Now is the time for small business retailers like newsagents to engage on penalty rates
With the new Malcolm Turnbull led government retailers including newsagents have a moment in time opportunity to engage on matters important to us, such as the issue of weekend penalty rates.
The new PM had spoken about the issue and we know the Productivity Commission is working on a report on this and employment terms more broadly.
I urge newsagents to leverage the opportunity of the new Turnbull government by letting local members and appropriate ministers know your views on penalty rates. The PM has said he wants to have an intelligent conversation on a range of matters. To our small businesses, weekend penalty rates are one such issue.
While some prefer shrill argument on the matter, the reality is there is plenty to discuss calmly and based on facts – and that is what is needed here. Calm discussion. Not in the media. Not by politicians and acolytes who refuse to consider any alternative to their view.
No, we need rational discussion on what could be, for the benefit of everyone.
My concern is specifically around weekend penalty rates. I’d like to see them pulled back to a 25% premium on top of regular hourly rates. I think 25% is fair. The current model is especially unfair in businesses where retailers have little control over the price of what they sell.
The adult casual employee hourly rate is $23.74 plus superannuation. Businesses have on-costs such as workcover and other overheads that need to be considered when assessing the cost of employees.
The Saturday rate for this casual employee is $25.64 while the Sunday rate is $37.98. The public holiday rate is $52.22.
I would prefer a flat penalty rate of $29.67 for Saturdays, Sundays and public holidays.
I know of many newsagents who would roster employees on for Sundays and public holidays if there was a lower cost of penalty rates – rather than working themselves. I also know of newsagents who would increase rostered hours if the hourly cost was less. Both examples show where people not getting shifts today would benefit.
There will be those who say such a move is not fair to the workers. I can understand that view since I am proposing we take something away they have today. However, $52.22 for a public holiday is unjustified in my view. I think it reduced the opportunity for more to get work. For many I speak with there is no burden of working a public holiday. Further, there is no bonus revenue windfall for the retailer, no extra capacity to pay a higher hourly cost.
Now is a good time to make the case to your local member of parliament and to the various new ministers who will consider the new government’s position on this matter.
Why I want higher margin better selling diaries
The space allocated to these diaries costs close to $40 a week in rent. That is what I need in gross profit each week to cover the space cost.
Publishers say the sale or return model mitigates risk along with the generosity of delayed billing. Neither of these things pay the rent and rent is the issue. It goes up 5% every year without fail. We either sell more or get higher GP$.
Unless publishers address the rent issue, newsagents will continue to reduce space allocated to lower margin product.
Why newspaper publishers need not worry if newsagents put newspapers at the back of the shop and why newsagents should place them there
More and more newsagents are placing newspapers deeper into the business, allocating less expensive space as well as allocating less space overall.
While newspaper cover prices now (finally) increase regularly, the additional margin dollars earned do not keep the return at a reasonable level because of the unit sales decline.
Newsagents cannot afford to provide front of store space to newspapers nor can we allocate the space needed for the old style publisher mandated fixtures that many of us called boat anchors. Publisher designed fixtures naturally feature specific mastheads, often taking more space than can be justified based on the return achieved.
Basket data analysis indicates newspapers are not the destination purchase they used to be.
The best approach I see is where newspapers are placed in generic fixtures toward the rear of the newsagency and in space that otherwise might not be financially valuable for the business. Customers will seek them out, especially if getting there is not too hard and if newspaper products are presented in a shopper friendly display where you place them.
My experience is that moving newspapers from the publisher preferred front of store display to a mid store or rear of store display does not, of itself, reduce newspaper sales.
Publishers do more to harm over the counter newspaper sales through home delivery discounts, supporting other retailers, deals with fast food outlets and by giving papers away. I see this as competition against my newsagency.
In response to all these activities newsagents need to treat newspapers as any other product. They have to pay their way. One way to do this is to encourage shoppers to shop the shop. This can be done by placing newspapers such that shoppers pass more other products to and from the newspaper stand. Placement needs to be tactical. get it right and newspapers can help drive a better return through a deeper shopping basket.
In my own newsagency newspapers are two thrifts into the shop, on the front of the main magazine aisle. They are well laid out. The full cover of each of the top selling newspapers is on show, helping to drive impulse purchases. from time to time we supplement this with counter promotion – based on the cover story. We also occasionally contemplate lease line promotion – again based on the cover story.
