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

Author: Mark Fletcher

More on Irish newsagents losing newspaper home delivery

Roy Greenslade makes sense in his blog post at The Guardian about the decision by the publisher of the Belfast Telegraph to take home delivery away from newsagents in response to a dramatic sales fall. Newsagents aren’t the cause of the problem. The publisher is responsible on a range of fronts.

It is great to see someone of Greenslade’s stature get behind the story and defend newsagents.

Are we really to believe that newsagents in Ireland’s northern six counties are solely, or even mainly, responsible for this dramatic decline in the fortunes of a paper that was selling more than 100,000 copies on weekdays five years ago?

Beyond this Irish issue, however, is Grenslkade’s veiw of UK newsagents. It is something Australian newsagents ought to read. Sure we take comfort from the fact that the UK market is different to ours. The reality is not that different that we can ignore what has happened to independent newsagents in the UK. Check out Greenslade’s opening paragraph:

Newsagents across Britain have been closing week by week for years, succumbing to a long-term trend that has seen the gradual disappearance of the economically unsustainable corner shop. Meanwhile, supermarkets have been supplanting them as the major retailers of newspapers.

Gulp. Did he really write that? Isn’t is heresy to put this view in front of newsagents. Don’t we want to believe that none of this will affect us? Yes, yes and yes.

Read the whole piece – you’ll understand why I bang on about the Newsagency of the Future and why I have been so interested in the demise of Kleins and other business models which have not been refreshed.

Roy Greenslade is someone I would have on a panel here in Australia to debate the future of our channel. His perspective on the future of our core products of newspapers and magazines could wake us from our slumber.

My original blog post on the Irish issue can be hound here.

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Newsagency challenges

Refreshing ink and toner

ink_fhn.JPGWe refreshed our Hot Ink ink and toner offer at Forest Hill last week, taking every product down and rebuilding the display and allocating position based on sales by brand. Nothing new in this, it’s smart retail. The latest Hot Ink flyer we have sent to thousands houses around our centre is driving excellent sales. Ink sales are growing well and, as I have noted here several times, are very efficient and profitabel.

This two metres of slat wall is the most profitable space in our broader stationery offer. Ink sales are up yet our stock investment is down – this is achieved thanks to good use of smart technology.

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retail

The Bill Express UAE connection

For information on Bill Express’ UAE connections, check out the iPay website.  Navigate to strategic partners and read about Bill Express:

Through our Bill EXPRESS® and DialTime® operation, the company owns and operates one of Australia’s largest electronic retail distribution networks.

Over the past 6 years Bill Express has established a robust and proven electronic network of nearly 14,000 terminals throughout Australia generating a revenue exceeding $1 billion.

I am not sure that newsagents would say the Bill Express network is robust, certainly not since late last year.

The iPay website also lists the troubled OnQ as a strategic partner.   OnQ is a substantial shareholder in Bill Express and the holder of the “technology” on which Bill Express is based.

Click here to read the press release announcing the iPay joint venture developed out of Vodatel.

My speculation is that parties associated with iPay are the parties who acquired shares in Bill Express within the last year.  If the reports of Bill Express CEO Ian Christiansen traveling to the UAE are accurate, I would expect him to be seeking more funds from his shareholders there.

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Bill Express

Memo tattersalls: I give up

Tattersalls has hand delivered a letter today breaching me for pormoting Intralot in space I have used for eight years to sell magazines and confectionery.  They have given me two days to remove the Intralot terminal.  They have also advised that my comments here are a breach of mny Tattersalls.  It seems the company is scared of my having an opinion and being public with it.

I give up.  The Tattersalls gorilla wins.  The Brumby State Government has been no help.  The office of the Small Business Commissioner has been no help.

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Lotteries

Bill Express in The Age again today

Mark Hawthorne nearly brings together the current situation regarding Bill Express in a good report The Age today. His report includes a reference to the meeting we held in Melbourne Thursday last week where attendees representing 70 newsagencies voted to add their support to the class action already on foot. At least 100 more newsagents who could not make the meeting have agreed to support this class action. There is a meeting of newsagents in Queensland to discuss the where they lodge their support.

Outside of the newsagent class action, anyone looking at the Bill Express business needs to carefully research the current revenues from all parts of the business.

  • My information is that at least 30% of mobile recharge business is now being conducted by providers other than the Bill Express Dialtime operation.  While margin on mobile recharge is slim for the company, every retail location lost is a significant bottom line hit when annualised.
  • Liabilities are growing at a concerning rate.  Take Bill payment revenues – newsagents had their commission of $1.00 unilaterally cut in February by 30%.  They were promised that this 30% would be spent on advertising.  So far, we have not seen any spend on advertising.  Five months on and the liability is significant.

Given the reports of Bill Express Director Ian Christiansen flying our to the United Arab Emirates I wonder is this is to meet with parties associated with an existing shareholder in the business and licencee of the Bill Express “technology” for that region. I’d be surprised as being caught once ought to be enough.

