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

Author: Mark Fletcher

Cartridge rescue good for the environment

cartridge_rescue.JPGSince we promote the sale of ink and toner products inside and outside our newsagency, a complimentary recycle service is essential.

Six months ago we replaced our Planet Ark cartridge recycle arrangements with an arrangement which we feel is more friendly to the environment. All cartridges returned by customers are sent to Cartridge Rescue which reuses them. More than 90% of all they receive are reused – to date, the folks at Cartridge Rescue have reused 2 million cartridges. This is far better than chopping the used cartridges and making them into something else: reuse before recycle is their mantra.

Given that newsagents cop flack in the media from time to time over plastic bags and paper waste (Thanks John Dee of Planet Ark), it is good to be part of positive action on an environmental issue. Talking about Cartridge Rescue with customers provides another reason for them to visit our store when they run out of ink – to take care of the spent cartridge appropriately and to buy a replacement – a win win.

newsXpress organised the Cartridge rescue relationship and rolled it out through the entire network of stores – these are listed at the Cartridge rescue website.

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Social responsibility

Location location – selling Darrell Lea

d_lea.JPGWe moved one of our Darrell Lea stands to the front counter and sales jumped significantly. While this is not the preferred location, so we are told, the sales speak for themselves.

We figured we would leave the stand here for a month and then move it on – we like the idea of constant movement around the counter and front of the shop to show a business on the move.

Too many newsagents operate a set and forget model – leaving too many products and categories in the same place for too long and therefore encouraging customers to become store blind. We are surprised how many have said – oh, you have Darrell Lea. We have had Darrell Lea for five years.

Sales over the last two weeks show that Darrell Lea products can work in an impulse situation.

FOOTNOTE: See the Herald Sun stand next to the Darrell Lea unit? It continues to help drive newspaper sales at the the front high traffic lottery counter.

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confectionary

Diana sells magazines

New Idea is strong this week in stores I have seen thanks to its Diana series. The same is true of the Australian Women’s Weekly with its stunning Diana souvenir – I’d be surprised if it is not a sell out.

The extra traffic generated as a result is providing us with an opportunity to push the magazine club card and remind customers of our exclusive loyalty proposition.

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magazines

Art supplies and newsagencies

art_supplies.JPGFor two years we have offered a good selection of art supplies which we have sourced from Queensland based Mega Shed. Sales have been good and we’re nicely in the art space.

While the range has been good we have been disappointed that Mega Shed directly competes with us in their retail and online businesses. This disappointment is compounded by frustration over delivery costs. They require us to order in pallet lots and this can be a challenge. When we cannot meet a pallet requirement, freight costs are extraordinary.

When they are out of stock it is frustrating to find the same product in stock in their retail business.

We are not continuing our relationship with Mega Shed and will instead seek a relationship with a more commercially astute art supplier – a partner who specialises in wholesaling rather than retailing.

Art supplies are an excellent add-on product for newsagencies. The key is getting a good range of product at a fair price and with good backup stock availability.

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art supplies

Benchmark project for newsagents

We have commenced a benchmark project with around 50 newsagencies, delving deep into the businesses to streamline benchmarking processes so that comparisons are easy and reliable.

While benchmark studies have been undertaken in the past, they are snapshots and rely on data from a range of sources. Our goal is continual benchmarking from one IT platform source. All of the newsagents participating are using the Tower Systems software.

Knowing, for example, that a shopping centre based newsagency needs sales of $8,000 per square metre is the bar. Our software tracks sales by department, category and supplier by floor space allocation. This enables us to report on these and other views against the industry goal benchmark and thereby facilitate local store decisions on, say, supplier. It also allows us to consider adjusting the industry benchmark if the reported data from the group is radically different.

Key to the project working is agreement between participants as to how products are categorised within their businesses.

We first considered this project when we undertook a study of data from 8 million shopping baskets in 2005. The results of that research demonstrated the value of newsagents working together to compare data.

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Newsagency challenges

Newsagent business works against newsagents

gns_newspower.JPGThis is the brochure form GNS to which I referred yesterday.

The exclusive offer from GNS is between 5% and 10% off selected stationery lines. It is offered exclusively to Newspower members but has been sent to other newsagents. Most items are priced less than OfficeSmart prices.

OfficeSmart is a GNS buying group for newsagents driving stationery – newsagents pay a premium to be part of OfficeSmart and are promised better pricing in return. Not this time.

As a GNS shareholder I am disappointed that they are using their resources to fund discounts for Newspower members to the detriment of their non Newspower members.

For a newsagent owned business it is sure making some odd decisions.

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Stationery

Poor lotteries processes cost money

Newsagents in NSW are facing an additional $900 in insurance fees as part of the fall out from the recent high profile case involving employee fraud in one lottery outlet. Had NSW Lotteries followed the processes established years ago by Tattersalls NSW newsagents would be better off today as such a fraud could not be committed. So, if I were a NSW newsagent facing this additional $900 in insurance costs I’d be asking NSW Lotteries why their processes remain open to abuse.