Newspaper publishers think that supplying a purpose made fixture gets newsagents to place newspapers in a better location. Those days of a nice stand driving behaviour are gone. Now, our focus is on financial return on floorspace, inventory and labour. One way to improve return is through a contribution to space cost. Any publisher offering this will get my attention.
In the meantime, my advice to newsagents is to exert control on where newspapers are best located in your business to make the best possible use of space for your personal benefit.
To publishers I say – don’t see this move as negative. rather see it as newsagents finding a way to keep newspapers in the newsagency longer. The alternative is they quit them altogether.
Leveraging the Oprah cover on AWW
I am leveraging Oprah on The Australian Women’s Weekly through social media and other out of store promotions. This type of promotion is simple, free or low cost and effective at linking the newsagency business with a respected star and the magazine. I urge all newsagents to promote magazines in this way. It’s smart business.
Sunday newsagency challenge: display cards off-location
Place a selection of cards from a caption away from the card department, in context with the display with which you place them. This photo shows placement of graduation cards with graduation gifts. We are selling six to eight cards a week from this off-location placement. I suspect most purchases have not been destination purchases. In other words – people have purchased a card from here on impulse because we have the cards placed here.
Try this tip and expect to sell more cards.
Sunday newsagency management tip: track business performance daily
I get a text message and email daily of sales by departments for each of my retail businesses. The message is sent without any human intervention. It tells me the business has closed for the day. In a couple of instances it has revealed an unacceptably early closure. The most important benefit is knowing how key departments are performing without having to log in a check.
While the text messages and emails are no substitute for professional business reporting, they are real time check-in with performance.
Sunday marketing tip: make your own showbags
It is Royal Show time in Melbourne and one way to drive interest in your business in-store and online is to create showboats for sale or giveaway to customers. This could be your opportunity to quit stock and push perceived value.
Even if it is not show time in your area, it is school holidays, or close to, so why not have a show bag for kids, for fun and to show your business as pitching something different to other retailers for this time of the year.
Gather a mix of items together, set a date for the promotion, maybe have some rules around age and some activity you want them to undertake. Invite suppliers to provide samples. HAVE FUN!
This is a simple low-cost marketing tip that could work in any newsagency any time.
Newsagents need to be careful with Star Wars products
I am told unauthorised Star Wars products were being pitched to newsagents last week. The person pitching was seeking orders, secured with a deposit. The company they claimed to be from is not an authorised Star Wars licenced product supplier. While the products could be legit – but it is hard to tell at this point – the process feels far from legit.
My advice to newsagents is to be careful. The Star wars licence will be fiercely protected,. You do not want to be caught with products that are not authorised.
Do not pay a deposit to any supplier, especially one pitching in-store for the first time without an appointment. Right there are alarm bells.
Example of poor magazine label placement in the newsagency
In my view the only magazines you need label are low volume monthlies. If you do label, get it right. This photo shows worst-practice labelling. The label covers the most important word on the cover of Quarterly Essay.
Removing the label – on the right of the photo – makes this title more compelling and the topic more easily understood.
I urge newsagents to remind team members about the proper placement of labels. Get it right is it should help drive sales.
Also, take time to reassess the titles you label. Label less and save time and money.
Cats and dogs sell magazines in the newsagency
As the Seven Network discovered recently, people love cat and dog videos. I know from calendar sales cats and dogs are popular. This is why I have the latest issue of That’s Life out in a feature off-location position to leverage interest in the pets. The free booklet is a perfect reason to give this issue of That’s Life a promotional boost.
Advice for newsagents on how to manage magazine space allocation for profit
With magazine cover prices not keeping up and no movement in newsagent margin percentage, the only option is to cut the cost of carrying magazines. While most newsagents have cut labour costs by using newsagency software to manage sales and returns, many are yet to manage the retail space.
I created a spreadsheet space cost calculator. This is the first step to managing magazine space for profit: understand your weekly magazine pocket cost. It could be that your cost is small, making magazines profitable.
In most newsagencies, however, the high cost of retail space and the high cost of labour will mean a high per pocket cost. Pocket costs are exacerbated by systematic and planned gross oversupply of stock to newsagents.
The best way to cut the overhead costs associated with magazines is to reduce the space allocated. This does not mean cutting magazines, or at least not cutting as many magazines as you may think. No, it is all about reducing the amount of space allocated to magazines.
Here are the steps I recommend newsagents take. They are steps I have followed for years in my own newsagencies. They are steps I have recommended to others with success.
- Relay your magazines. Get the right layout for your business. This is the appropriate next step as the work itself reacquaints you with what you sell. Click here for my updated advice on how to do a magazine relay.
