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

Author: Mark Fletcher

How large companies deal with small business

The Sydney Morning Herald had a terrific report Wednesday on how large companies deal with small business in the payment for goods and services.

The report is on the back of research by Kate Carnell,the Small business ombudsman.

“It’s pretty close to extortion really,” Carnell said. “Large multinational businesses’ payment terms have blown out considerably. They are now moving to have standard contractual payment times of up to 120 days. It’s really bad for midsize businesses and a shocker for the SME space. It will kill SMEs.”

We have all been there, waiting for payment from big business clients. The cost makes the business not worth it.

It is good see the Small business ombudsman engaged on this issue. More please.

13 likes
Ethics

Is Luke Brill, CEO of Lottoland, misleading in his offer to work with newsagents?

If we can find a way to co-operate with newsagents, we would be more than happy to do that. We’re happy to respond to things, we’re not hiding from anything.

This is quote from Luke Brill, CEO of Lottoland, as quoted at news.com.au today.

Lottoland has ignored correspondence from newsagents about mocking, attacking even, newsagents in their TV commercials. I have contacted Lottoland in Australia and overseas myself and they have not responded. Others tell me they have contacted Lottoland too. So I wonder if the Brill quote is misleading. Brill has not responded to me.

Click here for a PDF of the article – in case News puts it behind a paywall.

I don’t see a big issue with a Lottoland ticket being a bet nor do I see a big issue with them being online only as that is where the bulk of lottery products will be purchased in the future.

My issue is that they have deliberately targeted newsagents in their ad, they have misrepresented newsagents, mocked them and all in an effort to shift lottery purchases online. Tatts has stood by and let this happen without response.

The response I want from Lottoland is that they advertise their product without mocking or attacking family owned newsagencies, and that they apologise for the ads they have run.

The response I want from Tatts is they they support their retail network rather than ignore them. The Tatts inaction is a breach in my view.

Online is the big challenge facing newsagents today. This is why I think newsagents should challenge the capital expenditure demanded by Tatts for their new fits as the cost does not match future income prospects given changes in how people will purchase.

10 likes
Ethics

Q1 benchmark study under way

I am a couple of days into analysing data for the Q1 newsagency sales benchmark study comparing the performance in newsagencies from January through March 2017 with data from the same period in 2016.

While I expect this study will reveal a continuation of trends, it will also reveal new information, new opportunities.

It is terrific that many newsagents are keen to participate, keen for their data to bee part of the large dataset used in the analysis and to provide insights into the direction  of revenue sources and business performance in our channel.

Here is part of the call for participation that I sent out announcing this new study.

4 likes
Newsagency benchmark

Selling magazine holders

I found this photo from photos I took in the US recently. I like it as it is a different way to display and show magazines in the home or a waiting room. I like it as it shows engagement with a category that has it challenges.

4 likes
magazines

Why a spinner is perfect for some card ranges in the newsagency

I could have also called this post why some card companies should not pressure newsagents to get on the wood or on the wall or however else they refer to permanent card fixtures.

I heard from a newsagent last week about a card company that currently has a spinner in their business pressuring for space on the wall. The rep from the card company said the wall was premium space and if the newsagent respected the relationship they would allocate wall space to the card company.

The spinner is performing well. Indeed, in terms of return on floor space, the spinner is in the top five performing floor space allocations in the business.

It does not make sense that the card company would want to disrupt a situation that is working for them and the retailer.

This same supplier agitates for wall space by saying the number of spinners is limited. I suspect they do this without considering the performance of spinners, without carefully analysing the performance of spinners.

Here are four bother reasons, beyond sales performance, why a spinner may be a better solution for cards than being on the wall:

  1. The card department primarily serves destination shoppers.
  2. Shoppers do purchase cards on impulse. For this to happen you need to be where they are and often that is not the card department.
  3. Some card ranges can attract shoppers to a business. They can only do that if on the lease line.
  4. Some card ranges add to the entertainment / shopping experience. This is best achieved outside the card department.

So, to any card company wanting to move their cards off a successful spinner onto the wall I’d say prove to me that this makes sense, protect me if it fails.

If your rep tells you sales will improve, call them on it, ask for evidence to support the claim. Too many reps are allowed to get away with BS. They have a job to do and that is to serve their employer. Often that relationship does not drive the best outcomes for your business.

