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

Author: Mark Fletcher

The newsagency of the future

This is the subject of presentations I am giving to the ANF Conference on the Gold Coast this morning. The problem with the title is that no one can know what the newsagency of the future will look like. I have no crystal ball. The future for newsagents is a moving feast for many reasons. My hope from the two presentations is to open a conversation among newsagents about the future – not out of fear but out of opportunity. I’ll blog some key points after the presentation.

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Newsagency challenges

Promoting Men’s Health

mh_may08.JPGMen’s Health is the title we feature at our counter this week. It has a good free gift and should sell out in a few days. Men’s Health is one of those titles which works well as an impulse offer – we think about the titles we put in this space carefully.

We really have the process down pst – a new display can be created in between five and ten minutes.

Last week we sold seven copies of Money magazine from this location – a good result given that the title had been out a while. In fact, it is getting so we can almost predice the sales we will achieve from this display space we have created.

We have replicated the strategy at our Frankston newsagency. The next few weeks will show how it travels in a completely different demographic.

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magazines

Back to the Eighties

eighties.JPGNetwork Services has redistributed a Eighties: The Decade Collection, a one-shot which failed to set our newsagency alight with sales a year ago. I guess the Indiana Jones photo encouraged them to have another crack.

I’ll give it three or four weeks, no more – given the poor performance last time around it is not fair to expect newsagents to fund the second crack for any longer.

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magazine distribution

Gaming Minister ignores newsagents

Victorian Gaming Minister ignores lottery agents

The State Government of Victoria has made significant changes to the sale of lottery product this year. Newsagents and other lottery agents were looking forward to meeting the Minister for Gaming at a meeting organised for earlier today in Melbourne. While the minister did turn up he apparently had to leave early for family reasons and took no questions. The Minister’s refusal to engage is disappointing.

That said, people bleating about the changes ought to move on. The time to be concerned was prior to the decision when the Lottery Agents Association sat on their hands and said all was well.

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Lotteries

YouTube launches citizen journalism site

yout.JPGYouTube has launched Citizen News, a citizen journalism channel.  The YouTube mission for the channel “is to make the site a go-to destination for news on the web”.

Citizen News is further evidence of the media distribution channel being turned on its ear.  The distance from content maker to consumer is shorter than event thanks to the disruption of mobile devices, broadband and smart online services such as YouTube.

Understanding these developments can help us navigate our own future.

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Media disruption

Chasing a person of interest

sr_thief_may08.JPGThe man in the photo appears to have forgotten to pay for two Murano glass clowns worth $200 each from our Sophie Randall Forest Hill store in the last 24 hours. This happened Thursday afternoon and yesterday lunchtime. In each case we had different people working. He was in an out in less than 90 seconds, wearing the same clothes each day except for the cap. He was back today and was headed for our store but saw us spot him. Security followed him but lost him.

While I don’t expect any of the 1,000+ daily visitors here to recognise the man, I figured it is worth trying.

The video footage shows him leaving with goods in hand and not paying. While we suspect he knew what he was doing, we are prepared to provide the benefit of the doubt if he makes contact and returns to goods.

While it is shutting the gate after the horse has bolted, we are making some changes not only in this store but in other stores in or group to tighten security and to make it clearer that people stealing will be identified.

Situations like this remind me why retailers become bitter and trust no one.

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theft

The dark Bill Express screen

be_screen.JPGI was surprised when Bill Express announced their deal with the Swish group last month about in-store advertising screens. This was the day before Bill Express sought suspension because of a supplier dispute. The Bill Express / Swish deal trumpeted a combined massive network and talked up expectations. 3,500 newsagents knew otherwise. We knew that Bill Express had failed to get even close to the claims it had made to them around revenue from the in-store advertising screens. Many of us saw the ASX announcement as more spin to ignore.

