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

Author: Mark Fletcher

Why margin matters to newsagents more than ever

The thread on the Wrapaway margin cut for NSW/ACT newsagents includes a discussion on the broader issue of fair pay for service.

Our channel had its origins in Victoria in the 1800s as an agency model. I suspect that margin control had something to do with that. The agency model through last century and even into this century has been maintained for origin products like newspapers and magazines and more recent categories such as lotteries because, again, it offers the best way for suppliers to manage margin.

With many newsagents experiencing value from more commercial arrangements it is no wonder there are more fired up today when they experience disrespect from suppliers when it comes to margin.

Our businesses exist in a traditional commercial world. Our business overheads are set by commercial terms, tied often to performance of the economy outside of our small businesses.

Seeing agency suppliers push effective margin for retailers of their products in the opposite direction of economic factors intensifies the financial harm to businesses that stock them. This is an issue only with agency lines as they are the ones newsagents tend to want to keep and it is this desire that agency product suppliers leverage when they make decisions that disadvantage newsagents.

What has changed is that there are more newsagents now who care less about agency lines, there are more newsagents prepared to ditch agency lines rather than having to fight the fight to maintain a low and disrespectful margin.

Newsagents are finding their feet to make a stand on margin. As their businesses are confronted by disruption from the move online and more competitors stocking agency products, it stands to reason that they look for more equitable relationships. No longer are they prepared to let agency suppliers dictate take or leave it terms.

The Wrapaway decision to slice margin in half saw swift responses by plenty of newsagents. The company responded saying it needed two weeks to work on an alternative. Other suppliers need to take note as I suspect newsagents will react similarly, even with the small downward margin creeps driven by the newspaper publishers and the effective downward margin creep driven by magazine publishers who stifle needed cover price increases.

Experience is giving newsagents more confidence and power. It is good to see them exerting it.

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Ethics

Australian made sells

This Proudly Australian Made shelf-talker, in the card department, attracts shoppers, it starts conversations and brings appreciated comments of kudos at the counter. The artwork is smart and noticeable.

This Australian made pitch works in other parts of the business too, which feeds into social media messaging. It is topical.

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Greeting Cards

How is the News Corp. managed delivery of Ovato product going for you?

Here is information from one newsagent about their experiences with News Corp. delivery of magazines for Ovato:

  • Thursday, July 2:  We arrived at work 1 hour before we open as we do every magazine day to enable us to process the magazines and have them on the shelves before the customers arrive. No magazines. We eventually tracked them down to the News Limited depot, from where we picked them up ourselves.
  • Monday, July 6: No magazines when we arrived at work. We eventually located them, they were on the supermarket run and thus did not get them until 2pm. Yes, 2pm.
  • Thursday, July 9:  The same as Monday we thought they had sorted the issue but not so.
  • Monday, July 13:  We received our key parcels – they were on the newsagency run but our bulks New Idea, Woman’s Day and TV week were on the supermarket run.
  • Thursday, July 16 (mid morning):  Have been informed they are again all on the supermarket run.

I have had several newsagents call upset at the situation, upset at the anger from customers, upset at now being able to run they business they want to run, upset at the lack of communication from News Corp and set at the disinterest from Ovato.

This is a mess made by Ovato and News Corp. They are killing interest in magazines through this change and no one seems to care.

If they have the excuse of teething problems, I would reject that. They had time to get this right.

If they have the excuse of others are not affected, I would reject that as it would be a stupid excuse.

If they have the excuse of we are sorting it out, I would reject that because this should never have happened.

The poor management of the change by Ovato and News Corp. is costing newsagents time and money, it is impacting their mental health. yet, neither Ovato nor News Corp. is offering any support or assistance to the newsagents affected.

The other question is where are the magazine publishers in this? It is their product that is not reaching newsagents on time. Maybe they don’t care as long as supermarkets get their stock on time.

This is an own goal by all involved. Newsagents and their customers are the victims.

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magazines

Reuters: Rupert Murdoch’s big investment headache: Australia

This report by Byron Kaye, Rupert Murdoch’s big investment headache: Australia, which dropped at Reuters yesterday makes for a fascinating read.

SYDNEY (Reuters) – The birthplace of Rupert Murdoch’s media empire, News Corp’s (NWSA.O) Australian business, is shaping up as a trouble spot for the global firm, following a billion dollar writedown and a move to stop printing more than 100 regional newspapers.