9 likes
Greeting Cards

Marketing for Lent

I saw this marketing pitch in a Coles supermarket market on the weekend. I’d never considered Lent to be a marketing season. Now I am wondering what we could promote beyond Easter cards.

0 likes
marketing

Sunday newsagency marketing tip: marketing is not about you

Small business retailers tend to like marketing they can see. Like the ad in the local paper or the catalogue in letterboxes.

You seeing your own marketing is irrelevant. In fact, it is as irrelevant as many catalogues stuffed in letterboxes.

The best marketing today is about accurate engagement measurement, faster delivery and more immediate in-store engagement.

Take the old-school catalogue . Artwork, printing and delivery will take three to six weeks and cost you or your marketing group around $1,500, maybe more.

In many locations, that $1,500 could have funded 30 Facebook campaigns reaching 5,000+ people, carefully targeted with accurate data on engagement.

While catalogues play a role, that role today is far less than two years ago.

A newsagent told me they liked the catalogue because they could see it whereas they could not see a Facebook post. Their loss, as I told them.

9 likes
marketing

200th issue of Owner Builder magazine

If you stock Owner Builder magazine, dig out the latest issue and shine a light on it in your shop. It’s the 200th issue. I like the magazine as it is Australian, niche and loved by its readers.

Take a look at the preview the publisher offers vis this Tweet on Twitter:

3 likes
magazines

Inspiring Mother’s Day display

Here is a Mother’s Day display that I saw when overseas last week. I love it for the terrific range of products and the fun of the display and that it does not look like a usual retail display. This is why I say it is inspiring.

Mother’s Day is a season that can be boring if the product mix and in store pitch is the same old. The starting point for a fresh pitch is a display that looks different, like the inspiring display ion this photo.

4 likes
visual merchandising

Interesting take on the store of the future

This article from Digiday is an interesting look at Target in the US and their store of the suture project. Specifically, I appreciate the comments about evolution rather than a big launch of a future concept.

Brick and mortar retail has a bright future in my opinion … as long as it continues to evolve to engage shoppers how and where they want such engagement.

Small step changes, continuous changes, are the key, even in local newsagencies.

The days of set and forget retail are over. We have to see regular change otherwise we lose relevance and the revenue associated with this.

3 likes
newsagency of the future

GNS Chairman writes to newsagents

This correspondence was emailed to GNS newsagent customers today:

Dear GNS levyholders,

Firstly, on behalf of the GNS Board of Directors, let me thank you for providing the working capital that has enabled GNS to provide its services for so many years.

The levy, collection of which was ended on 30 June 2016, enabled GNS to provide low prices and serve you – our newsagent customers.

The levy amount now held by GNS is of the order of $6.5m.

Your own levy balance will appear on your statements from next month.

Many of you have asked for access to your levy sooner than when you leave the industry – currently the only way your levy balance can be reclaimed.

In response to this we are now preparing to offer levy holders the opportunity to convert their levy balance to a mix of credit against purchases over a two-year period and shares.

Of course, you need not do anything and your levy balance will be paid out in accordance with the agreement when it was charged i.e. paid when you exit the industry.

The offer however will be designed to reward levy holders by allowing you to use your balance to buy GNS products and become shareholders. Shareholders of course enjoy any capital growth in the share value, any dividends that are paid and access to share buyback when exiting the industry.

Full details will be available after July this year once GNS’ audited financials are completed.

Martin Hartcher
Chairman GNS Ltd

4 likes
Stationery

Gross profit from magazines

I was at a magazine retail business in Los Angeles two weeks ago where they were arriving new stock in for the day. I got to see an invoice. This shows gross profit of 34% from the magazines supplied.  yes, the model is sale or return.

Where there is an extraordinary difference between the magazine distribution model in the US and that of Australia, this gross profit percentage is interesting.

Retail space in the US costs less as does labour. These two data point differences compared to Australia highlight the challenge of the 25% GP we see in Australia today. We are far worse off that our US colleagues. This needs to change for magazine sales in newsagencies to grow, which I firmly believe they can.

8 likes
magazine distribution

See the Tatts screens in action in a newsagency

For those who have not seen two Tatts screens in action being the counter in an outlet, here is a video I shot yesterday in a newsagency in Sydney.

It looks good, impressive. However, and it is a big however, the content I saw did not reflect the average shopper wait and counter time. In the time I was at the store, 20% of customers looked in the direction of the screen and no one appeared engaged with the content on the screen.

