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

Author: Mark Fletcher

Australian Financial Review Christmas 2021 / New Year publication details

CHRISTMAS BUMPER EDITION

· On Sale Thursday 23rd December, 2021 until Tuesday 28th December 2021 (inclusive),

· All Mon-Fri & Mon-Sat subscribers to be delivered the Christmas bumper edition on Thursday

23/12/2021.

· All Sat only subscribers to be delivered the Christmas bumper edition on Friday 24/12/2021.

· Returns for the Christmas bumper edition will be on your Connect returns form week commencing

Mon 03/01/2022.

NEW YEAR BUMPER EDITION

· On Sale Wednesday 29th December, 2021 until Monday 3rd January, 2022 (inclusive).

· All Mon-Fri & Mon-Sat subscribers to be delivered the New Year bumper edition on Wednesday

29/12/2021.

· All Sat only subscribers to be delivered the New Year bumper edition on Saturday 01/01/2022.

Tower Systems has released advice to Newsagency ts on how to handle the changes.

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Newspapers

Crosswords the powerhouse magazine segment in Aussie newsagencies

Looking deeper at the November 2021 sales data compared to 2019 for the newsagency businesses in the benchmark mix I wrote about last week … crosswords is a powerhouse segment in newsagencies.

While sales of women’s weeklies (New Idea, Woman’s Day etc) is far greater, crosswords account for, on average, 8.5% of all magazines sold. This is significant with most of these sales being for titles that are only in newsagencies.

Crossword shoppers are loyal, more likely to return to you if they know you stock the niche titles in which they are interested.

Crossword shoppers are more valuable. Our of all the magazine shoppers, they are more likely to buy cards, a high margin category and more likely to buy jigsaws, another good margin category.

Crossword shoppers respond to loyalty offers. Whether it’s an amount off based on purchase value or a future benefit from today’s purchases, they engage with loyalty programs and therefore are stickier to the business.

Crossword shoppers dwell. Dwell time increases shopper visit value in a well laid-out shop.

Crossword shoppers stick together. They talk, share their love of the puzzle and this word of mouth can help you find more shoppers.

The performance of crossword titles is better than most other magazine segments. This also makes it valuable.

While the paltry margin from crosswords is frustrating, it’s a product segment we can leverage and from which we can drive value by being engaged retailers and following the opportunities revealed in data.

I recommend having crosswords in two places within magazines, their traditional home and in a column next to weeklies. I’d also post about crosswords on social media as different titles speak to different co-horts of value: large print, cryptic and word circle are good examples of these. Talk about them as a good gift for young and old.

One of the best things you could try is a crossword lover club that meets up at your newsagency. I suspect they’d love this to meet fellow puzzlers and to be seen, it shows that you as a specialist retailer see their interest and respect it.

Crosswords are valuable in the newsagency. Take a look at your range and consider working with the distributor to expand it. Growth in crosswords will deliver growth elsewhere in the business.

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crosswords

Follow the cash in your newsagency

From the moment a customer hands over cash, it should be tracked in the business. Each point of a gap in tracking is a point of possible theft.

This is on my mind today because a retailer colleague recently discovered an employee theft situation where the employee was able to steal undetected for many months because the business did not reconcile daily takings using their POS software. It was a manual process that was not regularly checked again st actual sales and even then, the checking was cursory.

More fool on the retailer for disinterest in managing cash.

The theft would have been stopped or at least seen sooner had they done their end of shift inside the POS software with that data feeding seamlessly and untouched by human hands through to Xero, the accounting software they use. Instead, they recorded cash manually and manually entered data into Xero.

This is a failure of process that was easily exploited by the thief.

Business systems exist to block this.

The more control a business owner exerts on their business by fully using their software and supporting this with black and white processes the less opportunity for employee theft.

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Newsagency management

Australian made is a factor in card buying decisions

Customers are loving the excellent range of locally made single and boxed Christmas cards. We know because of the comments.

I especially like the smart placement of Australian made by suppliers on their packaging. Here’s one example from a pack a boxed Christmas cards:

Here’s an example of the collateral from Henderson calling Australian made out with their Christmas singles:

I think the locally made story is one of several factors at the core of excellent Christmas card sales growth this year.

