ACCC press release on Bill Express
Click here for a copy of the ACCC press release regarding the application lodged with the Federal Court yesterday.
Newspaper masthead trashed
The Sydney Morning Herald brand was well and truly trashed by the placement of an ad for real insurance stuck on top of the newspaper’s masthead today. This is the worst of these stock-on ads I have seen. It demonstrates a complete lack of respect for the SMH brand and the newspaper masthead by
Brand is everything in business. It defines your product and evokes emotion in the mind of consumers. Why, then, would you allow another brand to cover it up. The only reason I can see is that the money from the advertiser is more important than the brand you are permitting to be covered.
ACCC commences legal action on Bill Express
The ACCC yesterday applied to the Federal Court of Australia for orders under section 87 of the Trade Practices Act 1974 (TPA) and injunctions under section 80 of the TPA in respect of contraventions of sections 47(1), 52 and 53(g) of the TPA. The respondents to the action are: Bill Express Limited, Technology Business International Pty Ltd (TBI), BNY Trust Company of Australia Pty Ltd and Mobius Financial Services Pty Ltd.
The Age has the details on this story.
I have read the seven page application as well as the seventeen page case summary as lodged with the Court by the ACCC. It is comprehensive and provides some insight into the considerable work invested by the ACCC on the Bill Express matter this year.
The ACCC application has been lodged with the court’s Fast Track List on behalf of two Victorian newsagents – as a test case.
In brief summary, the application seeks, among other things, a declaration that the TBI contracts are void, that the claims by BNY in relation to payments are void and that monies paid since February 2008 be refunded.
Many parties have worked toward this including the newsagents who supported the class action started by a group of newsagents in NSW and supported by the QNF and NANA and other newsagents. In June of this year the ANF cast doubt on the capacity of the ACCC to act on this matter. Yesterday’s action by the ACCC is considerably more than anything achieved by the ANF in relation to Bill Express in recent years.
VANA and the ANF ought to hang their heads in shame about Bill Express. They have let newsagents down dreadfully on this issue. Around 900 newsagents are still paying the monthly equipment lease – many because VANA and the ANF have not provided sound advice to members. My understanding is that more than1,500 newsagents have stopped these direct debits because of legal advice from the NSW class action published through NANA, the QNF, here and other places.
Given the developments over the last twenty four hours, it is no wonder that some legal advisors were shocked that the ANF had engaged in negotiations with BNY and related parties to reach a financial settlement. I sought to discuss this with the ANF but was met with arrogance and distrust. The experience reinforced the opinion I have come to over the last two months – the ANF is of no relevance to newsagents and the sooner we starve the organisation of cash and cause its closure the better.
How to compete with national retailers
I have updated the the Local Marketing advice sheet at the Tower Systems website. This advice sheet has tips for competing with the national retailers. Advice like this could get you thinking of other ideas which may be more suited to your own circumstances.
When the card is the gift
Through our Sophie Randall gift business we see a diverse range of greeting cards, far more diverse than in a newsagency. This is only natural because card and gift shops attract a very different consumer to newsagencies. One range of Christmas cards which really interest me are these which have a recipe inside for the food on the front of the card. So, the card is part gift. This works when you are giving a card to someone you would not usually give a gift to or if money if tight – make the item on the cover and give the card as well as the home made goods.
Complete Poker fizzer
The Ultimate Guide to Poker has been a dud in my newsagency. In three months we have sold one of the ten copies sent. I have given the title three months, investing my space and tile in this new title. Based on my spend, I’d estimate that newsagents have invested somewhere between $30,000 and $50,000 in the launch of the title. We have done this without any say in the matter. This is what is wrong with us – we take new titles and support them without expecting to be paid for our time or space. Some new titles don’t deserve our generosity because their publishers do not respect us.
Complete Wedding failure
Complete Wedding from Universal Magazines is a good example of a failure of a magazine. In my newsagency this title has a sell through of 30%. That is, 70% of copies sent are returned. The poor sell through, thanks to too much stock and its six month on-sale makes this title loss making for me and, I suspect, most newsagents who receive it. This is a good example of why I think Universal Magazines’ titles ought to be stripped from newsagent shelves. Unless they transact with us fairly and respectfully then they can find another retailer to take their stock.