(ASX:BXP) subsidiary, Xip Media Pty Ltd, to sell advertising onto its extensive digital signage network which operates over 5,000 video screens in approximately 2,200 newsagencies and convenience stores throughout Australia. The agreement applies to all existing Bill Express newsagencies and any future sites and will, when combined with the Swish Group digital signage network of approximately 1,900 screens in 1,800 venues, make it the largest digital signage network in Australia with approximately 7,000 screens in 4,000 venues. The combined Swish Group/Xip Media network will be more than ten times the size of its largest competitor in the rapidly growing digital signage / out-of home market.

Key to the Bill Express pitch to newsagents years ago was the revenue opportunity from the in-store advertising screen. More than four years on this screen is clearly a dud. We initially had the smaller screen.

Close to two years ago they installed the big screen in the photo. It has been down more than 50% of the time. When it was working the ads were, more often than not, inappropriate for our customers – promoting products not in Victoria or products which do not speak to our customers.

The earlier incarnation of the screen angered us as much as other newsagents because it was promoting the payment of bills for councils in other states – it made us look bad. Some customers even joked about this.

While we reported the new big screen not working, nothing happened.

Key to the screen pitch was the revenue split opportunity Bill Express pitched to newsagents. I am yet to meet a newsagent who made money from this. The company backed itself by providing a monthly rebate for in-store advertising. This was dropped a few months ago along with other rebates to newsagents.

The failure of the advertising screens to live up to expectations is just another problem for Bill Express. I’d be surprised if the Swish deal proceeds.

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Bill Express

Magazine makes money online

InfoWorld magazine moved from print/online to a pure online play a year ago. The International Herald Tribune reports that the online InfoWorld is generating ad revenue of US$1.6 million a month with operating profit margins of 37%. A year earlier, the print/online model it had operating losses of 3% on monthly revenue of US$1.5 million.

These are the things magazine publishers are talking about, alternative models and channels to market … things newsagents need to discuss.

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magazines

Connecting with Gen Y

Why Gen Y Is Going to Change the Web is an excellent post Sarah Perez at Read Write Web. Gen Y matters to newsagents because many of us employ them and because we need them as customers.

Part of the challenge for traditional media is the apparent disconnect between Gen Y and traditional media outlets such as TV, newspapers and magazines.

The newsagency model is built on structured, traditional media, a one way communication from producer to source. The communication model with and for Gen Y is unstructured. Drawn it can look like a bowl of spaghetti. Take a look at this – Sacha Chua’s Gen Y Guide to Web 2.0 at Work (made for IBM). It beautifully illustrates the point of the disconnect between traditional communication channels and Gen Y.

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Media disruption

Financial year diaries

fyd.JPGFinancial year diaries have never been big for us at Forest Hill – our customers are mainly retired people happy to forget their need for such things. That said, we don’t ignore the opportunity and always carry a small selection. The key with anything like this is to buy appropriately. While suppliers pitched enticing deals, we bought based on our sales data and not their spin. We allowed for some growth.

The performance figures I see from many newsagencies suggest that in the stationery department newsagents are bad buyers. Stock turns are low and the cost of dead stock – items and whole categories which have not registered a sale in six months. Buying is too often based on supplier or sales rep hype rather than sales history of the same or similar products in the business.

Ideally I would like to see a code of practice by sales reps guiding them to use sales performance to guide the order they pitch. With new owners especially I often see sales reps overselling and then wondering why new newsagents struggle.

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Newsagency challenges

Frustrating break fees

I am disappointed that the ANZ a few weeks ago significantly increased the break fee it applies to retailers exiting its merchant arrangements. The timing is curious – we received our letter a few weeks after the Bill Express difficulties became public. Even if you are out of contract the ANZ seeks to whack you.

The whole idea of break fees is disappointing. Any supplier ought to be confident enough of the services they provide that they don’t seek to handcuff you to their business.

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Bill Express

Sophie Randall expanding

sr_pic.JPGOur Sophie Randall cards and gifts business is expanding to a location on Toorak Road, Toorak.  Documents have been signed and the design of the new location is almost complete.  Our hope is for an opening some time in late June.

