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

Author: Mark Fletcher

Tough day at Bauer Media

Retrenchments and title hibernation the order of the day following completion of the Pacific takeover.

I suspect the cutting of 60 of the staff from Pacific Magazines and the pausing for up to six months of production of Men’s Health, Women’s Health, Elle, Harper’s Bazaar, OK! and NW is more in response to the collapse in advertising as a result of COVID-19.

I don’t see the pause of titles as a collapse in magazines in Australia. I could be wrong. It will be mid 2021 before we can determine if that is the case.

It is a tough time for any magazine publisher as they struggle to find ways to make their titles more appealing to rapidly changing consumer interests and doing do in an environment with so much ad spend on hold. There has been a significant shift that agile magazine publishers are tapping into through existing titles and one-shots.

Right now, too, cover price is a key source of income, with ad revenue down. This means over the counter sales matter more than ever. This is good as it aligns retailers and publishers more so than usual. Hopefully we see cover prices respond accordingly.

Looking at data for a broad cross-section of newsagencies, magazine sales are strong in high street and regional / rural situations. But more on that later in there week.

I feel for the Pacific folk let go today. Given risks that emerge in any takeover, changes were bound to happen.

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magazines

Shame on News Corp.

The handling by News Corp of the Dean Laidley story over the last 24 hours has been dreadful. Even now, this afternoon, they have run this story about a police office being stood down and above the headline they have one of the images that resulted in the standing down of the officer.

This is disgusting gutter stuff from a publisher that has made publishing such stuff an art.

Is there anyone with power at News Corp who understands mental health challenges and how to respect those facing such? It appears not.

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Ethics

As we come out of lockdown

With several state and territory governments starting to ease movement restrictions, people are talking more about life after lockdown, business owners are talking about this. If you have not done so already, I urge you to consider what your retail business looks like after lockdown or as lockdown provisions are eased.

While only you can know what is right for your own business, I offer this list of suggestions for your consideration:

  1. Change everything. This is the best opportunity to make major change. Move whole departments, change prices, change the counter focus, the counter process. Right now is a perfect opportunity for sweeping change in any business.
  2. Look at your pricing. Is it appropriate? Could adjustments be beneficial?
  3. Look at every supplier. Ask yourself, do they bring value (and joy) to the business.
  4. Make the shopping experience fresh, more appealing. Help your shoppers feel that they are in a new business.
  5. Quit hard and quick. Dump bins at the front of products you are exiting. This is the perfect time to make the move.
  6. Reconsider every business process. Is it beneficial to the business? If not, why continue with it? Be frugal with your time and capital investments.
  7. Share appreciation. From your front window to inside the shop, demonstrate shopper appreciation.
  8. Play uplifting music. Celebrate any step away from lockdown.
  9. Celebrate stories. Encourage people to share positive lockdown stories, somehow in-store on online through social media.
  10. The past is the past. It is tiresome hearing about how tough things have been, how troubling the times are, how difficult things are. People are living this. We are living this. Reminding people does not help in our view.

Now really is the opportunity for significant change in any business. Opportunities like this are rare. I urge all retailers to seize the opportunity.

I originally shared this with customers of my POS software company, Tower Systems, the list is as relevant here. I think being open all through matters not. The easing of restrictions itself will change the traffic you see and provide an opportunity to work through some or all of the list of suggestions.

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Social responsibility

Tabcorp misses an opportunity to respect and support its retailers

Tabcorp last week wrote to retailers asking that they self-assess as the company was not putting its assessment team in the field. This team usually visits outlets to judge them on their look at the time they visit. The judgements can have dire business impacts if they are bad. Tabcorp appears to place more value on appearance, often to odd criteria, over actual sales performance. The assessments cause considerable anxiety.

Rather than taking the opportunity to say something along the lines of – hey retailers, stay safe and well, we are giving everyone a gold stay assessment this round, you’re all 100% in our view. We appreciate you and hope this small step by us demonstrates the respect we have for you as front line retailers – Tabcorp asked retailers to do the assessments themselves:

Subject: COVID-19 Interim Measures – Compliance Self-Assessments 

Hi Retailer, 

Thank you for your ongoing commitment. COVID-19 has impacted us all in many ways, and as we navigate our way through this uncertain time, we must continue to be nimble and adaptive in the way we operate, support you to maximise sales, and meet our regulatory obligations. This is essential to help ensure we continue to protect our business whilst continuing to operate and deliver the best customer experience possible. 

The environment in which we operate in is complex with a lot of different rules and regulations, compliance to these regulations is core to our integrity in providing exciting games customer know and love. However, with COVID-19 the way we monitor compliance needs to adapt. As such, we have been working on alternative ways to ensure compliance monitoring continues and incorporates the additional COVID-19 requirements. 