The coverage by The Age these past two days is excellent.  They are drawing public attention to a problem which has been concerning newsagents for years.

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Bill Express

Kleins and the brand makeover

Newsagents ought to read page 58 of the Australian Financial Review today.  The article by James Stewart is relevant to the retail newsagency offer.  This topic is close to my heart as it relates to the content of my Newsagency of the Future workshop I presented at the recent ANF Convention.  The need for reinvention of our retail offer is urgent and ought to be pursued by us individually and collectively.  Look at what happened to Kleins.

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Newsagency challenges

Educating customers

ilot_scren.JPGIntralot has started its TV campaign based around the theme of the luck factory. In-store, they are using the LCD screens to educate customers about their new games they launch July 1. I am pleased to see such good use of the LCD screen – they add to the theatre of retail. All of this activity is exciting and will refresh interest in lotteries as a result

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Lotteries

Healthy Food promotion

healthy_food.JPGHealthy Food magazine is our counter offer this week – despite receiving no marketing collateral.

With sample bag packed with more than $10 worth of products, promoting Healthy Food at the counter makes sense. I’d expect us to sell out by the end of the week.

I can’t stress enough the economic value to our business of this small counter space allocation for promoting magazines with good giveaways.

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magazines

Filling the AWW space

aww_sell_out.JPGWhile selling out of the Australian Women’s Weekly is welcome, we have scrambled to find appropriate titles to fill the space.  AWW is usually in the column next to Woman’s Day.  We have called on Oprah, Woman & Home, SHE, Good Housekeeping and Women’s Health to do the honours – we feel they best suit the demographic.

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magazines

Cut and run by Brumby Government

fh_counter_june08.JPGThe Victorian State Government continues its cut and run strategy on its changes to over the counter lottery products. Their lack of genuine engagement in navigating the resulting changes is disappointing. I have written to the Minister for Gaming twice about unreasonable demands by Tattersalls regarding space allocation. The Minister has ignored my letters yet he has sent another form letter to all lottery outlets pointing us to the office of the Small Business Commissioner.  I have written again this morning.

A better approach would be to demand Tattersalls stop sending threatening letters to its retail network, require a moratorium of, say, six months and establish a commercial approach to resolving counter and other in-store space allocation issues.

If my moratorium approach is adopted, I could promote and sell Intralot and Tattersalls products as I choose – see the photo – and then be judged by resulting sales. If my Tattersalls sales are down compared to other outlets then I’d need to to what Tattersalls says. If, on the other hand, they are on par or up, I am left alone to run my business.

I have written to the Minister again this morning as well as Tattersalls and then SBC. With seven days to go and a legal threat from Tattersalls someone needs to step in and help my and others in my situation.

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Lotteries

Bill Express further exposed

The Sydney Morning Herald has a good report on the Bill Express situation this morning. The Age has a smaller report. The reports miss these details:

  • Bill Express unilaterally changed contract terms for its 3,500 small business newsagents, resulting in most facing an additional $495 (+GST) a month in costs to offer the service.
  • At least one company housing staff which provide IT services to Bill Express has gone into liquidation and another started in its place with less then half the staff. It has been reported that the staff not taken up by the phoenix business were not paid redundancy payments.
  • Newsagents have commenced class action against the company having notified them ten days ago that they are to be a respondent in a planned Federal Court action.
  • The Bill Express liability to newsagents is growing at the rate of more than $1 million a month.
  • The mobile phone recharge component of the Bill Express network is a day to day proposition with out of socks occurring every couple of days either network-wide or significant pockets.
  • The data room referred to in both reports was established by the business seven weeks ago.
  • The ANZ, somewhat cynically I suggest, doubled its eftpos break fees shortly after Bill Express got into trouble -my speculation is that they wanted to stop newsagents migrating to other eftpos providers.
  • I estimate that one third of Bill Express phone recharge revenue has moved elsewhere – ePay, Comm Bank Xpos, Suncorp, St George and our own eziPass.
  • The national newsagent association, the ANF, stood by and let Bill Express get to this point because it contracted away its rights to act as an association for its members in return for around $200,000 a year in fees from Bill Express.
  • Bill Express did a deal with Swish group over the advertising screens in newsagencies – after it took away from newsagents the”guaranteed” funding which underscored the economic value of the screens to newsagents.

Now that the Bill Express story has hit mainstream media I expect to see quick action around the future of the business.

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Bill Express

Marketing 101

I am often asked by newsagents where they can access good training in marketing without signing up for a long course. While there is no fast way to develop good marketing skills, I have found an online marketing course, Marketing 101, at Smallbizu which looks good. It’s free and from what I can see provides a good grounding in marketing principles. I especially like the structured approach it takes to preparing a marketing plan.

