ABC local radio in Sydney today carried a story about Zoo magazine that included calls on Coles and Woolworths to stop selling Zoo. Listen here. Click here to see an opinion piece by Jo Stanley about this.
This photo shows the state of one magazine title distributed by Network Services to a newsagent recently. This magazine is unmerchantable: not fit for retail, yet Network Services sent it.
Network is part of Bauer Media and Bauer thinks newsagents need help to manage and display magazines. They ought to tidy their own house first.
No wonder newsagents don’t trust Bauer when they receive products like this.
This Sponge Bob title is a good example of unmerchantable product.
While I expect the company would have an excuse and offer an apology, it happens too often for it to not be the result of poor leadership and poor management in Bauer when it comes to managing the newsagency distribution side of their business.
I like this sign I saw in a magazine / book / music shop in Auckland on the weekend: it’s direct, fun and in a style appropriate to the shoppers this business attracts yet clear in the point it makes.
This sign is far better than a dry sign saying don’t damage the books. Sure it is in your face – but in a style appropriate to eh magazines it is placed above.
Interestingly, I did not see one damaged magazine or book in this shop.
While we are still to see what WH Smith will more fully look like and do in retail in Australia, in New Zealand I see plenty of WH Smith branded products available. In the Whitcoulls bookshop / newsagency businesses, for example, they are a considerable range of WH Smith products.
I think this is the key interest of WH Smith in Australia – retail outlets for items they source directly from factories around the world. It is why I think the current number of stores they have is not enough for their longer term plans.
Yesterday, I lodged another submission with the ACCC in relation to the application by the MPA to trial new magazine supply rules for newsagents. Click here to download the submission. The submission is also on the public register of the ACCC.
Like my first submission which the ACCC already has to consider, this submission was made on behalf of newsXpress members, based on my experience through Tower Systems serving 1,800+ newsagents and in pursuit of fairness for all newsagents. Here is the submission in full:
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Our view remains that the proposed MPA Pilot is ill-conceived, poorly constructed and not appropriate to meet the public benefit claims made in Section 4 of the application.
No information was presented at the Pre-Decision Conference or since to address the concerns raised in the newsXpress submission of April 23, 2015 nor the oral submissions newsagents at the Pre-Decision conference.
We urge the ACCC to embrace the opportunity to more thoroughly explore the anti-competitiveness of current and proposed magazine supply arrangements to newsagents compared to those applied to competitors of newsagents. While this issue is considerably larger than the issue of the Pilot, it goes to the heart of the future of the small business newsagency channel in Australia.
While the Pilot has been proposed to test what is claimed to be a new approach to the supply of magazines, we note it only relates to newsagents.
Competitors of newsagents are already treated with supply rules considerably more beneficial than the magazine supply rules the MPA proposes to trial for newsagents.
This difference between the supply of magazines to newsagents versus their competitors sits at the core of concerns held by newsXpress and newsagents more generally. The proposed Pilot does nothing to address these concerns.
At its heart, this Pilot seeks to test the continuation of magazine supply rules to newsagents that ensure their inability to compete with supermarkets, petrol outlets and convenience stores in the magazine category.
PRE-DECISION CONFERENCE
Every newsagent who presented to the conference spoke against the proposed magazine supply rules at the heart of the Pilot.
The MPA did not directly address any specific issue raised by newsagents nor did it directly address the comprehensive and specific complaints raised by newsXpress. Instead, the MPA relied on generalities.
Considering various points made by MPA and Bauer Media representatives at the conference, there is a gap between what has been documented to the ACCC about the Pilot and what has been said will be done as part of the Pilot.
For example, newsXpress and others expressed concern that the Pilot is to test rules that deny newsagents the opportunity to early return magazines. On page 4 of the minutes of the Pre-Decision conference we can see Mr Varricchio of Bauer Media and the MPA to say the MPA plans to allow early returns after 30 days. While we say the 30-day moratorium on early returns is unfair, it is not referred to in the documentation submitted to the ACCC for authorisation.