The products we put into our businesses reflect choices we make. If we pitch shop local, it starts with us.

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Social responsibility

Desperate plush offer to try and move stock

A local plush importer with product that looks very similar to major brand, category leading product is offering heavily discounted product. This is hitting retail at less than half the price of the established leading brand, and driving some confusion for shoppers and frustration for nearby retailers.

While suppliers need to do what they need to do to move stock, retailers in a well established and commercially lucrative category niche notice this and will remember it when ordering in the future.

There is little shopper loyalty to be found in business won solely on price.

I first noticed this situation when contacted by a couple of retailers who were frustrated that what to them looked like knock-off product was pitched nearby, challenging their $45,000 a year revenue from this category. Once they realised the supplier behind the move and that they purchased other product from them in a different category, they made some decisions.

I get that suppliers with an overstock situation need to move stock. This situation, however, feels different, even targeted against a competing brand.

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Ethics

AFR: Afterpay fees may be passed on to shoppers

The Australian Financial Review has this story:

Afterpay fees may be passed on to shoppers

Customers of Afterpay and Zip may be forced to pay buy now, pay later fees now borne by shopkeepers under plans for more intensive regulation of the fast-growing sector being considered by Treasurer Josh Frydenberg and the Reserve Bank of Australia.

Afterpay and Zip prevent merchants passing on the cost of buy now, pay later credit, which represents about 4 per cent of the price of purchased goods. Major BNPL providers processed $11.4 billion worth of sales in the year ended June 30, implying about $450 million of merchant fees.

The Treasurer said changes to modernise the regulation of the payment system would be settled by mid-2022 to accommodate new and emerging payment systems.

“This will include considering the appropriate treatment of services like buy now, pay later and digital wallets, including any new rules around fees and surcharging,” Mr Frydenberg told The Australian Financial Review on Wednesday.

The story does not feel right to me. By that I mean it feels like it is part of a political game and not an active consideration. I doubt the government would help small business while at the same time undertaking a move that the big business BNPL operators would not like.

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Social responsibility

Seven news: How the rise of ‘tap and go’ payments is hurting small businesses

Great to see mainstream media shine a light on this story about the soft of tap and go:

How the rise of ‘tap and go’ payments is hurting small businesses

Published: 08/12/2021Updated: Wednesday, 8 December 2021 3:04 PM AEDT

The rise of “tap and go” has seen grocery and fuel sellers slugged with higher transaction costs they can no longer absorb, a small business summit has been told.
Consumers don’t know that buying a coffee with a mobile phone might be making it harder for their favourite cafe or servo to remain in business because of steep transaction costs.

“Transaction costs are accelerating more than any other,” Mark McKenzie, chief executive of the Australasian Convenience and Petroleum Marketers Association said on Wednesday.

Merchants’ fee costs have become an essential service, on a par with electricity bills in their impact on a business, as leaps in technology run ahead of legacy banking systems, he told the Council of Small Business Organisations Australia (COSBOA) payments summit.

Ben Kearney, head of the Australian Lottery and Newsagents Association, said there had been a massive increase in contactless payments, particularly during the pandemic.
“It has become an enormous issue for our members because of cost,” he said. He said a $10 lottery ticket brings a $1 commission but then a 10 cent transaction fee would erase 10 per cent of that commission.

Payments expert Robbie MacDiarmid said $67 million per month in excessive fees was being paid by small businesses due to routing of payments.

COSBOA members want every transaction to be processed on a “least cost route”, including from digital wallets and phones, despite legacy issues for banks.

However, head of payments policy at the Reserve Bank of Australia Tony Richards said small merchants have low transaction costs by international standards. “Payment costs in Australia are much lower than in the United States,” he said. Dr Richards was not aware of any market where least cost routing was compulsory but he acknowledged treatment of payments made with digital wallets needed work.

He said least cost routing in mobile payments was not common and it would involve retrofitting payment systems and overriding consumer choice. ‘In some cases they’re just trying desperately to keep their head above water’ But Mr McKenzie says merchants are the customer of the service yet the supplier is making the decision about how they get that service, and that is innately wrong.

Meanwhile, COSBOA chief executive Alexi Boyd said business owners often didn’t know they were being slugged the maximum amount.

