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

Author: Mark Fletcher

Newspaper and coffee go together

pacific_coff.JPGThe South China Morning Post is sold ar Pacific Coffee House outlets here in Hong Kong. For two weeks the deal is that you can use a coupon in the newspaper and receive two coffess for the price of one or you can get a double upgrade free. It’s an excellent deal for the consumer and excellent for the newspaper publishers and the coffee house.

Given the Starbucks / Fairfax and Gloria Jeans / News Ltd relationships I wouldn’t be surprised to see a promotion like this in Australia – it may be there already.

Newsagents need to proactively play in this space – promoting with other businesses, building their business and them building yours. Such mutually beneficial promotion is simple and sensible.

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Newspaper marketing

Bookazine, the magazine specialist in Hong Kong

bookazine1.JPGIn a city with street-level newsstands every 200 metres packed with top selling magazines and newspapers and every other block boasting a 7-Eleven or Circle K (or both) with a strong newspaper and magazine story right at the front, it was a surprise to look down the entrance corridor to one office building on Queens Road, Hong Kong and see this sign for Bookazine.

Down the corridor and down a flight of stairs we entered the narrow door and were in another world. Besides small (by Australian newsagency standards) ranges of greeting cards and stationery, there was a good range of books and an excellent range of magazines. Bookazine is clearly a specialist in these two categories.

Their range of magazines was fanned out across shelves in two aisles with covers overlapping and only a small quantity of each title on display. This is a range story and not about volume. It is Long Tail retailing but without a massive distribution network.

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Bookazine felt like a honey pot, drawing people in who really wanted to be there – to buy a book, a magazine, a card or stationery. In our brief time there, most browsers bought something. The staff sounded knowledgeable and, as you’d expect to see in a magazine specialist, they were working on the constant flow of new stock arriving.

The magazine category in Bookazine reminded me of Magnation, the NZ magazine retail model which opened in Melbourne a couple of years ago. Both businesses are not focused on the top selling titles as we are in newsagencies. They exist for the special interest title. This is why Bookazine can thrive in what appears to be an out of the way location.

They have built success, as has Magnation, around ensuring a broad range. To them, range is king. In newsagencies, I suspect because of how our model has evolved, many of us are not there in the range discussion – we need the volume titles to pay the shopping centre rent given that we are on fixed margin. Bookazine, because they are the magazine specialist, can charge a premium. This is where they can achieve a better return.

I left the Bookazine store thinking that we have too many full service newsagents in Australia. We have in almost every town, shopping centre and high street situation magazine specialists with a Long Tail type range but done in a way it does not feel special. Freer newsagencies with specialist grade ranges would help those focusiong on the top sellers to handle that well and those who truly specialise to handle that well. Right now we are in both worlds and have little control over them.

I found the honey pot approach to magazines in Bookazine is food for thought and am grateful for the time there.

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magazines

C-store competition in Hong Kong

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Now this is competition. The picture says it all. On one corner of a back street in Central Hong Kong is a Circle K store and on the opposite corner, of a very narrow street, is a 7-Eleven. The product mix is the same as is their store size. The only differences are the brand and what each stands for and the customer service.

This in-your-face competition is what newsagents are yet to grasp. If another brand opens up a newsagency next to an existing newsagency they would be called all sorts of names. This would happen because of our protected past. Competition, direct newsagent against newsagent competition is something we are yet to deal with.

What I am talking about is different to my comments about Australia Post government owned stores – they use a government protected monopoly brand to take business from us for the profit of the government. No, what I saw today was free market unprotected competition. The only monopoly in play is the brand.

What the photo says to me is that the brand is the thing. In the world of Australian newsagencies, the current brands are: Newspower, newsXpress, Nextra (and its subsets), Supanews, Lucky Charm and the generic Newsagency – but we all have a bit of that.

Circle K and 7_Eleven are not tied to a category, they are not relying on any business other than their branded stores to build consumer perception. This is what we have to do.

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Customer loyalty

Free newspapers in Hong Kong

hk_free1.JPGWe got out onto the streets of Hong Kong after rush hour this morning and missed the free newspaper frenzy I’m told you can see at the exits of the main railway stations.