9 likes
Lotteries

Shop Til You Drop closing

Bauer announced Monday that Shop Til You Drop is to close. I am grateful for the opportunity to be interviewed by Crikey for this story. It covers the topic well:

Closure of Shop Til You Drop signals ongoing crisis for Aussie mags

EMILY WATKINS
Crikey media reporter

The long death march of print is continuing with the closure of fashion mag Shop Til You Dropannounced by Bauer Media yesterday. Just over a year ago, Bauer was still insisting the magazine would not fold, despite closing its website in December 2015. It’s just the latest in a slew of closures both for Bauer and publishers generally across the industry.

Director of newsagency marketing group NewsXpress, Mark Fletcher, told Crikey the news of the closure was not surprising to newsagents around the county.

“Magazine closures are something that have become commonplace,” he said. “We are not getting destination traffic for a title anymore in the newsagencies.”

Fletcher went on to say that the high-volume weekly and monthly titles were the most vulnerable.

“The special interest titles are strong and are doing well because they have their own communities,” he said. “But the sorts of things I’m able to read in (the weekly and monthly) magazines, I can get much better content and more diversity of content online … Why am I going to buy a magazine for this?”

Media analyst Steve Allen said Bauer’s Australian CEO, Nick Chan, is likely to make more cuts to make to the business’s magazine titles.

“He’s been given a very clear direction from the German owners — every masthead’s being looked at and those that aren’t profitable will be closed,” Allen said. “I think there will be more, but we think they’re getting to the end of this clean up.”

Allen believes the titles now most at risk would be motoring magazines, like Wheels.

“A lot of people who are buying motor vehicles now will get roadtest information online, they don’t need to buy these magazines anymore,” he said. “They used to be very important.”

Allen told Crikey that once the motoring manufacturers realised that consumers were no longer relying on reviews in the magazines, they vastly reduced their advertising.

“They always had a difficult relationship with these titles because they couldn’t control them. When they started to drop in circulation, about seven to 10 years ago, a lot of the manufacturers decided they didn’t need to advertise in them anymore,” he said.

It’s been a bad year or so for print editions of Aussie mags. Bauer closed Cleo magazine in February last year, and Dolly’s print edition was axed in December. Back in October, Bauer Media also sold off five adventure titles and their websites.

And the closures aren’t limited to Bauer — Pacific Magazines’ FAMOUS closed in April last year, and Australian Property Investor closed in December.

Newsagents are dealing with the lack of traffic by diversifying their businesses. Fletcher said that, for most, this has meant reducing the space in their shops dedicated to magazines by up to 40 per cent over the past 18 months or so. He said one newsagent he’d spoken with today had, over the last 12 months, culled the 1,400 magazine titles he once stocked down to 600.

Now before magazine publishers call and ask me to not talk down the category, the numbers are the numbers. We retailers need to run our business pursuing the best return on space and labour possible. The 25% GP sets us up to watch what happens with magazines more carefully than growing product categories from which we can get 50% GP and more.

I think magazines have an excellent role in our businesses. Niche magazines, more mainstream special interest titles and magazines with content people want in print form, content they can trust.

Shop Til You Drop has been dropped not because it is a bad titles, but, rather, because the economic model on which it was based has fundamentally changed thanks to technology and direct designer / manufacturer relationships with consumers.

11 likes
magazines

The future of GNS the topic newsagents ask most about

Every couple of days I get asked what I think of GNS and whether I think the business has a future. If I can getting these questions others must be as well.

Whereas a year or two ago such a question was along the lines of GNS being a supplier, today the question usually relates to share value and sale options.

Unless there is communication in the marketplace I have not seen, GNS needs to arrest the concerns being expressed by outlining a leadership strategy that newsagents can feel connected to and optimistic from, strategy that breaking into tactical opportunities with which individual newsagents can feel connected.

I am posting about this today in response to a call yesterday afternoon from a concerned newsagent. They asked I put this post up to see how people here comment. So, here it is.

25 likes
Stationery

Crossword title range declining at US transit locations

The range of crossword titles I am seeing at US transit locations this year is down on last year and considerably down on two years ago. It is as if a tap has been wound back. Whereas previously there would have been twenty to thirty titles in good locations, now there are a few titles at the bottom of a magazine unit, looking neglected:

I am not sure if we can safely ready anything into this as the US magazine route to market is completely different to ours. However, there has been a considerable decline in transit where category representation was consistent for ages.

2 likes
crosswords