From Friday 1st May 2020, we will be introducing a Compliance Self-Assessment to outlets who have not yet been Site Surveyed in Cycle 3 (Monday 2 March 2020 to Sunday 28 June 2020). The Compliance Self-Assessment will be sent to selected outlets each week via an email and link from retailcompliance@tabcorp.com. This assessment will temporarily replace Site Surveys for an interim period. 

The Compliance Self-Assessment will take approximately 10 minutes to complete and, we will be asking outlets to upload a series of photos of their lottery outlet only. Further details on how to do this will be shared via a Training Manual when you receive the Compliance Self-Assessment. 

All Products Outlet Photos Required 

1. Outlet Customer Capacity Customer Notice 

2. Social Distancing Stand Here sign 

3. Responsible Play sign 

4. Internal point-of-sale posters, as per your weekly POS Plan. 

5. Instant Scratch-Its Dispenser point-of-sale, as per your weekly POS Plan. 

6. External blade 

7. Free standing Lucky Lotteries Cat stand (if applicable) 

8. Street stand (if applicable) 

9. Syndicate board 

10. Writing bench (including brochures, coupons and draw slips) 

11. Customer Ticket Checker 

12. Responsible Play Guide folder 

What a dumb and selfish move by this big business supplier against small business retailers who are already in tough situations.

13 likes
Ethics

April newsagency sales benchmark to gauge COVID-19 impact

Yesterday morning, I launched a new sales benchmark, comparing April 2020 with April 2019 to gain an insight into the impact of COVID-19 on our channel.

I have already received data from 44 newsagencies, which is terrific – more than is usual for the first 24 hours of a benchmark study. Already, this is a diverse dataset – city and country, mall and high street, banner group and not. This is good as diversity is key for insights.

I am particularly interested in product category trends as this information could be useful to retailers as they start to consider the other side of lockdown.

For any interested, here is the notice of the study:

APRIL NEWSAGENCY SALES BENCHMARK STUDY.
I invite you to provide data for a special COVID-19 related newsagency sales performance benchmark study. The benchmark provides data against which you can compare your business performance. 

How to participate.

  1. Please run a Monthly Sales Comparison Report for 01/04/2020 – 30/04/2020 compared to 01/04/2019 – 30/04/2019.
  2. Tick the category box. IMPORTANT.
  3. Tick to exclude home delivery and sub agent data.
  4. DO NOT tick the supplier box.
  5. Preview the report on the screen. Save as a PDF and email this to me at mark@towersystems.com.au.
  6. Read the report yourself and see what it shows you about your business.

I will email the results to all participating newsagents and publish the results on theAustralian Newsagency Blog as a service for all newsagents.

COVID-19 has impacted our channel in myriad ways. I am aware of significant differences between city and country, mall and high street. I’d love to collate data from a good pool of businesses to provide back to the channel useful data on this.

I own and run three newsagencies. Over the years I have had three others. I own newsXpress, the newsagency marketing group.

Tower Systems serves 1,750+ newsagents with best practice newsagency software, We are thrilled to note that our customer base is growing. We welcomed 30+ newsagency businesses as new customers in the last year. Overall, Tower Systems serves in excess of 3,500 small business retailers.

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Newsagency benchmark

Free Thank You cards at newsXpress

On Monday this week, newsXpress launched a free Thank You card offer to help people express gratitude to those people who have helped through the COVID-19 situation.

The campaign is 100% initiated and funded by newsXpress and its members.

Since newsagencies are the key retailer of greeting cards through which people express their feelings, I felt that the free Thank You card offer was a way of helping people pay it forward, a way for local newsXpress businesses to pay it forward.

I have been looking for a way for newsXpress stores to demonstrate social leadership in their communities. This campaign offers that. It specifically names cleanser, teachers, doctors, nurses, delivery drivers and other service providers as ideal recipients of a Thank You card.

Four days in, the feedback from store owners and from customers has been terrific. People are genuinely happy and overwhelmed with emotion when given a free Thank You card to give to someone else.

This is a good news story of these local small businesses demonstrating the value of local small businesses.

Here is how the promotion was announced to newsXpress members early Monday morning:

——–

Launching a national Thank You campaign.
Today, we launch a national Thank You campaign that we hope you will choose to be part of.

Here’s how it will work. Anyone buying a Mother’s Day card can choose a free Thank You card. For each 2 or any other card, they can choose a free Thank you card. You will have a selection of 3 Thank You cards at the counter, that you choose from current stock, for customers to choose from. As you run out of a Thank You card design at the counter, add another.