Mr Varricchio advised that newsagents participating in the pilot will have control over the range of magazines they stock. This is not covered in the submission from the MPA to the ACCC. There has been no evidence presented by the MPA as to the extent of control newsagents could have over the range of magazines they stock, whether the claimed control is being or can be applied uniformly, what the claimed engagement of participating newsagents looks like for them in the Pilot and in the future and or the magazine distributor processes to be put in place to enable such newsagent control over the range of magazines they stock.
Ms Azer, Director of the MPA, said the MPA would use POS data, among other data, to research how customers shop the magazine category. We note that while such data has been available for years, the MPA has made no effort to access same.
Mr Alf Maccioni, CEO of the Australian Newsagents’ Federation, told the Pre-Decision conference that the ANF had informed its members about the Pilot, with articles in newsagency magazines and newsletters. We can only find brief and passing comment about the Pilot by the ANF: to its members once in one paragraph in its magazine; and, once in as a topic in a general email to members. In neither case did the ANF adequately inform its members. We therefore say the ANF itself is not appropriately informed to speak on behalf of newsagents on this topic.
The most comprehensive information from the ANF information was published May 6, 2015. The ANF has not actively engaged with its members about the Pilot.
Every newsagent who spoke at the Pre-Decision conference spoke against the Pilot rules and the inequity of newsagent magazine distribution arrangements. No newsagent endorsed or supported the position taken by the ANF.
While the Pre-Decision conference was a welcome airing of concerns, the disconnect between claims made by the MPA and the documentation supplied by the MPA is considerable. Newsagent concerns about the disconnect are heightened because of a lack of trust that has built up over decades of oversupply and anti-competitive treatment.
HOW NEWSXPRESS FORMED ITS VIEWS
newsXpress actively sought feedback from its members at face to face meetings, via a private online forum, through face to face in store visits and through thorough telephone consultations.
The concerns raised by newsXpress are the concerns of the vast majority of its members following this comprehensive consultation process.
Following the Pre-Decision conference, newsXpress invited further feedback from members and this feedback has helped inform the views reflected in this submission including our advice that all concerns in the initial submission remain of concern to us.
MPA NOT PRERESENTATIVE OF ALL PUBLISHERS
The MPA is made up of three publishers, less than 5% of all magazine publishers in Australia. The vast majority of publishers who supply magazines to the newsagency channel have not been consulted as part of this process yet the Pilot seeks to test magazine supply rules that will impact their businesses.
It appears to us the Pilot has been constructed for the benefit of MPA members to the possible detriment of newsagents and other magazine publishers.
The MPA developed its Pilot and associated rules without consultation with newsagents. While it sought endorsement from the ANF, there has been no consultation with newsagents by the MPA nor by the ANF.
Any Pilot ought to be constructed with a more representative group of stakeholders including more publisher representatives and more newsagents.
WHERE ARE THE SAVINGS?
The MPA says that the Pilot is about reducing costs. There is nothing in the Pilot that reduces costs for newsagents and no evidence was presented to the Pre-Decision conference about expected cost savings for newsagents. It appears to us that the cost savings will be to the benefit of the magazine distributors and some magazine publishers over others.
Whereas newsagent competitors can be certain they will not be supplied more magazines than they have space to display, newsagents have no such certainty.
The only way for newsagents to reduce costs associated with magazines would be for them to be supplied such that more than 60% of all stock of each magazine title supplied is sold within 30 days and that full copy returns are eliminated.
IF THE MPA WAS SERIOUS
If the MPA was serious about its intent to optimise the supply of magazines to newsagents and to assist newsagents to more efficiently manage the magazine category (MPA ACCC application 4.a) it would have undertaken a study of the current performance of newsagency businesses to uncover the most efficient, the most successful at year on year sales uplift and the most engaged with the category. It would have thoroughly analysed these businesses and provided best practice advice to the newsagency channel.
Coming at the problem as a supply problem but not looking completely at the supply challenges and issues, the MPA has come up with a draft set of rules, what they call a Code of Conduct, that inadequately address the key financial and operational concerns of newsagents, the key factors which drive current newsagent behavior.
