We reused most of our Grazia display from last week this week. We have used this week’s posters on the stand. Having the monochrome background enabled us to get away with it and to give Grazia our premium position two weeks running.
The stand (to the left) is important in a display like this – it provides a place off of which consumers can make their purchase. There is no point in having a pretty display unless there is an opportunity to act.
I am surprised at the lack of Olympics themed magazines and related products. With the Beijing Olympic games just over a week away we have very little available, certainly not enough for a feature display. Maybe we missed out but I suspect not. We had more feature magazines and one-shot titles for the Rugby World Cup.
US research company Borrell Associates has released a report predicting that 39% of the ad spend on print yellow pages in the US will disappear over the next five years.
Check out the demands ASDA in the UK (Wal-Mart owned supermarket) is putting on magazine publishers as reported by the Guardian. I particularly like the proposed setup charge for a new title. New titles are expensive for newsagents, we carry the stock while the title finds its level. A new title setup charge would respect our labour and real-estate investment and see the publishers carrying the risk rather than us. I also like the proposal of being paid a fee for space allocation. Given rents in for shopping centre newsagents today this is likely to become an economic necessity. Some of the requests by ASDA are way over the top.
We have placed Take 5 in our prime counter promotional position today because of the free guardian angel brooch which comes with the magazine this week.
While I’d prefer customers buy one of our guardian angels, I’m equally happy to sell magazines because of such a good giveaway.
We achieve between 60% and 75% of weekly Take 5 sales on Wednesdays, the first on-sale day.
The Banking Industry Ombudsman website has some helpful information for canceling a direct debit which may be useful to newsagents who have had payments deducted for Bill Express equipment this week even though they had cancelled the direct debit authority with their bank.
If you have given a third party an authority to debit your account, that authority may be cancelled either by notice to the third party and/or by notice to the bank. This is reflected in clause 19 of the New Code of Banking Practice, which says that a bank will promptly process your instruction to cancel a direct debit request and will not direct or suggest that you should first raise any such request directly with the third party. The bank may suggest that you also contact the party and this is a prudent course to take to ensure that the authority is cancelled.
Newsagents who cancelled their direct debit authority and had money taken our for the Bill Express equipment this week ought to make representations to their bank about how this is a breach of the Code of Banking Practice.
If your bank refuses to refund the money they allowed to be deducted after you cancelled the direct debit authority, you should advise them you will make a complaint to Financial Ombudsman Service. Click here for details of how to register your dispute online.
Mark Hawthorne at The Age today continues excellent reporting on Bill Express and the collapse of OnQ.
We have spoken to the Administrators of OnQ and they have provided a formal proof of debt form. This will need to be completed and lodged with Worrells in advance of any creditors meeting. My view is that OnQ is indebted to my newsagencies for the rebates as documented in Schedule D of the Bill Express agreement.
While there is no money in OnQ, by registering as a creditor newsagents can at least have a voice at the table as the last rites are performed and therefore hopefully be better informed. I will publish an updated example of the form completed later today.
When a creditors meeting is announced I will publish details here along with a proxy form.
Meanwhile, a group of around 20 newsagents yesterday met with representatives of the ANF in Melbourne. Most of the meeting was taken up with Bill Express matters. The difference between the ANF approach and that of the team behind the NSW instituted Class Action was evident. The ANF approach is to negotiate a settlement of the Mobius debt newsagents have been saddled with. The NSW Class Action approach is to challenge the debt on the basis of legal precedent. As I blogged here last week there are precedents worth considering.
The major flaw in the approach the ANF is taking is that it accepts that the equipment rental agreement is separate to the Bill Express agreement. That acceptance leaves the ANF strategy pursuing an outcome which is unacceptable to newsagents. Unless the ANF changes its approach or communicates its reasoning in a more convincing way it will continue to lose members on this issue.
The ANF Directors needs to practically and publicly demonstrate that they will pursue the Mobius agreement issue until the very end and that they will put the needs of newsagents ahead of their own. If they are not prepared to do this they ought to resign. On the evidence so far this year, the Directors of the ANF have not put the needs of newsagents ahead of their own.
My understanding is that the majority of newsagents attending the meeting in Melbourne with the ANF yesterday signed up for the NSW Class Action and not the ANF strategy.
The announcement from Starbucks was drenched in the harsh reality of business. Sixty one underperforming Australian stores will close within a week. Tenancies vacated, employees (partners) let go, supplier relationships terminated.