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marketing

Free digital magazines

Texterity has announced the launch of a new magazine service making free digital editions of magazines available for subscribers of the companion print product.  This is an interesting move on several fronts: it sets FREE as the price point for digital editions of magazines, it subtly invites print consumers to migrate online and helps find new online only subscribers.  The cloverleaf site (that’s the name of the service) lists a bunch of magazines already participating.

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magazines

Traffic from a story in The Age

age_june21.JPGOur Sophie Randall shops were featured yesterday in the Domain section of The Age, in a report about the popular Cow Parade range.  The first we knew about the coverage was when customers visited our Melbourne Central location asking about our cows.  Their seeking us out as a result of the story is  reminder of the value of editorial coverage in newspapers.  We are thankful to Jasnor, our supplier of the Cow Parade range for pitching the story to The Age.

At the local newspaper level, newsagents have many opportunities to provide story ideas to editors: events in store, unique products, community support.   All it takes is a phone call or a good press release.

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marketing

Tattersalls claims Quick Pick

Tattersalls has claimed that it owns the term Quick Pick meaning that Intralot has had to ditch tonnes of printed material and come up with a new name.  While we will work hard to pitch their Lucky Pick to customers, customers will call it what they will.  If it catches on, customers wanting a Tattersalls product could ask for a lucky pick, now that would make me smile.

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Lotteries

Swish group and newsagents

be_screen2.JPGI bet newsagents have not heard of the Swish group.  This public company, SWG on the ASX, claims newsagencies as part of their retail signage network – see their May 2008 shareholder update.  Bill Express announced an agreement with Swish on April 28, giving Swish control of the advertising screens in newsagencies.  In February, Bill Express removed the $210 a month rebate which it had reviously guaranteed to pay newsagents in return for having the screen in their stores.

I wonder if Swish needs to make an announcement to the ASX about the Bill Express situation. I hear that many screens in newsagencies do not work and that where they do, many newsagents have them turned off because of their issues with Bill Express.   I do not plan to turn my screens on until Bill Express addresses my concerns over their breach of agreement relating to the “guaranteed” $210 a month they would pay per store.  Not that it matters in one of my newsagencies as the screen has not worked for months.

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Bill Express

The Bill Express liability

I estimate that newsagents currently ‘owe’ somewhere between $15 million and $20 million to Technology Business International for the equipment used in-store for the Bill Express Dialtime bill payment / phone recharge service.

Most newsagents entered into their lease agreements for this equipment expecting that they would never have to pay the lease costs thanks to rebates offered by the company.

The removal of the rebates by the company in February left newsagents out of pocket for the fees for the first time. hence the interest in the network wide ‘liability’.

I wonder how this all plays out when the future of the company is being considered. While Bill Express probably unlocked the total value of the lease early on, I would not be surprised if there was some liability from the company to the financier in the event of a mass newsagent revolt or some other issue around the monies being paid.

$15 million to $20 million is an amount newsagents cannot afford to lose. This is why I support Federal Court action to challenge the actions of the company and others which has left newsagents in this precarious position.

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Bill Express

Promoting the Who Pantene offer

who_pantene.JPGWe are promoting the Pantene giveaway with Who this week. The offer is excellent but the point of sale material light on so we created our own to make for (we hope) a better display. We would have displayed this at the counter but that space is supporting the In Style giveaway.Magazine giveaways are important in driving sales. The key is to not become too dependent as has happened in the UK with Sunday newspapers. This Who offer fits their demographic and will be a great success.

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magazines

The dying CD

Death knell sounds for CDs published by The Globe and Mail in Canada is a story worth reading.  The opening two paragraphs offer chilling reading for any music retailer.

The compact disc has less than three years left in its reign atop the music industry in Canada, with new data on music sales indicating the download will officially be king by 2011.

Physical music distribution, defined largely by the sale of compact discs, is eroding faster than expected, while online music is growing quickly, says a report published Wednesday by PriceWaterhouseCoopers LLP.

This is a story not just about music.  It is about smart always-on devices, the desire for specific content rather than aggregated content and the elimination of old world supply chains.

While it sounds like doom and gloom, it is as much about opportunity.  It relates to newsagents as much as music retailers.

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Media disruption

Good and bad bagged magazines

bagged_mags.JPGSome publishers handle bagged magazines better than others as the photo shows.

The folks at Fast Car have included their masthead on the bag whereas the folks at APC have hidden the masthead and made picking the title more challenging.

Fast Car in this packaging has a quality feel. Also, the information on the bag makes it less likely to be ripped open. APC feels cheap. The lack of detail on the bag makes it more likely to be ripped open.

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magazines

Last Wednesday Tattslotto

last_wednesday.JPGAt Forest Hill we are getting behind the last Wednesday Tattslotto draw this coming Wednesday, June 25. We are promoting that there can be no jackpot, the prize pool must go. The focus of our locally produced marketing is our house syndicates which we have created just for the occasion. This, coupled with Tattersalls provided material will drive good sales.

Embracing the final draw as we have allows us to talk about the changes coming July 1 when Intralot games start.

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Lotteries
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