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

Author: Mark Fletcher

Talking the magazine supply model last night

Screen Shot 2016-07-20 at 6.28.58 PMI was involved in a discussion with several people on Twitter and directly last night as a result of my comment on a Tweet about Andrew Bolt’s book that had been sent to newsagents. It was an opportunity to let more know about the low margin for us from magazines and newspapers.

Sharing this information is vital as it provides context for some of what people see in newsagencies.

The discussion started because of my response online. I have not seen the ANF engage in such public representation of our channel. That’s another opportunity they miss.

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magazine distribution

Promote the Pacific Magazines $150,000 competition on your receipts

towerreciptWUT150Klong-1Newsagents using the Tower newsagency software were provided coupons for auto-serving on customer receipts to help drive shopper engagement with the Pacific Magazines shopper promotion.

Tower worked with Pacific Magazines on the production of coupons and provided advice to 1,750+ newsagent customers on how to include the coupons on receipts.

Receipts provide a free to use marketing platform that can work well away from the business, when a customer is at home and unpacking their purchase.

This is another example of the Tower AdvantageTM.

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marketing

Excitement at being part of a worldwide launch

This Friday a range of limited-edition collectible products will launch in association with San Diego Comic-Con. Connected retailers in Australia, including some newsagents, have purchased, sight unseen, close to $3,000.00 worth of limited-edition product. They have been promoting their participation and this has led to calls, emails and store drop-ins with people prepared to pay in full, in advance, to get something, anything from the ‘blind-box, that is available from Friday.

I expect most of the $6,000+ worth of stock, at retail value, will be gone in days. I also expect that by participating we will have attracted some new shoppers who might otherwise not have considered our business.

th whole thing doesn’t feel like traditional newsagency business activity – being part of a worldwide launch, connecting with a demographic not usual for a newsagency, people paying in advance for products they don’t even know about and being part of a community abuzz with excitement.

The whole experience has been enlightening. It gives me excitement for the next opportunity and the one after that. While it is hard work to learn the men processes and deal with such non-traditional activity, it is exciting as it shifts the business forward and that is vital in today’s world.

It is opportunities like this that make me excited for the future of the newsagency business.

And, yes, there isa connection between the shoppers this launch attracts and core product categories we have in the business. We make sure of that.

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marketing

Tatts expands games available on their App

Tatts Group has updated their App, expanding the games now available with this announcement to those with the App yesterday:

IMG_1281

The way App updates are handled, the additional games will be available once the App is auto or manually updated by users.

My opinion remains that online is the biggest threat to in-store lottery ticket purchases. Online is the reason small business retailers with Tatts ought to be careful about the capital investment they make in support of Tatts products.

Given how Tatts responds to retailer concerns, I doubt newsagents could achieve much in complaining about this mobile and online expansion.

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Competition

XchangeIT email to newsagents delivers poor service and passes the buck

Screen Shot 2016-07-19 at 1.49.13 PMXchangeIT sent an email yesterday to 607 newsagents using various computer systems advising they have been making the mistake of sending data to the now closed magazine distributor Network Services. Note: click on the image to see the email.

Some time fter emailing newsagents, XchangeIT advised the software companies. Of course that was too late as newsagents had swamped help desks asking what to do.

XchangeIT should have contacted the software companies first as this would have led to a discussion about the possible causes and guided XchangeIT to provide more useful and respectful communication. Instead, the email shifted the blame to newsagents and their software provider – when, in fact, the problem could be brought on by neither.

The XchangeIT email should have been tailored for each newsagent, advising them of the title(s) involved as this is the first step to understanding the issue(s) and understanding is vital for resolution.

If XchangeIT understood and cared about customer service of newsagents and its relationship with the software companies it would have taken a more helpful approach rather than sending a vague email to 607 newsagents yesterday.

One way software companies and newsagents can hide this problem is to turn off sending sales data to Network. At Tower Systems, the newsagency software company I own, we chose to not do this automatically as our view was and is that newsagents need to know if they have a data issue. Hiding it achieves nothing.

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Newsagency challenges

Specialty tobacco retailers encroaching more on newsagency retail

Challenges for tobacco retailers are pressuring them to diversity in order to maintain traffic and revenue. More and more specialty tobacco retailers are expanding into categories that are traditional for newsagencies. This is a challenge for some newsagents not geared to deal with more competition.