This is how corporates act. They put up with poor numbers for so long and then make the decision which has to be made.
While I didn’t care for their coffee – how could you in a country blessed with so many exceptional independent coffee houses – I admire the business model. Margins are good, better than newsagencies. They controlled their brand and most of what they sold. Rent and labour would be key challenges.
If Starbucks can reach this decision with key factors – range, margin and buying power – working for them, what is the situation newsagents face? How many in our channel are looking at their businesses as the suits at Starbucks have done over the last few weeks? If these same suits controlled our channel, how many would they close on the numbers?
A key challenge we face is the percentage of our sales over which we have no margin control and over which we exert no margin leverage. This must change, especially for circulation product. While some newsagents do already, more of us must diversify and offer a broader, good margin, product range. Newspapers, magazines, lotteries, transport tickets and low margin confectionery will be part of the mix but they do not contribute enough to the bottom line for you to use these as springboards for th level of growth we need to stay in the game. (Read me earlier post this morning about the Daily Telegraph to understand this point.) These products, by the very nature of the controls around them, restrict what we can achieve. Our future lies in leveraging the traffic of these regulated products into sales of other, more profitable, lines.
The alternative is that more in the newsagency channel face tough decisions like those faces at Starbucks recently.
While consumers would be happy that the Daily Telegraph has not increased its cover price for eight years, newsagents are not happy. What newsagents earn is based on the cover price. Having this fixed for eight years makes the Daily Telegraph considerably less valuable today than eight years ago. Rents are rising 5% a year and wages between 3%b and 5% a year. This freeze on the cover price is not sustainable, especially when the publisher requires newsagents to place its product in premium retail space.
The publisher can sustain the fixed cover price because the majority of their income comes from advertising which has not remained capped over the eight years.
This is a good example of poor treatment of small business by big business. Newsagents cop it because they are the weak party. They are too scared to take a tough stance in negotiations because of the fear they will lose newspapers or at least see them placed directly in more outlets.
The price of the Daily Telegraph is one reason newsagents in NSW are doing it tough. Any publisher who doubts this should take six months off and live the life, physically and economically, of a newsagent.
I am okay with magazine publishers including subscription offers in their publications. However, I am not okay with them talking us down in the process.
The photo is of a flyer inserted with National Geographic. This flyer claims we are expensive. We are. Rent and labour in newsagencies make up the most of our costs.
National Geographic is happy to use both these resources to promote their business. It is offensive they talk us down in this way.
Newsagents are about to receive a letter reminding them about the importance of the accuracy of returns claims. Network Services has increased the number of newsagent returns being audited. This has resulted in some breach notices being issued and several newsagents having their contracts terminated.
Based on my recent experience on behalf of another newsagent, I am concerned that the Network process for resolving a dispute about a returns discrepancy is not structured fairly. There are various reasons there could be a discrepancy and newsagents need certainty that all of these have been fully considered before any breach notice is issued.
I wish that Network would apply the same vigilance to the supply side of the magazine transaction. Too many non ACP titles are supplied at quantities not justified by sales data. I consider this breach to be as serious as a breach by a newsagent in over claiming on returns. Unfortunately, Network appears to not see it that way. A higher sell through as a result of a more accurate scale out model would result in fewer returns and therefore fewer problems with returns discrepancies.
Having said all that, fraud cannot be tolerated so if newsagents deliberately make false returns claims they can suffer the consequences.
OnQ, the parent of the collapsed Bill Express company, has announced the appointment of administrators. This move was only a matter of time given once Bill Express collapsed.
I am a creditor of OnQ as are most newsagents. The Agreement I signed commits the company to paying rebates as outlined in Schedule D attached to the Agreement. While the company will claim that it varied the Agreement, I’d like to hear how a judge views that. In the meantime, I’ll register as a creditor. If I get a form for this I will post it here.
I will be interested to see what happens now with ETT, a public company 43% owned by Bill Express. If it collapses that will be three related ASX listed companies collapsing.
We have created a partworks row in front of our counter at the entrance to our Forest Hill store. As with my last post, this says we are specialists. Each of these partworks has been or is being advertised on TV. Newsagents are the exclusive retail partner. By being bold about these products we are connecting our business with current TV campaigns and thereby leveraging the relevance that link brings.