People interested in print media in Australia should find the article interesting regardless of your views of the Murdoch controlled company. The report has been widely shared on Twitter since its release yesterday. Here are some of the tweets where a link to the article was shared:

  • News Australia dinosaur drag on whole company…Reuters.
  • analysis of why the short sellers are moving in on the Murdoch empire. #auspol
  • Newscorp the most shorted stock in Aust says Reuters. “Rupert Murdoch‘s big investment headache: Australia”
  • “I’ve had a view it’s worth nothing for a long time.” Death rattle.

Yesterday, Crikey published a report by Christopher Warren on the closure by News Corp of a printing plant in Queensland. This, too, is worth a read.

As News Corp closes down more printing presses, it threatens to lock out new players.

Australia’s press took a big step this week in its decades-long journey from venerable manufacturing process to nostalgic metaphor with the accelerated closure of those production plants where newspapers are — or were — printed.

The resulting consolidation will see News Corp making a further change, reducing the size of its metropolitan papers to the shorter size technically-known as the “bastard measure”, beginning with The Courier-Mail.

…

The Yandina press will use a single press to print the company’s remaining south-east Queensland papers — The Courier-Mail and Sunday Mail, the Gold Coast Bulletin and the Toowoomba Chronicle. It will also print local copies of The Australian, The Daily Telegraph and Nine’s The Australian Financial Review.

There’s form here that will concern independent publishers. When Horton Media, Queensland’s last independent printer, closed two years ago, some small independent papers had to shift printing to Sydney and truck their copies to the state due to local capacity constraints. Fairfax’s print plant at Ormiston (and in NSW’s Hunter), closed the same year as part of a printing and distribution agreement with News Corp.

This is all part of the disruption. newsagents, as we have seen in recent weeks, will get caught in the changes, left without papers, left dealing with angry customers. Communication from News Corp has been and continues to be appalling. It is a selfish company with a history of bullying small business newsagents. Top be fair though, plenty of newsagents have willingly made themselves available for this.

From the perspective democracy, we have to hope that there are more genuinely independent news outlets and that they have more journalists asking tough questions of politicians from all sides. The current concentration of news outlets in Australia is unhealthy for democracy. You only have to look at the biased Daily Telegraph.

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Ethics

Opportunities for newsagents in the cancellation of gift fairs

With the Reed gift fairs cancelled, more suppliers are keen to connect with new retailers in different ways. They are also keen to connect with retailers outside of their usual retailer channels.

Those with stock certainty in the back half of this year that they need to clear are especially keen.

I am seeing suppliers who would not usually connect with our channel, even with highly evolved gift and homewares retailers in our channel, pitch to newsagents individually and through some of the groups.

This is a good trend to see as it will further break down the borders between channels. Newsagents will, overall benefit from this while some could lose business as traditional Newsagency suppliers also trade more outside they channel as they, too, seek growth.

In a related topic, it is terrific seeing more suppliers engaging with Zoom and other platforms for virtual showroom tours and mini supplier / retailer conferences.

How we do business has changed for the long term and through this those doing well and those leveraging new platforms and skills for safely transacting business.

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Newsagency management

Palace papers promotion

Placement of this issue of The Australian Women’s Weekly at the counter as the palace papers story is top of mind is tactical and smart. Regardless of where you stand on the issue, the Queen was involved at the time and in seeking to block access to the papers.

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magazines

Victorians showing signs of understanding the need to socially distance

The second lockdown in Victoria a week old and we can see that people are reacting to it. They are distancing more carefully and shopping less for non-essentials. Malls across Melbourne are all but empty. Even supermarkets in malls have been hit – harder than in the first lockdown. On the high street, for essential businesses there is a business as usual, but safe, feel.

After talking with a range of retailers and looking at sales data, I put together these trend notes for retailers in my POS software company community. I share it here as some insights may interest:

Here are trends from the latest Victorian lockdown:

