Free e-commerce workshops in Sydney
I am running a free workshop: Connecting online and in-store, how to make ecommerce work for your small business to Sydney later this month. Click the links below to book. each session will run for 2 hours. Refreshments provided:
- August 24, 8am. Figtree Conference Centre: Mission Room, 5 Figtree Drive, Sydney Olympic Park NSW.
- August 24, 11am. Figtree Conference Centre: Mission Room, 5 Figtree Drive, Sydney Olympic Park NSW.
I will demonstrate live websites that are connected to our the Tower POS software in local businesses. I will also show how to transfer stock to a website and how to manage images.
This is an excellent session for any newsagent keen to leverage online sales, regardless of the software you use.
Everyone is welcome.
News Corp. bundle offer for Queensland
Direct account newsagents have been advised of a bundle offer from News Corp. that will run for 4 weeks from 21/8/17 to 17/9/17 (inclusive). The bundles are:
- Gold Coast Bulletin/ The Courier-Mail: $2.50 Mon-Fri/ $4.50 Sat/ Sun
- Gold Coast Bulletin/ The Australian: $3.50 Mon-Fri/ $4.50 Sat
- The Courier-Mail/ The Australian: $3.50 Mon-Fri/ $4.50 Sat/ Sun
Newsagents need to set the offers in their software so they charge the bundle price for the period covered.
Product design key to differentiation
As newsagents look for more opportunities to attract new shoppers through new products, some are making poor buying decisions, thinking that cheap sells.
Customers buying on price are not loyal as the only way to bring them back to spend more money is through a price offer. There is little upside in that in my opinion.
Beautifully designed products with good margin are more valuable thank cheap products that are not visually different to tons of other products in the marketplace.
Design is everything for many categories of products. A good design makes price less of an issue. Products are only differentiating if they have a good design in my view. Design is where some wholesalers let retailers down. In such situations retailers are left holding stock they can’t move.
Of course, what each retailer buys for their business is their choice. For me, I look for differentiation and value to the business – where value is a combination of quality, usefulness and uniqueness. I don’t see value win cheap products. I am happy to leave that space to others.
High importer markup could see more newsagents buying direct
At the Melbourne Gift Fair this week I have seen items for sale by a local wholesaler that I can purchase direct from the factory for a third of the price even after allowing for freight.
The items are exactly the same, from the same factory, with the same packaging.
While I understand that everyone needs to make money in business, a 300% markup by an importer / wholesaler is too high. By the time retailers apply their 100% markup, the items will retail two and a half times what I expect to sell them for in my business if I source them directly.
Overseas factories are offering lower mini mum order quantities for non-licenced items, making dealing direct easier for individual and small group businesses. This is a risk for local wholesalers that apply too high of a mark-up on what they import.
Thanks to online and direct reach-out from overseas factories small business retailers are more aware of direct purchasing opportunities. Some approaches are random while others are well researched, from factories where they are certain you would be interested in the products they make.
All of this is a risk for wholesalers that mark-up too high.
I understand the costs of importing: paying up front, funding freight, the risk of products that do not work, the stock turn rate and more. These factors need to be reflected in wholesale cost. However, good buying, smart marketing and a tech-engaged infrastructure can reduce these costs and thereby enable a wholesaler to see more competitively than is reflected in a 300% mark-up.
At the retail end, your buy price determines your sell price. If you are buying products at the high end as described here and a retailer near you has gone direct and landed the same products for less than what you paid at wholesale you will not be able to be competitive. The situation is more intense when the products are exactly the same, from the same factory.
The bottom line is – buy carefully. If you are in a group, leverage their buying. The better you buy the better you can pitch your business.
Q2 newsagency sales benchmark study results
The April – June quarter was tough for core products sold through the newsagency channel. In addition to the continuing decline in print media sales, this quarter’s benchmark results reveal a troubling downturn in lottery revenue as well as card revenue.
Here are the headline numbers by key product category:
- Magazine unit sales declined 11%.
- Greeting card revenue declined 4%.
- Lottery revenue declines 4%.
- Newspaper unit sales declined 12%.
- Gift revenue increased by 11%.
- Toy revenue increased by 16%.
- Stationery revenue declined 8%.