We want you to include Thank You cards from our preferred suppliers only: Hallmark, Henderson, Affirmations, Simpson, Paper Street. Be sure to include a blank card in the mix as that could provide the creative freedom customers will like. The card does not have to say Thank You on the front.

We have collateral for you to use on social media. Please post every day about this. Encourage your followers to share your post. We also have text you can use to promote this – see below.

If you want to participate in this program, advise us at help@newsxpress.com.au by 5pm Wednesday April 29, 2020. This is critical. You can start promoting the campaign right away, from now.
 
We will promote participating stores.
We will list all participating stores on a new special page that we create on our website. This page will list all participating businesses. This is why we need you to register with us. We will link to the list in all our social media posts – and there will be plenty of these.
 
Who is funding our end?
We have not asked and will not ask any card company or any supplier to fund this. This is our initiative. We think it is critical that we put our money where our mouth is.
 
Please join us and make a HUGE noise to encourage Australians to be grateful.
 
Please sign up for this campaign and actively start promoting it.
 
3 social media posts for you to use promoting this:
 
FREE Thank You cards. Buy a Mother’s Day card from us and you can choose a free Thank You card to thank a teacher, first responder, doctor, nurse, cleaner, retail employee or someone else helping you through each day. newsXpress is grateful to offer you this. #StaySafe #ThankYou #Appreciation #Grateful #COVID19 #COVID19AU
 
Say THANK YOU to the nurses, teachers, doctors, first responders, carers, cleaners, everyone helping you get through. When you buy cards from us, choose a FREE Thank You card for you to express your appreciation. newsXpress is grateful to offer you this.  #StaySafe #ThankYou #Appreciation #Grateful #COVID19 #COVID19AU

Say Thank You to everyday heroes, the teachers, nurses, cleaners, carers, delivery drivers, garbage collectors, the people helping everyday to help us and those we love get through this. When you buy cards from us, we will offer you a free Thank You card to share your appreciation. newsXpress is grateful to offer you this.  #StaySafe #ThankYou #Appreciation #Grateful #COVID19 #COVID19AU

A public statement:
 
Helping you thank those helping you and all of us.
Local newsXpress stores are making it easier for you to say thank you to nurses, doctors, teachers, first responder, cleaners, farmers, local council workers, retail staff and others keeping people and communities safe and running.
 
When you buy a Mother’s Day card or 2 or more or any other cards from a local newsXpress store, you can choose a free Thank You card from a selection we will have for you to choose from.
 
A thank you card left at a school, hospital, doctor’s surgery, police station, nursing home or even on top of your garbage bin could offer the appreciation and encouragement to make the day of those spending their days helping you every day.
 
newsXpress and its community of local family retailers is grateful to be able to help you say thank you.
 
The free Thank You cards will be at the counter, for selection when making your purchase.
 
#ThankYou #Appreciation #COVID19 #COVID19AU #Grateful #StaySafe

——–

 

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Social responsibility

FFS! News Corp. puts papers in 100 Chemist Warehouse outlets

News Corp has announced that it is putting its papers into 100 Chemist Warehouse shops. Here is their media release.

News Corp Australia and Chemist Warehouse have joined forces to make trusted newspapers available to customers during the coronavirus pandemic.

From this week, 100 Chemist Warehouse stores across New South Wales, Victoria, Queensland and South Australia will become a point of sale for News Corp’s metro mastheads, The Daily Telegraph, Herald Sun, The Courier Mail and The Advertiser.

Pharmacies as well as news brands have both seen consumer demand surge in the past two months, as Australians stock up on wellbeing products and turn to trusted sources for information and analysis on the crisis.

Lou Barrett, managing director of national sales for News Corp Australia said: “We’re always looking for new ways to assist our clients and their customers and given we’ve seen a spike in audience demand for our products, it makes perfect sense to have them available for sale in Chemist Warehouse stores.”

Lia Heim, group marketing manager at Chemist Warehouse said: “As an essential service ourselves, the ability to provide our customers with another essential service within our stores, that being trusted newspapers, means that shoppers can minimise their travel within the local community whilst remaining updated and informed.”

The initiative will operate on a trial basis until July and, pending the result, may be extended to 400 stores nationwide.

Newsagents are wondering is the News Corp move to sell papers through Chemist Warehouse is a move by the company to break away from these local family businesses. It certainly looks that way. That said, I suspect them move is News Corp. working with a valuable, long-term, advertising partner.

Given the Chemist Warehouse model, look for free papers to be offered when shoppers spend above a certain amount, like News Corp regularly runs in supermarkets. These campaigns hurt local newsagency over the counter sales.