  • Relaxing products. The jigsaw surge from March and April is back but in an expanded form – adult colouring, art and craft, journaling, cross-stitch, knitting, games and art. Smart retailers are selling these items as well as offering customers opportunities to connect with others doing this.
  • Nesting. This category is surging not only in Victoria but nationally. Nesting includes candles, diffusers, essential oils, rugs, cushions, homewares, pets, cooking and related.
  • Tactile products. We have seen a surge in cuddleable (not a word I know but it best describes it) products. This segment includes plush and other soft toys, pets, rugs, blankets, pillows and similar. With touching and hugging discouraged, it stands to reason that people seek out alternatives.
  • Easy shopping. We have seen retailers gain sales by making shopping easier through packaging items often bought together and having these placed front of store and at the counter.
  • Postable gifts. People are loving that they can easily send a gift to people they are unable to see.
  • Working from home. For some, this is now a permanent arrangement. Many retail channels have offers they can make to those working from home and businesses with employees working from home. The opportunities are usually broader than retailers think.
  • Contactless retail. Having the EFTPOS machine shopper facing and situated for easy tap and having in place arrangements for the lowest cost possible to the business for EFTPOS.
  • Online. Having an online offer matters. While people like the safety of having goods shipped, they also like click and collect and they like to use the website to ensure you have something in stock before they visit the shop.
  • Online events. More retailers are hosting events to show off new products and offer education –  Zoom, Facebook live and similar events. Unboxings, educating on new products meet the maker and more.
  • Christmas has started early. Yes, we are seeing Christmas purchases already in businesses that are offering Christmas stock.

While the pandemic has disrupted business, in that disruption are opportunities. The Victorian situation is a reminder that disruption is not temporary. We think history will show that winners will be those businesses that adapted early and were able to finesse their offering and processes as the market demanded.

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Newsagency management

The value of being online

Being online with the right product and the right mix of purchase options can deliver sales like this one, $1,082.99, at 7:48am yesterday, Sunday, on a day the store connected to the website is closed. This was one of 5 sales in the day for the store, $2,000+ in revenue, which the shop remained closed. Every sale above 50% GP.

This website, like all websites I have been involved with for my shops and others connected to groups of newsagencies, the online pitch is not through a newsagency related shingle. I think this matters. Indeed, the most successful online pitches are through either a known product brand or a widely loved product category.

Newsagents can sell online and doing so successfully can help you adjust physical store operations to be more overhead cost efficient.

The key thing to understand about what you an do online is … the only barrier is you and what you think you can and cannot do.

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newsagency of the future

Newsagents face a 50% cut to margin following News Corp. fee hike

Wrapaway, a niche magazine and newspaper distributor, late yesterday wrote to NSW / ACT newsagents advising them of a cut to their commission (gross profit) from 25% on their titles to 12.5%. Their letter to newsagents explains that the move has been brought about by a 500% increase in what News Corp. charges them to deliver their product.

This is another of many changes in the News Corp. that are impacting and will impact newsagents.

The challenge for impacted newsagents is when is it too much, when do you quit suppliers. While financially  such a move may make sense, when it comes to niche titles, such as foreign language titles, you may accept a reduced margin to maintain your specialist status.

The other options of course, is to increase the cover price.

If the Wrapaway letter is accurate and News Corp. has increased their charges by 500% the company needs to fully explain the basis for this increase, it needs to prove that such an increase is necessary.

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Ethics

Sunday marketing tip: use products to speak for you

This iconic jigsaw at the front of the shop in Victoria makes a timely and powerful statement right now.

While the image on this jigsaw represents a message from another time, the simple words resonate today. I was at the shop Thursday and heard a couple of customers comment positively about it. It reminded me that sometimes products can be a better advocate than pretty signage.

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marketing

Advice for newsagents confronting another lockdown

Based on what we have seen over the last few days in Victoria since the government announced a second lockdown, people are nervous. While the news reports show empty toilet paper, pasta and baby formula shelves, it is more than this, people are distancing again and they are touching products in-store less. So, it’s back to basics in retail, back to what we know is important:

  1. Show that your shop is clean, safe and easy to shop. Uncluttered, easy access is key to safe shopping.
  2. Have hand sanitiser at the entrance and at the counter with a sign encouraging people to use it.
  3. Encourage staff to wear face masks. This helps set the tone for safe shopping. I saw first-hand the value of this on Thursday. In an area serving older customers it was appreciated.
  4. Ensure the counter is setup for safety of staff and customers.
  5. Have suggested product packs ready to purchase easily – as appropriate to your business.
  6. Offer curbside pickup.
  7. Offer home delivery where possible.
  8. Be positive in-store.
  9. Be positive on socials and on the front foot. This is your opportunity to be clear with o=your messaging outside the business.
  10. Bring to the front of the store things that were popular during lockdown. If appropriate to your business: jigsaws, books, adult colouring books, activity sets, knitting / crochet / craft packs, music, art supplies, home nesting products and tactile products for kids.
  11. Clean regularly and let people see you doing this.

I get that this list is common sense. I mention it as a reminder.

Part of what has happened in Victoria, I think, is complacency within the population due to people thinking we were through it. This has been encouraged by some media reporting on top of corona fatigue. Indeed, some in the media and some politicians have driven the push to get back to normal with dumb Dictator Dan headlines and labels.