These are not good headline numbers. The bottom is falling out of the historic core of the newsagency channel. This will not be news to many as it continues a trend we have seen in this benchmark study for several years.
The above percentages reflect the overall performance of the 181 newsagency businesses in this benchmark study. It includes stores from a range of banner groups as well as independents. There are large businesses and small. Some are in shopping centres while others are on then high street. The cross-section is broad.
What is concerning is the pace of decline, especially with magazines as the decline had slowed recently. Looking more closely at the data, the decline is in the volume categories. Fringe categories such as special interest titles are doing well. Indeed, some segments show terrific growth.
Newsagents need to manage the overhead cost of newspapers and magazines. Labour, space and capital investment needs to be kept in line with the gross profit contribution of these categories. Busy work relating to newspapers and magazines should be eliminated.
The decline in greeting card revenue is a surprise. The reported percentage of decline, 4%, does not read well. However, like all the above data points, it is an average from the entire data pool. There are stores experiencing decline above 20% with others reporting growth above 20%. There is a clear correlation between stores with strong gift sales and card performance – in this case card revenue is stronger.
GOOD NEWS.
The good news is the performance of businesses playing outside the traditional space. For example, the newsagency with $25,000 in toy revenue in the quarter, reflecting growth of 18% or the newsagency with $45,000 in gift revenue and year on year growth of 22% of the newsagency with card revenue of $47,000 and year on year growth of 22%.
There are many good news stories in the latest study results. However, the good news will be overshadowed by the performance of the majority. It is challenging, some days, to know what to do or say to cut through with newsagents who are not engaged.
Too many newsagents think growth will come from categories close to what they have done historically. For example, too many get into cheap social stationery thinking that is competitive with Kikki.K or Typo.
My experience is the best growth comes from turning away from traditional lines and traditional suppliers and going with products and price points you would never have considered for a newsagency business. I see this approach working well in the benchmark results in businesses of different sizes and in different situations.
OVERALL PERFORMANCE DATA.
- Customer traffic. 78% of newsagents report average decline of 5%.
- Overall sales. 53% reported an average revenue decline of 3%.
- Basket depth. 61% report a 2% decrease in basket size.
- Basket dollar value. 63% report a decrease in basket value of 3%.
It is in the overall business gross profit numbers where the differences in businesses can be seen. 62% sit in the traditional newsagency GP performance band of 28% – 30%. 7% sit below 28%. 20% sit in the GP band of 30% and 35%. 7% sit between 35% and 40%. The rest, 4%, have a GP of more than 40%.
GP is a function of what you stock and the type of shoppers you attract to the business. Buying is where it starts.
WHAT IS DRIVING THE DECLINES?
Close to 80% of the businesses in the benchmark reported a decline in traffic with the average decline set at 5%. However, just over half reported a decline in revenue. This is because plenty are selling higher priced items, usually gifts. This softens the blow of the decline in legacy products.
I think the traffic decline is being driven by a decline in interest in legacy products on which traditional newsagency businesses have relied. I have said for years it is crucial newsagents have a strategy to drive net new traffic. Relying on legacy product to sell new products is not a plan. You need to source new products and to use these to attract people to your business who would otherwise not have shopped with you.
HOW TO RESPOND TO TRAFFIC DECLINES?
Any newsagency business can be successful, regardless of location and situation. This is truer today than at any time in the past thanks to what we can see being achieved online – not only in newsagency businesses but through other retail channels.
The key to success is to not run the business as a newsagency. That’s is, to not obsess about legacy products. Focus on new traffic products. Focus on price points you would usually say would never work in your business. Buy products you think will never work. Be radical and through discover what is possible in your business.
I urge you to ask yourself daily, what have I done today to reach a new shopper, someone who does not know we exist? This is what successful businesses in the benchmark study are doing and doing well.
DOES THE NEWSAGENCY CHANNEL HAVE A FUTURE?
I ask this every quarter. My answer remains – Yes! Absolutely. If you are prepared to shrug off what has been traditional for a newsagency business, stop hoarding, embrace change and embrace social media – you can have a bright future. The transformation from traditional to the new world must be urgent and dramatic.
AGENCY IS OVER.