Nor would a consumer know that paying through a digital wallet like Apple Pay or Google Pay or doing a “tap and go” payment with their phone meant the transaction attracts fees were up to six times greater, she said.

I urge you to read the full story, and to share it on social media.

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EFTPOS fees

Strong November retail sales in small business newsagencies

I am grateful to the 56 newsagents who quickly shared their November 2021 vs. November 2019 sales results so I could compare and see how the channel appears to be faring this year. the dataset is a mix of businesses, city and country, in marketing groups and not. All bar two were not in major capital city shopping centres.

I compared 2021 with 2019 so as to check-in with pre-Covid trading and now, with relatively open retail settings.

After comparing data from all 56 businesses here are the averages for business performance measurement points and categories, comparing 2021 with 2019:

  • Revenue: Up 27%.
  • Sales count: Down 6%.
  • Basket value: Up 43%.
  • Items per basket: Up 10%.
  • Average item value: Up 38%.
  • Greeting card revenue: Up 24%.
  • Magazines unit sales: Down 15%.
  • Toy revenue: Up 45%.
  • Gift revenue: Up 30%.
  • Stationery revenue: Up 9%.

There are other categories but I’m not reporting them here as the dataset is small. For example, jewellery. I have data for five businesses and the growth is excellent, but the numbers are too small. Similar niche categories are: jigsaws,  calendars, baby, homewares and garden … all delivering excellent results.

Several businesses reported no revenue growth and several others with extraordinary growth.

It is in the average item value and items per basket where we see the value for a business in that the value compounds. Now, if you can get more shoppers returning, that compounds further.

Of particular interest is the ratio of gift revenue to cards. The goal here now is $3 to $1. Some were at $.5 to $1 and others at $10 to $1. The gap in performance is considerable. Any newsagency business can sustain excellent gift revenue. I have seen this in small towns of around 1,000 people in the area through to capital city businesses. When it comes to gift revenue, population size is not the mot important factor, your range choices and in-store engagement are.

Overall, this benchmark is showing excellent results – good growth not only in revenue but good growth in overall business GP%. This is vital as selling higher GP% items sets the business to be able to sustain a revenue decline without profit decline.

The newsagency channel is healthy. The average newsagency is reporting a revenue surge and a GP surge. Newsagents have every right to be happy. Well done to everyone involved.

…

I own and run three newsagencies. Over the years I have had three others. I own newsXpress, the newsagency marketing group.

Footnote: I usually do newsagency sales benchmark studies comparing 3 and 6 month periods. 1 month is too small to call a tree on. However, it does provide an insight that can be useful not only in terms of performance but also in terms of transition, and that is evident in the data from this benchmark. More newsagents are evolving outside the lanes traditional to newsagency businesses.

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Newsagency benchmark

Updated checklist for anyone considering buying a newsagency

There has been a surge of interest in buying a newsagency in 2021. Retail businesses in our channel are appealing, and, looking out in the market, there are some excellent opportunities.

A common question I am asked by people who find me through this blog is what should I ask for when looking at buying a newsagency?

The question itself, when asked, indicates how green a prospective purchaser is when it comes to purchasing a business. My first advice is that they better understand the newsagency business of today, to understand what they could be buying into.

Here is an updated list of data I suggest prospective newsagency business purchasers access from the vendor or their representative:

  1. P&L from the accountant for the last two years. i.e. not a spreadsheet created for the purpose.
  2. A list of add-backs used to achieve a profit figure on which the asking price is based.
  3. Tax returns for the same two years. While note always appropriate given business structures, they can provide a cross check with the accountant P&L.
  4. Sales data reports, for the last two years, from the POS software in use – to verify the income claim. This source data is key.
  5. Sales data reports from the lottery terminal to verify the income claim.
  6. BAS forms to confirm data in the P&L.
  7. A list of all inventory in the business including the purchase price and date last sold for each item. And, copies of invoices from which you can randomly select to verify.
  8. A copy of the shop lease.
  9. A copy of any leases the vendor expects you to take on board.
  10. A list of all forward orders placed on behalf of the business.
  11. A list of all employees: name, hourly rate, nature of employment, start date, accrued leave and accrued long service leave.

This is good basic information, a starting point, which will enable any purchaser to undertake reasonable assessment of a business.