- Reduce space used. In some title categories of your magazine department you will be able to fit more than one magazine per pocket. You may fit three magazine titles into two pockets or five titles into three. Every pocket saved is space you could use for something else. Here are examples of categories where I have seen this work:
- Woodworking.
- Model trains.
- Trains / planes / boats.
- Special interest auto.
- Special interest sport.
- Special interest music.
- British weekly.
- British monthly.
- Fringe fashion.
- Intellectual.
- Decide how many magazine pockets you will cut. Do this by running a Magazine Sell Through rates report. Titles with a sell through of less than 40% ought to be up for consideration to be cut. You decide your cutoff point based on your business needs. Be thoughtful in your process. Do not approach this task with anger.
- Decide other changes for magazines. The report you produce in the above step will also show top selling magazine titles. Use this data to chase a sales increase. Leverage the positive information for your commercial advantage.
- Do not try and do everything at once. Expect to cut space several times. For example, if you have 1,200 pockets today and you have 500 titles with a sell through of 40% or less, cut 300 pockets in your first go. Do this, measure over several months, plan then consider doing it again.
- Advise the magazine distributors. Write to each distributor on your business letterhead advising them you have cut magazine pockets by xxx. Be specific on the number of pockets and the percentage of space cut – this is important. Advise that the change has been made. Ask they immediately cut the number of titles by the same percentage as your cut. Ask for them to acknowledge the letter. Fax the letter and post in an Express Post envelope – keep the tracking number of the envelope.
- Watch your supply. If, after three weeks, there is no reduction, send another letter with a copy of your earlier letter.
- Watch your supply II. If, after a further three weeks there is no reduction, act by making a complaint to your local Small Business Commissioner. Request mediation. Explain the steps you have taken and why you have taken. Ask for their intervention.
- Consider legal action. Consider using VCAT, QCAT or a similar state based tribunal to have your complaint adjudicated. This action will force mediation. Note: it is at this point that most newsagents will give up, preferring to complain than following a process to the end. Taking the matter to a tribunal is vital if you want to demonstrate you are serious in your endeavour.
- Use the new space. There is no point in cutting unprofitable magazine space unless you have a plan to use it for something else. You should not start work on the list I have documented here unless you have a valuable use for the space you will free in your business.
Despite what the magazine distributors might say, you have control over the magazine space you pay for. The process outlined here, while time consuming, provides the distributors with a visibility of data about your business on which they must act if they are ethical in how they run their business.
I urge you to give them the benefit of the doubt embedded in these processes. I am confident that if you follow the processes I have outlined you will achieve reduction. It may take some extra steps or duo ling of work – but it will work.
Keep your communication civil. Be clear that you do not want to quit magazines altogether. Outline your cost base and that unless the change you seek is brought about your business is under broader pressure on its very survival.
Magazines are important in any newsagency. The million dollar question is how many magazines? I think that number is currently somewhere between 600 and 700 titles. I am confident this figure is understood by key people in magazine publishing and distribution. Thanks to the work outlined here you can fit 700 titles today in the space you would have used for 1,000 titles previously.
The difficulty right now is that we newsagents are agitating for more efficient supply while magazine distributors are operating with some publisher contracts that hark back to a time when there was less pressure on the issue of oversupply.
There is no shortcut to this process, no way to avoid the work of the steps above. Sure, there is a time commitment. It is your business. You need to invest in its future. Complaining about having no time takes time away from getting the work done. get on with it – pursue the one goal of achieving a lower overhead cost for magazines in your business.
What do you think? Let me know. Also, let me know if you need help.
To publishers: if you read this and worry about your title, my advice is only worry if your title is supplied at a volume that makes it unprofitable for newsagents. The equation is simple really – oversupply and your title is more likely to be cut … as it should be.
To the ANF: Where are you in all this? Lost at sea, preferring to hop behind publishers and distributors without offering critical analysis and professional thought to practical steps newsagents can take.
Victoria Beckham shops in newsagencies
Twitter went a bit nuts two days ago with a photo of Victoria Beckham (Posh Spice from the Spice Girls) shopping in a newsagency with her kids. While not ‘news’ to some, it was news enough to be reported by Metro to its 209,000 Twitter followers. There are more than 300 stories online about this shopping visit.
In the UK this is a good story for newsagents, illustrating relevance.
What is more interesting to me is that the story is a story. It’s kind of – okay so newsagents may have some relevance if Victoria Beckham shops there.
I guess the channel ought to take the victories it can.