My opinion remains – there is no upside in any agency parts of the business. People saying they are proud to be called a newsagent are entitled to their view. History will show that era is behind us.
OPTIMISTIC.
I am optimistic for my own newsagency businesses and for the businesses of many newsagents. Indeed, I have opened a new outlet the last few months. It does not look or feel like a newsagency. The numbers are terrific.
WHY I DO THIS STUDY
My interest in the study is as a newsagent and as a supplier to the channel through Tower Systems and through newsXpress. I want the channel to grow for selfish reasons and because it has been my life since 1981. I am invested.
BENCHMARK GOALS.
I am often asked for benchmark goals newsagents ought to aim for. Here are some benchmarks I have developed in my work with newsXpress and through Tower Systems:
- Gross profit: this is the goal gross profit for all product sales not taking into account any revenue or costs related to any agency business. The traditional newsagency average sits at 28% to 32%. For a newsagency focused on the future, the goal has to be at least 45%.
- Ratio of Gift revenue to Card revenue: 50% minimum. The goal ought to be 100% or more. If you do $100K a year in cards, target to do $100K in gifts, or more.
- Revenue per employee – $250 an hour minimum not including agency revenue. This is a contentious KPI. If you think it is not for you, work the numbers back and see what your number needs to be based on each labour hour in the business.
- Revenue PSQM $4,500 – $8,500 depending on country vs. city / high street to shopping centre and depending of product mix. Higher GP lower revenue required.
- Overall revenue mix percentage targets: Cards: 25%; Gifts/toys/plush: 25%; Stat: 10%; magazines/newspapers: 20%; other: 15%.
- FLOORSPACE ALLOCATION: Cards: 25%; Gifts/toys/plush: 25%; Stat: 8%; magazines/newspapers: 15%; other products: 15%; office/back room / counter: 12%. It’s rare you make money from an office or store room.
- Mark-up goals: Stationery: 125%; Gifts 110%; plush: 110%.
- Occupancy cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Location and situation are a big factor in this benchmark. For example, a large shopping centre business will have a higher cost than a high street situation.
- Labour cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Labour cost should include fair market costs for all who work in the business. (See above).
Mark Fletcher.
Email: mark@towersystems.com.au Website: www.towersystems.com.au Blog: www.newsagencyblog.com.au
M | 0418 321 338
Footnote: I founded Tower Systems in 1981. That company now serves in excess of 1,750 newsagents as customers with its newsagency software. In 2005, I joined newsXpress. That newsagency marketing group now serves 243 retail businesses with a traffic and revenue growth strategy.
Are you missing out on Father’s Day card sales?
When should I put out Father’s Day cards? This is a question that is asked every year and even year my answer is – as soon as you have the stock. The supermarkets have their stock out so why not you.
I don’t care if most Father’s Day related sales are in the last week. Having cards out now, in prime position, shows you as being in that space. Shoppers may remember that when they think it is time to buy.
Our action, or inaction, as a channel will determine how much Father’s day revenue the supermarkets will get compared to newsagents for this season. The battles we wage locally matter in this.
Newsagents should own the Father’s Day season, more so that any other retailer. To achieve we this we need to:
- Have cards in prime position, away from the card department.
- Regularly promote on Facebook, a card at a time. Choose the quickly cards, those most unusual and that appeal to a demographic that is important to you.
- Feature quirky gifts people would not expect to find in your shop.
- Run a competition for Father’s Day shoppers.
- Pitch a small selection of Father’s Day cards at the counter.
- Change everything you do for Father’s Day on a weekly basis, to keep the offer fresh, so people notice it.
Father’s Day is a good season for pitching men’s gifts, a growing gift segment in engaged newsagency and gift businesses. My advice is to look at what you do for the season beyond the season. The rewards are terrific year round in the men;’s gifts space.
Is this Tatts outlet compliant, would it pass an audit?
I have created a new tab, Tatts compliance, and will post photos here of big business Tatts outlets that may not comply with the standards Tatts demands of you. Email me your photos of non-newsagency Tatts outlets to mark@towersystems.com.au.
I am tired of hearing stories of Tatts using the compliance process as a form of bullying small business retailers when big business outlets get away with what appears to be non-compliant behaviour if they are held to the same standard.