If the MPA was serious about its intent to optimise the supply of magazines to newsagents and to assist newsagents to more efficiently manage the magazine category it would engage with the magazine distributors on:
Instead, the MPA, and in particular the Bauer Media controlled Network Services, has participated in a process which as recently as this past week has seen newsagents reissued magazines which have failed, newsagents supplied magazines to a volume based on previous sales which will deliver a loss-making sell through rate of 40% or less and introduced new titles without any regard as to their appropriateness for the newsagent businesses to which they have been sent.
In short, for all its statements of wanting to help newsagents some organisation in the MPA have most recently been treating newsagents in ways which are contrary to what are claimed to be the goals of the Pilot.
THE DISCONNECT OF COMMERCIAL REQUIREMENTS
At the heart of the unprofitability of magazines for newsagents is the commercial requirements of the two main magazine distributors Network Services (owned by Bauer Media) and Gordon and Gotch (owned by PMP Limited).
Gotch and Network are effectively trucking companies – they make money on delivering bundles of magazines. They have complete control over what they ship to newsagents whereas they to not have the same control over what they ship to all other magazine retailers.
The ability of Gotch and Network to control magazine supply to newsagents is vital to their commercial performance. It is understandable that Gotch and Network make decisions to serve their commercial needs ahead of newsagents.
The supply decisions of Gotch and Network are the single biggest factor in the financial losses endured by newsagents from magazines as well as the single most significant driver of behavior of newsagents toward magazines.
The impact of deregulation has been Gotch and Network having less control over the volume of magazines distributed outside the newsagency channel. With newsagents the only channel over which they do have control through pre-deregulation contracts distributors engage in practices that have driven up costs to newsagents, creating the problem the MPA says it wants to address.
WHY THE IMPACT OF THE 1999 DEREGULATION NEEDS TO BE ASSESSED
At the heart of the Pilot is the goal to optimise the supply of magazines to newsagents and to assist newsagents to more efficiently manage the magazine category.
The situation today of magazine supply to newsagents being unfair and a hindrance to their ability to be competitive is a consequence of deregulation.
Given the ACCC role in deregulation, we consider it is appropriate for the ACCC to more completely assess the various magazine distribution models as we are certain that thorough research would reveal significant differences in the supply of magazines to newsagents compared to their competitors – differences that make newsagents less competitive, differences not addressed by the proposed Pilot.
THE MPA PILOT RELIES ON PROCESSES AND SERVICES THAT CANNOT BE REPEATED
newsXpress has become aware that some processes engaged in as part of the MPS Pilot will not be able to be part of any changes delivered outside of the pilot. These include personal in-store visits to change approaches to magazines and a level of labour involvement setting allocations.
Our concern is that the Pilot results could not be reasonably repeated unless equivalent in-store services and manpower are invested.
CONCLUSION
For newsagents to be viable with magazines, they need the access to business management levers that enable them to act in the interests of their businesses and in the efficient service of their customers.
The current magazine supply model applies what is effectively a tax on newsagents that is a major factor in the closure of many newsagencies in recent years. The proposed MPA Pilot does not address this unfair cost.
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This second submission runs to five pages. I wrote it to be read in-conjunction with the first submission. I encourage newsagents to read the entire document. I am not going to post it all here. Click here see the entire document.
Here’s a brief training video I shot for my software company last week explaining to retail employees how to hand out a discount vouchers. I am sharing it here as it illustrates the importance of getting the pitch to customers right. A brilliant loyalty program pitched poorly can fail. By sharing the video I hope more newsagency employees engage with loyalty offers in the business.
While the video talks about my software, key principles in the video can apply to any over the counter loyalty pitch.
I am finding brief videos like this one work well in training retail employees across a range of retail channels, especially at driving consistent engagement – which is a massive challenge in independent retail.
At a WH Smith store on Sunday I noticed they had packaged the Australian Women’s Weekly magazine with a sweet gift as a Mother’s Day promotion. Some had a pack of Tim Tam biscuits while others has Cadbury Roses chocolates – cell wrapped with a ribbon. I like this approach to making a magazine appealing as a gift for a season such as Mother’s Day.
While there are plenty of challenges being in a in newsagency in shopping mall every so often there is a mall marketing activity that connects with the business at the right time. That is what happened for us last week with this massive Star Wars Lego display. It was placed right outside our entrance. While we don’t have Lego products we have plenty of Star Wars products.