My advice to newsagents looking to sell who may be concerned about this list is: think about it now and focus on your business so the data I have listed looks good. The time to prepare your newsagency for sale is every day you are in the business.

This is why I say every day is your pay day. Run a smart, lean and profit focused business and you will have a good pay day today and a good one when you come to sell.

The most appealing businesses are those that are easier to run and are making money.

Sure a purchaser can turn a business around. They should get the rewards if they are expected to do that for your business.

The price you can sell your business for will be based on what it is making now.

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buying a newsagency

Having an A team and a B team is still necessary in retail in this Covid impacted world

Last year, a few months into Covid, plenty of retailers that could open set their roster so that the business could function of Covid impacted their workforce. They’d have an A team and a B team, and, sometimes, a C team.

I know of some newsagents continuing with this approach today, which makes sense given how much infection continues to spread in the community. In my own businesses we have them structured to minimise interruption should an infection hit the workplace.

The arrival of Omicron in Australia and news of the ease with which it spreads is a reminder, I think, of the importance on business owners to determine settings that appropriately serve the health and safety of all who work and shop in the business – regardless of state or territory government regulations.

I am fortunate to have spent the weekend in Sydney. It was interesting seeing retail outside of my home state Victoria. In big businesses the approach to protection pot employees and shoppers was more consistent than in small business.

In small businesses while check-in was monitored as was vaccine status, there was little checking of shopper distance and in most situations, no acrylics at the counter separating shoppers from employees.

For what it’s worth, I think all retail situations in Australia right now should have acrylic panels between shoppers and employees, along with easy access to hand sanitiser, free good quality masks for all employees and rest / cleaning breaks.

We keep hearing that there is no stopping Covid spreading. A business that is a point of infection does have to close, and be cleaned. Any step we can talk to reduce the opportunity for this the better in my view.

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marketing tip

The retail award is not enough to attract good candidates to retail jobs

$26.00 an hour is proving to be insufficient to attract good candidates to basic retail assistant roles in Melbourne and Sydney.

This is my recent experience and the experience of several retailers I have spoken with in both marketplaces.

I know of one retailer who advertised at $30.00 an hour just to attract good candidates. Another offered a $10.00 a day meal allowance, while another offered a travel reimbursement of $100.00 a week even for local applicants. I know of another retailer looking for a junior full time, a role they have easily filled in the past, who has not given upon on that plan.

In my own case we are hiring for three shops and while we are attracting candidates, most are looking for their start in retail and still expect to be paid at Level 4 or Level 5. One good candidate took a role in logistics as they will make 50% more there since pay rates have grown along with the spike in what is being shipped.

In plenty of areas of need pay rates are growing fast. Other benefits are being offered, too, to attract employees. Awards are needed, but they are a baseline, a minimum, and in the city they are proving to not be enough.

Considering all this and stories in the news, it seems we are in for up to a year of challenges in finding staff, which makes holding on to existing staff very important.

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Newsagency management

Changing the pen pitch in the newsagency

I’ve talked here plenty of times about how pens are displayed in retail shops I like overseas. I am grateful to the team for this execution now in place at one of my shops.

It’s been in place a couple of weeks and the shopper reaction has been terrific in terms of comments and purchases.

Best of all, it has changed (in a good way) how shoppers interact with the category, which was our goal for making the change. The move is part of the on-going narrative evolution away from traditional newsagency.

I made the video to pitch the change on social media. I filmed it using my iPhone and dropped that video into iMovie, where I stripped out the sound of the shop. From there I took it to an online edit quite where I added background music and text. The whole thing took less than 5 minutes to make. I mention all the steps to show that anyone could do this.

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Stationery

Your local newsagent is the best shop to shop for Christmas cards

If you’re shopping for Christmas cards, shop at your local newsagency.

At your local newsagency you will find the best range of Christmas captions, better than in the supermarket, better than almost anywhere. Captions like son and daughter-in-law or daughter and family or aunt, or uncle or neighbour.

At your local newsagency you will find quality Christmas cards. Sure, the local $2 shop may have cheaper cards, but they feel cheaper.

At your local newsagency you are more likely to find Christmas cards that co-ordinate with wrap and bags, offering a cohesive visual message.

At your local newsagency you will find Christmas money wallets and Christmas gift card wallets that you’re unlikely to fine elsewhere.