This lady was busy handing out one free broadsheet. She was in uniform and quite proactive – standing in the middle of the footpath – making sure everyone passing was offered.

hk_free2.JPGThis chap was the only other person we saw. No uniform. Less proactive. I guess the paper is known – his was brighter looking and tabloid. One of our party who went for a walk at 7:30 said it was a frenzy with people reaching for the free newspapers.

I checked Dr. Piet Bakker’s excellent blog on free newspapers – Newspaper Innovation – for an update on free papers in Hong Kong but there was not much. We will keep our eyes open for the rest of the trip. Newsstands are full of paid for newspapers but I suspect the free and paid are focused on different markets as is the case in Australia.

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Newspaper marketing

Free tissues with newspaper

hk1.JPGIn Hong Kong this morning I noticed one of the local newspapers was being sold in a plastic carry bag. That was to keep the newspaper and the free promotional pack of tissues together. Some were handed out as two items but most were given to customers pre bagged.

You can see the bagged newspapers to the left of the photo.

With so many newspapers, free and paid, here in Hong Kong I am not surprised at such giveaways. It’s interesting to see the bag approach given that all the giveaways in Australia are coupon based with the premium item being held being the counter.

I’d be surprised if this kind of promotional offer made its way to Australia but I am no expert.

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Newspaper marketing

OzLotto and PowerBall jackpots to boost traffic

With Christmas not really started yet, the lottery jackpots of next week will drive some excellent traffic to newsagents who sell Tattersalls, Golden Casket, NSW Lotteries, SA Lotteries and LotteryWest products. This traffic boost is an excellent opportunity to configure the store layout and the counter to drive the up-sell. Candy, pens, crossword books, ZOO magazine, lost cost food magazines – these all work at the lottery counter as long as it is not cluttered.

We have a few seconds at the counter with the additional traffic and I don’t want to have my team act likes the monkeys in Coles and Woolworths petrol outlets with their u0psell gibberish. No, we will use the counter and store itself to drive the up-sell. Newsagents ought to decide on a daily offer and put it at the counter to drive the silent up-sell. With the anticipated 10% to 25% increase in sales it is excellent timing. It is also a good opportunity to hand lottery customers a flyer – promoting the business and with an offer to lure them back in.

If only a publisher had a special offer for the lottery counter. I have pitched this previously to Lovatts for a crossword offer without success.

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Lotteries

The power of the window

We have learnt about the power of the window since we opened our Sophie Randall card and gift shop eight months ago. We change the window display at least every two weeks with significant tweaks every other week. Our range of Gund plush is the most successful product in the window. Sales can triple when we put this on display.

While we have done adult themes for Father’s Day and Mother’s Day, it is windows based around children’s product which works the best. Below is the main window currently on display – we have three window displays in this store and the one below is the biggest:

window_oct2.JPG

You can see from this that we are focused on respected brands – Peter Rabbit, Noddy, Pooh and Gund – and that even though we have a bold window display, we don’t let it become a barrier to seeing into the store. The top of the display is chest height.

The learnings from Sophie for our newsagency continue – in terms of range, display and even margin on some products.

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newsagency marketing

How newsagents can help magazine publishers

bull_oct5.JPGAny publisher wanting to sell more magazines ought to read this – if they really want to sell more magazines that is. Rather than throwing money at expensive subscriptions sent through the mail, publishers could do better providing newsagents with deals for an over the counter subscription pick up.

Take the Bulletin. It retails for $6.25. If I subscribe, it costs $129.90 a year and they mail it to my home. In my shop I sell between 6 and 12 copies a week. I think I could sell more by offering an over the counter subscription – customers would have to pay up front for a year. The difference from the current subscription offering is that the magazine would not be posted – the customer would pick it up.

A regular Bulletin customer in a newsagency might buy 70% or thereabouts of copies a year. An over the counter subscription offer could get that to 100%.

Newsagents have excellent technology to manage subscriptions at the counter and back office including the ability to SMS text message customers when the magazine comes in.