Send me your photos of non-compliant big business Tatts outlets and I will post them here. Send them to mark@towersystems.com.au. One way to confront the harm Tatts audits are doing to small business is to show the competitive advantage Tatts is giving big business competitors.
I’ll blur out people. The photo above from was a Woolworths petrol outlet. Do you think it would pass the compliance audit you are subject to?
Newsagents are fighting the battle Tatts should have fought on Lottoland
This story was on 9 News late last week in Queensland.
Popular gambling site LottoLand could be robbing Queensland taxpayers of $250 million every year. @brittneykleyn_9 #9News pic.twitter.com/6dhnFc1zk2
— Nine News Queensland (@9NewsQueensland) August 4, 2017
As a reminder abut how Lottoland operates, here is the story from The Checkout on ABC TV earlier this year:
Advice for small business retailers on managing a severe cashflow challenge
Cashflow can get very tight in any small business. How you deal with it is a test of leadership.
The common approach is to hide from those to whom you owe money. That only serves to harm your business and put you under more pressure.
Here is our practical advice on how to deal with a cashflow challenge:
- Understand the problem. Know if it is short term or long term. Be certain about the role you have played.
- Own the problem. Fixing this is on you.
- Develop a plan and document it succinctly:
- To borrow if appropriate.
- To put more of your own money into the business.
- To cut overheads: labour, rent.
- To convert more stock to cash.
- Work our what free cash you have availabke from your weekly trading.
- Ensure all creditors receive payments, no matter h0ow small. Regular payments reflect your commitment to goodwill. They also show you are not playing favourites.
- Talk to your creditors, apologise, outline your plan, ask for help.
- Act. Every decision, every action you take must work to addressing the cashflow challenge. If you have created a plan(point 3 above) act on it immediately. This is not a time to overthink things.
- Invest. If your cashflow challenge is because of a decline in traffic, not spending money chasing traffic will only make the problem worse.
If your cashflow challenge is more serious than a short to medium term plan could resolve it could be that your business is insolvent.
Company directors have a legal obligation to not allow their businesses to trade while insolvent.
Many have been in this situation. You can come out the other side by acting sooner, with commitment and with transparency to your creditors.
Videos an important marketing tool on Facebook
Videos have come into their own on Facebook with more and more retailers using the medium to show off products in an entertaining way.
To be successful the need to be entertaining, fun and short. They should not come across as a sales pitch.
Don’t overthink them. Shoot them with your phone and get them live. Most social media content is disposable so they are not things you should spent too much time or money on.
Making the most of Melbourne Gift Fair
The Melbourne Gift Fair kicks off today. It is the biggest gift fair in the country and as such can be daunting, especially for people attending for the first time.
If you are in a marketing group, check to see if they have a fair guide. I know newsXpress published to its members a week ago of newsXpress preferred suppliers and information on special deals available.
Here are some tips designed to help you navigate the fair:
- If you have time, walk through a whole location before you go back and do buying. While this takes more time it gives you a better overview.
- When ordering, be sure you understand the suppliers backorder policy. The last thing you wants stock dripping through when you do not want it.
- If a claim is made on success of a product, ask for evidence or reference retailers you can speak with. This is to push back against trade show puffery.
- Get a copy of every order you place. If the supplier does not give you a copy on the spot, take a photo of it for yourself.
- Focus on products that make your shop more appealing than it currently is. If you buy within the categories you stock today you are doing nothing to broaden the appeal of your business.
- Meet up with others at the end of each day to debrief and compare notes.
- Be clear on timing. You want stock when it is best for your business rather than when a supplier thinks you should get it.
- Target local competitors. Think of a local business you want to win customers from. Plan to achieve this through what you purchase.
- Tell a story. Buy enough stock from a brand, range or licence to enable you to tell a story in-store.
- Live within your means. Every purchase you make has to be paid for. Do not expect suppliers to become your bank.
- Understand competitive placement. Ask which other retailers will get product you particularly like. Some suppliers will put their stock anywhere. I prefer to avoid them.
- Have fun. Gift Fair can help you see your business differently. This can be fun.
This Gift Fair should set your business up for new inventory through to early 2018. It is important to attend thinking that far ahead.
