I’ll be speaking at the QNF regional conferences in Cairns and Townsville on August 17 and 19 respectively about strategies we can use to reclaim our businesses for a brighter future. For too long newsagents have been faithful servants. Our future depends on us thinking and acting as business owners and ending the agent era.
UPDATE: Click here for the Cairns registration and click here for the Townsville registration.
Tattersalls has produced an excellent retail flyer to promote a competition around the 08/08/2008 date. The small flyer (80mm x 125mm) is perfect to hand to customers, the 8/8/8 headline will connect with lottery customers, the image in the LCD TV screen connects with the Olympics and basing entry in the competition around a System 8 purchase is smart. It is the size of the flyer I like the most – it is perfect for a newsagency counter pitch.
While stories about scammers who fleece cash from unsuspecting folk is everyday fodder for the TV current affairs shows, an equally costly cash scam goes unnoticed. I am talking about the magazine supply model and, in particular, very long shelf life titles with a track record for poor sales performance – sales which leave more than 50% of product unsold. This situation is costing Australian newsagents millions each year.
Take the Country Collections 2009 Diary which arrived in newsagencies yesterday. Last year we received 17 at or newsXpress Forest Hill store and sold less than half. This year, by the miracle of the magazine supply model which we are told works well for newsagents, we received 34 copies. This product has a shelf life of six months. By the time we will receive a credit for returned stock we will have been out of pocket for six months.
To the suppliers who wonder why newsagents act as they do sometimes, try and put yourself in the position of dealing with this situation created by Universal Magazines. Multiply that across many other smaller publishers who abuse the system in the same way. This financial abuse is stopping newsagents focusing on other more commercial opportunbities.
While Universal Magazines will have their reason for what they do and Network Services, the distributor abetting the Universal model, will have their reasons, they do not matter. What matters is that it is an abuse of newsagents to expect us to carry a product for six months, pay for the real estate and pay for theft and pay for stock well before it is sold – and do all of this for an unsatisfactory margin.
It is titles like this Country Collections 2009 Diary which hurt sales at the top end. Maybe one day other magazine publishers will understand this and join newsagents in their fight.
I have found another Olympics publication not distributed to all newsagents. Australian Olympic Team came out a couple of weeks ago. This title and the Beijing guide I blogged about earlier this week could have formed the centrepiece for a good retail display on the Beijing Olympics. I have rung around a few newsagencies and cannot see any consistency in the scale out model.
There are radio ads running in Gippsland promoting Newsink and newsagents selling their ink and toner product. The value proposition is that if you can find ink cheaper elsewhere they will beat it by 5%. While it is great to hear newsagents being advertised on radio, I’d rather the pitch be one of leadership – this is our unique selling proposition, come and shop with us rather than think of us if you see a good price elsewhere.
A couple of marketing specialists I have spoken with say the low price guarantee approach works as it positions you as the place to go to when price is the key determinant. If the newsagents want to sell on price it is a good strategy. However, there are other ways to pitch on price without guaranteeing to be the lowest and without cutting margin in an already slim margin category. There are plenty of examples of clever use of hero products to drive price perception without being the cheapest on all products.
For ink and toner I am happy growing sales based on competitive (but not always the lowest) prices, a good range and great service. I like this approach because it is sustainable, it better fits with the newsagency model and reflects the approach national brands prefer – the last thing they want is to turn ink and toner into a liquor or soft drink price model where massive discounts are offered on a rotation basis. This will happen is we train people to buy this way.
At Forest Hill we have been playing in the ink space for more than three years. Growth continues to be excellent. It accounted for 40% of stationery sales on the 2007/08 financial year, up from 30% for the previous financial year. While we send our flyers, this is part of a co-ordinated campaign which pursues sustainable growth.
Disclosure: I am a Director of newsXpress which offers the Hot Ink ink and toner strategy. I am also a Director of Inkfast, an online ink and toner business.
Marie Claire with the free Lancome Black Mascara is a worthy title to have on display at the front counter as shown in the photo. This is the space we have allocated to titles with what we judge as a genuinely valuable giveaway. The latest issue of Dolly is a good choice too but Marie Claire won because of sales and how the title performs in the on-sale week compared to Dolly which has a slower decay. We have created this display in each of our stores.
We are promoting this weeks special edition of New Idea at the front of both our newsagencies in different ways.
At Forest Hill we have a display in front of our cards. Since New Idea is well covered at our sales counters and in our magazine department, we felt it more appropriate to get in front of shoppers in another category. There is less visual noise and the cover of the magazine speaks for itself.