Many customers would prefer to pick the magazine up. I’d like their traffic.

Publishers show in the subscription order forms in their magazines every issue how much money they will throw to acquire subscription sales. Let newsagents be part of the acquisition process and I’d expect net sales growth to be achieved.

While I can sell subscriptions now, they are for mail delivery. What I am proposing here is different.

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magazines

Angus & Robertson accounts payable to NZ

Cleaning up some paperwork overnight and I found a letter from May about A&R advising they were moving accounts payable to New Zealand. For a small business supplier to A&R, such as a newsagency, this is a problem. It delays payment and makes problem resolution more challenging. The terms set by A&R in the May letter put them in control and not the small business supplier who may have different trading terms which more appropriately meet their requirements.

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Customer Service

Newsagents welcome new phone recharge offer

We have received plenty of feedback over the last 24 hours since we launched eziPass, the direct from your point of sale mobile and calling card phone recharge service in association with Touch Networks. Knowing what products and services are coming down the line, I am sure that eziPass will be of interest to many newsagents. The eziPass website has more information including answers to many questions and the sign up forms.

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newsagency marketing

Small hair magazines frustrating

small_hair.JPGIs it just me or are other newsagents frustrated with these small hair magazines? They are not made to fit our traditional fixturing and, as the photo shows, they get lost. No wonder sales are not good.

While we could display them flat, the return does not warrant that premium space. I bet the editor and publisher would be frustrated if they saw how their product looked on the shelves.

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magazines

Drought, Horse flu and newsagents

The drought has hit farmers hard over many many years. The Howard Government this week announced hundreds of millions of dollars more in funding and assistance for farmers.

Horse flu breached the federal Government’s quarantine controls and shut down horse related events pretty much everywhere for more than a month. The Howard Government announced tens of millions of dollars in support.

In 1999 the Howard Government managed the deregulation of the distribution of newspapers and magazines in Australia – taking away a monopoly of newsagents protected and supported by the Government. Since deregulation the Government owned Australia Post has moved more into areas previously dominated by newsagents. Newsagents, without the protection of monopoly in any category, are losing market share. The Government has offered no compensation.

I guess the thousands of families which own newsagencies and those who earn an income through newsagencies don’t matter as much as the farmers or racing folk.

In the case of newsagents there is clearly little political value in supporting small business so the Government facilitated the whack in 1999 and the death of a thousand cuts by allowing Australia Post to use its monopoly protected brand to grab sales from newsagents – for the benefit of the Government.

Labour, Liberal, National Party, Democrats, Green and Family First candidates need to do more than provide lip service on small business policy. Newsagents are not looking for charity – just a fair shake from a government that spends a lot of money telling us all how much they care.

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Newsagency challenges

She is cheap

she.JPGShe is a cheap magazine. $3.99 here in Australia – half the US price and a third of the UK price. I’m not sure what is going on there given the magazine She competes with. While I am no expert, I’d think the price devalues the product and makes potential customers second guess the purchase – what’s the catch?

While on the price, what’s with $3.99? Either make it $3.95 or $4.00. Customers get annoyed at 99 cents.

And also on the price – see the backing card supplied with She this month. That says $2.99. The price printed on the cover is $3.99. Oops.

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magazines

Hallmark music cards popular

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Last month I blogged here about how successful music cards are in the United States. The new range from Hallmark, while too small, is selling very well in our Sophie Randall store. Once browsers open a card and hear the song they smile. Some play it again – that’s when you know you have them. It’s good to hear people interacting with your products. I’m confident this range would work well in newsagencies.

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Greeting Cards

New Phone Recharge and Electronic Voucher Platform for Newsagents

ezipass.JPGNew technology launched today allows all newsagents to sell phone recharge and other electronic voucher products direct from their point-of-sale computer, without the need for a complex long-term contract.

Developed exclusively for newsagents by Tower Systems, eziPass works on computers with broadband internet access.

eziPass supplies the same Touch suite of products as offered by major banks and retailers. Excellent commission is provided – up to 33% extra commission on some mobile recharge products.