Sophie is the card and gift model we are developing through newsXpress as a complimentary model for newsagents – pursuing higher margin card, gift and related item sales and attracting customers who are less likely to shop for these items in a newsagency.

The Toorak location will be our fourth in Melbourne.

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About us

Powerball $40 million opportunity

Newsagents have an opportunity to reconnect with customers over the next seven days thanks to the Powerball jackpot reaching $40 million.  Key to making the most of the opportunity is action:

Dazzle with customer service.

Connecting with their dream – the motivation for the purchase

Offer an up-sell (either to sell the Powerball or to sell another add on product)

Offer a bonus gift which connects with other products in store – come on suppliers, help us out.

Reminding the customer where they shopped.

This jackpot is not a chore, it is an opportunity.  The more of us who seize this opportunity the more we reinforce to consumers and supplier why the newsagent channel is a viable business partner.

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Lotteries

Preparing for Intralot

We have now completed all of our paperwork with Intralot.  The next step is training on Tuesday.  There is plenty of activity around bringing this new offer to market and we have made sure we are among the first.

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Lotteries

Getting stationery into newsagencies

I am contacted at least once a week by a stationery supplier looking to get their product into the newsagency channel. Most have a story to tell about the challenges of dealing with the gatekeepers they encounter – stationery wholesalers, associations and marketing groups. The issues are either about refusal to carry a complete range, the cost of access, the challenges of 4,500 managing directors or other hurdles.

While some of the blocks are reasonable and do stop suppliers newsagents are better off without, there are some products which newsagents would like to stock and some complete ranges newsagents would like to stock.

For what it is worth, here are my suggestions for stationery suppliers looking to get gain access to the newsagency channel:

  • Do your homework.  Develop a sound commercial case showing how newsagents benefit.
  • Back your claims with an investment in the channel – too many products seek to leech off the traffic already coming to newsagencies. If you don’t plan to invest in driving traffic to newsagents supporting your product why should they take the range?
  • Use the road to newsagents which delivers the maximum return to them – including direct accounts with newsagents.
  • Help newsagents compete. Too often suppliers use newsagents and with other retailers, retailers who get a better deal or receive compensation for displays and counter space.
  • Price for newsagents as a complete channel and not as individual small businesses.
  • Newsagents are starting to realise that sale or return is not always a good deal.

With fewer newsagents doing cash and carry shopping, suppliers need to be smarter in how they approach the channel. Newsagents are more discerning and want surety on the return on investment they can achieve.  This is why more are buying outside the traditional newsagent supply chain.

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Stationery

Michael Buble, Andre Rieu double act

limelight_june08.JPGAndre Rieu and Michael Buble are a double act in this month’s Limelight magazine. In what is sure to be a popular issue, fans of both can read about Rieu’s Australian tour preparations and Buble’s longevity in Limelight. Both artists have amazing puling power in our Forest Hill demographic – featuring this title will drive good sales.

Last time blogged about a Limelight feature on Rieu I ended up sending copies overseas to fans.

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magazines

Promoting Healthy Food magazine

healthy_food.JPGThe folks from Healthy Food wanted us to place the small footprint display on the counter. Unlike other publishers who ask, they offered a free gift – a nice cookbook. The gift worked and we have the display at one of our lottery counters.

This is a win win promotion from the publisher since the Healthy Food itself is a good impulse pitch to consumers.  We’re certainly proud to promote the title.

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magazines

Melbourne Formal magazine

melb_formal.JPGWe have Melbourne Formal magazine in our Forest Hill and Frankston stores. It’s a challenging title to locate. While it looks like it would be more at home in with wedding magazines, we have placed Melbourne Formal with the higher volume weeklies since we suspect this is closer to the market for the title. Mums and daughters frocking up for formals are probably not looking for such a specialist title.

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magazines

The future of news

I am grateful to Mark Hamilton’s blog where I found the link to videos of sessions at the two-day The Future of News workshop hosted by Princeton University’s Center for Information Technology Policy last week.