The reality is our relevance is ours to nurture. We do this through what we range in our shops and how we pitch our products outside our shops.
While a celebrity visit would be good for business, it would only be good for a short time. Our long term success relies on our standing our ourselves through what we do, how we do it and how we position it externally.
Do you check for magazine returns discrepancies in your newsagency?
When you scan magazine returns, your newsagency software should provide to you a report listing discrepancies between the magazines you scanned for return and what your newsagency software thinks are to be returned based on arrival and scanned sales data.
Do you check your discrepancy report?
Checking the discrepancy report is a basic newsagency management task. In a few seconds you can see if you are returning all magazines due to be returned. The report also highlights for you magazines that may have been stolen. This last insight is important with theft accounting for between 2% and 5% of product revenue in a typical newsagency business.
It frustrates me when I am asked to help newsagents deal with a magazine returns problem and discover they do not regularly check for discrepancies between what they should return and have scanned for return. In these instances these newsagents have operated in ignorance by not checking the accuracy of their returns.
One I spoke with recently said their returns were being done properly. It turns out they were;t being done properly. Checking the discrepancy report would have highlighted this when it happened rather than using the report after the event to support the claim back to the newsagent that they were managing the returns process incorrectly.
Scanning returns is simple. The overall magazine returns process is equally simple. That said, people do make mistakes. Time pressures, poor training of new employees, tack interruptions, ignorance and other factors can lead to the scanning of returns being incomplete or wrong.
Laziness about the technology itself – hardware, software status and internet connection – can also play a role in returns not being processed accurately and to the level of compliance required by XchangeIT and through to the magazine distributors.
Given the long established standards overseen by XchangeIT and their process of compliance over the accredited newsagency software companies it is hard to get it wrong, hard to fail at returns processing but fail some newsagents do.
I think all of us who work with newsagents on the management of their businesses need to revisit the basics, we need to help them get these everyday tasks right, to lift the quality of business performance and reduce the occurrences of mistakes as every mistake has time and cost consequences not only for newsagent businesses but also for supplier businesses.
I appreciate this is a long winded blog post. Please, take a moment to check that your magazine returns processes are best practice.
Newsagency marketing group newsXpress grows to more than 200 newsagent members
Newsagency marketing group newsXpress has just passed 200 member locations, achieving a new milestone for the business.
This is a good story not only for newsXpress but for the newsagency channel as the core focus of newsXpress is optimism among newsXpress retail business owners and their employees – optimism for today and optimism for the future.
Achieving growth takes hard work in any marketplace. In the newsagency channel it is especially hard given some of the legacy supplier relationships, limited local newsagency capital availability and the clouds of negativity too many talk about. The growth of newsXpress is against trend, it is an achievement everyone involved with the group from the local store level through to supplier team members can be most proud.
In addition to excellent growth in the number of businesses in the group, plenty of newsXpress stores are reporting shopper traffic growth, revenue growth and business efficiency improvement. This is being achieved through the careful introduction of new product categories that attract shoppers who may not otherwise shop in a newsagency.
The most important service provided by newsXpress is the optimism it builds with members and those who work for them:
- optimism in a bright future, that you can change your business
- optimism that you can overcome road blocks
- optimism that you can enjoy your newsagency business
- optimism that you can make your business asset more valuable.
Having cleaned house and reduced members in 2013, newsXpress started growing in mid 2014 on the back of plenty of good news being shared by newsXpress members. The state by state breakdown now is:
- Queensland: 63.
- New South Wales: 48.
- Australian Capital Territory: 4.
- Victoria: 46.
- Tasmania: 6.
- South Australia: 14.
- Western Australia: 17.
- Northern Territory: 4.
The current membership breakdown by type of business is as follows:
- Shopping centre: 30%
- Suburban high street: 40%
- Regional / rural: 30%
newsXpress is not focused on the size of the business. rather, the focus is on the people in the business – referring people who are proactive, embrace change and are committed to a newsagency of the future.
Newsagents are joining newsXpress from other groups as well as from no marketing group membership at all.
The most common question newsagents have when exploring joining newsXpress is what is the one thing you can do to grow this business? The newsXpress answer is direct yet hopeful:
Anyone who says they have the next big thing for newsagents, the one thing they can do to save their business or make massive amounts of money for the business is wrong. There is no one thing, no silver bullet, you can do to turn your newsagency business around.
newsXpress will never sugar coat, never over promise. We believe the truth is what sets a business free to chase its real potential. We think this is why we have newsXpress stores growing.
