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

Author: Mark Fletcher

Overall business Gross Profit ought to be the key focus of every newsagent right now

Overall business Gross Profit growth is the key answer to every major challenge retail newsagents face today.

A higher than average overall business gross profit can help you address:

  • Falling shop traffic.
  • Declining print media revenue.
  • Increased rent.
  • Increased labour costs.

A higher than average overall business gross profit helps you trade through these and other challenges.

The average overall business gross profit for a traditional newsagency currently sits at 28%. There has been little movement for years in these traditional businesses. A business with a reasonable but average range of gifts can expect this to increase to 32%.

32% overall business gross profit is insufficient in today’s marketplace. My recommendation is a ramping-up target. Target 40% today and once you are close, shift your target to 45%.

No one outside the business will fix this for you, not in the way it needs to be fixed. Here is my advice on growing overall business GP:

  1. Reset what you sell. You can only achieve higher overall GP if your product mix supports it a higher overall GP. This means more products with a GP above our target. It starts with your buying. However, before you can embrace this new buying you will need to break what you currently do.
  2. Focus on long term GP beneficial products. It is easy to source cheap China product with high GP. That may not be a sustainable answer in that much of the cheap gifts product does not work for the long term in most newsagency situations. For those products you get it, sell through and get out. No, the best higher GP products are those people will seek your shop out for and will attract return business from the same shoppers. These types of products are efficient as well as delivering higher GP.
  3. Reset your shop floor. Guide shoppers to a higher overall GP basket value. Use high traffic locations in-store to pitch high GP items to leverage the opportunity. The result of such shop floor moves will be that your business no longer looks like a traditional newsagency.
  4. Reset your out of store marketing. Higher GP items are more likely to be non-traditional.l Use these to reset shopper expectations about your business.

I appreciate these points are high level and lacking in detail. The reality is specific moves will depend on the USP you are targeting for your business and your specific location.

If you are successful and achieve a GP shift for the business while maintaining or growing revenue your business will be more able to withstand the challenges around traffic, print media declines and other difficulties in the marketplace.

Can you radically shift your overall business gross profit? Yes, absolutely.

11 likes
Newsagency challenges

ALNA representations pay off for WA newsagents

Newsagents in Western Australia would have to be happy with the announcement from Lotterywest that they will increase their contribution toward the cost of shoplifts, an immediate review of the shoplift design and a common sense approach to signage.

The announcement by Lotterywest is a win for ALNA and the campaign they have run on behalf of newsagents.

Newsagents outside of WA will be envious and keen to explore how they can leverage similar gains from Tatts.

Here is the Lotterywest letter:

Here is the ALNA statement:

Lotterywest agrees to halt RTP & Network Expansion & Increase Shop fit Contribution – A Result of ALNA’s Representation to the new WA Government

ALNA welcomes today’s important news for all WA lottery retailers, that Lotterywest has agreed to the following essential changes to the Lotterywest RTP including contribution and review of design and necessary halting of the network expansion program:

  • Increase its contribution towards the Lotterywest shopfit with the intention to cover the costs of the Lotterywest components of the shopfit and to pay a capped contribution towards installation costs.
  • Immediately halt any further shopfits and review the RTP to address concerns on the shopfit and the signage
  • Immediately halt the Network Expansion Program and halt any further expansion pending appropriate review of the impact on existing locations.

Further to the communication sent out to all retailers today, Lotterywest have also commented in a letter sent to ALNA, that:

  • We will explore opportunities to involve retailers in our online offerings. This is a longer-term objective that will take some time to develop.

ALNA has been delighted with the support from the new WA Government, in particular the WA Premier Mark McGowan and Small Business Minister Paul Papalia. Both the Premier and Small Business Minister are extremely supportive of ALNA and WA lottery retailers and we extend our thanks to them in achieving this essential outcome in such a speedy fashion. WA Premier Mark McGowan said in a recent newspaper report ‘We acknowledge and understand the issues raised by the Australian Lottery & Newsagents’ Association’.

This common-sense outcome has taken more than a year of hard work by you the members and your Australian Lottery & Newsagent’s Association.

We are extremely pleased that Lotterywest has listened and is now treating its retail network with the respect you truly deserve.

This outcome sees:

  • a fairer apportioning of costs for retailers
  • an immediate halt and necessary review of the shopfit design
  • an appropriate and common sense approach to signage – not a less is more minimalist strategy not appropriate to the sale of lotto
  • an immediate half of all further shopfits.

ALNA appreciates Lotterywest coming to this conclusion and we look forward to working closely with Lotterywest once again for the betterment of Lotterywest and all WA retailers. Together, we can achieve great things and we look forward to a new era with Lotterywest and retailers.