ALNA agitates on sports lottery on behalf of newsagents
As the federal government continues to let small business newsagents down with its proposed new sports lottery, ALNA has achieved good media coverage on the topic. Check out these stories from The Australian and the Herald Sun.
The government announced the sport lottery but appears to have not done much since. In the meantime, small business newsagents are left in the dark, again.
Local newspapers show there is life left in print
The ABC had a story this week showing that there is good life in some local newspapers. If you love newspapers or are in regional rural Australia I encourage you to read this story. It has plenty of good news.
All Good Health editorial staff axed
Mumbrella reports that Bauer has axes all editorial staff. The magazine will now be produced by the company’s NZ team.
OfficeMax / Staples in Australia would create tough competition
The ACCC will later this month announce its decision on the proposed acquisition of the Australian OfficeMax business by Platinum Equity, the company that bought the Australian operation of Staples earlier this year.
A complication has been another offer for the business.
Any deal that further concentrates the ownership of B2B stationery sales in Australia is problematic for a newsagency channel that already has challenges with stationery. Indeed I think the prospective merger of the Staples and OfficeMax businesses is something that should have prompted a submission from GNS or even newsagents with big stationery business.
The activity is a reinforcement of how much stationery is in play in Australia. This indicates more disruption ahead for this product category. Disruption can be good if you leverage it to your commercial advantage.
The disruption in this category is not confined to our shores with major activity in the US
Stationery News has more perspective on the Australian moves:
Recent media reports quote “industry sources” who estimate the merger of Staples and OfficeMax would give the group “90 per cent of the B2B market in Australia and New Zealand – 10 times more than nearest rivals COS and Lyreco.”
As Stationery News has stated before, the figure is off-target – a combined Staples/OfficeMax business would have estimated revenues of between $1 billion and $1.2 billion. This compares with an estimated figure of $2 billion for Officeworks (consumer and SME sales) and a combined figure of $500 million plus for dealer groups Office Brands, Office Choice and ASA Australia.
Leadership urgently needed from Tatts on the year of mixed messages
Tatts agents are justifiably confused by the changing messages from the organisation over the last year.
The company’s position on fit-out requirements, digital screen requirements, audit standards and more have been changing, with businesses in some locations pressured and penalised while others in other locations are let through for lesser breaches or refusal to act.
The actions of Tatts represent a failure of leadership. Worse, they represent a disregard for small business retail.
I know of plenty who were bullied into undertaking the new fit out and digital platform installation without any business plan put by Tatts. Now, they find out that others who have not done the work yet may have a lower cost for what is to be done.
If I was a retailer who had completed the refit and installed digital screens prior to now I would be contemplating a compensation request. Part of the pitch from Tatts reps, I am told, was there is no getting out of this, everyone will have to do it. It turns out that statement was not true, given the position of Tatts today.
People yet to do the refit and yet to install the digital screen(s) are at a commercial advantage to those who have gone before them.
Tatts need to communicate clearly from the top down and ensure that all within the organisation communicate a consistent message. Localised bullying has to stoop. Localised miscommunication has to stop. Communication needs to be only in writing, for training purposes, of course.
Newsagents meeting with Tatts reps may want to consider openly recording conversations.
Newsagents are at where they are at as a result of poor leadership within Tatts. Shame on the company for the bullying. Shame on the company for the mixed visual images around the country. Shame on the company for the lack of a business plan at the retail outlet level.
Tatts has only itself to blame for this mess.
Promoting cards on social media
Interactive cards lend themselves to being used on social media to promote range. Where a good card has sound and terrific visuals we shoot a short video to use. The feedback online is good and sales in-store reflect the value of this type of use off social media for promoting cards.
Here is one such short video we have used recently with success.
Employee theft in a newsagency
I am frustrated hearing about another case of theft by an employee in a newsagency. This theft could have been discovered much sooner had the newsagent used the tools at their disposal, tools that expose theft with irrefutable evidence.
Sadly, this time, like so many others, the newsagent did not think too use the easy to access tools at their disposal, until other evidence was uncovered that caused them to be suspicious.
Make sure you know how you can discover, track and manage theft in your business. To find out how, ask your software company. It should be easy and only accessible too you as the owner.