I am seeing it myself from two tobacco retailers less than fifty metres from one of my newsagencies. They have expanded into cards and several lines of gifts that compete head-on with what I have.

I don’t begrudge the expansion of range by tobacco retailers as engaged newsagents have been doing this themselves for years, taking business from gift shops, toy shops and other specialty retail.

My concern piques when I see newsagent suppliers placing products in a nearby tobacco retailer that the newsagent already stocks. Newsagent suppliers ought to respect their long-term customers.

In several cases in the last week suppliers have done this, they have placed products in tobacco retailers close to newsagents who already have the same products from the suppliers. While one could argue the two businesses serve different customers, in the locations of which I am aware this is not the case. Shoppers from the street can walk past two businesses and see the same stand in each.

I get that it is a competitive marketplace – for everyone. Suppliers do themselves no favours if they place product into businesses competing with retailers who stock their product nearby. That will not end well.

When this happens to me, my view is to reduce support for the supplier and shift focus to a supplier who is more respectful of my business. That in itself leads to regular change and change is good.

Newsagents with specialty tobacco retail located nearby – keep a watch for moves they make. It could be that pre-emptive action now protects you into the future.

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Competition

Federal government downgrades small business focus

The cabinet reshuffle announced by Prime Minister Turnbull today downgraded Small Business focus out of cabinet as reported in The Age today:

Kelly O’Dwyer, the assistant treasurer before the reshuffle, will be renamed the minister for revenue and financial services. She has been axed as small business minister, with that portfolio now downgraded out of cabinet and handed to Nationals MP Michael McCormack.

This is not a good look for the government given their statements about small business leading up to the election.

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Small Business

Saturday Herald Sun price rise

Screen Shot 2016-07-18 at 12.45.35 PMHere is the official announcement from News Corp’s Victorian office about a price rise this coming weekend for the Saturday Herald Sun. Coles has an opportunity to soften the blow of the news with their News Corp. half price offer. Click on the image to see a larger version of the letter.

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Newspapers

Promoting the News Corp. Marvel campaign

IMG_5154 (1)Here is how we are promoting the News Corp. Marvel offer at the front of the newsagency on the lease line. While the display is nt as big at the publisher would like, it is in the very best position for eyeballs, the the front of the shop and next to a stunning display of Marvel licenced products, most of which you cannot see in the photo.

While I like the promotion, News Corp. needs to re-visit newsagent compensation as what we make does not cover the actual costs involved and the sales kick is not sufficiently long-term to provide a good return on our investment.

Looking at this more broadly, the company’s approach to sharing reasonable details of the promotion early denied many newsagents enough time to get in other products to leverage the border opportunity. I consider their approach selfish and not what we should see from a supplier that says they support our channel and want newsagents to have a string future.

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Newspaper marketing

Locating the newspaper stand in the newsagency

IMG_1152The days of locating the newspaper stand in the best position in-store in the newsagency on a purpose built stand are over. Newspapers do not deliver the return to warrant this prime space allocation nor do they deliver the return to warrant the space of the purpose built newspaper stand. While they are a destination purchase, shoppers are prepared to go to the destination in-store to pick up the paper.

Newspaper publishers cannot expect newsagents to allocate prime position in-store given their placement into other retail businesses, promotion of other businesses over newsagencies, promotion of home delivery and promotion of digital. Just as newspaper publishers have made decisions to serve their need, so must we.

The photo shows the placement of newspapers now in one of my stores – at the back of the magazine unit, facing the back wall. If there is a major promotion, we pitch that toward the front of the store as we support these, like the Marvel promotion about to commence.. However, for everyday trading, we place the newspaper stand in the location shown as this is where it works for us. Customers are happy to walk to her, even our older customers who you may think could be cranky about th extra steps.

The location you can see for the paper stand is not permanent. We move this like we move other items in the business. Constant movement of items around is vital to retail today so having a newspaper stand we can easily move is important to us and the mission for the business.

Click on the image for a larger version.

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Newsagency management

Sunday newsagency challenge: keep your stands full

I have been tracking sales of selected lines in a range of newsagencies over the last six months and have evidence supporting the claim that a full stand is more successful than a half empty stand. Put in place a weekly check-up of stands. Order to have floor stock to feed into the stands so you never have an empty stand. Watch sales grow. This does not work with all products. Those it does not work with, quit. This it does work with – keep them full.

