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

Author: Mark Fletcher

Offering the ANF a right of reply

I have been contacted by several people saying that I am treating the ANF unfairly in relation to the moves by News Ltd in South Australia to cut revenue from newsagencies.  Their message, curiously, has been the same – leave the ANF alone and let them resolve this.

My limited commentary about the ANF on this issue so far has been based on what the ANF has done and not done on this issue.  I have seen their correspondence with South Australian newsagents.  More words were spent talking up the News Ltd changes.  They clearly had not thought through the implications of the changes until I blogged about them here on Tuesday morning.  After reading that post, the ANF changed focus – probably realising that their original approach to the issue was flawed.

The best way for the ANF to stop me giving attention to poor leadership would be for them to stop delivering this.  The issue in South Australia was (and may still be) an excellent opportunity for the “new” ANF to demonstrate an understanding of the complete newsagency business, provide fearless national leadership and deliver on the will of its members.  Instead, it appears, for the moment, to have been blinded by bright lights pointed at it by a supplier.

Facing off with suppliers is a huge challenge for our newsagency industry associations.  No, more than ever, newsagents need to know that their associations will put newsagents ahead of suppliers and the revenue they offer for conferences, awards and other association costs.

I do not have a political agenda here.  While through my software company I directly serve in excess of 1,600 newsagents – 136 in South Australia, I care about all newsagents and have done so for 28 years.

The ANF is welcome to a right of reply to reach the 1,500 unique visitors who visit here each day – don;’t fear debate for its is from robust debate that leadership is tested and strengthened.

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Newsagency challenges

Bringing food into weekly magazines

fhn_food_magazine_section.JPGWe have introduced a column of food titles into our weekly magazine display for the next few weeks to increase sales of these titles.  The new column is next to our TV related titles.  While creating the space has been a challenge, we expect it to be worth it.

My feeling is that in our store many food magazine purchases are on impulse.  The change has been in place since Wednesday and already we are a lift.

We first played with our weeklies by introducing a column of crossword titles more than a year ago.  This has been a tremendous success and remains in place today.  We do not see the food column as staying for anything more than a few weeks – we do not ant to reduce browsing of the rest of the magazine department.  We are, however, likely to use this created space to feature other categories on rotation – but we will only do this with categories which work with the weekly magazine shopper.

In this marketplace we need to take every step possible to extend the basket.

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magazines

Cows in the window

cow.jpgWe had a good selection of these cows on display near our counter, expecting them to sell quickly – they are a cute and inexpensive novelty gift (with a good margin).  We sold one.  Within two days of moving them to our window we had sold all stock except for one.  As we have found in our gift shops, moving gift stock regularly is crucial to finding sales.  What is lost in one location can work a treat in another.  We have a floor stock rotation program which is helping drive good results from our entry into gifts in our newsagencies.

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Gifts

Recycling magazines

I was talking with a newsagent last night who received a porn pack to sell, seveal magazines bagged together.  Inside the pack was a title which would be, I am told, at least ten years old.  You have to wonder how many times some magazines will go around because they are eventually pulped.

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magazine distribution

News Ltd move could cut newsagent revenue by 10%

Many distribution newsagents in South Australia have benefited from a long-standing 2.5% 2% settlement discount arrangement with News Ltd’s Advertiser Newspapers.  With Advertiser taking home delivery account collection, newsagents stand to could lose access to this 2.5% 2% if the newsagent is no longer required to pay for the newspapers and are just paid for the distribution service.  This translates into a margin cut of around close to 10% if my assumption is right.

UPDATE: (9:30pm) I updated the above paragraph following feedback from the Advertiser.  I note that I have been told that the settlement discount remains.  I am awaiting clarification on whether it will apply to the value of the newspapers deliivered and the account collection for which the Advertiser plans to take over.  This is important as it represents real margin to the distribution newsagents.

Newsagencies are slim margin small family businesses.  They cannot afford a 10% cut in margin – not in today’s marketplace, not ever.

Meanwhile, the ANF, the only body representing newsagents in South Australia, appears more concerned with control than the issues if the email sent out to newsagents this morning is anything to go by.  It included…

Can I remind ALL N.A’s that ANY correspondence should be handled by the ANF CEO or media representative in every instance and ANY information given to the media without the ANF approval could harm potential negotiations between the ANF and its suppliers and partners now and in the future.