Regardless of the reason, the News Corp decision will hurt small business newsagents emotionally and, possibly, financially, and this is bad news for the channel.

What do I think? I think this move sucks. There is nothing good about it for newsagents. The move by News is socially irresponsible right now.

Our channel has been a good and faithful servant of News Corp for decades. Putting up with cuts to margin and watching as they preference supermarkets with sweet deals.

It seems to me that News Corp. does not care for our channel.

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Ethics

Some retailers closing stores for online

Just about every day we  read stories of retailers retreating from physical stores to online as a result of a seismic shift in online purchases. The Nine papers yesterday reported such a move by Accent Group.

Shares in major footwear retailer Accent Group soared 20 per cent after it announced plans to shut stores and shift major parts of its business online as part of a full re-evaluation of its 522-strong store network.

The ASX-listed operator of brands such as Platypus, Athlete’s Foot and Hype DC told investors on Monday it had witnessed a “seismic” shift towards online spending after stores were shut during the coronavirus-induced lockdown.

Digital sales have jumped from an average of $250,000 per day in early March to as much as $1.1 million per day during the last two weeks of April, a surge chief executive Daniel Agostinelli said was likely to persist.

“It is clear that there has been a seismic and most likely enduring shift in consumer behaviour away from traditional shopping centres to shopping online,” he said.

Plenty of newsagents are making the move. I see it through my POS software company, which develops websites for retailers too. I also see it through my work with newsXpress and the well-established integrated web strategy it has with and for its member retailers.

The current lockdown has educated shoppers about many things, including shopping online. Previous age barriers have been broken through as have barriers as to what people would actually buy online.

Being nimble is key now, nimble for the next few months and especially nimble about what is likely to follow this period.

We are in a period of change upon change upon change, and through all this there is opportunity, as businesses like Accent Group are leveraging.

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Newsagency management

GOOD NEWS: Small business landlords support small business

Here are examples of small business landlords supporting small business retailers, including newsagents, with rent relief.

  1. 2 months rent free, April and May, without being asked.
  2. 1 month rent free and 50% off for May and June, without being asked.
  3. 75% off for six months, after one request for help.
  4. 50% off for 3 months, after one request.
  5. A 100% credit for March, 50% off April and 25% off May, after one request.
  6. 50% off for 3 months, after one request.
  7. 2 months rent free, after visiting the shop a week ago and seeing it and the street empty.
  8. No rent increase, which was due as per the lease from May, and a discount of 33% for the next for months, after one request.
  9. 25% off for April, with no request, and then 50% off for the next 3 months after being given the revenue figures for the business.
  10. 2 months rent free, 2 months half price and 2 months 25% off, after one request and a phone call to discuss.

In each case, the landlords and tenants have acted respectfully and cooperatively. Indeed, most landlords have gone beyond what has been sought through the mandatory national code as put in place by the national cabinet.

This is great news.

Well done small business landlords. They have come through for small business retailers in timely and genuinely helpful ways.

The 10 stories above are only some I have heard of. They are representative though. There are small business high street retailers happy today to have the landlord they have, appreciating their support and the relief it provides.

Many landlords of small business retail tenancies are small business owners themselves with only 1, 2 or a few commercial properties in their portfolio. Many acted before state or territory governments moved on taxes and other costs. This is small business helping small business.

We talk about heroes these days, the health front line team members, cleaners, teachers, drivers and others keeping the economy running. I’d attach that label to the landlords who are supporting small business retailers, especially those in essential businesses. The landlord actions through rent reductions and other help is wonderful to see, and appreciated.

There are wonderful people in Australia who are helping in everyday ways, often beyond their capacity.  Some of these small business landlords are in that group. Thank you!

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Ethics

COSBOA: The big landlord problem is now obvious for all to see – small businesses need intervention

The Council of Small Business Organisations of Australia, of which ALNA is an active member, is lobbying on behalf of small business retailers. Here is their complete release on this, a release that draws on an earlier release from ALNA:

The big landlord problem is now obvious for all to see – small businesses need intervention

COSBOA calls upon the biggest landlords in Australia to set an example of responsible behaviour in a time of crisis, and to start acting in good faith with the proposed Mandatory Commercial Tenancy Code (“the Code”). Some landlords are doing the right thing, but many, including the largest ones, are still unwilling to share the financial impact of social distancing.