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Newsagency challenges

Sunday newsagency marketing tip: leverage adorable images

Screen Shot 2016-07-15 at 10.34.15 AMSocial media is a perfect place for connecting your newsagency business with adorable images people are certain to love. Take the dog and cat images in this post I did on Facebook a couple of days ago – they are images from greeting cards. In taking the photos I focussed on the face of each animal rather than the whole card. I figured this would gain more traction.

Sharing images that evoke a positive emotion is important in social media engagement. It is good marketing activity for the business, far more valuable than promoting products available elsewhere such as weekly magazines, newspapers or lottery products.

The more you use social media in a way that pitches you and your business as unique the better.

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marketing

Sunday newsagency management advice: cut fraud with Tap and Go EFTPOS processing

Regardless of the Tap and Go limit set by your EFTPOS service provider, I suggest you consider your own rules to reduce the opportunity of fraud being committed in your business. While there is a slow-down in processing, the delay is minimal and the outcome considerably better.

My suggestion is for transactions above $20.00 you have the card swiped or put in the slot in the device and request the PIN from the customer.

The only delay is in the handling of the card. The rest takes the same time regardless of how you present the card.

With an increase in fraud as a result of tap and Go, this can be your approach to cut fraud, your commitment to protecting your customers. The people who will like this will be those who are fearful of such fraud. You probably see them like I do, the people with their cards in a container to protect mistaken scanning wrapped in Alfoil.

In asking for the card say something like: we have a $20 limit on Tap and Go to help fight against fraud. said with a smile, most customers will agree and appreciate your concern.

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Management tip

The scams some people use to rip businesses off…

I know of a newsagent who wanted too access a business service urgently. They were told the price and provided a credit card. That failed to go through so they were called back and a second card was provided. The transaction went through. They got immediate access to what they wanted. Over subsequent days they used the service over and over, downloading and extending the value they achieved. Six weeks later, they contacted their credit card company claiming the use of the card was fraud.

I own the company that has been hit by the scam. The time being spent to prove the legitimacy of the charge, to provide documentation supporting the charge, phone conversation notes and more is considerable. In the meantime, the newsagent has unfettered access to what they downloaded, to the products they purchased once agreeing on the price.

A consequence of the experience is a tightening of back office processes, and this is the point of my post here. It is often misbehaviour by one that impacts on the vast majority in any community who behave well.

There are people in our newsagency community who do not act as if they are in a community with metal obligations of respect. They do not act thinking their behaviour could impact on other newsagents.

Speaking as a supplier, I’d love a place to share details of newsagents to not deal with, a bit like putting up a phone or video of someone who steals from a shop. But that idea is not possible so you suck it up, learn from the experience and move on.

While writing about it here provides some relief, it is minimal compared to the cost to the business regardless of where the fraud investigation lands.

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Ethics

What is the end-game for News Corp. of the half-price newspapers in Coles?

IMG_1167I like the signage promoting the half-price newspaper offer in Coles. Placed directly above newspapers and magazines on the stand usually at the entrance to the supermarket, there is no missing this offer.

I feel for newsagents located close to Coles as it would be easy for people to spend $30 in Coles to qualify for the half-price newspaper. If they do this enough times it can change their habit of purchasing the newspaper from the newsagency to purchasing from the supermarket. And once that switch occurs, the supermarket can satisfy with magazines, greeting cards, stationery and, maybe soon, lotteries.

Shame on any supplier doing a deal with a supermarket to discount fixed price products like newspapers and many other everyday items we sell.

News Corp. has form on this – remember their Inside Out deal with Coles – $2.00 less than our price.

If News Corp. wants small business newsagents to close they should keep doing deals like this one with Coles.

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Competition

Being niche is important in toy and gift retail today

IMG_1129While the major retailers chase sales of the top selling lines in toy, gift and other categories, newsagents and other small independent retailers can do well by playing a niche game, serving what you could call the long tail in the categories. Sure majors serve the long tail but the size of their stores and usual lacking customer service makes serving shoppers interested in long tail products challenging.

The play money and play coins are an good example of what I am telling about here. They are vital to any toy department yet they are hard to find.  I know because I tested this recently at a Target, K-Mart and even an independent store. At the two majors I was pointed to a general area whereas at the independent store they did not have the products.

But this post is not really about play money and play coins. No, it is about being thoughtful in product choices and buying to provide a point of difference for your business through serving long tail niche needs. And once you have done this, using social media and other p;at forms to let people near your business know you have the products.