Valuable and sustained success for newsagents comes from many small steps. We call it our small steps strategy. Many small steps we guide you to take compound to success – not all of them as some will not work for you but as they are small steps they come at a small cost. This is one feature of the strategy. We don’t outline before you join all the small steps because that would be giving too much away. Also, many steps require access to newsXpress exclusive deals as well as in-store training and other support that is only available to newsXpress members.
Here is a video explaining some of what newsXpress does.
Click here to access a document outlining what newsXpress does in more detail.
Footnote: I am a Director and shareholder of newsXpress. I am happy to report here growth achieved by other newsagency marketing groups.
Ethics in small business: do newsagents pay employees below the award pay rate?
A post I wrote yesterday about convenience store competition in Sydney has become a discussion about pay rates and an argument about whether newsagents pay award wages.
Three commenting on the post say newsagents do not pay award wages. One, Burgess, goes further saying: Bet you London to a brick for each newsagent who pays his staff award wages, there are atleast ten others who pay less than award wages, this is so especially in major urban areas . To feign ignorance or to suggest only a small number entertain such devious measures, is being a bit simple and also extremely naive.
Chandra follows this comment with: Totally agree with you Burgess. It’s not only newsagents but I dare to say that majority of small businesses are doing it.
These comments damage our the newsagency channel and small business retailers generally.
When you start or purchase a business you accept the obligation to operate lawfully. Every payslip, BAS, tax return, payroll tax return … they are all statements from you that you fulfil your lawful obligations.
If you pay less than the award rate to any employee I hope you are caught and prosecuted.
If you know of newsagents paying under the award rate or paying employees off the books, report them. Do not let their illegal behaviour damage the reputation of our channel.
There are no excuses for ignorance. We all have easy online access to award rates and government mandated employee terms and conditions. There are no excuses.
If you underpay employees or scrimp on your obligations such as demanding they pay for uniforms you require them to wear you are asking for trouble for your business not only from government but also from the employees themselves as your own behaviour toward them invites them to treat you in a similar unethical way. Don’t complain if they steal from you.
But back to the purpose of this post: Do newsagents pay under the award rate? I say it is not as widespread as Chandra, Dean and others say. I have heard of it and have spoken to the newsagents I have heard of it about. I have not heard of it being widespread.
I’d love newsagents to comment on this. If you pay the award, say so. If you don’t, say so.
Chandra claims the majority pay under the award. Burgess says for each paying the award ten pay under the award. Dean said many newsagents don’t pay the award. Are they right? Do you want their opinions left on the record as representing your newsagency business?
We want customers to trust us. We want governments to support us. We want national suppliers to use us ahead of supermarkets and others. These positions are earned through respect and our own social responsibility. Are we as a channel socially responsible?
Marketing inspiration
You don't get that service with @dominos pic.twitter.com/vUejMVBeER
— You had one job (@_youhadonejob) September 21, 2015
Newsagents ought to consider hiPP for fresh packaging and stationery
hiPP is a stand out supplier for on-trend stationery and gift packaging. If you want a point of difference I urge you to consider them.
The photo shows part of the range on show at the Reed Gift Fair in Sydney.
I particularly like the notecard packs and that they have two designs each pack – look at the left side of the photo. I also like the marble design bags, wrap, invitations, thank you notes and napkins.
Everything I saw on the hiPP stand is worth considering if you want a point of difference in these product categories in your newsagency.
Sure, your existing card and wrap suppliers will probably not want you to consider hiPP. I’d suggest you ignore them as hiPP products have a broader appeal than products from everyday card and gift suppliers. You won’t see hiPP in supermarkets or mass variety, for example.
Suppliers need to understand that having a point of difference is important to small business newsagents, to major retailers especially. This is where specialty design-led suppliers like hiPP can work well for us. Through their products we can frame our narrative of specialty retail. This narrative will help drive sales of the everyday mass range as well.
My advice for newsagents taking on hiPP is that you introduce one or two themes with aisle-end displays, capping your main magazine aisle. Showcase the designs to shoppers not shopping for these products today. They are so unique and so well made that people will purchase on impulse for future use. That is how they have worked for me. This approach also enables you to offer the range without taking product away from existing suppliers.
In terms of product display, I’d encourage you to display hiPP or similar design-led products in a way that respects their design. i.e. not on hang sell. Consider using a piece of furniture to feature the products Pitch the products as differently as they look compared to other wrap and card products you have. Your display ought to reflect the difference.
I have loaded a high res image so you can see the detail. Click on the photo.