At your local newsagency you’ll find a range of boxed Christmas cards that are second to none.

But, best of all, in plenty of local newsagencies, you will find Aussie designed and printed Christmas cards. What a treat … supporting jobs for local artists and printers.

Where you buy your Christmas cards is a choice. I’m sure your local newsagent and all who rely on the business for income and support would appreciate your business.

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Greeting Cards

Is the influence of influencers waning?

Social media is clogged with influencers peddling products and services they are being paid to peddle. The extent of it is enough to push you away from social media.

Influencers started our when they discovered and businesses discovered that people following other regular people added on what they talked about.

But that was back when the opinions were genuine, based on personal experience, when their kind words about a product or service were authentic.

Today, it’s all about the money – the money the influencer is paid, their agent is paid and the agency is paid to put a campaign together. When they talk about a product they ‘love’ it’s transactional for them … pay is $5,000 and we will deliver you a 30 second video sprucing your product and talking about how we ‘use’ it or ‘love’ it.

Maybe I am outside the demographic but I don’t trust influencers nor do I act on the endorsement of influencers.

It surprises me when I see companies, usually big companies, paying influencers to spruik for them – because it’s a crowded marketplace, and because, for me at least, of the trust thing, or lack thereof.

I’ve been approached by influencers. I’ve had several parents offer up their kids to play with a toy and talk it up in a video for $500. I’ve had a self-labelled shop local influencer offer to walk through my shop and share the joy for $1,000 for a 3 minute video.

They are nothing compared to the bigger campaign influencer engagements from the millions paid to a Kardashian to the thousands paid to local Aussie influencers.

I think the gloss has worn off the influencer temple, that people see them for what they are and that their spruiking is ignored as much as other advertising, because that’s what it is, advertising. This has happened in part because of the blurring of the lines between what is clearly paid advertising and ‘heartfelt’ endorsement.

But, maybe, that’s wishful thinking on my part.

I do think in this noisy influencer look at me world, I think people crave truth and authenticity. This is why a real review from a customers about your business or products matters much.

Personally, when I see an influencer talking up a product, my first question is how much they sold themselves to pitch. I wonder if I am alone in that. I suspect there are plenty who see a face they recognise pitching a product and understand the transactional nature of this and realise that the endorsement has come about because they have been paid to make it.

…

Influencing, of course, good back many years. In the early 1990s I was approached by a newsagent who held a position on a board. They asked for an extraordinary deal on the software in return for them using their position to tell others. I heard about it from the salesperson working for my company at the time. The newsagent wanted the deal so much that they repeated it – the quid pro quo – in detail, not wondering why we set a second meeting. The recording of it was damning. There were consequences. We refused the opportunity by the way.

Paying someone to say good things has to be understood fort what it is, even in today’s influencer world.

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marketing

NOVEMBER NEWSAGENCY SALES BENCHMARK STUDY

I am collating data for a quick benchmark study, looking at sales covering November 2021 versus November 2019.

To best understand 2021, it’s best to compare to 2019, a more stable trading period.

I need your emailed report by midnight December 2.

How to participate.

  1. Please run a Monthly Sales Comparison Report for 01/11/2021 – 30/11/2021 compared to 01/11/2019 – 30/11/2019.
  2. Tick the category box. IMPORTANT.
  3. Tick to exclude home delivery and sub agent data.
  4. DO NOT tick the supplier box.
  5. Preview the report on the screen. Save as a PDF.
  6. Email these reports direct to me at mark@towersystems.com.au.
  7. Read the report yourself and see what it shows you about your business.

I will email the results to all participating newsagents and publish the results on the Australian Newsagency Blog as a service for all newsagents.

I own and run three newsagencies. Over the years I have had three others. I own newsXpress, the newsagency marketing group.

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Newsagency benchmark

Some police could be better informed re Covid requirements in retail

We received our third visit from the police last week to check our Covid plan and check on our processes. They were not happy that we were not checking the vaccine status of customers. Eventually, they agreed that essential retailers were not required to do this check.

It’s frustrating that those policing the regulations are not as up to date with the regulations as they should be. The visit wasted our time and created a brief ‘scene’ in the shop.

We take our Covid responsibilities seriously and have done since the pandemic began.