If your toy department and gift department looks the same as others then people will compare price as price will be the only difference. If your range is different and you are known for serving long tail niche needs then you build loyalty. But achieving that starts with your buying and buying beyond the main selling items.

The buying I am referring to here is best done under your control and not that of a supplier. Yours is the business with the unique local opportunity.

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Newsagency management

More on the Pokemon GO opportunity for newsagents

13612140_1741803999392275_7975590512027229433_nWe are now more than a week into life with Pokemon GO and each day has brought new opportunities from new traffic and from products of practical value to Pokemon GO players as well as licenced Pokemon products. With plenty of suppliers of Pokemon licenced products the opportunities are considerable.

US business magazine Inc this week published a terrific article on the business opportunity of Pokemon GO: Pokemon Go Is Driving Insane Amounts of Sales at Small Local Businesses. Here’s How It Works. This article provides practical advice retailers can engage with in any situation, advice newsagents can engage with.

We are engaged not only with products and a welcoming smile for Pokemon GO players, we are connecting with players and fans on social media. This is a terrific opportunity.

For more background on this, read my earlier post on Pokemon GO.

It would be easy to ignore this as a fad or as something for a younger generation. If you are a retailer, traffic is your lifeblood. Pokemon GO is doing more for getting people out on the streets than just about anything else right now. Understand it, embrace it and welcome those playing into your business.

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Newsagency management

Pen refresh boosts sales in the newsagency

IMG_1153The pen refresh in the newsagency has resulted in an immediate boost in sales.

Located next to the counter, the position drives impulse purchases. the new layout is more shopable and the branding more professional than what we had.

The results speak to the value of a regular refresh, especially of pens as a good pen department will deliver at least a third of all stationery revenue, making it the most efficient retail space in most stationery departments.

The stationery layout in the photo shows our standard approach to stationery – efficient use of space, layered to use the space well and in a way shoppers expect today if they are shopping at Officeworks or elsewhere for stationery.

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Stationery

SA distribution newsagents take a hit with Advertiser cover price rise

Screen Shot 2016-07-13 at 8.46.13 PMNewsagents in South Australia were sent a letter yesterday by News Corp. about a cover price rise for The Advertiser to take effect from July 23. The distribution newsagent commission is 22%. With the retail newsagent getting 12.5%, the distribution newsagent is left with 9.5% unless there is something I and others are missing.

This situation comes about because the distribution newsagent is on a fixed fee. Concern would not be significant if the fixed fee was fair, if it reflected the work, risk and capital cost of being a distribution newsagent in South Australia, if it allowed fora reasonable profit over and above all the costs.

In setting the fee, News Corp. has not considered these factors in my view.

For me, as an observer, the issue here is fair pay for the distribution newsagent. I don’t think $0.2601 per copy is fair is it does not reasonably cover labour, infrastructure and other costs of running a distribution business.

News Corp. will respond and say it has an annual fee review process. While this is true, it is reasonable to question if the fee the company sets is fair compensation for the time and infrastructure required to do the work it demands.

It is fundamentally unfair that News Corp. sets the fee it pays newsagents as it is conflicted in setting the fee. The fee ought to be set by an independent party. The alternative is newsagents set their own fee. However, the problem with that is there will always be bottom feeders who undercut.

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Newspapers

April – June 2016 vs. 2015 newsagency sales benchmark results

This study is based on data from 161 newsagencies in city and country, high street and shopping centre situations, newsagencies in different groups and trading alone.

Overall, Q2 2016 delivered better results than Q1. There is good news in these benchmark results, especially for newsagents who are working their business as retailers.

  • Customer traffic. 57% of newsagents report average decline of 1.4%.
  • Overall sales. 59% reported an average revenue decline of 2.2%.
  • Basket depth. 64% report a 1.9% decrease in basket size.
  • Basket dollar value. 61% report a decrease in basket value of 1.1%.
  • Discounting. 35% of respondents use a structured loyalty offer such as points or some other discount.