At Frankston we have New Idea displayed right at the front of the shop, at the end of the counter which faces the mall. We usually sell weeklies and high volume monthlies from here. The photo does not show the detail of the display – writing on the yellow balloons, baby items and gifts.
Customers behave differently in each newsagency and our approach reflects strategies we have found to be successful in each when promoting a special edition such as this week’s New Idea.
I have been contacted by several newsagents over the last two days who have found it particularly difficult to cancel direct debit arrangements for their now useless Bill Express equipment. In each case their bank, the ANZ, has refused to act on their written instructions. My understanding is that this is a breach of the Australian Bankers’ Association Code of Banking Practice. It will be interesting to see whether a formal complaint to the Financial Ombudsman Service can resolve the disputes.
To balance this I would note that several other newsagents have been refunded amounts taken by their bank after they canceled their direct debit arrangements.
Twitter must be getting popular judging by the number of newspapers now using the platform to provide access to newsfeeds. For those wh9o have not heard of Twitter, it’s a free service delivering small chunks of text. News organisations use it to feed headlines. It’s another free channel through which people can get a new fix without needing to purchase a newspaper.
There is no doubt that the ad for ING stuck over the masthead on The Age newspaper today looks stunning. You see this before the headline about Eddie Maguire – almost sacrilege in Melbourne. The advertiser would be very happy as would the advertising department at The Age. I love newspapers and wish that newspaper professionals inside The Age had the strength to stop ads being stuck over editorial content or, worse still, the newspaper masthead.
Holding New Idea back a day so it could provide full coverage of the twins born to Angelina Jolie and Brad Pitt has paid off if sales figures I am seeing are reflected across the retail network. In two of our newsagencies, sales today (as at 4:30pm) are ahead of what we usually achieve with New Idea for a full Monday. In the third store we are just under usual Monday numbers. This is an extraordinary result for a Tuesday, the quietest day of the week. It says something about the pulling power of this story.
The photo shows the value of the full face fixturing we use at our newsXpress Watergardens store. With an issue like this seeing the full cover is what sells the magazine to its target market.
ACP magazines has a good pitch at their website again this year for Father’s Day. I wish I could offer my customers a change to win a Holden SV valued at over $85,000.
We are debating whether to lose the bag rail at the counter when we do the shop fit at our Frankston newsagency. As the photo of the current counter shows, we use the bag rail for magazines. While watching customer behaviour confirms that this drives good impulse purchases, it is old school retail. But if it works well, why change? Our plan is to find a way to retail magazines at the counter but with a 2008 feel.
We will also ensure the new counter provides flexibility as this is key in the design of newsagencies today. No more old style fixturing which has one purpose only.
Esquire has set the publishing world alight with the announcement that the September issue will feature e-ink on the cover and in a two page ad for Ford. A screen and battery will be inserted into the cover. Moves like this demand that we in the print supply chain take notice e-ink and similar innovation even if it is a bit of a gimmick. The real challenge will come when we have a foldable rechargable paper thin device which receives newspaper and or magazine content without the need to visit a shop to purchase content.
Staples in Canada has announced plans to roll out what it is calling video agent customer service stations. Customers use these to speak with a call centre which directs the query. This is a big contrast to the personal service one receives in small business. Sure Staples is a huge retailer compared to, say, a newsagency. However, Officeworks, their Australian comparison, competes with us in the suburbs for stationery business. I am sure they will continue to hunt down ways they can cut labour costs – such as this video agent customer service station. Hence the importance of us concentrating on live in the flesh customer service.
We promoted Family History magazines at the counter of our Forest Hill newsagency at the weekend. This is a category rarely given any attention here. In the UK, the interest in family history appears to be huge – many newspapers have given away free software and content CDs to drive sales. Our very basic display delivered excellent results on the weekend, showing that even a small interest category can work at the front counter.
It was a grave move to delay publishing New Idea for a day. I understand the importance – the Jolie-Pitt twins photos would not be worth as much if published next week. In our newsagencies more than 50% of sales are on the Monday. Sales data I have seen suggests that the decay is not as sharp in supermarkets and convenience outlets. It will be interesting to see of the people looking for the title today do come in tomorrow.
As the photo shows, we have moved OK! Australia to the New Idea position.
Father’s Day is a season around which newsagents can choose to shine. I know from Hallmark market research that our the newsagent retail network is a popular destination Father’s Day and other seasonal cards. We need to make the most of this popularity, not only in the card category but in allied categories.
Father’s Day 2008 is our opportunity to shine. Here are some tips which can help you make the most of the season starting from today:
It is not enough to replace some lifestyle or other cards with Father’s Day and hope for the best as newsagents often do. This season is an opportunity for us to choose to shine and chase sales growth. Newsagencies which outperformed others last Father’s Day were those where the season was actively promoted.