Magazines helps in Daniel Morcombe case
Kudos to the folks at Woman’s Day and ACP Magazines for getting behind the Daniel Morcombe case. Daniel was abducted from a bus stop in Queensland on December 7, 2005. This week’s Woman’s Day poster calls for people with any information on Daniel’s case to contact the police. This is terrific use of newsagent real estate. Hopefully one of the posters in thousands of newsagencies triggers someone’s memory and progress on this case is made as a result.
Is it time to kill off Universal Magazines?
No!. It is not time to kill off Universal Magazines. It is, however, time to develop a magazine supply model which is fair to independent publishers such as Universal Magazines, Australian newsagents and consumers.
I published a blog post here under this headline on October 29, 2008 in frustration about my inability to control the supply of product from Universal Magazines. After years of getting nowhere with suppliers on achieving an equitable supply arrangement for many I felt I had to strike out and bring the supply model issue to a head. That morning, Universal was on my mind because of what I saw in my shop.
In the months since the initial blog post, Universal executives have dug deep into the magazine supply model to understand why I and other newsagents who commenter to the post were so angry. The result of their investigation and reflection is improvements to processes and around the supply of their titles which did not exist last year.
From my own face to face discussions with the folks at Universal I also understand more about their goals. Interestingly, we agree on many discussion points. It is the magazine supply model between their business and my newsagency (and newsagencies around Australia) which is the barrier to an idyllic relationship.
magazine distributors lept to the defence of Universal quickly in October last year. The reality is, the blog post was more about them and decisions they make and not so much about Universal – it is breathtaking that they did not out their role in the problems at the time.
Hopefully, over the next few months, progress will be made on the model so that independent publishers and Australian newsagents can achieve a more mutually beneficial and rewarding relationship.
February 10, 2009.
For transparency, here is what I wrote back then:
Universal Magazines is the most financially inefficient publisher in Australia in my view, based on data I have seen. Oversupply and long shelf lives mean that their titles are more often cash-flow negative for small business newsagents than not. No amount of representation appears to be able to resolve the situation. The only option is to take the step to ban all titles from Universal Magazines.
This would mean that we no longer carry: Backyard Design Ideas, Build Home – Victoria, Build Home – NSW/QLD, Contemporary Home Design, Kitchens & Bathrooms Quarterly, Luxury Home Design, Melbourne Living, Outdoor Design & Living, Poolside, Poolside Showcase, Renovate & Extend, Sydney Living, Westcoast Living, Bargain Shopper Sydney 2008, Bargain Shopper Melbourne 2008, Choosing a School for your Child, Dogs Life, Life etc, Wellbeing, Sydney Eats with Cheap Eats, Complete Wedding, Crusty Demons, Dirt Action, Australian Road Rider, Trailrider, Australian Country Collections, Australian Beading, Homespun, Quilters Companion, Scrapbook Creations, and Outdoor Design Source.
While this may appear to be a drastic step, the reality is that overall we would be better off. In one newsagency, the P&L would benefit by over $1,000 by killing off all titles from Universal Magazines.
While this may seem like an unusual step for a magazine specialist to take, I see no choice given that I am not permitted to adequately control supply quantity and trading terms and given
Newsagents represent a tremedous asset to publishers. The sooner we manage ourselves as if this is true the better.
If, say, 500 newsagents decided to kill off Universal titles, I am sure that the company would take notice. Sure they may look for other retail outlets. They may also engage in useful negotiations with newsagents about fairer trading terms including payment for non performance of their titles.
So, I don’t want to kill off Universal Magazines. What I want is a magazine supply model which is fair to my business, supplies what will sell and on terms which are equitable.
Politics fails newsagents in Victoria
I am told that at the VANA Board meeting yesterday, Board members were convinced to call in the Australian Electoral Commission to handle the election of a Chairman. Why eight Directors could not conduct themselves to elect a Chairman is a mystery. It suggests that the new Directors went into the meeting ill prepared.
Newsagents have challenging relationships with suppliers and they, rightly or wrongly, rely on their associations to navigate better outcomes. Yesterday’s events at the VANA Board meeting indicate that VANA is distracted more by politics than the needs of its members.
