Author: Mark Fletcher

The Book war which erupted in the US last week is set to get more serious with the Booksellers Association seeking Department of Justice intervention.  The argument is that Aamzon.com, Wal-Mart and Target are using predatory pricing.  The discount on top selling new release books is close to 70% off the cover price.

This battle started when Wal-Mart and Amazon engaged in a tit-for-tat price war close to two weeks ago. Walmart.com was offering the books for US$8.99 with free shipping; Amazon had the same books for US$9.  Target soon joined in.

While the three retail giants slug it out, smaller booksellers are left floundering in their wake and publishers are wondering whether there will be a long term shift in new hardcover pricing and, if so, what the implications will be for their model.

This is all happening on the backdrop of continuing significant moves on e-reader device sales and digital content promotion.

The recent US experience is relevant to us because it reflects another impact of disruptive technology and the lengths to which major retailers will go to drive their businesses in a tough retail climate.

One way or another, the US book war will impact on book retailing here in Australia.  We will have to wait and see the size of the ripples.

Coles is quietly playing with a newsagency model within its supermarkets as a visit to Coles Bayswater (VIC) last month showed.  There, inside the supermarket and close to a newsagency, is a Paper shop – as the signs label the area.

While there is plenty to criticise about the model I saw, there is enough to it to raise concerns.  This is Coles playing and I suspect that they have only just started.  My understanding is that they have people with UK experience in this space working with them.

UK supermarkets ASDA and Tesco both successfully introduced newsagency like formats into their supermarkets years ago. There have been studies done on the considerable impact on high street shops in the UK, including newsagencies, of the march of supermarkets into the independent retail realm.  High Street Britain 2015 is one such report.  I first blogged about this in January 2006.

It is not only newsagents at risk if Coles and others get this model right.  All publishers would suffer.  The bigger publishers would give up more margin because of the higher cost of selling a copy of a magazine in a major supermarket compared to the cost of selling it in a newsagency.  Independent publishers would suffer because they could not afford to be represented in supermarkets and there would be fewer newsagencies through which to sell their product.

While there is a risk in studying the competition in too much detail, newsagents ought to inform themselves about the work Coles is clearly undertaking. If they get the model right in terms of range, service and community connection, the impact on newsagents could be devastating.  Especially considering the likely impact of disruption from devices such as the Kindle and similar technology when they get that right.

My visit to Coles Bayswater was a wake-up call, a call to action for newsagents to work on their businesses to meet this new challenge, to step up to the plate and be ready for Coles (and Woolworths) to get their paper shop model right.

Newsagents will ignore this at their peril.

I am working on what I saw at Coles on a number of fronts but I’ll save writing about that for another time.

Some newsagents appear to be lost when it comes to handling the award changes which apply soon and which I have covered previously here.  There are new regulatory obligations on us which will take time and money to address.  Smart newsagents are getting appropriate advice and establishing necessary procedures and paperwork to esnure that they meet the requirements.  Others are “leaving it for now”.

The smart approach for newsagents is to engage with a party to have all of the necessary paperwork, procedures and staff training provided professionally.  The changes are too complex to navigate yourself along with running a newsagency.   The ANF is running roadshows around the country educating newsagents.  The QNF is also doing roadshows and providing practical assistance.  Here’s a summary of QNF activity:

QNF have developed a ‘calculator’ which shows the extra cost the Modern Awards will bring to newsagents over the 5 year transition period. This helps for some to understand the severity and others are able to re-arrange staffing to ensure the impact is minimal.

QNF have engaged an I/R specialist to draw up EBA’s for individual newsagents and also had dealings with the SDA who are offering a free EBA to Qld newsagents (one multi employer agreement).

We are presently doing roadshows all over Qld informing newsagents the up-to-date information on the Modern Awards.

The differences between the State & Federal Awards and the impact on each as well as Delivery Drivers, casual staff vs permanent part time, the use of contractors.

QNF started all of this early this year and are confident that they have kept newsagents informed all along the way.

Time is running out for those who wish to do an EBA. The end of this month just about sees it in as it is a 6 week process and it must be finished by 31st Dec.

For more details on the overall changes, check out Fair Work Australia.