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

Author: Mark Fletcher

Is Tatts asking retailers is increase costs and ignore their own image requirements?

I have spoken with several newsagents about reported requests from tatts representatives to retailers that they print more and more marketing material in-house.

One I spoke with told me there had been a considerable reduction in the marketing collateral provided by Tatts.

Another told me their area rep regularly showed photos of suggested displays, displays completely made up of collateral printed in-store by the newsagents.

All of this adds to the operating cost of Tatts outlets. Increasing costs for what is a slim margin business is a problem.

If Tatts is providing less printed collateral and requesting more printed in-store this is an extra cost on top of the expensive new corporate image fit out and the expensive digital marketing technology requires,.

The other issue I am hearing about is the claim that images some tatts reps show newsagents when suggesting they do the same show displays that themselves breach the Tatts guidelines as they obscure Tatts poster units. Newsagents have been breached for this yet, if my source is right, tatts representatives are encouraging such breaches.

From what I am hearing there are double-standards being played by Tatts area managers – within states and between states. As retailers talk with each other this makes for a challenging situation … with the sword of an expensive breach to deal with.

Tatts needs to sort this out as it adds to stress and cost for the small business retailers.

Footnote: I was not going to write about Tatts today but newsagents contacted me about these issues. The best thing Tatts could do to stop posts like this would be for the company to get its act into gear.

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Ethics

Poor journalism by A Current Affair in scratch ticket story

I was sucked in by the 9 Network marketing for A Current Affair last night. The promotional script sounded bad for newsagents and bad for scratchies. The story itself was a dud, a waste of time. The “shock” of the show was that spending $2,000 on scratchies produced around $700 in prizes.

The odds for scratch ticket games are readily available. They are produced and sold as a commercial enterprise and overseen by government. There is nothing to see here except for poor journalism.

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Lotteries

Is Tatts encouraging newsagents with advice that harms long-term business prospects

A Tatts area manager posted this photo with the comment did someone say 30 Million !!! Very eye catching and driving customers into store.

Okay I guess it is eye catching in that there is nothing else to look at. However, I’d like to see the evidence of the $30 million prize posters driving customers into the store.

The store appears to be regional or rural. If this is right, shoppers are unlikely to have brick and mortar lottery retail alternatives nearby. If this is the case then the number of posters are not likely to spike traffic.

Any time a Tatts representative posts a photo with comments they need to provide context, they need to prove their claims. If these posters are driving customers into the store the Tatts rep should advise the extent of this. What doe they mean exactly. Prove it. They should also encourage a healthy business and not one focused only on one product.

Tatts reps and management have made many claims in recent years about the demanded refits and the digital marketing platform and from what I am told there is little (if any) evidence offered to support the claimed benefits. 

As I noted in this place yesterday, newsagents are quitting their businesses because capital investment along the lines of what Tatts demands is not delivering financial benefits to justify the investment.

My opinion is that the number of posters in the photo is a waste of good promotional space. This business is pitching one product. Once the $30 million is done, what next? Promoting, say, three product categories on the front of this should would treble the reasons you are calling customers in. Promoting one product is inefficient.

I don’t think the extra posters are delivering the traffic and revenue bump to justify all the space given over. I could be wrong. In fact, I hope I am wrong for the sake of this business. But I don’t think I am wrong.

I see these posters like newspaper posters. Take them down and your sales are not affected. Tatts says put the posters up without proof that this many posters work.

Tatts has an obligation to be factual in its representations. As a franchise operation it has obligations to its franchisees. The company should back its claims.

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Ethics

Newsagents acting on Tatts refit costs

I know of newsagents are preparing to hand back their Tatts agency at the deadline of the requirement for them to install the new corporate image and digital platform.

Several who have spoken with me say they have advised Tatts.

I know of other newsagents who have decided toque their businesses because of the Tatts refit and dignity marketing costs.

It surprises me that Tatts is not more engaged on this issue, in the face of this evidence.

Here we have small business retailers turning their backs on their businesses because capital expenditure requirements for which there is no obvious return on investment.

The silence from Tatts on their requiring a capex by small business retailers for which there is no sound business case. Indeed, I am told that when newsagents raise this at Tatts forums they are shut down.

My understanding is that a franchisor cannot rehire a franchisee to engage in capex without provide a sound business case.

Tatts has enough shops with the new cutout and the digital marketing platform for them to provide evidence of the commercial value of the capex.

The only reason I can think why Tatts would shut down conversation or provide evidence supporting the capex is that no such evidence exists.

Newsagents I have spoken with recently feel helpless, leaving them no option but to walk away. This is a dreadful situation for their families. It speaks to the handling of this by Tatts.