Now if only every promotion connected as this one did.
The January through March quarter was tough for plenty of newsagents. Key traffic categories magazines and newspapers experienced further declines. To balance this, cards and stationery did okay. New traffic areas such as gifts and plush in engages newsagencies did well.
Here are the headline numbers:
It is not possible to declare the performance of the channel as uniform. The gap between those in decline and those growing is greater than ever.
Benchmark results by key departments:
The strong are getting stronger and the weak are getting weaker. There is no geographic or demographic trend to this.
Product mix shift. The shift in product mix I have seen over the last three quarters is continuing. Ranges are expanding as is the average price point. Suppliers ought to take note of this.
I have not included my newsagency in this study as my numbers are outside the average and I did not want them to skew the results. I don’t mean this to sound arrogant.
My numbers all off a good base, are: Cards up 23% with Everyday Counter up 21% and it accounting for 56.09% of all sales, Gifts up 126%, Magazines up 1.8%, Women’s Weeklies magazines (New Idea, Who, Woman’s Day, Famous etc) up 3%, Stationery up 11%, Plush up 4% and accounting for 12.48% of overall sales and Toys up 95%. This business does not have lotteries and does not sell tobacco products.
Traffic is down 2%. Average sale value – up 17%. Average items per sale – up 2%. Overall average GP – up 14%. Each of these measurement points compounds on the other, delivering a very strong result for the business.
This growth is as a result of pursuing what we stand for. This newsagency is in an outer suburban Westfield centre in Melbourne with around 300 stores including majors, a nextra newsagency, two Coles supermarkets, Wild, Typo, several large card shops and twelve gifts shops. Competition is strong.
I include my data for comparison and to show that I walk the walk with newsagents. I put my money where my mouth is.
What we do in this business any newsagent can do. Growth is achievable.
Newsagencies are good businesses to own. It would be wrong to say that the declines reported in this study reflect badly on the future of the channel. I think the results reflect badly on some operators, newsagents not chasing change.
The best type of newsagency to own is the one where you have the most control over what you sell and where you generate traffic for several product categories where average gross profit is 50% or higher.
The most important advice I have for newsagents has not changed: Run your business today as if today is your pay day. Too many newsagents continue to run their businesses as if their pay day is when they sell. This will not happen.
This year on year same-store newsagency sales benchmark study is an analysis of basket data from 151 newsagencies: city and country, shopping centre and high street, banner groups (Newspower, Nextra, newsXpress) and independent. To be included, a newsagency must have been using the industry standard Tower Systems newsagency software for both analysis periods and be compliant with industry data standards.
The current issue of Model Art Australia has the potential to appeal to plenty who don’t even know the title exists. The Doctor Who themed issue looks terrific. The cover shot is excellent. We have placed copies with our range of Doctor Who products is this magazine is what separates from others in the shopping mall with Doctor Who products.
This separates us from other magazine retailers.
Sydney Wedding is a good example of why newsagents need control over magazines. It is think, takes up too much space and is unlikely to sell for us in Melbourne.
Bauer reps say to the ACCC they want to help newsagents be more engaged and more professional with magazines at the same time as they send out this title which will lose money for us.
If I had control I would have said no thanks to this title. I have a good range of wedding magazines and no space for this title. Sending it wasted my time topping it and returning the cover. No I did not give it time on the shelves as there was no space.
The first place I look when helping a newsagent address cash-flow issues in the business is the roster. Too often the roster is either done for convenience or for laziness: convenience to reduce owner time in the business or laziness because the roster never changes.
Identifying the daily labour cost in dollars focuses attention. Most newsagents find savings immediately on seeing the daily labour cost.
Every hour saved is a bottom line benefit to the business. While this places more pressure on the owners and or existing staff, the financial benefit is crucial – especially if the business is paying off debt.
If you don’t roster knowing your labour spend by day, work it out. Better still, use roster software which provides this.
FOOTNOTE: Here is the problem with a post like this: it is boring. While rostering to a budget is an important newsagency management task, it is something the majority of newsagents do not do … to their cost.