As an employer my my primary interest in the shops is employee health and safety. This is why I have taken a strong position on face masks. I am grateful to have a team that gets it.

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Newsagency management

Newsagency businesses selling

Newsagency businesses are selling through the covid challenges. While retail businesses in some other channels are not selling, newsagency businesses are selling and some have sold quickly, in a week or two of going on the market.

This is good for the channel. The number of buyers looking speaks to how the channel is viewed as an investment opportunity.

I have heard of a couple of instances where the purchasers were able to obtain bank finance, too, which is a nice shift from recent times.

Being essential through the pandemic is helping to reset how the channel is viewed.

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Newsagency

How UK newsagents have been helping their local communities through covid

This is a terrific news story from the UK about how UK newsagents have been helping their local communities through covid:

Newsagents have played a crucial role in their local communities during the coronavirus pandemic, from ensuring residents can get their daily news fix to keeping emergency stashes of toilet paper behind the till for customers unable to get their hands on any elsewhere.

Yet unlike many other essential workers who have, rightly, been praised for keeping the country going during the hardest of times, the contribution of newsagents has been largely overlooked.

As fears about the likelihood of a Covid-19 outbreak in the UK spread prior to lockdown, many shoppers who had previously bypassed their local newsagent in favour of the larger supermarket chains started dropping into convenience stores closer to home in order to avoid the crowds in towns any city centres.

…

Some newsagents have gone to great lengths to help customers and their local community during the pandemic.

Asiyah and Jawad Javed, who run the Day-Today Express store in Stenhousemuir, Falkirk, have given away hundreds of free Covid-19 hygiene kits to elderly and vulnerable people in their area to help to keep them safe during the public health crisis.

The kits include antibacterial hand gel, sanitising wipes and facemasks, and have cost the business more than £4,000. The couple also offered free delivery services for any residents unable to get to the shop.

What a great story!

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Social responsibility

Magazines worth promoting right now

Plenty of magazines are worth promoting right now given the unique circumstances of this point in 2020. Food titles, of course, as well as craft, crossword and hobby titles.

This create and decorate one shot from Bauer is an easy pitch with crafting currently popular in homes around the country.

I only rarely pitch magazines on social media as I’d rather attract shoppers for higher margin and stickier products. However, these days are different.

With Spotlight and other craft related businesses experiencing a huge sales surge, magazines like this can give us some connection to the opportunity.

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magazines

Victorian shops closing, again

I was in a couple of Victorian shopping malls yesterday and plenty of stores in those malls were already closed for the lockdown – jewellery, clothing, services and some gift.

Of the gift and related businesses that were open, in more than usual there were sales on – 20% through to 50% off. One national brand franchise gift business had everything in-store at 20% off with the look of quitting the centre.

Shopper traffic was down by, I am guessing here, 75% – based on people I saw and based on car park emptiness.

Out on the high street, from those I spoke to who were open, it was business as usual.

Looking at my own businesses in Westfield centres, yesterday we were down by 25%. I expect the decline to be greater today and into the weekend. What is interesting this time around is that card sales have not collapsed as they did in the early days of the first lockdown.

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Newsagency management

Melbourne 2020 Gift Fair rescheduled to 2021

Reed just issued this statement:

An Important Update From Reed Gift Fairs

Reed Gift Fairs would like to express our ongoing concern for everyone impacted by Coronavirus.

After closely monitoring the rapidly escalating situation in Victoria and following the State and Federal Government directives, we have made the decision to reschedule the upcoming edition of Reed Gift Fairs Melbourne to 2021.

Reed Gift Fairs Melbourne will take place at the Melbourne Convention and Exhibition Centre from 31 July to 4 August 2021.

We are in unprecedented times and continue to witness first-hand the challenging impact of COVID-19 on all industries, both professionally and personally. Prior to the recent escalation of COVID-19 in Victoria, we were optimistic that Reed Gift Fairs Melbourne would run safely and successfully in October this year, and our principle focus was on ensuring that the rescheduled dates were ideally positioned to support our community. However, following consultation with you, our customers, and all other stakeholders, we have concluded that the best option is to refocus on maximising business opportunities for wholesalers and retailers in 2021 at both Reed Gift Fairs Sydney (February, ICC Sydney) and Reed Gift Fairs Melbourne (August, MCEC).

We appreciate that this is disappointing news, however we have made this decision with everyone’s health and safety as our number one priority. We can now look ahead to the 2021 editions of Reed Gift Fairs in Sydney and Melbourne with more certainty.