In another email they indicate that there are issues in the changes for country newsagents.  I have received calls from suburban newsagents most concerned about the impact on their businesses.

The reaction from the ANF has been poor.  It reflects an ignorance of the issues and a lack of commitment to genuinely serve the newsagent constituency.

The ANF must get this right.  Now, today and tomorrow and not in a week or two.  This issue is affecting newsagents and their families right now and I am not seeing anything in the ANF communication which demonstrates empathy or leadership.

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Newsagency challenges

South Australian newsagents concerned about losing customers

I have received more calls from South Australian newsagents concerned about the risk to retail traffic as a result of the decision by News Ltd owned Advertiser Newspapers to take over control and management of home deliveries.  More than half heard about the move for the first time through this blog.  As I outlined in my blog post yesterday, retail newsagencies are finely tuned businesses – we rely on traffic for a broad range of purposes – each supporting and feeding off the other.  Take part of that away and the balance is impacted.

Take a country town newsagency which processes newspaper home delivery payments from around 150 customers each week and with 90% of these for Adelaide Advertiser only accounts.  many of these are customers won by the newsagent.  The Advertise plans to take these accounts from the newsagent and thereby provide one reason for these customers to not visit the newsagency. The knock-on impact on other sales and therefore the goodwill value of the business could be significant.

This planned change needs to be put on hold while all newsagents are brought into the discussion and while appropriate authorities are consulted.  I would hope that the ACCC might have a view on this as well as the Minister for Small Business in the South Australian Government.

Newsagents could consider getting together themselves to establish a committee to take the matter further.  There is nothing stopping them working collectively on a uniform approach – in the absence of leadership elsewhere on this issue.

I hope that News Ltd nationally prevails on their South Australian outpost to delay implementation while fair and open consultation proceeds.

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Newsagency challenges

Relaunching Good Health

fhn_good_health.JPGWe have given the relaunched Good Health an excellent location in our newsagency – at the entrance to our busiest magazine aisle – not too far from the usual home for this title.  While not the prettiest retail display, it is functional and easily shopped.  It focuses on the re-launch of the title and the low price point – function over form.

Famous benefited from its re-launch and lower price point earier this year, hopefully these moves work well for Good Health and bring new customers to the title.

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magazines

Google Wave to evolve story telling?

Google last month previewed a new product, Google Wave.  Developed by Google in Sydney – yes, here in Australia … this should be a huge story locally – Google Wave is a product which has the potential to change the way we communicate and collaborate online.  It is the collaboration facilities which make Wave interesting from a newspaper and magazine story perspective.  While much of the concern I express here about the future of newspapers and magazines relates to the transition of these aggregating products to digital platforms, the longer term discussion needs to be around how we engage with stories.  This discussion goes to the heart of relevance of books, magazines and newspapers.  Google Wave is one of several technologies which may provide a pointer to evolution considerably beyond the fears and opportunities of what we see on the horizon.  Jeff Jarvis sees Google Wave facilitating collaboration on stories.  Here is the first public presentation of Google Wave at a conference in the US earlier this week:

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Media disruption

Are newsagencies opening later?

Three newsagencies I visited between 6:10am and 6:20am earlier this week were closed.  I had to get the newspaper I wanted from a 7-Eleven. I’d be curious to know if newsagencies are opening later than they used to.  In my own businesses we are in centres and no longer have runs so we open Tuesdays and Thursdays at 8am and Monday, Wednesday and friday at 7am.

To those wondering, I was half an hour from my own newsagencies and was not planning on visiting them on this particular day.

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Newsagency opportunities

Major changes for newspaper home delivery accounts in South Australia

Advertiser Newspapers announced to South Australian newsagents Monday their plan to take over managing home delivery accounts for Advertiser products. They will gradually assume control for starting new home delivery accounts, collecting payment, managing stops and starts, handling holiday redirections and handling queries.

This significant and unexpected move by the publisher has been pitched to newsagents by them as a positive move with significant benefits. The key reason for the change appears to be improved subscriber retention.

The implications for South Australian newsagents, should the planned changes proceed, could be considerable. Indeed, the implications for newsagents across Australia could be considerable. This is why the proposed changes need to be discussed and debated nationally. If they are as valuable and equitable to all stakeholders as the letter from Advertiser Newspapers says then I’d expect them to proceed. If they are not then I’d expect the proposal to not proceed.