Benchmark results by key departments:

  1. Magazines.  78% of report an average decline in unit sales of 7%. The average decline in weeklies was 8.4%. 20% report an increase in unit sales.
  2. Newspapers.  77% report average decline in over the counter unit sales of 6.1%.
  3. Greeting cards.  56% of report average revenue increase of 2.9%.
  4. Lotteries. 68% of those with lotteries report average decline of 5.5% in transactions.
  5. Stationery.  77% of newsagents report a decline, with an average of 1.7%.
  6. Ink.  23% of stores report ink separately. Of these, 51% reported increase of 2%.
  7. Gifts. Of the 78% with gifts, 61% report average growth of 5.1%. Note: for the purposes of this analysis I roll gift related departments such as plush, collectibles, homewares and gifts into one.
  8. Tobacco. Of the 45% with tobacco, 73% report an average decline of 17%.
  9. Confectionery. 66% of stores reported an average decline of 3%.
  10. Toys. Of the 25% with toys, 70% report growth of 4.5%.

Here are some insights from analysis of the data:

  • High street and regional newsagencies were among the best performers.
  • The traditional newsagencies: papers / magazines / lotteries / cards / stationery and little or no gifts fared the worst.
  • Newsagencies with a strong gift department performed better with cards.
  • Newsagencies selling higher value gifts did better than those at the low (under $20) end.
  • Newsagencies in a group usually, but not always, perform better than those not.
  • In the successful group, the ratio of gift to card revenue continues to grow.
  • The most significant growth year on year is in the businesses where significant shop floor change has been undertaken. i.e. increasing gifts, shifting to higher price point products, introducing homewares and / or introducing toys – but not the usual low end toys we see in newsagencies.

I say the results this quarter are better than last because there is evidence of the value of embracing change. While there is no doubt that print media continues to challenge as does tobacco and lotteries, newsagents acting as retailers can achieve gains as the results show.

HOW TO USE THESE RESULTS
Look at your own situation. Compare your year on year results with those detailed here. If you are doing worse, act. If you are doing better, celebrate briefly and then get back to it.

There is no time to lose. We are in a period of extraordinary change and challenge on many fronts and the best way to confront change and challenge is to lean in and bring it on.

The business owners of any newsagency are the single most important influence on their results.

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 newsagency marketing group 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:

  1. 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%.
  2. 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.
  3. Revenue per employee – $250 an hour minimum not including agency revenue.
  4. 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.
  5. Overall revenue mix percentage targets: Cards: 25%; Gifts/toys/plush: 25%; Stat: 10%; magazines/newspapers: 20%; other: 15%.
  6. 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.
  7. Mark-up goals: Stationery: 125%; Gifts 110%; plush: 110%.
  8. 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.
  9. 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).

If you want help transforming your newsagency business reach out for help to people you trust. The earlier you reach out the better.

Here are my contact details: Mobile – 0418 321 338; email – mark@towersystems.com.au. I will help as much as I am able.

Tower Systems serves in excess of 1,750+ newsagents with newsagency software. newsXpress has 220 newsagency businesses as members.

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Newsagency benchmark

What is Pokemon GO and why does it matter to your newsagency?

IMG_1117Pokémon GO launched Wednesday last week in Australia. It is a game played on your phone or tablet that integrates with the real-world in a ground-breaking way. Pokémon GO uses your phone’s GPS and camera to turn the real world into a hunting ground for Pokemon characters. It also transforms local landmarks (yes, here in Australia) and businesses into locations players can physically visit to stock up on free accessories and items.

Click here for a bit of history. Click here for a story in the SMH on the Australian perspective.

There is a business connection with this phenomenon. Forbes published an interesting article from a business perspective.

newsXpress, the newsagency marketing group of which I am a director, has confidentially shared comprehensive information with newsXpress members on what Pokémon GO is how to embrace Pokémon GO and leverage the opportunity for their businesses. newsXpress also shared details with its members on five suppliers with products for the Pokémon GO fan plus specific revenue strategies. Note – these are suppliers who do not usually supply newsagents.

newsXpress has detailed other products ideal for Pokémon GO players. Plus, it has shared traffic driving strategies that can be used to attract Pokémon GO players and through this drive engagement with the business.

The early adoption and embrace of Pokémon GO is another example of the newsXpress difference. newsXpress is the first newsagency marketing group to embrace Pokémon GO.
 
This is what we have to do in our channel: be early adopters of trends. For some, this means stocking products while for others it means connecting on social media while for others it is about full immersion and playing the game.

This initiative on Pokémon GO is a good example of what newsagency marketing groups need to do for newsagents – to be out there researching new ideas, developing commercial strategies, training newsagents and encouraging their employees to entrance the opportunities of change.

Yes, I have Pokémon GO on my phone and I’m giving it a crack.

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marketing
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