Passion is powerful in retail. Get a staff member who is passionate about something you sell and sales will benefit. Offer products that connect with the passions of customers and you are certain to see good sales. Passion is powerful.
It is important to look at product selection as a marketing activity. You can define your business and determine who you market to through your product selections.
Take this AC/DC jigsaw. We have people who love AC/DC who now love us even more for sourcing this jigsaw puzzle for them. It is especially timely with the band in the news in recent times.
Following the passions of customers and employees is one way you can explore beyond the traditional for your business.
We had a stunning day yesterday, especially in card sales. A success yesterday and in the lead up to Mother’s Day is the T2 tea set and tea prize one of our customers will will. Available as part of a Hallmark promotion, this prize pack has been popular.
The real test of a shop-drawn prize is the number of people prepared to complete an entry form. The tea set has been one of the most popular prizes we have had on offer.
Footnote: It was a thrill to give first-time and infrequent visitors a voucher on their receipt to bring them back.
Since most newsagents carry the Adventure Time magazine (from Gotch) and some have Adventure Time licenced products, I thought I’d share some insights I gained to an unexpected type of shopper who purchases Adventure Time products.
Around a year ago I noticed males – late teens through to mid twenties – purchasing this title. It is those in their twenties which surprised me. It’s a thing, an interest by a group outside what you would consider to be the target age for the title.
Read about this at Hero Complex. There are plenty of similar articles online that explore the fascination among adults for Adventure Time, especially males in their early twenties.
If you are game to go deeper, read a Reddit forum where adult fans talk of their love for Adventure Time. It includes this:
23 here, Simon Petrikov episodes are frightening. I have a grandmother with Alzheimers and I can’t watch those episodes without thinking of her. Holly Jolly Secrets’ Petrikov monologue is probably the most powerful moment of Adventure Time so far.
Take a look at where you have Adventure Time and consider what else you could do to reach more customers. This is an opportunity.
While it can be challenging getting to a deeper understanding of all the magazine we sell, there are many we could achieve more with as a result of a deeper understanding of their appeal.
A newsagent colleague called me yesterday with news the newsagency received Wedding Styling Handbook issue #1 for the fourth time. First time around their received 4 copies and sold all. Two months later they received 5 copies and returned 3. Four months later they received 3 and returned 3. This title was done after the first two go rounds. The newsagency shelves were full. They have an excellent range of wedding titles. How long will Bauer continue to hit this newsagent with extra stock of this title? As you would expect, the newsagent early returned the title.
Check if you have been sent issue #1 of Wedding Styling Handbook. Consider early returning – check your sales data.
Bauer says it wants to do the MPA magazine new supply rule trial to help newsagents. Maybe they should spend their time helping not sending the same issue of this title over and over.
What Bauer has done here makes a mockery of their MPA submission and goes to the distrust newsagents have for them. It makes newsagents less competitive than supermarkets as it takes, time, space and cash which supermarkets do not have to spend.
I like the placement of the stand promoting the James Patterson kids book Middle School next to the newspaper stand at an airport outlet in Melbourne. Patterson has been in town this week – interest should be strong. I know newsagents who would love to have easy access to new book releases.
While independent newsagents can access books, it is challenging to organise for new titles and on good terms.
The ACCC advised yesterday that the MPA is seeking to vary arrangements for the pilot to test magazine supply rule changes.
Click here to see the MPA letter. Click here to see the annexure. This latest correspondence from the MPA does not trial magazine supply changes that enable newsagents to be competitive with others. The concerns raised in my video earlier this week have not been addressed.
This week I am looking five cores of today’s newsagency. I have selected five that relate to every retail newsagency, or should at least. Each core is important because of traffic and that mastering it defines our business in the eyes of these we serve.
Core #5: customer service
Customer service can be the single most important defining differentiator for a local newsagency. It is mission critical. It is also hard work.
Good customer service is a whole of business activity, requiring unrelenting commitment from everyone in the business.
Here are some tips on delivering good customer service:
The purpose of this series is to remind newsagents what sits at the core of today’s newsagency business. And I am talking about today. Tomorrow may be different. Hat we need to do right now is manage for today to achieve the best we can with today’s traffic.
I am not including tobacco and lotteries in this list as not every newsagency has these.