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Social responsibility

Are newsagents facing challenges accessing credits from IPS as that Australian Community Media business winds down?

Integrated Publication Solutions (IPS), is a distribution company owned by Australian Community Media (ACM). Several months ago IPS announced they are closing down. This, naturally, has resulted in newsagents wondering about credits owed them by IPS.

The challenge, I am told, is getting answers from IPS, as has been noted in comments here.

It is appalling that newsagents have to deal with decades-old and seriously under-resourced accounts offices in magazine distribution businesses – not only at IPS, but elsewhere. It costs us money, which hurts given the low margin made from magazines.

Of more serious concern is the mental health impact on some newsagents of poor accounting processes in and poor account credit related communication from magazine distribution businesses.

Australian Community Media pitches itself as locally engaged and supportive. It would be a bad look for the business if local small business newsagents are not treated with fairness and haste in the settling up of refunds owing on the closure of ACM’s IPS magazine distribution business.

The closure of IPS is challenging enough with poor practices at Wrapaway.

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magazine distribution

Strong Christmas card sales

I’ve been able to look at Christmas card sales data for the first three weeks of November for ten suburban and regional newsagencies and it’s terrific to see year on year growth of 15% and more when comparing 2021 with 2019.

In the boxed Christmas card space the growth is stronger.

While this small dataset does not claim Australians are buying more Christmas cards this year, talking with regional and rural based newsagents where their reach really is only the local community, they feel people are buying more Christmas cards than usual this year.

In looking at the data, I excluded any stores that did not have Christmas singles for the entire month of November, so the data was not skewed.

I also excluded one of my own shops that offers boxed Christmas cards online. As a result of this, it’s sales are up 250%. I am shocked at the number and size of boxed Christmas card transactions. They started in September and have been strong ever since.

While there is more Christmas to come, Christmas 2021 already feels successful – that’s what plenty of retailers tell me.

This is all great news for our channel.

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Greeting Cards

Sydney gift fair registration now open

Click here for the Reed Gift Fair registration. This runs Feb. 19 through 22.

Click here for the AGHA Gift Fair registration. This runs Feb. 18 through 21.

Life Instyle will run alongside the Reed Fair, in the same location.

These events will be the first major gift fair / retail trade shows in almost two years. I expect them to be full with suppliers and visitors as we all looks for business refresh opportunities.

I am keen to see fresh ideas and fresh products from suppliers.

If you are planning on attending, book now as accomodation is filling and prices are still pretty good.

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Gifts

Hiring for my newsagency software company help desk

My newsagency software company, Tower Systems, is hiring for a new POS software help desk role in Melbourne. If you know of someone with good tech knowledge and customer service experience in retail, they could be ideal for this role. Knowledge on the Tower software would be helpful, but not essential. While the company has recently recruited for new roles interstate, this role is Melbourne based, working out of our Hawthorn head office.

If you know anyone who could be interested, please have them email me: mark@towersystems.com.au.

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Newsagency opportunities

Simple and fun engagement can be the differentiator that works in local small business retail

Within a five minute walk of my office I can reach ten coffee shops. In nine of the shops they pitch their muffins with a product description and price sign while in one they have this fun sign.

They do have a sign saying the flavour but it’s this sign people reference. A couple of people in the office have mentioned it. They love the fun of it.

I love that it stands out as different. It gives me a better understanding of the business and that they are enjoying themselves.

While I will preference a coffee shop for their coffee, if I am thinking about a muffin nearby, it’s this shop that I will think of.

Standing out in retail can be challenging. It doesn’t necessarily take a big bold sign or some grand price gesture to stand out. It could be the smallest of things, like this whimsical sign about a muffin that likes to snooze.

With most of the coffee shops outsourcing their muffin baking, this sign suggests something more local, and that matters in local retail.

Subtle marketing can be noticed more than the big and bold.

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marketing

Will The Saturday Paper, best Bets and Winning Post suffer from poor data management processes at Wrapaway?

Publishers of The Saturday Paper, Winning Post, Best Bets and a bunch of other titles should listen to concerns raised by newsagents about the out of date data handling processes of Wrapaway, the new distributor of these titles following the closure of the IPS business.

Wrapaway does not provide electronic invoices. Indeed, they do not incline until the end of the month.