Peter Strong, CEO of COSBOA, stated “The COVID-19 issues for small business are many, as they are for everyone. We recognise that thanks to strong leadership, federal and state/territory governments have flattened the COVID-19 curve. A consequence of this, however, has been an extraordinary drop in our retail foot traffic. This is not the fault of tenants or their landlords, but one of the most pressing issues is getting landlords to engage genuinely and effectively with their small business tenants to fairly relieve their rent burden when they have few or no customers. As we work hard on the other big issue, employment, through the JobKeeper program, we have to also deal with the immediate challenge around rent and retail leasing. A business cannot use JobKeeper if it is bankrupted, or will be, by a landlord.”

COSBOA sees the best solution now is for the states to legislate that all retail tenants who are eligible under The Code and who are the most vulnerable, like businesses with less than $2 million turnover, have an immediate three-month waiver for April to June on rent, with support from government to share this cost with landlords.

This will clear the decks with immediate support and we won’t lose businesses unnecessarily. It can be followed by good faith negotiations under the code. Mediation can occur if it is required, as is the intent of the Code.

Mr Strong added “the fact is that payment of rent is not possible for a large proportion of small businesses in malls and the current behaviour of the landlords will create tens of thousands of bankrupt businesses. The development of the JobKeeper program would be meaningless if a business was bankrupt and the owner of the business was in deep despair. However, landlords overwhelmingly seem to fail to understand we are in a crisis.”

COSBOA understands this is not a federal issue as the states are responsible for legislating the leasing regulations required for the proposed Code now.

Mr Strong also added “we see the West Australian Government have led the way with yesterday’s announcement of $100 million in land tax relief grants available for commercial landlords who waive rent for 3-months for small business tenants who have suffered a 30 per cent drop in turnover due to the impact of COVID-19.

Where the federal government can help is to bring forward changes to sensibly increase the thresholds for Unfair Contract Terms (UCT). This will provide fairness for small business tenants from aggressive contracts and leases. It must be acknowledged that the Prime Minister and the Treasurer have confronted this problem, and they have probably discovered what we in small business have known for decades: that the biggest landlords are not the most constructive, contributing members of our society.”

Many businesses need outcomes now or at least in the next few weeks, not the next few months. Unfortunately, we do not see this happening. There is also the recent intervention of the ACCC which has given many landlords the ability to share information about their tenants. This has provided those landlords the opportunity to legally connive and then take similar ‘actions’ with tenants. These landlords appear to be using the authorisation and The Code (even though it is not legislated yet) to co-ordinate and provide a protective mechanism for themselves while complicating and deferring outcomes for tenants.

Some of these landlords are asking for extensive information from tenants far in excess of what is required under The Code. This includes in many cases requests for P&Ls and balance sheets, not just disclosure of revenue impacts. They are also asking the retailer to demonstrate they have used all state and federal small business support packages first as well as bank assistance before they will consider any request. The landlords are creating significant additional and needless expenses for their tenants. These requests are time consuming, delay outcomes and require information which they really have no right to require (other than revenue impacts), and are not consistent with The Code or acting in good faith.

Mr Strong further added, “Bizarrely, some of the biggest landlords are asking tenants to predict their turnover for the next twelve months. This shows the landlords are not capable of forward planning yet expect small business people to do that planning for them. The federal government has deferred its own budget until November as it knows it cannot yet predict the future with any certainty, but the landlords expect small business people, under extreme personal stress, to produce a plan for the next twelve months. It is obvious that the authorisation landlords have been given by the ACCC should now be rescinded, and they must stop opportunistically asking for information that they do not need and that may harm these tenants in the long run.”

Note: The business folk and the employees who will be affected come from cafes, restaurants, newsagents, shoe stores, clothing shops, lottery agents and hairdressers among others and they need government help and good faith from their landlords to address this.

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retail leases

It’s time for all newsagents and their suppliers to engage with the 3 months rent free campaign

I urge newsagents and their suppliers to send this, or their own version of this, to politicians to drive maximum interest in a 3 months rent free campaign, to achieve for others what was achieved yesterday in WA. Here is the suggested text:

I am a small business retailer and retailers like me need your help. Thanks to strong leadership, federal and state / territory governments have flattened the COVID-19 curve. A consequence has been an extraordinary drop in retail foot traffic.

While we appreciate the 25% rent waiver we can negotiate with our landlord thanks to the mandatory code, it will not help. There are retailers like us who can’t cover wages let alone the 75% of usual rent. JobKeeper helps employees, not in paying rent.

We urge you to advocate for an immediate 3 month waiver of all rent, funded by government. Without this we think many independent local shops will close, families will lose their homes and demands on Centrelink dramatically increase.

This is urgent. Please help. Small businesses need you.

