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

Author: Mark Fletcher

People coming late to support newsagent pressure on proposed magazine supply rule changes

It is interesting seeing those who claim to support and serve newsagents now supporting requests for the ACCC to listen to newsagent concerns about the trial of new magazine supply rules after the ACCC has agreed to hold a public conference on this. Makes me wonder where they were over the last couple of months when those more engaged with newsagents were publicly agitating on this matter. They were silent.

It’s easy to run with the crowd when it runs past you.

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Ethics

Here’s what I look at when asked to help a newsagency in trouble

If your newsagency is challenged – losing money, risking closure, not paying bills on time – and you’d like help on this, here is a list of information necessary to asses the situation.

  1. A comparison of trading periods. Start with the latest three months compared to the same period a year earlier. In the Tower software, this is the Monthly Sales Comparison report. Compare transaction volume, basket size, sale value, GST collected and then unit sales and revenue by department and category.
  2. Report on items not sold in the last six months. Lets look at dead stock in the business, what’s not turning for you.
  3. A product efficiency report. Look at your top 20 items and what sells with those items – as well as the percentage of times those items are sold alone.
  4. Your latest profit and loss statement.
  5. A weekly analysis of gross profit weekly by week for the last thirteen weeks. Add a line for each week showing your labour cost (wages plus super plus any other employee costs including your own wages). Add another line showing lease costs.

These five overall packages of information will provide a good indication of the health of the business and the current direction in which it is headed.

Once I have all this information I can usually find steps to take to improve the situation. It could be that I have more questions that require a deeper analysis of data.

I often find that newsagents assembling this data for me discover opportunities in their business which they could have discovered long ago. One newsagent recently discovered stock not performing which they were certain was performing. Another discovered their roster was bloated.

My key message here is that data matters. Data can explain where your business is at and provide a pathway to a better situation.

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Newsagency challenges

Marvel Chess partworks continues to drive terrific traffic

IMG_4679Customer loyalty to the Marvel Chess part series remains strong. I think this has something to do with the size of the parts – it is easier to collect from a newsagency than from a Post Office or to risk damage in the post. Supply is reliable – enabling us to serve needs.

A recent check of basket efficiency indicates that partworks customers are the most valuable we have out of all magazine customers. This efficiency – based on other items purchased with partworks, – is one reason I remain committed to partworks.

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partworks

Show off the knitting needles to drive BHG sales

bhgdispThe photo shows how we have the current issue of Better Homes and Gardens magazine on display in the usual location for the title. Fanning the title out this way across two pockets leverages the knitting needle gift – our sales are strong.

We also have BHG with newspapers and at the counter. The gift is well targeted to the BHG customer.

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magazines

What newsagents and other independent retailers need have to make a case to a landlord

If you want to make a case to your landlord for rent relief – short or long term – here is a list of what you will need to assemble to enable you to make a case.

You cannot go to a landlord and ask cut my rent or seek short-term rent relief without evidence to back your claim. It’s a rookie move to ask for a rent related deal without evidence, without making a case.

Here is the evidence I suggest you assemble and fully understand before you prepare your case:

  1. Current profit and loss (most recent year or to the end of the most recent quarter) and for the same period a year earlier.
  2. Sales transaction count year to date compared to a year earlier.
  3. Details of every step you have taken to improve traffic and sales including external marketing and costs associated with each activity.
  4. Details of steps you have taken to manage costs.
  5. Changes made to the business over the last year. Assume your landlord has not been to the shop and seen the work you have undertaken.
  6. If possible, comparisons with other newsagencies – an understanding of how you compare, especially if it shows you as doing better than most in key parts of the business.

Once you have all of this information together look for a narrative, a story, which supports the proposal you want to make to the landlord.

If your P&L shows your profit is stable or improving, your case will be hard to make. If it is falling your case is easier. You should not manufacture figures to suit your case though. Look at the accurate data and listen to what it tells you.

If your P&L shows profit declining or you making a loss, consider what you actually want.

Too often retailers go to a landlord with a problem and not a solution. Work on your solution and use the information you have gathered to justify the solution to your landlord.

My experience is that the best people to pitch a landlord for assistance are the business owners. There are some horror stories in the newsagency channel about so-called leasing experts who have left newsagents worse off than ever.

Prepare your proposal, based on verifiable evidence and present it without emotion.