For close to 20 years newsagents have been receiving magazine inventory with electronic invoices. Electronic invoices save time, guide accuracy and facilitate stock inwards reconciliation.

The Wrapaway manual processes cost newsagents time, accuracy and the ability to reasonably manage incoming stock.

One newsagent told me last week that the move to Wrapaway has added at least 30 minutes additional work each week, morning work, which has to be covered in the roster. The actual cost is close to $15.00. That hurts when dealing with meagre margin products such as newspapers and magazines.

Another newsagent told me they no longer sell the titles as there’s not enough money to be made to warrant the extra work.

I raised the issue with the folks at The Saturday Paper in September when the move was first made public. Their circulation manager was disinterested in the issues raised. I outlined what newsagents expected from a magazine distributor: electronic invoices at the time product arrives, no physical returns etc. Yet, here we are approaching December, and newsagents are worse off.

I like The Saturday Paper, but I don’t like the extra cost I have not to carry it in my shop. This is something Schwartz Media and the other publishers now engaged with Wrapaway could have resolved – if they cares about local small b business newsagents.

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magazine distribution

Small business retail advice: the logistics bottleneck, Christmas orders and having stock through January.

In this post I share advice provided to newsXpress members a week ago about logistics challenges and what steps to take not to ensure supply.

The situation.

There is no one single cause to the delays. Most imported products are arriving late. Import facilities are overwhelmed. Import distribution centres are overwhelmed. This is a significant pressure point and a place where packages do go missing. What used to be a two-day turnaround can be anything from five-days to four-weeks here.

From these centres, parcels are trucked to state based distribution centres. This is the second most significant pressure point, and another place where parcels go missing. The turnaround at this point has gone from two-days to, often, ten-days.

Once a parcel leaves a state based DC, it is on board for delivery. Now, depending on the courier company, this is where it can get interesting as on-board for delivery used to mean the parcel was on a truck and on its way to you, usually that day. In this current constipated situation, a parcel can be on-board for two weeks, sometimes more. It can switch trucks and even be warehoused somewhere while overloaded and overloaded trucks move parcels around. This is another pressure point.

Every time a parcel is touched puts it at risk. Today, parcel handling is up four and five times what it used to be. This is resulting in more mistakes, more losses. This dramatic increase in multiple handling is making the situation worse. It is another pressure point.

What confuses the understanding is when a parcel comes through quickly, like it used to a couple of years ago.

The situation is made even more complex with pallet shortages, more truck breakdowns as a result or working longer hours and support systems that are themselves overloaded with calls and emails – where’s my parcel?

What suppliers are doing.

Some suppliers are air-freighting stock in to get around the shipping bottleneck, which is worse than the trucking challenges noted above. Some suppliers have edited their 2022 plans, reducing range for fear that some seasonal inventory will not arrive on time. Some suppliers have brought forward their own orders to provide inventory certainty, which is further clogging inbound logistics.

Some are communicating well. Others are not.

Most suppliers do not run their own warehouse or logistics operation. They are reliant on third parties to do this, including reliant on their management decisions and communication, which is often left wanting.

Planning into 2022.

We expect the situation to remain as it is today until at least mid January: severely congested, slow, challenged, frustrating. That is what we are planning for at least. We don’t want it to run another two months. but, we think it is best to plan that this will be the case.

Monday this week we asked all preferred suppliers for an update from them on cut-off dates for Christmas orders as well as their view on supply through to January.

I don’t have time to edit every response for you here. Sorry.

The overall messages are:

  • Inventory levels are low for some suppliers, because of surge orders from businesses that have recently come out of lockdown.
  • Order ASAP for what you need six weeks from now.
  • Order by Friday this week for anything you want by the end of this year.
  • Order by the end of this month for anything you think you will need in January.
  • Fewer orders are better. If you used to do plenty of small orders. Try and reduce order quantity into bigger orders.
  • Some suppliers are closing for Christmas as early as from December 15.

So, right now, we think you need to have all your orders in for December, January, Valentines Day, Back to School, Back to Work and even into Easter so you have a plan for coming out of Valentine’s Day.

Do not put off acting.

Planning for the first few months of 2022 cannot be put off. If you do put it off, you will be disappointed and we will be unlikely able to help.

