The best games customers will purchase from stores that respect them. respect is shown by actual interaction with the products.

Licenced products provide another avenue here too. Take Game of Thrones. There are multiple games and related products you can offer that tell a strong Game of Thrones licence story. You can pitch these such that the GoT fan, of the person purchasing for them, could purchase multiple items from the one licence.

Games as a category requires more work than many other categories. This work pays off if you invest. Games could shut at around 25% of toys where toys could be equal to close to 100% of card revenue based on benchmark data I have seen. While not always the case, these numbers can be useful to those assessing whether to get into the games space.

If you are not established in games today and think it could be for you, look carefully at nearby competitors. if you are in a marketing group, leverage their knowledge as they should give you access to deals, marketing and more that helps you get into the space more easily.

The ideal games shopper is committed to the category. They purchase multiple games a year and the bring others into their enjoyment of games, growing the customer community. This is where local shops can do particularly well.

I am committed to games in my business. This is why I look carefully at the data I have access to as the insights help propel sales success.

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Newsagency management

GNS issues statement on levies paid by newsagents

The GNS Chair this afternoon issued a statement to newsagents regarding the levy collected by the business as a premium on top of purchases.

Dear GNS Levyholder,

As you are aware for many years GNS charged its customers a levy to provide working capital for the group.

The levy impost was ended last year on the basis that the company was now mature enough to generate its own working capital and to make prices for you, our customers as low as possible.

So while the levy was no longer charged from last year, GNS has a present balance of $7.8m of those levies.

Since April this year, your levy balance has been provided on your monthly statement, so you are aware of the amount of your levy.

From time to time, customers have requested access to their levies and we have been endeavouring to find a way without endangering the company’s cash flow and working capital needs.

So in the next two months, provided ASIC clears it, an offer will go Levyholders to take up half their levy in GNS shares and the other half as trading credit.

All the details will be sent in October.

Yours faithfully,

Martin Hartcher
Chairman GNS Ltd

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Newsagency management

Choose social media images carefully

This painting of a cat is on a card form Hallmark. I have more success with this photo on social media than a photo of the whole card. People like cats, and dogs (I guess). If they see a nice image of a cat they may pause. That is the first step to achieving engagement with on social. Try it. Your card department should have opportunities like this.

Oh, and this is up to you and not your card supplier.

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Greeting Cards

Is Lottoland advertising misleading?

While I am no lawyer, I do wonder if this ad from Lottoland that appeared on Facebook last week is false or misleading.

A lottery jackpot is a win based on the accumulation of first division prizes that have not been won from what I understand. Is this $100M that? I don’t think so, unless I am missing something.

In the ad text they say Bet on OzLotto Online. My understanding of Lottoland is that you are n to betting on OzLotto. rather, you are betting on the numbers that are drawn for OzLotto.

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Competition

Learning from supermarkets

Supermarkets are educational places because there we get to see in-store execution by retail experts. Take the placement of SIM packs and phone recharge product with magazines. They do this for a reason. Sure, Optus would have agitated, probably paid, but it is done because it works for the supermarket.

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Newsagency management

Pitching New Idea Sugar Free

We have been pitching the New Idea You Won’t Believe It’s Sugar Free cookbook with newspapers in the last week as it is a title that is easily purchased on impulse. I figured newspaper customers are good candidates as they should be well-informed about sugar.

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magazines

Management tip: backup your whole system

It is not enough to backup trading data from your computer system. No, not need to backup everything on which you may rely on all computers in your business.

A retailer recently lost their hard disk drive and only had a backup of the data managed by their POS software. They lost everything else.

With professional cloud backup it is easy to ensure all data is backed up. Do it.

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Management tip

Marketing tip: smart use of social media

The folks at Tims garden Centre in Campbelltown use social media well to connect with the local area and to compete with big retailers. This post from them showing off the performance of their potting mix compared to that from a big retailer is a perfect use of social media. They market by showing. The evidence speaks for itself in terms of the superior products they sell and in terms of people who engage with their Facebook page.

Social media posts need to entertain, inspire and / or help people feel good. What they do at Tim’s Garden Centre is ideal.

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marketing

Interesting puzzle title

The folks at Lovatts have launched, with little fanfare, a new puzzle title, Audrey Daybook. We have placed it with fashion as well as crossword titles. Plus, we have written about it on social media, to explain with it is.

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crosswords

1,474 words from Universal Magazines pitching a calendar

I have complaints from newsagents about Universal Magazines emailing them with a 1,474 word pitch for the Johnathan Thurston Immortal Queenslander Calendar 2018. The length of the email is the core concern – it is a single blob of text that most in small business retail do not have the time to read.

The calendar offer itself is not competitive, based on what we can get elsewhere.

While the title is unique, is it unique enough and the GP$ sufficient to read 1,474 words and risk your capital on? I suspect not.

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Calendars
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