I don’t expect comments to this post as most who do comment on Tatts matters raised here contact me privately out of fear of retribution by Tatts.

Tatts could fix the situation with evidence of a good return on investment from the refit and digital marketing investment. I cannot understand why Tatts refuses requests for such information. The only reasonable conclusion is that such evidence does not exist. This his what newsagents think. Tatts knows it. mThe best counter tatts could have would be evidence to the contrary.

The future of many family owned businesses rests with Tatts.

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Ethics

Lotteries floor and fit-out costs low for UK retailers

Here are photos from my brief time in the UK late last week, showing the space efficient lotteries fit requirements in different types of businesses.

This photo is from out the front of a WH Smith.

This is from inside the same WH Smith, placed with magazines.

This is from a Tesco supermarket in London.

It is interesting the placement of the small footprint stands next to high traffic locations.

The big difference between the UK and Australia is the connection between lotteries in the UK and community engagement. They run local lotteries supporting 51 local British communities.

It will be interesting to see how the federal government handles the roll out of the proposed Olympics lottery. It would be the first national community-c0onnected lottery from what I understand. It will be important for existing small business retailers to be part of the sales network.

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Lotteries

When you sell out of newspwpers

This stand is for free newspapers at London’s Euston station. I am interested in their pitch for digital access if all the papers are gone. With many retail-only newsagents I know of not getting enough stock to get beyond late morning this could be a good customer service sign – but pitching one of the free services like Huffington Post, the Guardian and similar.

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Newspapers

Sunday newsagency marketing tip: greet customers with unexpected displays

Displays that can be seen from outside your business are the most important for they are the ones that set elections. It you have lotteries this will be a challenge because of their location demands.

If you don’t have lotteries, go for it I say, recast your business through your displays for it is the most important in-store marketing pitch you can make.

This photo is a recent display from one of my businesses.

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marketing

Daily Mail jumps on fidget spinner craze

The Daily Mail newspaper in the UK has jumped on  the fidget spinner craze, using the lure of a free spinner to get people to sign up for an account, that I expect will be used for marketing. They have 50,000 spinners to give away.

Kudos to the marketing folks for jumping on the fidget spinner craze quickly. This is a smart move made at the right time.

That said, the giveaway indicates that retail sales are in steep decline.

I like this promotion as it is relevant today, far better than recent promotions we have seen in Australia.

Here are the details from page 42 of the newspaper here today outlining how the promotion works. I am sharing this as I expect some newspaper marketing folks will find it interesting.

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Newspaper marketing

What is the most expensive item you have sold in your newsagency?

Outside of lotteries and business stationery orders, what is the most expensive single item you have sold in your newsagency business?

I am asking because I was talking with a newsagent a couple of ays ago who said they could not sell any gifts over $20.00 and that is why hey only stock gifts up to a value of $20.00. I told them of another newsagent who told me that a year ago and new sells items priced at $350.00 each and more, and sells them?

So, what is the single most expensive item you have sold in your newsagency?

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Newsagency management

Driving Facebook engagement using greeting cards

It is easy to attract more likes for your business Facebook page if you use photos of carefully selected cards.

Take this card from Hallmark, for example. It features an image people will stop at rather than scroll past on Facebook. That is key to any Facebook post – getting people to stop rather than scrolling past.

Social media posts are multi-layered. first you ant them to stop. This is achieved by a fun, beautiful or shocking image. next you have text to support the image. finally you have something for them to do, to click or ring or some other way engage. This third piece is about them acting. It is not essential – it all depends on the goal you have for the post.

In the average newsagency card department there are hundreds of cards you can use for different posts, cards that call out range, fun and emotion, cards that help to make your business appealing beyond what people expect from your business.

If you are reading this and thinking that you don’t have the time I would say to you: you can’t afford to not do this. It is vital to the future of your business. Too often newsagents leave the card department to do its own thing. That will see you only sell cards to destination shoppers. Your card sales will decline.

By being proactive about cards, using fun and emotionally charged cards, you can expect to achieve net new traffic for cards and this is bonus revenue off the back of low or no cost marketing.

I urge you to take a walk down th cared aisle right now and choose a few cards for the type of post I a suggesting. I am confident you will find them.

Here a post I did recently along the lines of what I am proposing here. It pitches sympathy cards. It achieved engagement from more than 1,000 people. As you can see it is easy to choose good content, write a short post and get it live for shopper engagement. A small $$ boost on facebook can help you reach beyond your own regular community.

It all depends on whether you want to increase card sales. If you do, have a crack at this approach. If not, leave your cards to do the work for you … and watch sales match your overall store traffic.

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Greeting Cards

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.

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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.

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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:

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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.

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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.

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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.

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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.

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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.

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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.

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Management tip
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