14 likes
Leadership

It’s only a matter of time before the war on waste turns to print

The new ABC show about waste is getting plenty of traction. This is on the back of a similar BBC show. It is only a matter of time before the focus on waste engages with print, especially magazines with a sell through of under 66% where a third and more, often plenty more, of what is printed does not sell and is waste.

Here’s a clip from the ABC show, to give you an idea of the approach:

5 likes
magazine distribution

More suppliers rush to the fidget spinner craze

I have heard of several more newsagency suppliers announcing they will soon have fidget spinners. Each one of these is too late to the party. Had they taken notice at the Nuremberg Toy Fair, the New York Toy Fair or any of the other international fairs months ago they would have known this was coming and been stocked up ready to go.

In capital cities it is time to ensure you have cleared stock rather than stocking up. Sales for this craze have slowed and the key is to not be left with stock, like many were with loom bands.

7 likes
Newsagency management

Ransomware attack brings cyber security into focus

The global cyber attack story has been dominating news services over the last four days. The best way to ensure you are not hit is to follow the computer use advice that I published here previously and first published to Tower Systems customers.

The fastest way to recover is if you use a cloud backup service like the Tower Systems cloud backup service. Be careful. Be proactive. Make sure everyone who uses your computers are aware of your f=rules for how the computers are to be used.

3 likes
Newsagency management

American Express needs to be a better Australian citizen if they want us to believe they support small Australian retailers

American Express invests heavily in their annual Shop Small campaign, pitching the business as a good corporate citizen with a commitment to social responsibility. It’s a feel good campaign with plenty of support from small businesses and shoppers.

Shop Small is a movement dedicated to helping businesses at the heart of our communities. Whether you’re a small business or a Card Member, there’s something for everyone.

While Shop Small is nice PR, American Express engages in legal steps to minimise the tax they pay in Australia. This behaviour is at odds with there Shop Small campaign as tax minimisation hurts Australian taxpayers including small business owners.

How Amex paid no tax in nine years on $10 billion by Michael West explores how American Express minimises their Australian tax obligation.

American Express has paid no net tax in Australia for nine years, according to its latest financial statements. That is zero tax on $10 billion in revenue.

Michael West goes into considerable detail about how the company acts to pay less tax in Australia.

Over the past nine years, the financial services juggernaut has racked up revenues from its credit-card services of $9.93 billion and shown a tax gain, rather than a loss, of $900,000.

American Express Australia Limited used to pay tax in this country, but thanks to a “restructure” in 2004 billions in profits have since been siphoned out to an associate in the tax haven of Jersey.

I would prefer American Express to stop spending money to make itself look good with the Shop Small campaign and instead  be a good corporate citizen and pay a fair contribution of tax as this would be more beneficial to the economy and all Australians.

rather than shifting revenue offshore to a more favourable tax jurisdiction, I would like to see American Express pay Australian tax on its Australian revenue. Back to Michael West’s report…

The 2008 annual report for the Australian arm of American Express notes: “Included within borrowing costs in the income statement is the discount charged on the transfer of receivables to AECA of $370 million.”

Through this arrangement, Amex in Australia has transferred almost $5 billion in credit-card receivables to a related entity in just one year, and at a large discount. These receivables are money due to be paid by customers on their credit cards.

It is the actions of all global organisations that shift Australian revenue overseas to minimise Australian tax that hurts our economy. Worse still, the actions of American Express and others intensifies the tax burden on small businesses, the very group that American Express purports to support.

We need to not let American Express and other global companies get away with not paying their fair share of tax. Consumers can act, small business retailers can act – even if our politicians fail to act as they have done for many years on this.

Every small business owner knows how tough things are in Australia. Most have felt pressure from various points of government for funds for various taxes, levies, fees and more. We can’t revenue shift like the big  businesses.

Kudos to Michael West for his report and shining a light on this issue.

Footnote on Michael West – what he is doing through his website is business journalism that I am keen to see more of. His direct to market approach is smart and appreciated.

15 likes
Ethics

Ken Murphy memorial

Further to my post about the passing of former QNF CEO Ken Murphy, a memorial will be held at the Queensland Cricketer’s Club on May 24 at 4pm.

Ken was a warrior for newsagents, particularly Queensland newsagents. The memorial is an opportunity for those in our channel back when Ken was involved to remember his contribution.

4 likes
Social responsibility

Are you ready for after Mother’s Day?

The next big season for newsagents after Mother’s Day tomorrow is Father’s Day – if you are not doing a mid year sale or something similar.