My concerns are:

  • Transition challenges. The transition will require newsagents to hand over partial account details where they deliver and bill non-Advertiser products. Given the nature of home delivery accounts, balances handed over and or retained will be wrong.   This will make for a frustrating time for newsagents and customers. Newsagents will end up giving away credits to satisfy customers.
  • No benefit for newsagents. Many newsagents will need to maintain accounts for customers – for Fairfax product, magazines and other non Advertiser product delivered. Indeed, with the accounts being smaller one could argue that, based on experience, these accounts will be harder to collect. Indeed, from a data management perspective
  • Reduced revenue. Today, newsagents are able to sell home delivery to a customer at full price. Under the planned arrangement, the publisher controls all pricing. This denies the newsagent the opportunity of selling at a better margin.
  • Retail traffic. While many suburban distribution newsagencies are distribution only, across the state many newsagents have retail businesses which rely on account payment traffic to drive retail sales. Customers receiving only Advertiser product will not need to visit to pay the bill and will therefore have greater opportunity to purchase traditional newsagency lines from other retailers.
  • Processing delays. The current system allows customers to contact newsagents until late in the day before new run lists are printed or data transferred to electronic run devices. Centralising this in Adelaide will require an earlier cut off so that newsagents can have the data in enough time to get their local processes taken care of.
  • Relevance. The move by Advertiser Newspapers goes to the relevance of the newsagency. Newsagents provide a one stop shop for home delivery customers. Slicing that relationship up by publisher will confuse customers and demonstrate that one supplier sees newsagents being less relevant. This may, in turn, impact back on the publisher down the track.
  • Ripple effect. Newsagencies, retail and distribution, are finely balanced – take one slim plank away and there is a ripple effect. We saw this in 2004 with the ACP move to supply 800 or so petrol and convenience outlets directly. Reducing contact between home delivery customer and the newsagent, retail and or distribution, will lead to a loss of revenue in another part of the newsagency and this weakens the channel.

Some will disagree with my concerns. Others will want to add their own. Regardless of your position, please join the conversation here.

What is important is that newsagents, publishers, customers and other stakeholders engage in open discussion about this change. We owe it to each other to test the proposal and be prepared for what comes out the other side.

How the newsagents discuss and debate this plan will demonstrate our resolve in relation to the future of the newsagency channel as there will be more challenges like those outlines here.

UPDATE: I originally posted this at around 6:15am today.  I have updated the time stamp because newsagents new to reading the blog are having trouble finding this post.  I’ll leave it in this top place overnight.

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Newsagency challenges

Sweet $30 million Oz jackpot

OzLotto jackpotting to $30 million is most welcome.  We are making the most of this with fresh promotion in-store and a bonus offer to team members if we reach a self-imposed sales stretch.  We have configured our store to leverage the trafffic boost opportunity.  We will derive greater benefit from this than the stimulus package.

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Lotteries

Memo to NDD: Art Almanac does not sell

art_almanac.JPGArt Almanac does not sell in our newsagency.  The sales data shows this to be the case yet we continue to receive plenty of stock of this title from NDD.  Indeed, we receive plenty of art titles from NDD, none of which pays for the space they use.  I am happy to carry special interest titles – if they sell.

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magazine distribution

Late return for British Vogue

vogue_british1.JPGThe new issue of Vogue (British edition) went on sale this morning.  The old issue is not due to be returned until next month.  We don’t have the space to have two issues on the sehlevs.  While the distributor, NDD, will argue that the old issue may sell, I doubt they would take the risk if it were their money at stake.

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magazine distribution

Promoting the copying service

quayside.jpgThe landlord at the Bayside Centre in Frankston has provided access to large format poster lightboxes for June for our promotion of copying and related services.  Australia Post has moved out of the centre and they were doing good copying business.  The opportunity to promote the business elsewhere in the centre was too good to pass up.  While we wanted to hold off until we rebranded the business, the space was free this month so we took it.

We did the artwork in-house to the standards required by the landlord and and are supporting the posters around the centre with flyers given to other tenants and being put in customer bags.

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marketing

Vale McGills Newsagency

McGills Newsagency in Elizabeth Street Melbourne closes this week, a victim of changing times and soaring rent.  Entrepreneurial newsagents should be talking with the owners of McGills to access customer lists and market services around interstate and overseas publications.  This specialised part of the business has loyal customers and would be a nice earner for the right newsagent.