While I have not watched all the content, what I have seen reinforces the need for Australian newsagents to listen to the conversation among news professionals about changes in how they do what they do.

These changes and the associated challenges affect us yet most newsagents continue to ignore them in their business plans.  The shop designs I see are as traditional as ever and do not reflect the future of news.

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Media disruption

Intralot training starts

Some Victorian newsagents start training on the new Intralot lottery offer next week. The considerable change this will bring to our businesses will be welcome. Beyond having new products backed by an advertising and marketing campaign, there is the change in mindset Intralot is bringing to the lottery space and newsagencies more generally.

Since newsagencies were created we have lived with a territorial mindset. Our discussions with suppliers and our views of our colleague newsagents have been through the prism of territories. In 1999 that was broken but not really since the new contracts from newspaper and magazine publishers and distributors maintained the territories – albeit with some changes.

Intralot changes that for Victorian newsagents. There is no territory. I see this as a good thing because it treats us like other business people. Whereas previously we could rely on geographic exclusivity to drive traffic to our Tattersalls counter, for the Intralot products our efforts as retailers will be more important. The smart operators will pick up this opportunity and run as fast as they can to beat other Intralot outlets.

While some newsagents (and others) are angry at the changes in the lotteries playing field, I suspect we will look back on the non-territorial position Intralot has adopted as being the wake-up call newsagents needed. We are business people after all and the best exclusivity or territory we can have for our businesses is the one we make and own for ourselves.

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Lotteries

Magazines and retail space

2wheels_may08.JPGWhile magazine publishers and distributors don’t like early returns, we are using them to manage the cost of fat titles. Take Two Wheels magazine. It has a sell through of 50% – less for some issues. The latest issue, with a free back issue, takes twice the retail space. In our case Two Wheels this month demands four pockets instead of two. Rather than keep stock in the back room until return time (as sone newsagents do) we return what we can’t fit early. 

Magazine distributors know the usual size of a magazine pocket in a newsagency. They know the dimensions of titles. Their systems ought to cut allocation where it will use more than the usual number of retail pockets and where the sell through history shows sales will not be affected.

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magazines

Growing bike / cycling magazine category

bike_mag_col.JPGThe bike magazine category is growing thanks to several new titles.  We have allocated a full column to give the category an appropriate presence in the shop.  This is in addition to space for BMX titles.

Bike riding enthusiasts spend big on their hobby – for equipment, apparel as well as riding trips locally and overseas.  We know this from our software company – we have a software package for bike shops. 

It stands to reason that magazines are popular given the growing popularity of the sport and the money invested.  Increasing our space allocation makes commercial sense.

What surprises me is that this now has more space that we have for Tennis, Cricket, water sports … any of the sports.  Seeing this trend is helping us maximise the opportunity.

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magazines

Magazines and coffee

time_sing.JPGThe photo is of Time magazine featured on the counter at a coffee concession at Singapore airport. I took the photo because I was taken with how strong the pitch was for Time. While the collateral was created for a specific issue, it could be developed to work across several issues of a title. We could also create something generic – magazine of the week or the like.

My point is that the stand caught my attention – and we have nothing like it on newsagency counters. However, with the visual noise in our shops maybe it would not work as well as it does at a coffee concession. I do want to find a way to make something lik this work.

The other aspect of this display which caught my attention was how easy it is for the coffee business to offer a magazine – a category in which they do not usually play. While I am sure they got the magazines for next to nothing – even though coffee is high margin and they could fund at least part of the deal.

Thinking along these lines, of add on deals to high margin sales of items which are not core, I wondered what newsagents could offer. Then I recalled that we don’t have any high margin products which we control like coffee. I wish we did. I wish we have coffee or bread or something else which we made in-store off of which we could leverage other deals.

I know this is one of my more rambling posts. These matters are on my mind because every retail business I see I look at from the view of what can I apply to the newsagency model for a healthier future. The coffee concession in Singapore took me down that road.

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magazines
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