My question today is what are you doing after Mother’s Day?

My advice is do something!

You should be in  position to come out today with something strong, with a focus, designed to drive traffic. Something you are proud to promote outside your business.

If you look at your key competitors they go from season to season. The whole year is planned, integrated. They will come out of Mother’s Day with something big and bold, something they promote outside their businesses.

If you are in  a marketing group they could already have something for you. If they don’t you have to put something together yourself.

In my own situation I am coming out of Mother’s Day with one season, which folds into another season, which then folds into Father’s Day.

The ideal season you create is one with supplier support for driving margin and providing traffic leveraging opportunities, something for which you have strong branded collateral so it looks like you are part of something big.

These months between Mother’s Day and Father’s Day are the worst for retailers who do not have a plan.

Gone are the days when you coasted on the back of certain lottery, stationery and magazine traffic.

You have to create your own success. You do this by attracting new shoppers.

You attract new shoppers by promoting outside your business.

You promote outside your business with opportunities people who do not currently shop with you value.

Value is something you can create based in a brand shoppers love and for which your business is already known in the area.

It starts with you creating product-based opportunities that fit with your business and that local shoppers will love.

It is not too late. I urge every newsagent reading this to make this week and the next few weeks count. It’s up to you, not your suppliers.

But back to my question – Are you ready for after Mother’s Day? I hope so. It starts today.

9 likes
Newsagency management

Sunday newsagency management tip: frictionless loyalty drives sales

The Mother’s Day traffic spike is a reminder of the value of a frictionless loyalty program. That is what I saw in-store with discount vouchers with first-time and infrequent shoppers using the voucher they received for an additional purchase. The vouchers absolutely drove incremental purchases.

I call it frictionless loyalty because there is no paperwork, no sign up process, no delay. The rewards are easy to understand. People responded by shopping the shop, again, after their first purchase.

Major seasons are a perfect opportunity to do this.

9 likes
Management tip

More middlemen entering our channel

The newsagency channel has had several start-up middlemen operations enter, claiming to offer newsagents good supplier deals while at the same time pitching to would-be suppliers that they have access to newsagents who want to buy their products.

My experience is you can’t offer both sides of a transaction margin beneficial opportunities without adding value yourself. Buying cheap is not useful without support to help you sell the inventory you buy.

I am not naming any of the start-up operations as one has already threatened me with legal action.

My advice to newsagents is to do your homework. Understand fully the relationship sought. Be certain of any promises made. Understand how the model fits what you need in your business.

11 likes
Ethics

Wow, Tatts invests in second online platform

Tatts Group has taken a 15% stake in Jumbo Interactive, the operator of OzLotteries, it was announced today. This has happened as tatts has extended its commercial relationship with Jumbo for online sales of Tatts products. The expanded relationship includes more tatts products being available on the OzLotteries platform.

Newsagents wondering about the plans of Tatts for online should read today’s announcement as strong statement from Tatts about online.

The announcement details what the share acquisition revenue will be used for. It includes:

expansion opportunities identified by Jumbo such as approaches to accelerate the growing charity lottery business.

The expanding charity lottery business is certainly interesting. Its represents another example of disruption challenging the single focus lottery retailer, such as many newsagency businesses.

Also in the release is this about Jumbo:

In 2000, Jumbo sold its first lottery ticket on the internet and witnessed a dramatic rise in popularity due to the convenience of buying tickets online. At first customers were attracted to the security of never losing a ticket and the convenience of automatic number checking, prize payments and auto-play. In 2012, Jumbo released a lottery app for the iPhone and a new transition began driven by the convenience of mobile lotteries. A new app for the Apple watch takes the customer experience a step further with prize alerts, winning numbers and ticket management now available on the wrist.

Yes, lottery product engagement on the Apple watch. #retailersnotneeded

13 likes
Lotteries

Advice to retail newsagents: take care with the fidget spinner craze

The fidget toy craze has peaked in Australia in the last two weeks with extraordinary media coverage. Retailers with stock have been cashing in. Suppliers have been struggling to keep up, some have been selling stock they don’t have.

I anticipate the craze will start to fade in revenue terms in the next month. My advice to newsagents is to be careful about stock levels.

This craze was evident months ago and that is when engaged retailers stocked up, ahead of the curve.

In Hong Kong two weeks ago I saw a ton of suppliers with various versions of the spinners and other fidget products. This told me the market was to be flooded. That is happening right now as several wholesalers have air freighted in stock.

Be careful. Stock quality products and know it is better you sell out rather than be left with unsold stock. Too many got caught with loom bands.