Members can respond by taking control of the association, quitting or leaving it to someone esle to sort out. Newsagents can get the association they want if they actively engage and take control. The VANA Constitution has mechanisms for achieving this.
The VANA Board has demonstrated that it does not want newsagents controlling its direction by the way it has called the November 11 meeting to discuss industry matters. Newsagents can fix this.
How to sell more crossword magazines
If you want to sell more crossword titles, place a selection of titles from the category next to your women’s weeklies section. The photo shows our display at Forest Hill on Saturday. This space in a high traffic area to your target demographic will work, crossword sales will increase.
We know from UK newsagent sales data that crosswords outperform our sales here – this may be due to their location next to women’s weeklies.
Newsagent magazine benchmark data I have for more then 100 newsagencies indicates that crosswords should account for between 6% and 8% of total magazine sales. Newsagents aggressively pursuing magazine growth are achieving unit sales increases of 10% and more year on year.
Here are some tips for how we manage our approach to co-location:
- Create the space by compressing slower moving categories further along in the display.
- Only use this found space for Lovatts and Puzzler titles.
- Put Lovatts titles next to each other and the same with Puzzler titles – don’t mix the brands.
- Place titles so they colour contrast – for example, don;t put two titles with green covers next to each other.
- Know your demographic in selecting titles. For example, if you aree in an older area, be sure to include the Lovatts Large Print product.
- Use the first column – otherwise you may confuse browsers.
- Place the same number of each issue in each pocket – this quickly shows if there has been movement from this space.
- Remember to update the titles with new product.
- Rotate the titles weekly.
- Use the whole column and flat stack area for crosswords.
If you try this, please let me know how you go.
We have tremendous opportuniies in our magazine department since most other retailers do not have or range or our space. The tips in this blog post about crosswords are all about us demonstrating our range, showing off our point of difference.
Magazine cover up steals space
The masthead of latest issue of The World of Cross Stitching by the calendar included in the sealed bag with the magazine. This will confuse non-regular customers. The other problem with this issue is the packaging. They have cone for a bag which is around 12% bigger than the usual magazine which steals space from the title next to and the title above The World of Cross Stitching. While this may seem petty to blog about, as a specialist magazine retailer we try hard to fairly represent all titles. Space is finely balanced and all it takes is one or two publishers to encroach on others and that balance is thrown off.
The Broons calendar 2009
It surprises me sometimes the products which we sell in Australian newsagencies. Take the 2009 calendar for The Broons, a soap-opera comic strip developed around seventy years ago in Scotland. This is a product for a highly specialised market. Given our sales of Scottish magazines we are a good candidate for receiving stock of The Broons calendar – now that I know the back story to the characters. We try and take time to research products we don;t understand so we can answer customer questions.
More on US newspaper woes
Ken Doctor adds his perspective of the latest data reflecting performance of US newspapers at his Content Bridges blog. While there is a considerable difference between the US and Australian newspaper markets, his analysis is helpful for those newsagents considering the next phase of investment in their business. Capital city dailies recording double digit sales declines is big news. I was interested to see that national and community newspapers are doing so well.
Labour cost ratio
More and more when talking with newsagents I am asked what percentage of revenue labour ought to cost. In a retail only newsagency the figure I consider okay is between 10% and 12% depending on product mix. There are only two ways to achieve a healthier labour cost to sales ratio: increase sales without increasing labour or cut labour costs without decreasing sales.
If you need to cut labour costs, start by analysing sales by time and see whether there are pockets where you can eliminate casual hours as these are the easiest to adjust. A good sales by time report viewed in association with the roster ought to help uncover opportunities to trim certain shifts.
To drive a healthier labour cost to sales ratio, you could consider sharing the current data and your target with staff. This sets a shared goal. Sometimes retail staff will engage more proactively if they know there is a specific outcome which can affect them as well as the business.
Dominating the morning
I am grateful to a colleague for sending me this list of good ideas in response to a blog post here a couple of days back. These ideas fit what you might call a dominate the morning strategy – a brilliant idea which could work in many newsagencies.