Footnote: On top of everything covered above, for states outside the main logistics hub areas of Melbourne, Sydney and Brisbane, add the usual distance delays multiplied by two or three. Sorry, but for you it will be worse than the worse it has been.

5 likes
Management tip

This ABC story about Pearcedale Hardware is a must-read story for all small business retailers and every Australian who cares about or relies on small business retail

Pearcedale Hardware is closing today and the ABC has published a deep-dive into why:

The cost of doing business

Published

For many residents in the quiet township of Pearcedale, the local shops are the heart of the community.

On this weekday, the complex an hour’s drive south-east of Melbourne is beating strong.

Shoppers exchange cheerios across the car park and small talk about the impending rain as they bustle, car keys in hand, between the 13 shops.

…

The shop was their retirement plan. They hoped to rebrand it and work towards selling it, believing they could get a few hundred thousand dollars.

But they say things began to look shaky when their lease lapsed in 2019, and the owners wouldn’t sign a new agreement with them.

They were on a month-by-month arrangement, when in May this year their property agent emailed them a new leasing agreement.

“[I was in] disbelief. I couldn’t believe what they were asking,” Adrian says.

The landowners were tripling the rent — from $29,687 a year to $88,638 a year.

Be sure to read the whole story.

There are many good landlords out there who go above and beyond for their small business tenants. There are also plenty of landlords who suck.

This story is a reminder that we small business retailers sign our leases, accepting the terms and conditions, accepting the risk.

When a lease goes to month-to-month, that’s what it is. We need to manage our business with that expectation and do our own planning, rather than relying on a decision from the landlord.

I appreciate it can be difficult and challenging. But, it’s best we expect the worst and plan for it, to protect ourselves and our business as much as we can … because, too many landlords do suck.

Retail is fundamentally changing in ways we can see and, more importantly, in ways we cannot see. We have to be as far ahead of that curve of change as we can be. This means disrupting your own businesses.  Running a shop with one prime source of income (the shop) is an out of date model. we seen to diversify as to what people buy, how they buy and the locations they buy from in the retail world today. This approach spreads the risk.

Back in the day, opening the front door of your local shop was the key marketing activity. Not now. Not for many years.

I have been in the situation of the folks at Pearcedale Hardware, facing a massive rent hike. I said no thanks. I am lucky to have a diverse business such that closing one shop would not hurt too much. But … I evolved the business to be that, to not rely  on one location.

I appreciate many local small business retailers don’t feel they can do that due to capital, local situation or other factors. But, there are ways to insulate your business from the impact of a massive rent hike. The time to seek those ways out is long before you need to … and that is the core point I’d make today.

15 likes
Ethics

If you have a moment to do some good …

If you have time and are able, I’d appreciate you helping a remote community in Aurukun, Queensland. Janelle from Cape York Partnership reached out earlier this week asking for old magazines. here is her note:

Good afternoon My name is Janelle and I work in a very remote community called Aurukun where most of the community is on Centrelink and struggle to live day to day as food is very expensive here. It is a community that has many barriers and issues that impact on all the community people I work in CDP which requires anyone on Centrelink to come in and see us, at times this is very busy and means sitting and waiting for extended periods of time. I am approaching you to see if there is any chance of being given some of the old magazines ie That’s Life, Take 5, Australian Geographic, Football, Hunting anything like that. Also any old basic Crossword/Find a work type magazines as well, kids too. It doesn’t matter to them if they are months old it will just give them something to look at while they sit and wait and then we could pass these onto the Aged Care Centre for the patients there. I hope that this is possible and wait to hear back, much appreciated Janelle

I spoke to Janelle and discovered they could use plenty more than old magazines. They can use pencils, colouring books, kids toys and gifts, too.

Rather than send returns, we sent a bundle of current issue magazines from each of my shops and 30 Beanie Boos and some colouring sets. I mention this as an example of what any newsagent could do if they would like to help this organisation.

I appreciate we all get calls daily for help from local and other groups.

This message from Janelle resonated.

If you can help, I am sure the Aurukun community would appreciate it. Here iOS the address for sending any donations:

Janelle Ainsley
C/- CYE
508 Kang Kang Road
Aurukun 4892
7 likes
Social responsibility
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