Magazine publishers appear to be reacting to mygazines.com just as music publishers reacted to Napster.
I received a call yesterday from a newsagent who had not stopped the direct debit arrangement for the Bill Express equipment because of advice from the Australian Newsagents’ Federation. She rang me after reading the advice from the ANF three days ago that newsagents suspend the direct debit arrangement. She was in tears at what she calls at least two months of “lost” payments. As she explained, the two months payments was more than a year of ANF membership fees.
Her story is not uncommon. She went into Bill Express on the advice of the ANF and, in her words, has always done what they told her.
In a business with annual sales of $345,000 and a net profit of under $20,000, the $6,534 a year in Bill Express equipment rental fees for no return will be a huge cost. This is why she was in tears. As she put it to me, had she ignored the advice of the ANF and listened to other newsagents she would have stopped the direct debit earlier and saved, maybe, two months of payments.
My caller told me that when she spoke to the ANF twice about this they were adamant that she should continue to pay for the equipment and that they had legal advice newsagents should do this. She tried called the ANF Friday but could not speak to anyone who knew why they changed position.
My understanding is that the ANF did not receive any different legal advice before it revised the advice it provided newsagents on Thursday to “suspend” direct debit arrangements for the Bill Express equipment. I hope I am wrong and that the Board issued the changed advice based on new legal advice and not political expediency.
While some on the Board will not like this blog post – it is more of the “third party commentary” they criticised on Thursday – the questions I post warrant answers. Did the Board get new advice? If so, what are the details? If not, why did the Board take the u-turn on Thursday and why not sooner? It would appear that the ANF Board has misjudged the mood of their constituency on the Bill Express matter. The Chairman said most West Australian newsagents were not affected when he spoke to a group of newsagents in Melbourne earlier this week.
I know I should welcome the u-turn by the ANF and focus on next steps. The call I received yesterday does not permit that. While I get calls about Bill Express daily, yesterday’s was highly emotional. The cost could lead to the owner shutting the business and walking away such is her trauma of the financial situation and being let down. I felt helpless in listening to her situation.
I have told people at the ANF and at VANA of these calls. Others have told them too. Many newsagents cannot afford to have to pay for equipment from which they can achieve no return. They feel let down for having been told that Bill Express by organisations they trust only to find that those organisations had not done their homework.
Hopefully the ANF will better explain its advice this week and ensure that its staff are well equipped to explain this to callers. Newsagents need certainty. They also need to know that their national association has empathy for their position.
What has happened to newsagents over the last few months with Bill Express is a crime. Newsagents need to see justice pursued by ASIC, the ACCC, the Administrator and any other avenue so that the closure which is important to victims of crime can be achieved.
Tower Systems has a stand at the Reed Gift Fair in Melbourne this weekend and through until Wednesday. If yesterday was anything to go by it will be a ripper of as success. While we are there primarily to talk to gift shops about our software, we have met with plenty of newsagents already.
A couple of newsagents I talked with yesterday made the same observation – this is the kind of fair newsagents should attend as they will see product here they will never see at a newsagent trade show.
It’s great to see so many newsagents researching the gift category. Given the size of this fair it would be hard to come away without any new products to try. While I was at the our part of the Fair yesterday I saw several suppliers offering product which I’d like us to sell in our newsagencies.
To walk a show this size properly will take at least two days. Thankfully, we have several on the team for our newsagencies and gift shops to cover the area. From what I saw yesterday there is plenty of new product and some excellent deals.
What is it with people talking Intralot down? Several media outlets have been talking Intralot down this week and some newsagent suppliers are weighing in with their doom and gloom stories as well. My experience is that these commentators are ignorant. I would judge the introduction of Intralot as a success.
While it has was a bumpy start, each day has improved. To get a 700 retail point network running in a few weeks is a good effort. And, no, I have no deal, arrangement or anything else with Intralot!
At Forest Hill, where we have Tattersalls, Intralot scratch tickets sales are up 25% on Tattersalls scratch ticket sales for the same month a year earlier. Even after accounting for overall store growth, the Intralot scratch ticket result is excellent. The online games are well on the way to replacing the revenue from games Tattersalls lost.
At Frankston and Watergardens, locations where we did not have any soft gambling product, scratch ticket sales are very good and the online product slow. I am confident both will grow as our team in each store becomes more familiar with the gambling category, the games and we better fit the offer in the businesses.
I have taken the view that Itralot did not create this situation. The State Government did. As for Tattersalls…