Here are email addresses you could use in addition to other state and federal politician email addresses you find – especially state leaders in your area.

senator.cormann@aph.gov.au
senator.cash@aph.gov.au
josh.frydenberg.mp@aph.gov.au
attorney@ag.gov.au
Christian.Porter.MP@aph.gov.au
department@treasury.gov.au
Peter.Dutton.MP@aph.gov.au
Karen.Andrews.MP@aph.gov.au
Chris.Bowen.MP@aph.gov.au
jim.chalmers.mp@aph.gov.au
mark.dreyfus.mp@aph.gov.au
senator.katy.gallagher@aph.gov.au
Brendan.O’Connor.MP@aph.gov.au

For the Prime Minister, use a feedback form on his website.

The more newsagents and their suppliers engage with this campaign the better.

I emailed 1,700 newsagents about this yesterday morning. I have also engaged with newsXpress members about this and they have been engaging with politicians, sending the email far and wide.

This is an important lobbying campaign by our channel. Even if your business is not down in revenue, you have colleagues who are and they need your support. The email have been written with that in mind.

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newsagency of the future

A retail tenancy win for small business in WA

Great news out of WA tonight with the state government announcing 3 months rent free for SMEs that have experiences a 30% decline in turnover. It is backdated to start from March 1, 2020. The government is providing landlords terrific financial support if they waive rent for 3 months for SMEs. The landlords have an excellent incentive because of this.

This is an excellent result from the WA government, a government that continues to deliver terrific results for small business retailers.

NOTE: the 3 months rent free is exactly what ALNA and all the newsagency marketing groups have been agitating for and suggested members write to politicians about.

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Ethics

Zoom workshop: winning sales online

I’m hosting two workshops, today and tomorrow at 10am, at which I will share examples of selling online.

We will research some of your competitors, popular keywords and more as part of understanding what selling online could look like. This will be a live research opportunity designed to give you insights you can leverage if you are planning a website for your business.

Come armed with questions and details of your competitors you’d like us to stalk.

2 sessions: Apr 23, and 24 2020 10:00 AM Melbourne time.
https://zoom.us/j/96727738375?pwd=ZUprQzJKRDAxL3Z2YXNWTE80c2ZOQT09
Meeting ID: 967 2773 8375 Password: 004633

Everyone is welcome. There will be retailers from several channels there – it will not be newsagency specific.

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Newsagency management

If you are selling face masks or hand sanitiser…

If you are selling face masks or hand sanitiser, my suggestions are that you ensure product quality and that you charge a price reflective of public service.

Basic face masks at $5.50 each and 60ml of hand sanitiser for $12.99, which was available in one newsagency yesterday, reflect price gouging given that the masks can be bought wholesale for under a dollar and 60ml of hand sanitiser for $2.50.

Price gouging is a bad look for the retailer and the channel of which they are part.

9 likes
Ethics

SME retailers can’t carry the extraordinary cost of government COVID-19 decisions

Small business retailers have been left to carry an unfair burden through COVID-19.

The rent relief offered by the national cabinet’s mandatory code of conduct is too little, too late. I suspect it will send many small business retailers to the wall.

We need an urgent federal government funding of 100% of rent for 3 months. Otherwise, the economic impact will be devastating.

I say this based on how landlords are reacting and based on the experiences of several retailers as put to me. Here is one example I heard of yesterday. While the numbers change between stories, the situation itself does not change.

One shop in a major centre in NSW is down 75%. Revenue is $25,000 a week with a GP of 15% given the product mix, plenty of the revenue is lotteries. That is a GP of $3,750.00.

Wages sit at net $500 a week after you allow for JobKeeper. Rent for the business is $8,750.00 a week and the landlord has made it clear they will waive no more than $2,187.50 of that. The landlord has also required this retailer provide certified management accounts 2 years of P&Ls, tax returns, certified current revenue data, a personal assets and liabilities list and details of all grants and other COVID-19 related benefits tapped into by the business and its owner.

The business has a deficit of $3,312.50.

The business has an overdraft maced at $200,000. Their bank is reluctant to lend more as there are no assets to back this.

The owners have three maxed out credit cards and $10,000.00 in the bank.

Their latest BAS will release some welcome funds. However, the amount buys a week or two, no more.

This is a good business, which usually sold plenty of unique, high-margin, items. Through no fault of the owners, foot traffic has collapsed, leaving only low margin traffic visiting and even that is declining further this week.

With governments pumping truckloads of cash into private hospitals, media outlets, airlines and other businesses impacted, they are yet to pump any cash directly into retail. The mandatory code of conduct sees some state / territory tax waivers flow, but not much.

Only an immediate payment of 100% of rent for 3 months buys the time needed to understand the complexity of the situation. Without it, businesses like the example above will collapse, impacting not only the owners but all who rely on the business.

There is urgent concern among SME retailers that politicians do not understand the critical situation they face.