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Newsagency opportunities

Is Metcash looking at acquiring a magazine distributor?

The Sydney Morning Herald today reports that Metcash is considering acquisitions in the newsagency channel among others.

THE food and beverages wholesaler Metcash is examining acquisitions worth up to $1 billion as it seeks to apply its expertise in distribution to industries such as pharmaceuticals, newsagencies and hardware.

Gotch could be a target given the challenges at PMP.  Network could be a target given the financial challenges imposed on the business by CVC.  NDD could be a target because, as the smallest of the three, they need to reinvent themselves.

Maybe Metcash is considering establishing a new newsaget-focused distribution opportunity.

I have no idea if Metcash is in discussion with any magazine distributors or whether they are planning to enter the market. While I don’t plan to let my thoughts run with a what if they buy a amagazine distributor scenario, Metcash is clearly a company for newsagents to watch.

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magazine distribution

Promoting outside the newsagency

hotink_foresthill.jpgOur landlord has given us free lightbox space in the centre at Forest Hill Chase for large format posters.  We are using these this month to connect with our ink offer.  The posters promote saving money and brands – the two most important messages when it comes to driving ink sales.  Given that our HOT Ink! brochures hit homes around the centre last week, the placement of the posters is timely.  Our only cost has been in creating the artwork and having the posters printed.

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marketing

Promoting gifts

Click here for a copy of the June Newsletter for our Sophie Randall gift shop businesses.  We have evolved this into a more professional, outcome-focussed, document.  The June is the second in this new format.  The customer reaction has been excellent.  We are applying more learnings from our gift businesses into our newsagencies.

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Gifts

Tough May sales numbers

We have experienced a tough May at Forest Hill with overall newsagency traffic down 14%.  While the landlord will not share centre figures, we expect that our traffic result is not different to other retailers.

All key departments are down except for Books up 39%, Calendars up 100% (at $300), Diaries up 122% (at $900) and Gifts up 436% (at over $2,000).  Magazines were down 10%, ink down 16% (this reflects a promotion last year which this year’s promotion did not start until May 28) and stationery down 23%.

Overall store revenue (not including lotteries) was down 6%.

While it would have been easy for me to not publish these figures, and provide fodder for some, I am committed to this blog being a place of transparency.

We have several promotions under way in the centre as well as external marketing to drive traffic.  We are also extending two departments which we feel will work well with our customers as well as planning to make some changes to the shop to allow us to evolve our magazine offer.

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How is business?

Books and magazines share challenges

The New York Times has a sobering report about book sales in the US from the Book Expo America, the industry’s annual convention which ended Sunday in New York.

I found the report interesting on a couple of fronts: the evolving challenge of print and the reliance of the channel on mega brands – Dan Brown and Stephenie Meyer to name two.  In the magazine space we are challenged by mega brands too, the top selling titles account for most of our sales.The opportunity newsagents have had for years is to focus on range.  We have not done this well and now that it really matters we are losing out.  I know people who will travel to a Borders for range of magazines instead of to their local newsagent.

Newsagents can embrace range and build a marketing campaign around this point of difference – if we are serious about our future in the magazine category.

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Book retailing

Embedding newspaper content

Google web elements is one reason newspaper publishers don’t like Google so much. Embedding newspaper content via Google is easy.  Newspaper publishers don;t like not having control over their distribution channel.  The thing is, if they refuse their content to Google they will lose eyeballs on their brand. The element below aggregating news with the keyword newsagents was created in seconds.

Thanks to BuzzMachine for the tip.

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Media disruption

Pitching Australian Women’s Weekly at the counter

fhn_aww_jun09.JPGWe are featuring the Australian Women’s Weekly at the counter this week.  While this space is reserved for titles with a free gift we have not received any new stock which qualifies.  We created the AWW display primarily using covers we copied – in the absence of anything from the publisher except for one poster.

Complaints aside, this issue of AWW has sold well and we are only one week in.  This second week promotion at the counter should help our sales nicely.  Indeed, all issues of AWW have sold well this year except for May which was average.

We support AWW with a waterfall display, front of shop co-location for the first two weeks and an ACP basket builder pocket near one of our registers.  This extra activity is because we have found it is often purcahsed on impulse.

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magazines
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