“Newsagents told us they wanted an alternative to the Bill Express / DialTime contract and a simpler, more robust, operation at the sales counter,” commented Mark Fletcher, Managing Director of Tower Systems.

“We only agreed to become involved if there was absolutely NO margin or commission for us. The last thing newsagents need is another middleman making money from what is already a slim-margin business.”

eziPass has initially been launched to existing Tower Systems’ customers. And within the coming weeks, Tower expects to provide a free copy of the eziPass software to all newsagents.

Vouchers for more than 30 telco products are part of the launch range. Tourist attraction tickets, flower deliveries, magazine subscriptions and tollway passes will be added in coming weeks.

“eziPass provides a low-risk, low-overhead option for newsagents considering whether to extend their Bill Express / DialTime contracts,” said Mark Fletcher. “There is no lease to pay, no long-term contract to sign and newsagent bank accounts are swept once a week – greatly assisting cash-flow.”


www.ezipass.com.au

Tower Systems was founded in 1981 by Mark Fletcher. Today, the company serves in excess of 1,400 newsagents nationally – more than 50% of all newsagents with a computer system. It wholly owns one newsagency and is a major shareholder in another.

Touch Networks Pty Ltd provides over 200 products and services and is available over EFTPOS terminals and retail point-of-sale systems.

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Newsagency challenges

Financial Times goes free online

The Financial Times has decided to make access to its online content free of charge. This follows the about-face at the New York Times last month. As Eric Sass says at Media Daily News:

And in late September, Fitch Ratings issued a report endorsing free, ad-supported content as the most profitable approach for newspaper companies.

There you have it, cover price matters no more online. Make it free, get eyeballs and charge advertisers. This should not be a surprise to newsagents. The cover price of newspapers has not kept pace with CPI. In some cases, 10% in 10 years – while advertising has jumped more than CPI every year.

The more news is available online free, the more over the counter customers will migrate online. This is another disruption to the newsagent model which we need to understand and plan for. Publishers love the online model as it eliminates much of the cost of distribution – the only reason they have a cover price for the print edition.

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Media disruption

Newsagents helping others

Elaine and Geoff Munro from East Geelong Newsagency kindly sent me three copies of Sunday’s and Monday’s Geelong Advertiser – my family are mad Geelong fans. They didn’t want any money – such is their support for others in the broader newsagent community.

Compare the generosity of Elaine and Geoff to the relatively new newsagent who sent a magazine to another newsagent needing a copy for a customer – they charged the recipient newsagent full retail plus postage.

It is more newsagents like Elaine and Geoff we need in this channel.

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Customer Service

Promoting British magazines

british.JPGThis is the display we have created at the counter to promote some of the British magazines we carry. It looks better in person than my my poor photo shows. Headed The Best of British we have printed some flags to highlight the promotion.

In the day the display has been up we have sold some of the featured product – it is too early to tell if the sales are impulse or not.

While not a glitzy or sexy retail display, we think this promotion will work as it speaks to our demographic in a subtle way – and is located right at the counter.

We’re doing this because we want to promote the British connection across multiple magazine categories – not because a publisher is paying us promotional dollars. This is an important difference between small and big business when it comes to magazines, a difference some publishers are yet to grasp.

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magazines

Time and the bonus magazine

time_oct1.JPGTime this week has a style and design magazine stuck on the back. It is frustrating that this is bigger than time – making the resulting double look a bit messy on the shelves. While the editorial and production folks for the Style and design issue probably have the size they want, the main Time product suffers – it’s too big for the usual location in our shelves and looks messy. The other side of this offer is how we display the product. Time is not a big seller for us so we’d just focus on the weekly and not the bonus title. None of these issues are big deals – just things we wish had been thought through.

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magazines

50% discount off cards at Nextra

nextra_cards.JPGThis is a surprising deal from Nextra – 50% off John Sands and Ink Group cards for a week. While I’d expect Sands to be rebating newsagents at full retail, it is the message to the consumer which I question.