2 likes
Ethics

Landlords demand secrecy from SME tenants as they continue to push back on the MANDATORY CODE OF CONDUCT SME COMMERCIAL LEASING PRINCIPLES DURING COVID-19

Small business retailers can’t take a break in dealing with landlords over the collapse of retail traffic in shopping centres. Yesterday, several retailers told me that in addition to demands for extraordinary business and personal financial data, the landlords are demanding a signed confidentiality agreement.

Two requests I have seen make it clear that a signed confidentiality agreement is required before any discussions can proceed. This is despite existing leases covering confidentiality requirements.

It makes no sense that landlords are demanding more paperwork when they have a lease in place covering these requirements.

Every day this drags on is a day closer to small retail businesses going to the wall.

The behaviour of many shopping centre landlords in Australia is appalling. Their approach to dealing with the mandatory code as agreed by the national cabinet makes a mockery of the decisions by state and federal governments. The landlords are demonstrating that they are a law unto themselves.

On top of extraordinary demands for personal and business financial information, some landlords are refusing to put anything in writing, demanding that the matters are discussed. I suspect this is so there is no record of the discussions.

Shopping centres, major shopping centres, are empty. People are not visiting. This is not due to the retailers. The retailers should not have to bear the costs of their tenancy if the centre is not delivering the people expected to be in the centre in the usual course of business.

Governments have to step in here and help address what is now a crisis for independent small business retailers because the landlords are acting, together it seems, agains these most vulnerable retailers.

This is why I support an immediate three months rent free arrangement – to provide time for politicians to actually understand the problem and to realise that their decisions so far, while made with the best intent, have disadvantaged small business retailers and pushed SME retail to the brink of collapse … because of appalling behaviour of shopping centre landlords.

While it sounds melodramatic, this is a crisis for many families around Australia. It has been made a crisis by the landlords and their disinterest in fair resolution of the situation brought about through no fault of SME tenants yet for which SME tenants are having to carry the majority of the financial cost.

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Ethics

How small business retail tenancy landlords are ignoring the national cabinet’s MANDATORY CODE OF CONDUCT SME COMMERCIAL LEASING PRINCIPLES DURING COVID-19

More and more landlords are pressuring independent small business retailers to provide information prior to them considering negotiating rent relief.

It appears to be that these landlords are doing everything possible to delay agreeing to any offer.

There appears to be a co-ordinated campaign by landlords to slow access to relief to small business tenants. Here is an example of communication I have seen from a national real estate company sent to all tenants in a small shopping centre.

The landlord is sympathetic to the impacts of COVID-19 and echo the Prime Minister’s comments that Landlord’s and Tenants need to work together during this unprecedented time. 

Following the announcement from the Prime Minister and National Cabinet on 7 April 2020, there has been further clarity on the proposed amendments to legislation and the now released Mandatory Code of Conduct. 

As stressed by the Prime Minister, tenants are still obligated to honour their leases and its terms throughout this period. The landlord is committed to providing an equitable solution, but we expect tenants to respond in kind. 

The landlord is willing to provide support to retailers so all parties can emerge from the current challenging environment. We would recommend that all tenants have the following information prepared, so we can move quickly on any responses and support all retailers in a proportionate and equitable manner. 

  • • Evidence that the business has made application for the “Job Keeper” assistance and has a turnover of less than $50 million (in which case the mandatory code will apply); 
  • • A statement of financial position, outlining income, expenses, assets and liabilities (preferably audited or certified by a chartered accountant), as at 31st March 2020; 
  • • Year to date and recent financial year financial statements for the impacted tenancy 
  • • FY’19 and year to date FY’20 P&L 
  • • Balance Sheet; 
  • • Sales turnover history for 24 months to March 2020 by a Certified Accountant 
  • • Documented evidence of their application and acceptance for assistance from the ATO, State Govt, Federal Govt. and Franchisor where applicable. 
  • • Report from an accountant or financial advisor with evidence that the business has experienced a substantial reduction in its ability to pay rent due to the impacts of COVID- 19; 
  • • Summary of major debt obligations and whether any repayment holiday has been offered by the financier; 
  • • Other relevant information depending on the nature of the business, for 
  • instance, evidence of a decline in sales or loss of clients/projects and the consequential anticipated turnover for the current quarter, which shows how circumstances have changed as a result of COVID-19 since 1 March 2020; 
  • • What arrangements are currently in place for the ongoing operation of the business, such as work from home arrangements and whether staff have been stood down; and 
  • • Whether the tenant holds business interruption insurance that covers the payment of rent and outgoings and if the circumstances for a claim on that insurance have been triggered. 
  • • Business Plan looking forward as to actions planned post lockdown and beyond. 