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Newsagency challenges

Making space to feature a magazine

puzzletopI like what they do at the Newslink store at Brisbane airport to promote the small format Lovatts crossword and puzzle titles. Throughout the magazine department they have acrylics placed on top of the magazine fixture promoting a title. One on each facing in each magazine aisle. This pitches the puzzle titles outside their area and, I suspect, helps drive impulse purchases.

If your magazine fixtures have a flat top, consider doing something similar. This space costs you nothing extra. Puzzle titles sell well outside their usual location in my experience.

I’ve loaded a large version of the photo so you can see what they have done. Click on the image to see this.

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magazines

Selling old magazine issues

sellingreturnsThis photo is from the same store as the previous post – a general store in a Fijian resort. They are selling old issues of magazines at half price – because they can’t return them?

I can see old issues selling in Fiji. Good luck to them.

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magazines

The reach of WH Smith

snithsosCheck out this photo from a general store at a resort in Fiji. If the sign is accurate, UK newsagent operator WH Smith apparently manages their magazines and books. I’m told the same signs are in place in plenty of resorts in Fiji. Given the titles this could be managed out of Australia.

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magazines

Reporting tobacco cover-up requirements in the UK

The Times has a story today, Crisis at the corner shop as newsagents rush to hide cigarettes, which reports on the challenges faced by UK tobacco retailers, especially newsagents, to meet the demands of UK legislation requiring placing tobacco products behind doors.

I don’t like their use of the word crisis in the headline. I am sure there are sone UK newsagents who planned for this from when the legislation was introduced over two years ago. So for them, this is not a crisis. It is unfortunate The Times prefers to run with a negative rather than a positive when reporting on newsagents.

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Social responsibility

Must read: Fairfax report on News Corp tax affairs

Fairfax newspapers this morning have published a report claiming News Corp. has sent $4.5 billion to the US virtually tax free.

Rupert Murdoch’s media empire in the US has siphoned off $4.5 billion of cash and shares from his Australian media businesses in the past two years, virtually tax free.

According to calculations by University of NSW accounting academic, Jeffrey Knapp, over the past 10 years, Mr Murdoch’s companies here have paid income tax equivalent to a rate of 4.8 per cent on $6.8 billion in operating cash flows, or just 10 per cent of operating profits.

If true, regardless of whether what the company may have done is legal or not, the act of minimising tax in Australia is damning for a company which often uses its pages as a pulpit to tell Australians what to think and how to act.

To me, a good newspaper is one which is the social conscience of the community, operated by a business we trust, respect and look to for leadership, a business operating in the open, with full disclosure and in full support of the law and the principles of the community in which it operates / serves.

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Ethics

Hallmark Itty Bittys work on three levels in the newsagency

hittyThe re-launched Hallmark Itty Bittys are working well as collectibles, licence targeted purchases and impulse purchases – yes, all three.

The new stand recently released by Hallmark helps us connect with all three opportunities. The licence branding is key to attracting attention. The small footprint helps us place the stand for maximum impulse opportunity engagement. The depth to the range gives people to aspire to purchasing in building a collection.

Understanding the multiple levels on which a product line works can help us as retailers to maximize an opportunity. It can also help us better position ourselves against other retailers with the same product.

Target, for example, has Itty Bittys. Their approach with the range is good but not a broad as the approach I have outlined.

We have found the keys to success have been: moving the stand every week, keeping it full, placing characters in their designated locations and being able to speak to the product to possible collectors. This last point involves understanding the release schedule.

We have has Itty Bittys on the lease line leading up to Easter and it’s terrific seeing kids drawn to the stand from outside the business.

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Management tip

The unexpected gift makes for a memorable experience

lindtOn a Qantas flight on last Thursday morning after the meal service the flight attendants came through the cabin giving each passenger a Lindt Easter bunny. It was unexpected. People were thrilled – some even talked to the person next to them to whom they had not spoken all the flight. The experience reminded me of the value of delivering unexpected good customer service. It can be the simplest of things that delight the most.

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Customer Service

Sunday retail management advice: roster employees for profit

When you roster employees in your newsagency, know the cost of labour for each day. This labour cost should include owners time.

If you don’t do this, don’t know and track your labour cost by day, your attention may not be on what is likely to be your highest or second highest business operating cost.

Too often I see retailers rostering for friendship and laziness when some management attention could result in thousands of dollars, even tens of thousands of dollars, added to the profit of the business.

Roster for profit.

The best way to assess labour cost is as a ratio of revenue. There are best practice benchmarks you can track against in retail but none for newsagencies. It is a challenge for our channel given the diversity of our office ranging from convenience through to high end gift.