The discount might grow sales but will it add to business? At best, I’d expect it to pull card sales forward of when they might otherwise be achieved. People only so many birthdays, anniversaries and the like to buy for in a year. This 50% discount will not increase the buying occasions. But maybe the folks at Sands and Nextra know more about card buying habits than I do.

Nextra has a good Card Club. I think it would have been smarter to better promote this since it supports the habit basis of card purchasing. The Card Sale locks out this loyalty promotion – read the small print on the poster.

I’d rather leave these chunks discounts to the likes of Target, K-Mart and others. They are known for category wide discounting. Newsagents are more known for card quality and range than price. If someone really wants to buy a card on price they will more likely go to the Reject Shop or similar.

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Greeting Cards

Future distribution

One only has to look at the investment moves of major media players like Kerry Stokes to get a feel for the future. Distribution is the key, hence the interest in Unwired and possibly Austar. In the meantime, many newsagents struggle with the question of whether to install broadband.

How are the Stokes moves related to newsagents installing broadband in their businesses? Both moves say something about how the respective operators view the future. Stokes sees that distribution is the key. Newsagents, by their slow uptake of broadband, do not.

Newsagents ought to get live with broadband. Beyond that, they (we) ought to take careful note of moves by the Stokes, Murdoch and Packer. We need to reconfigure our business for a future where information and news are accessed more online than in print. This world, when it arrives, will impact our current model.

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Newsagency challenges

Federal Government in conflict

Senator Helen Coonan speaking on the 7.30 Report on ABC TV last night:

…we clearly couldn’t have the conflict of being both the owner and the regulator.

This from the same Communications Minister happy to be responsible for regulating the government owned Australia Post.

Australia Post, holder of a postal monopoly in this country, also owns 865 corporate stores which compete with small business newsagents in the stationery category.

This same government deregulated the distribution of newspapers and magazines in 1999, stripping newsagents of their monopoly without compensation.

Australia Post has unleashed considerable corporate muscle against newsagents in the years since 1999. Much of that corporate muscle has come as a result of its Government protected monopoly.

For some background on the Government facilitated Australia Post assault on small business newsagents through its corporate stores click here.

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Australia Post

Framing printer ink

To counter visual noise and draw attention to our ink and toner offer we are experimenting with a frame around our ink product. The Hot Ink border draws attention to ink – I’ve noticred people walking across from the newspaper stand in front. On saturday one such customer walked out with three cardridges when all she came in for was a newspaper.

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The frame is make-shift, printed on our copier. Now we can see it works, we’ll make it pretty and robust.

Visual noise is a real challenge for newsagents – we are provided many posters and other materials by suppliers wanting eyeball time. Many of us just whack these posters up without thinking that less is more. By framing like this I hope we can better manage space allocation and drive categories which support our margin goals.

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Stationery

Returning lost credit cards

We send credit cards left in our newsagency and not reclaimed for a day or so back to the issuing bank with a covering letter. Not once has any of the banks written to us thanking us and while we are not looking for kudos, it would be nice to have the return of the card acknowledged. Given the risk of credit card fraud of lost cards I would have thought our attention to closing the loop was appreciated.

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Customer Service

Which copy Real Living is the real copy?

rl_oct.JPGWhich copy of Real Living and Table am I supposed to promote in my newsagency this month? The regular issue or the one hidden in a sealed bag proclaiming 20% off. I know which one customers will reach for first – the bagged copy.

This is a frustrating offer from ACP Magazines. We have Real Living. We have Table. Now we have the real Living / Table combo pack – a new stock item requiring additional shelf space, labour and cash flow.

I appreciate ACP may want to experiment with these deals. I wish newsagents had been consulted first and that we were compensated for our investment. The magazine experience in newsagencies is built around browsing. Bagging a magazine like Real Living, which is already struggling compared to Notebook, will not help sales.

Real Living is a feature magazine this week so my question about which version to promote is serious – do I feature the bagged version promoting 20% off or the version people can browse?

This offer sends a mixed message to newsagents and consumers which, I suspect, will not help the title achieve what it needs to achieve.

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magazines