We have created a small display around magazines with the SAVE MONEY! theme near our front lottery counter. Each title has been chosen because it offers practical advice on how to save money from budget meals through to cutting household costs.
Most of the titles rarely get to the front of the shop. None are are collectively displayed in this way. This display demonstrates that we understand that money is tight. It also pitches that we can help people save with ideas from various categories of magazines.
This display pitches us as a magazine specialist more so than a power end display for a single title.
The departure of ANF (Acting?) CEO Don MacAskill today is an opportunity for the ANF to regroup from what has been an unsuccessful three years. The mission to unify newsagents behind a single national body has failed, newsagents are quitting the ANF over its involvement in promoting newsagents into the now collapsed Bill Express contracts and suppliers appear less engaged with the ANF than ever.
I’d encourage the ANF Board to reclaim the organisation for the good of newsagents. Specifically, I would propose:
Newsagents are tired of the politics and are frustrated at the lack of face to face contact with those who represent them. Today’s events are an opportunity to reinvent national leadership for newsagents in pursuit of a strong future for our channel.
On the weekend I checked my Bill Express and Mobius equipment agreements and noticed that the document version markings, in fine print on the lower left corner of each page, matched. These common markings link the Bill Express and Mobius equipment finance agreements.
Much has been made about these agreements being separate. The ANF in its communication to newsagents makes it clear they view the agreements as separate. While I am no lawyer, I would have thought that a court would find it relevant to its considerations that agreements intended to be separate would have the same version markings.
The status of these agreements is of grave concern to newsagents across the country. It concerns me that not enough is being done by the ANF to address this situation.
We are promoting Famous at the counter at our Frankston newsagency this week. The free nail file / shiner is bound to drive a good sales result for this poor cousin of the weeklies. The photo shows the display we have created to support Famous – it’s a copy of the counter displays we have been doing at our Forest Hill store.
FYI, at Forest Hill we placed the Aussie Movie collection on display Friday morning. Between then and Sunday night we sold 14 copies off the counter display. That’s an extraordinary result for a title which had been out two weeks.
Scott Karp has written an excellent piece about what newspapers could learn from the General Motors decision to transform their business around producing a commercially viable electric car. The connection between the GM reinvention and newspapers is covered in this paragraph:
All the talk about “saving newspapers” is focused on finding new business models to keep doing what they’ve always done — which is like GM looking for a new business model to sell the kinds of cars they made in the 50s and 60s. What the newspaper industry, if it is to survive as such, must find is a radical new value proposition for news — something so audacious, so self-evidently valuable that, if they can find a way to deliver it, would lead to the rebirth of newspaper journalism.
The same could be said for newsagents. Our future is dependent on us finding new customers based on new products and services. It is based on us reinventing ourselves locally and nationally. This is what our industry associations ought to be thinking about and demonstrating leadership on. Developing, debating and creating The Newsagency of the Future is the most important mission newsagent associations could have. Unfortunately, I don’t hear anything from them about this.
Newsagencies should have a good range of pencil cases. Most don’t. While there are a couple of basic student pencil cases, few newsagents have a good range. The photo shows part of a new range we have found for our newsagencies. They are selling well, especially to girls. Their fashionable colours and designs make them an easy sell to this demographic.
More and more we are sourcing product from gift related suppliers as their stationery and related lines have greater consumer appeal than traditional newsagency stationery suppliers. Fashion can be more important than function to many stationery customers. hence the importance for us to have a broad and fashionable range in categories such as pencil cases.
A Victorian newsagent wrote to his bank a week ago seeking a refund of the funds taken from his account by Mobius for the Bill Express equipment. His letter sought the refund on the basis that the direct debit authority he signed for the Bill Express equipment was in favor of Technology Business International. Yesterday morning, checking his account, the newsagent found that his bank had refunded payments it has deducted without his authority since March this year.
This is a tremendous outcome. Good on the bank for realising that it did not have the right paperwork to allow such a withdrawal.
Charles Warner has written an excellent article at the Huffington Post about the disruption to old media thanks to new devices such as the iPhone. In plain language and without emotion, Warner’s article explains how the iPhone and other devices are turning the news, information and entertainment supply chains on their ears.
We are promoting The Flying Scotsman partwork in our model train category as well as the usual partwork space. With model magazines selling so well in our newsagency, co-locating The Flying Scotsman makes sense. Model magazine customers are loyal if you maintain a good range and make browsing easy. They are efficient too, often buying two or more magazines at once.