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Management tip

Sunday newsagency marketing advice: setup a craft table

At the Toy Fair recently on the Ed Vantage stand they had tables setup allowing you to play with their products. It was an excellent way to learn about the products and enjoy the experience first-hand.

What Ed Vantage also did was to show newsagents how they could do the same thing in their shops. A trestle table with some paper and items laid out gives you somewhere for kids to play and experience products you sell.

You could take this to another place – set up an adults play table. Show that these items you sell for kids to play with could equally be used by adults in a range of situations. This is where you could make it a fun marketing opportunity.

Based on what I saw at Toy Fair I am sure Ed Vantage would work with newsagents on ideas like these. A good practical opportunity for any newsagency in almost any situation.

If you are not buying from Ed Vantage – check them out. They don’t sell to majors. Their products give you a good point of difference.

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marketing

How would this title from Network Services be handled by the proposed new magazine rules?

10438891_10153707011626679_5744046767887816458_nUnless I am missing something, this behaviour by Network Services would be permitted under the magazine supply rules the MPA has developed and the ANF endorsed: this magazine, SpongeBob and his Buddies, which failed at one newsagency in April 2014, has been sent to another newsagency. Unless it is a redistribution to the newsagency receiving it now, it’s a new title. But look at it … it’s been supplied in appalling condition. It’s a redistribution regardless of whether the newsagency receiving it had it  previously. The stock sent out last week is not in mint condition.

This is a significant gap in the proposed magazine supply rules, a gap through which dreadful behaviour such as this could pass, behaviour which costs newsagents dearly.

Shame on Network Services for sending out junk like this and causing newsagents to have to waste time and money processing the stock. This effort contributes to making us less competitive with magazines.

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Ethics

Here’s a barcode tip for newsagents

barcodestockToo often newsagents sticker items which do not need to be stickered. Take this organza bag of easter eggs. The barcode is sitting loose in the bag – not stuck on the bag or on eggs. This approach respects the product and it can still be easily scanned.

When barcoding items we take a thoughtful approach, preferring to not stick a sticker on products we can barcode in a more creative way. This is especially important for collectible items which will sell if they are not damaged by tickets.

With the Easter eggs, one customer commented that they got a bonus organza bag they can use after the eggs have been eaten. They would be less likely able to do this if the sticker was stuck on the outside of the bag.

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Newsagency management

Discount vouchers continue to drive excellent newsagency sales results

dvpurchOur sales in the newsagency for the first quarter of 2015 are up 15% on the same period last year. While shop floor engagement, product selection and displays are a factor in this result, the discount voucher performance report shows the extraordinary value this front end loyalty approach is to the business.

Take this 60 cent voucher. It’s from a $10.00 purchase. The first time shopper spent the voucher on a $12.99 item they did not come in to purchase – doubling what the original intended to spend with us. It is a thrill to see this.

For a well established newsagency in a large shopping mall with another newsagency nearby, plenty of card shops, competitive supermarkets, Typo, Wild and other businesses in the card, gift, toy, plush, magazine and other categories, the result is excellent. While I am happy, I am not gloating. The result is a result of a thoughtful approach to the business.

The discount vouchers are a point of difference for us. We are the only business in our categories with this offer. Customers have noticed and reward us with their loyalty.

Since 25% of our shoppers are first time or infrequent, the vouchers are especially helpful in getting these people spending more in their one visit.

Newsagents who ask me for one thing they can do to improve their business, my answer is run discount vouchers – but do everything necessary to leverage their success. The vouchers alone are the tip of a broader whole of business strategy.

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Newsagency management

Making the most of school holidays

scholsAll throughout the newsagency we are leveraging the different traffic brought in by school holidays with placement of activity products for boys and girls as well as pure fun toys. We have these in different locations to provide a treasure hunt type experience. This approach works for kids in the store as well as for those who buy for kids. It’s good seeing people add between $5.00 and $10.00 to their destination purchase.

This is an example of us making our own success, from buying to pricing to placement on the shop floor. each step is thought out with the sole focus of making sales.

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Newsagency management

Has the ANF misunderstood the MPA magazine supply trial?

Yesterday, the ANF sent an email to newsagents lauding the MPA magazine supply trial which many here consider to not be in our interests. The email from the ANF includes this:

Some newsagents appear to have a single focus on the right to early return. If you are able to manage your supply and are able to work with the distributor to order what you need, then the need to early return would be negated.

However, the reality is when an agent has been given the opportunity to set supply, on average less than 10% of the channel actually put in any figures to set their own supply.