There are still opportunities for fidget spinner and related products, especially in the premium space of adult focussed fidget products that can sell for $200 and more. That range interests me considerably.

I say the craze is fading because of the mainstream media coverage. Once any craze hits mainstream he rely adopters exit as it is no longer cool. The early adopters are the ones who usually make an opportunity like this. It is useful to watch them.

The lifecycle of the fidget craze will vary by location, however. In capital cities it will fade first and this could be noticed before it has peaked in rural locations.

Yes, there are long-term opportunities with these products, especially in therapeutic areas. But that will not deliver the sales volume of the peak. Remember kinetic sand. I was doing hundreds of dollars a week and it stopped, before starting again but at a much lower level.

Oh, and re the suppliers who took your orders and told you the stock was coming and then said they ad oversold, remember that for next time.

Footnote: if yo are wondering about what this is about, read the terrific article in the New York Times.

7 likes
Newsagency management

Tatts promoting online for Powerball $50M

Online and in shopping centres over the last couple of days Tatts has been promoting online purchases of tickets in tonight’s $50M Powerball jackpot.

Here is a screen in a Brisbane Westfield centre.

Their online ads encourage printers to use their app.

While Tatts demands newsagents promote Tatts in-store, Tatts does not reciprocate in its own marketing.

10 likes
Lotteries

A personal invitation to look under the hood at the newsXpress online strategy

newsXpress now operates six customer-facing websites and is about to launch two more and has commenced planning for two more after that.

The newsXpress web strategy is the most comprehensive web strategy of any newsagency group in Australia. It attracts new in-store shoppers for newsXpress business as well as healthy online sales.

newsXpress has resolved the questions others wrestle with – accurate store stock on hand data, account reconciliation, shipping, aggregating an order across multiple retailers, geolocating to deliver online orders to the best and closest local stockist, click & collect and online LayBy.

newsXpress knows how to be #1 in the Google searches that matter.

I write today to personally invite you to a two-hour behind the scenes look at the newsXpress web strategy. Here are the details of each session. Click on the respective link to book online.

  • ADELAIDE. May 23. 10am. Rydges South Park, South Terrace.
  • SYDNEY. May 24. 10am. Mercure Sydney Airport, Wolli Creek.
  • MELBOURNE. May 25. 10am. The Kew Golf Club, 120 Bedford Road, Kew.
  • BRISBANE. May 30. 10am. Hotel River View. Kingsford Smith Drive.

I am hosting each session and will outline the strategy behind the sites, show you the results, dive deep into sales and other data with you and share next steps.

I will also share where the web strategy fits into the broader newsXpress model and outline the benefits newsXpress offers its members through which they can redefine their businesses in a rapidly changing marketplace.

Plus, I will share insights from three recent international e-commerce conferences I attended, where I gained some valuable insights.

What newsXpress is doing online is ground breaking and it connects independently owned retail businesses under unifying online platforms, driving traffic and revenue.

This session is for those interested in joining newsXpress. If joining newsXpress does not interest you, please do not book to attend.

Sorry but I don’t have time in my schedule to add more cities at this time. Nor will we film the sessions for confidentiality reasons.

If you have any questions I’d be happy to answer them. You can also contact the newsXpress National Sales Manager Peter Francis on 0423 298 020 to find out more about newsXpress. Click here for an overview document: newsXpress: What we do.

Mark Fletcher.
Email: mark@newsxpress.com.au  M | 0418 321 338

PS.  Outside of online work, newsXpress has a well thought through strategy of recasting the consumer connection with the brand, redefining the news in newsXpress.

PPS. Yes, I am a Director of newsXpress. BTW, the vast majority of what I write on this blog has nothing to do with newsXpress nor my other business Tower Systems.

8 likes
Newsagency management

Interesting pitch with crossword titles

In the Newslink store at Townsville airport yesterday I noticed small format crossword titles in the last two rows of a unit with pens and journals. It is the placement with pens that interests me as in the transit situation this co-polacement is smart.

What we can sell with magazines varies greatly between retail situations.

3 likes
magazines

Ruth magazine reflects special local interest

In Townsville yesterday I am pleased I got to see Ruth magazine. This is a terrific special interest title, focussed for locals in Queensland. It is the sort of magazine you want to see in a newsagency as would struggle to find it in any other retail outlet selling magazines.

Special interest magazines are important to our businesses.

5 likes
magazines

Would you like to sell Lottoland in your newsagency?

The folks at Lottoland have said they would like to work with newsagents in Australia.

I have had newsagents ask how they can do this, how they can sell Lottoland in their shop.

If you are interested in selling Lottoland in your newsagency let me know. Email me at mark@towersystems.com.au.