We will continue to do our utmost to help all our customers, partners and attendees to prepare for the 2021 events. While we are disappointed that we are unable to meet face-to-face in Melbourne in 2020, we remain committed to keeping Australia’s vibrant retail community connected over the coming months.

We once again thank all of our exhibitors, visitors and partners for their encouragement and support during this challenging time and we apologise for any inconvenience that the rescheduling to 2021 may cause. We look forward to Reed Gift Fairs in both Sydney and Melbourne returning next year with even stronger events.

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Newsagency challenges

Fascinating Wednesday as Melbourne prepared for lockdown

The sales of toys, games, plush, cards and nesting (candles etc) surged yesterday, Wednesday, in Melbourne as the city prepared for lockdown.

In my own experience, sales more than doubled in these and some other categories as people stocked up. The surge was greater in shopping centre businesses than on the high street – I suspect because shoppers expect the shopping centre businesses to close.

the card result was particular interesting. It said to me that people understood what was coming and that they wanted to ensure they had birthdays etc. covered through lockdown.

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Newsagency management

UPDATED: state and territory covid grants

This is an up to date (as at July 7, 2020) list of state and territory government Covid related grants. There are some new opportunities in this mix. Click on the state / territory name for their landing page. Then, where possible, I have links to specific current grants.
Do your research as to eligibility. If you are eligible, do it now as waiting could see you miss out and there will be no point complaining then.
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Newsagency opportunities

Bauer launches new TVC promoting magazines

Bauer today launches on the 7 Network a new TVC pitching magazines: https://f.io/8gpyUtcH

‘The little things’ will run on the 7 Network from today as a 4-week campaign through to early August. Across the 4-weeks our investment will see more than 360 spots run – booked in as a 70% peak split. Highlighted programming includes Big Brother, Home & Away, Seven News, Sunrise, Night movies.

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magazines

April – June newsagency sales benchmark study under way

I am collecting basket data from newsagents for an April – June 2020 compared to April – June 2019 newsagency sales benchmark study.

I already have data from seventy stores and am hoping for data from another 50 at least.

My goal is to have the data collated and assessed early next week.

based on what I saw for May 2020 compared to May 2019 and May 1 – 30  2020 comp[ared to April 2020,l I anticipate seeing a strong result from regional and rural Australia and a good result from high street suburban.

It is the shopping centre b businesses that I anticipate will provide challenging results as that was the trend in both May data sets.

There are plenty of newsagents doing well right now and kudos to the engaged retailers who have taken the steps necessary to position themselves for this success. Agility is key to this success.

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Newsagency management

How local newsagents have helped Aussies through COVID-19

Small business newsagents have helped their local communities in many ways through COVID-19 and here are some of them:

  1. Being open. While many retailers closed, newsagents remained open all through Covid as they were classed essential. This presented rostering challenges along with workplace health and safety challenges.
  2. Diversifying. With other local shops closed, plenty of Newsagency businesses temporarily filled those product gaps that emerged.
  3. Helping others clear stock. With other shops closed, plenty of newsagents took some stock others had and helped them clear it. I know of cases where newsagents took on stock from closed nearby shops, helping friends out.
  4. Expanding the range to serve evolving needs. Helping with home office supplies, nesting products, iso home entertainment like jigsaws … newsagents have moved quickly to serve emerging needs, and not often at huge profit, like, maybe, some supermarkets.
  5. Making shopping easier. Packaging selected items to make shopping faster and easier for things people might buy together.
  6. Offering safe curbside pickup. Newsagents have made shopping easy and safe for shoppers to collect items orders over the phone or online. Staff in-store shop for the items, bag them and have them ready for contactless collection.
  7. Offering new home delivery. This has been done in situations where retailers have not offered home delivery. For example, delivery of care packages to nursing homes, delivery of gifts to locals ordered by family members elsewhere.
  8. Offering safer shopping. By re-shaping the in-store space and experience and making shopping safer, newsagents lead locally on this early in Covid.
  9. Being local. Living local and being engaged local offers a big difference. Being the one local shop people could go to for some, distanced, human interaction.

Covid has been challenging and continues to be challenging for retailers. Newsagents are here every day, trading, serving their communities and often helping beyond what one might expect for a business. It is this commitment to community that runs through the veins of newsagents.

With older Australians as their customers, newsagents have been particularly focussed on safe retail for them.

Covid has a long way to go, as the current situation in Victoria shows. Newsagents are doing their best to offer local safe and helpful service to their local communities.

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Social responsibility
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