We thank you for your understanding during this difficult and unprecedent time. 

The code of conduct is clear. Plenty of the information being requested by this real estate agent is not covered by the code. Worse still, plenty of what they are requesting will require small business retailers to spend unnecessarily to provide the information.

Take the supply of turnover data. Most shopping centre retailers provide turnover data monthly. To now ask for certified data, which will cost more, is nonsense. It’s like the landlords say they do not trust the data they have bene receiving for years.

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Ethics

VANA shows it’s out of touch, again

The VANA created wannabe national group, NLNA (not to be confused with ALNA, the real national body serving newsagents) emailed newsagents last week saying they had been busy serving newsagents through COVID-19. They demonstrated this by providing access to a supply of hand sanitiser. Once again, arriving at the party late thanks to many many suppliers of hand sanitiser reaching out to newsagents over previous weeks.

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Newsagent representation

How some retail landlords are misbehaving in dealing with COVID-19 relief requests from tenants

Here is a list of information requested by some retail tenancy landlords, including some shopping centre landlords where tenants have registered for JobKeeper, advised they qualify for JobKeeper and provided retail turnover data (in the usual format supplied to the landlord) showing declines of between 30% and 75%. Landlords have asked for information prior to opening discussions on rent.

Note: the list is not from the one landlord.

  1. Business bank statements for the last 2 years.
  2. Personal bank statements for the last 2 years for all business owners.
  3. Tax returns for the last 2 years, certified by your accountant.
  4. BAS statements for the last 2 years.
  5. A personal assets list for each owner or shareholder for the business.
  6. A full stock listing showing age and value of all stock.
  7. A list of all other businesses you own.
  8. A list of all other retail tenancies you have.
  9. Details of all state and federal government COVID-19 related funding and or grants you have applied for.

In my view, landlords have no right to this information. The CODE OF CONDUCT agreed by the national cabinet is clear. If a business applies and meets the criteria for JobKeeper, their lease falls within the details of the code.

The only data points that matters are comparative revenue. This can be provided in the form that has been used for years with most landlords. Their request for it in a different form is not part of the done. Indeed, I suggest that any such request is outside the good faith  goals of the code.

I think it is critical that retailers advise state and federal politicians when their landlords seek information outside the code, like any of the information on the above list. At the time of advising politicians, I also suggest advising the office of federal small business and family enterprise ombudsman, the shopping centre council of Australia, the treasurer, prime minister, premier / chief minister, local small business commissioner as well as your local council.

Landlords and tenants have clear obligations under the code. From what I am seeing, too many landlords are misbehaving in their requests for information. I doubt this is due to ignorance. I think it is to create a barrier to providing financial relief to tenants. If it continues, more retail businesses will close for good.

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Ethics

Magazine subscriptions up

Mediaweek is reporting a bump in magazine subscriptions:

Magazine subscriptions surge: isubscribe reports record uplift in sales
This week, magazine subscription retailer isubscribe is reporting a 29% uplift in sales for March 2020 and is on track to achieve an increase of over 50% in April. Those figures are just for print magazine subscriptions.

Digital subscriptions, typically a much smaller proportion of the overall magazine subscription market, have jumped 134% in volume for March and over 400% in volume as at 15th April. Health titles are experiencing the strongest growth, particularly Women’s Health magazine. The brand is still a Pacific Magazines publication given the impasse between Seven and Bauer over the sale of their magazine titles.

“It’s been a strong end to the first quarter and start of the second, due to the dramatic changes in community and consumer behaviour.” said Hunter Drinan (pictured), managing director, isubscribe.

“Together with additional media spend, particularly TV, there’s increased awareness of our products at a time when customers are wanting to keep their minds and bodies engaged, and they want support and inspiration for the projects they haven’t had time for until now.”

The magazine categories experiencing the strongest uplift on isubscribe are home and garden, kids, lifestyle and health and wellbeing magazines.

“We’ve seen a massive 60-150% increase in sales across those categories in April. The stand out performance has been our puzzle magazine category. While starting from a lower base than the major categories, it’s experienced an almost 300% increase in total sales for March and an over 1400% increase to date for April,” said Drinan.

“Working from home and home schooling also means more screen time in the house. People are seeking more traditional, ‘offline’ forms of entertainment such as reading books and magazines, walking or bike riding in the park.

“We’ve actually seen this trend building in recent years, particularly in relation to kids magazines. Big players are coming into the market to create educational, fun magazine products for kids. National Geographic launched National Geographic Kids in 2016 and it’s been the number one title across our business for over two years.”

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magazine subscriptions
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