The rules for the trial do not give newsagents the ability to manage supply.

Newsagents cannot say no to a new title.

Newsagents cannot directly set supply.

Under the terms of the trial, supply for a new title is set based on similar title performance and print run size – both key criteria in the current model.

Either the folks at the ANF have not understood the trial rules or they are out of touch with the control newsagents need. The ANF claim that newsagents will be able to manage supply is ignorant and unfortunate.

Go to page 12 of this document from the ACCC to see the rules for yourself. If I am missing something please let me know.

On the claim of less than 10% of newsagents engaging when given the opportunity to set supply, the ANF demonstrates poor judgement in saying this. Sure, I believe the less than 10% figure is accurate. However, you have to think about the level of control newsagents think they have and they trust they have in the current system when assessing the number who engage. I suspect most don’t trust enough to bother.

Change the system to something which is genuinely fair and I am sure more newsagents would engage. If the ANF actually represented newsagents they would have chosen their words to reflect this representation.

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magazine distribution

ACCC schedules a pre-decision conference of MPA magazine supply pilot in response to newsXpress submission

I received this from the ACCC today as I suspect others who made submissions did. I am pleased they have responded positively to the newsXpress request for a pre-decision conference.

Dear Sir or Madam,

I write in relation to the authorisation application lodged by the Magazine Publishers of Australia (A91472). A pre-decision conference has been called by the newsXpress buying group of newsagents in relation to the application. The conference will provide the opportunity for applicants and interested parties to make oral submissions to the ACCC about the draft determination.

The conference has been tentatively booked to be held on Thursday, 23 April 2015 from 12pm. It is hoped that video link ups will be available for interested parties to attend the conference from ACCC offices in the capital city of each state and territory.

If you think you may wish to attend the conference, please express your interest by COB Wednesday 8 April 2015, and advise which city you would be attending from.

I will be in touch with parties who express interest in attending with further details in due course.

Further information about the MPA’s authorisation application is available on the public register:http://registers.accc.gov.au/content/index.phtml/itemId/1183386/fromItemId/278039. Further detail about the pre-decision conference procedure is available in the ACCC’s publication Authorisation Guidelines: http://www.accc.gov.au/publications/authorisation-guidelines-2013.

Involving newsagents in matters such as these is important, especially since the ANF appears to not have.

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Newsagency management

Newsagency of the Future workshop – Perth next Wednesday

Screen Shot 2015-04-02 at 10.29.29 amI had to reschedule my last Newsagency of the Future session in Perth because of a flight delay of several hours. The next session is in Perth next Wednesday at 8am (breakfast included).

Perth. April 8. 8 am.  Country Comfort Inter City. Great Eastern Highway Perth.

All newsagents welcome. It’s free.

Click here for the booking form, or email bookings@towersystems.com.au.

I will share insights relevant to newsagents and detail opportunities available to newsagents to attract new shoppers and to improve what we make from existing shoppers. I’ll back this with data from some newsagency businesses growing against the channel average.

This Perth event is the first of a national series that will include Melbourne, Sydney, Brisbane, Canberra, Adelaide, Hobart, Cairns, Townsville, Gold Coast, Sunshine Coast, Newcastle, Parramatta, Geelong, Launceston.

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Newsagency benchmark

The challenge of roadworks for newsagents and other small business retailers

rwIn Mackay in North Queensland earlier this week I saw dreadful disruption of shopping streets in the centre of town. The work is dragging on for too long, keeping shoppers away from the centre of town and making access to some shops near impossible. I walked in and around to see what it would be like for shoppers. It’s awful. I can understand why shoppers are avoiding downtown Mackay at the moment.

The council claims the works will improve the amenity of the area. Looking at what they are doing I doubt it. I certainly doubt that the ‘improvements’ will provide a return to the small business owners over years which covers the reduced profits caused by the works.

Unfortunately, the council, like so many councils, pushes on with works with little regard to the actual cost to business. There ought to be assessments at yearly anniversaries for several years to report on the return on investment and to assess the economic benefits to businesses so profoundly affected.

Whether it is parking restrictions, council beautification works, road works or other infrastructure works impacting foot traffic, small businesses like newsagencies can be affected as shoppers are given reasons to try retailers elsewhere.

The only way for retailers to confront this situation is to look for opportunities to transact business outside the business. If the customers can’t get to you, you need to get to them. This involves more marketing and other investment, investment the council should support to help a small business get through the council caused disruption.

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Newsagency challenges
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