Given how Lottoland is sold and what is sold, I suspect the costs of being able to do this in-store would be minimal.

45 likes
Lotteries

How to deal with community groups that ask for donations

Local businesses are being hounded by individuals and community groups to donate cash and products. It feels like the number of requests is up this year.

Often, the requests are from people you have never seen in your shop.

Requests from schools, charities and other community for donations can be a challenge for any size business. If you do not take a structured approach to this you will find yourself giving away plenty for little or no return.

Requests are often loaded with guilt.  People can be passive aggressive in their approach. Often, people requesting help leverage pester power. It can be hard to say no. There are too many stories of retailers giving a gift as a prize, receiving the Thank You poster and achieving no benefit for the business.

My advice is that you determine the amount you are prepared to donate in a year. This is best donated as a voucher for redemption in the business.

Next, publicly invite community groups to submit to be considered as part of your annual giving commitment. Ask them to submit what they would / cold do to support your business so that your business has the resources necessary to support they community.

HOW TO PICK GROUPS TO SUPPORT

Focus on community groups that support you. That is, groups with members who support you. The more they support you the better you are able to support the community.

Be prepared to ask where people shop for the items you sell in your business. Ask if they will change in return for your support.

Asking these questions underscores to you the importance of approaching the decision as a business decision.

Be thoughtful and deliberate. Support the groups that support you. This is important as it helps you stay within a budget.

REWARD ENGAGEMENT

In addition to any direct gift, consider an offer whereby anyone who is a member of the group who shops with you accrues an amount you donate to the group. You could manage this through your software. It could be you offer a discount to the shopper as well as accruing a value for the group.

This type of program could also be in addition to your core giving program as the value here is driven by sales – hopefully, incremental sales.

EDUCATE GROUPS ABOUT GOOD ENGAGEMENT

Here are things groups you support can do to help your business. You should ask them to do these things:

  1. Tell members to buy from you.
  2. Write about your business on their Facebook page.
  3. Distribute flyers of your offers.
  4. Have you speak at a meeting.

WRITE ABOUT YOUR ENGAGEMENT

Once you have a decision on which groups you will support, write about this in your newsletter and on Facebook. Not just once but multiple times. Invite them to provide you with content to publish too. Talk about their good works.

Ask them to write about you too.

Footnote: the advice in this post is part of the advice newsagency marketing group newsXpress provides its members. A more comprehensive form of this local community group giving advice was first shared with newsXpress members in 2015.

15 likes
Newsagency management

Politicians pander to big business media mates while ignoring small business

It has been a disappointing weekend for small business in Australia. The government is set to give big media companies valuable free kicks, because of the “challenges” faced by those companies.

Of course, the media companies love the financial benefits they are gaining. And there appears to be little opposition outside of government – because the media companies can make or break you.

What made the announcement disappointing is all the bleating about the budget deficit. Yet here they are able to give more away to big business mates. And at a time when independent and small business retailers are confronted by extraordinary structural change, for which they receive no government support. Indeed, politicians have stood by and watched as Tatts forced small business newsagents to overcapitalise the lottery side of their business.

Small business makes a greater contribution to the economy yet we are ignored, except at election time. More fool us for being sucked in.

22 likes
Ethics

Sunday newsagency management tip: make your shop smaller

The shop we took over recently as too big for what we wanted to do with it in the short to medium term. So, rather thankful the excess space with stock and rather than fixing the problematic back part of the shop, we installed a black curtain, blocking it off.

The curtain was cheap and installing it was a breeze.

We put some Ikea shelving in front of the curtain and we are a professional looking space, the right size for what we want right now. Plus we have a work area behind the curtain for us to play in.

I see too many retail businesses with too much stock – because they have not trimmed their space to what is appropriate to the business. Do not put stock in the business just to fill up the space.

A quick visit to Spotlight or similar and you can create a professional looking wall without the cost of a shopfitter.

6 likes
Management tip

Sunday newsagency marketing tip: be smart with photos

Next time you the a product photo that you plan to use in marketing, make sure it is the best photo it can be.

My advice is to put more than one product in a photo.

Pose the items so they tell a story beyond the products themselves.

Have fun.

Don’t overthink the photo as any social media content is scrolled past in a second or two, unless you are lucky.

In the example here I have a unicorn gift items in front of  frame. I felt the two worked well together, playing off each other.

8 likes
marketing
Trending Articles

Fairfax changes approach to TV Guide, disrespects newsagents

Published on April 20, 2011

What do you think of the Powerball changes?

Published on February 16, 2018

IPS releases new magazine contracts

Published on June 21, 2011