Newsagencies on high streets open earlier every Morning. There are few outlets open at the time, we can provide a complete solutions for the people (both on-the-go and local) in early Morning to attract maximum sales on our traditional lines, and convenience lines.
1. Support basic lines on bread, milk, paper, cigarettes.
2. Offer coffee and food service lines.
3. Increase basket size and customer purchase frequency by tailoring offers to targeted groups, for example, health products for morning exercisers, breakfast deals for morning workers, coffee deals for morning commuters, milk and bread deal for mums.
4. Build up the volume on basic lines, and specify offers on high value-added products. Be outstanding on food service and convenience service
5. Get advice from retired newsagents and small business owners. Get advice from experts on convenience / food service trade. Get advice from suppliers and distributors. Pay for the advice if needed.
6. Be happy to take risk and loss on trying new products, be happy to make no money on certain new directions, be happy to make some stupid mistakes, be determined to dominate target trade at all cost. While it may not suit every newsagent, the list is bound to generate ideas for most newsagents.
I like this idea of focusing on a certain part of the day. The morning makes sense because we are open early, most of us at least. Given that our location is a key part of the newsagency offer, convenience as a focus makes sense too.
I can see a dominate the morning strategy working well in a high street situation.
Reusing retail fixtures
Our team at Forest Hill has reused an old display unit for our range of small magnetic day-to-a-page calendars. This small unit fits nicely right at the front corner of the counter next to the ACP magazine display stand. All too often specially built display units are trashed once the purpose for which they were provided has passed. Reuse such as that done by our Forest Hill team is good for the environment. The bonus is that it solved a challenging display problem.
Seeing double Andre Rieu
The same photo of Andre Rieu has been used for the covers of Limelight and Reader’s Digest. Oops. No matter, both will sell well in our demographic at Forest Hill. We have both titles on display above The Age in our newspaper stand. The hype leading up to his tour next month is considerable.
If only we could snare a store visit.
US newspaper financial health
The Newspaper Crash of 2009 is a sobering blog post from Tim Oren about the financil health of US newspapers. While there is bound to be debate about some of Oren’s views, his description of the US newspaper business model is most interesting.
Promoting Delicious at the counter
Delicious is one of those excellent magazines which suffers from bumpy sales – in our our newsagencies at least. People either forget to buy or don’t buy because money is tight. Delicious is not a must have magazine. That said, Delicious responds well to promotion and that is why we have it displayed at our premium counter position this past weekend – that and the free cookbook. The result has been good sales uplift.
Great National Geographic promotion
The National Geographic promotion through the Herald Sun which has just ended is one of the best newspaper promotions I can recall. We have been provided with plenty of stock, the promotional product is good value and it has been well promoted and thereby drives excellent traffic to the shop. The outcome is infrequent newspaper customers frequently buying the paper and that is what promotions like this are all about. Kudos to H&WT for getting the back-end processes right.
Magazines pinch space from a competitor
Gourmet Traveller has an advertiser’s catalogue stuck to the back of the magazine so that it sticks up above the masthead. The catalogue steals space from the next magazine up in the display unit. The photo illustrates how Delicious suffers from this intrusion into their space. The same catalogue, for The Garden Lounge, is on this month’s Burke’s Backyard. In addition to blocking other product, it looks like bonus content rather than the advertisement it is. Magazine publishers need to show more respect for competitors and newsagents who need to serve all titles.
On Q administrator update
The administrators for the On Q Group, parent of Bill Express, issues an update late last week. There is not much news, the main announcement was that the Supreme Court granted an extension of the convening period by two months. This extension was sought to enable the Administrator to finalise their investigations into the company’s affairs and to finalised negotiations for a proposed deed of Company Arrangement. In their Advice to Creditors, the Administrator states:
We anticipate that a Deed of Company Arrangement may provide a more favourable outcome to creditors within a sorter timeframe and with greater certainty than in a liquidation scenario.
On Q is the company which committed to paying rebates to newsagents for the Bill Express / DialTime equipment and services. These rebates were the reason many newsagents signed with Bill Express. While I don’t see any beneficial outcome for newsagents from the On Q mess, it is interesting to watch the process.