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Lotteries

GNS discounts for Newspower

GNS in Victoria has announced discounts on some stationery items exclusively for Newspower members. As a GNS shareholder of 11 years standing and owner of a newsXpress store I am disappointed that I am locked out of this pricing. I note that when newsXpress approached GNS to negotiate pricing arrangements a year ago GNS advised it would not offer pricing which disadvantaged any of its newsagent customers. I guess time has changed for them.

What is interesting to me is the third line forcing situation – that I have to pay money to company A (Newspower) so that I can get a discount from company B (GNS).

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Stationery

Stunning Women’s Weekly tribute to Diana

aww_aug07.JPGI would be shocked if the August issue of the Australian Women’s Weekly (out yesterday) is not a sell out. It is one of the classiest magazines I have ever seen. The cover is sensational and the free DVD attached of Diana is excellent value.

Congratulations to everyone at ACP Magazines involved.

This issue has been on sale for one day and early indications are that it is a winner. We are supporting it with a feature display in store, a front of shop display and our usual waterfall display in our women’s magazine area. We saw it as key to go hard and go early with this.

While there have been plenty of Diana covers over the years, the quality of the AWW production and that it stands out visually from the usually noisy newsagent magazine shelves make this the tribute to collect.

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magazines

Rejecting calendars

We have let our magazine distributors know that we do not want to receive calendars from them this year as we have negotiated more lucrative arrangements direct with calendar publishers and importers. It does not make sense to carry calendars which deliver 25% to 33% GP when we can carry similar or better product which delivers 60% to 75% GP. Also, given that the Government owned Australia Post post office opposite my newsagency will have some product similar to what the magazine distributors send, I would prefer to offer a genuine point of difference.

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Calendars

Shopping centre rent

I have been provided current financial data for a newsagent in a major regional centre on the eastern seaboard of Australia with an occupancy cost of 24.76% – double a reasonable benchmark. I bet that for a similar size tenancy in the same centre a national retailer is paying half or less per square metre. Despite excellent sales by any measure – for a newsagency or on a per square metre basis in a major centre, the exorbitant and ever increasing rent condemns this business to losing money.

If it were me, I’d be asking the ACCC or any state authority which may be interested whether an occupancy cost of 24.76% for a newsagency – where around half of what you sell has a GP of 25% – would be considered unconscionable.

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Newsagency challenges

Harry Potter Chess Set tears

harry_potter_chess.JPGMany newsagents across Australia are angry this week on discovering that supplies of the Harry Potter chess set partworks have been cut and they cannot get enough stock to satisfy customer demand.

Customers are angry when their firm order is not available – what is the point of such a firm order some ask. Kids are upset.

That the Harry Potter Chess Set has been a runaway success should not surprise anyone – yet it apparently has.

I love partworks like this Harry Potter series yet constant supply problems and an inability by the importer, distributor and UK publisher to solve the problem suggest it might be time to give up on them.

Newsagents are justified in their anger on what appears to be another partworks supply botch up and the damage it will cause in customer relationships. Newsagents deserve better.

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magazines

Better magazine allocations

Newsagents have received a letter from Horwitz Publications and Network Services committing to allocate quantities of Horwitz titles to ensure that supplies closely match expected sales. If this happens newsagents will cheer as it reflects a more appropriately tuned supply model – I expect supply to be on the basis of a target sell through rate of 70% or higher for anything less would not provide the return I am looking for.

Now if only all publishers and distributors would agree to such arrangements. It would be good for the environment.

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magazines

Red ink washes US newspaper ad revenue

MK-AK967_NEWSPA_20070717203235.gifThis graph, published in the Wall Street Journal, documents a horror story for US newspaper publishers. This shows that the rate of decline in newspaper advertising revenue has accelerated since the beginning of the year. The ad decline reflects sales decline.

We know from basket data that over 70% of newspapers sold in newsagencies are sold alone. We also know that newspapers are the key habit based traffic generator for newsagencies. When the US trend hits here – even allowing for locaol conditions such as the US real-estate slump – it will hit newsagents hard. This is why working on your newsagency of the future is crucial.

Be sure to read Emily Steet’s excellent report at the WSJ for details.

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newsagency of the future

Officeworks vs. your local Newsagency

officeworks.JPG

I visited Officeworks this morning and it reminded me of the clarity of their stationery offer compared to newsagents. While we are broadly focused retailers, Officeworks plays in a relatively narrow space. This makes their pitch easier – the same as the card and gift pitch at our Sophie Randall Cards and Gifts shop finds it easier to sell cards and gifts. Beyond this, however, I noticed several other things of interest:

– The counter is well populated with everyday impulse purchases. Gone in the confectionery from the past and how they have blister packs of opens at what appear to be good prices. It would be hard for a small business owner to pass these up.

– Plenty of staff on hand. At 7:10am I counted five around the store. I was asked three times if I needed help.

– Deals. The way they sign their product it is easy to be lulled into feeling that everything is priced competitively. Their use of laminated made in-store signs adds to this feeling.

– Logofarm. At the counter was a brochure for this business. Given that many of their customers are small business owners it is logical they will want a good logo. The logofarm brochure makes it seem easy.

– Range. Even though the store has a broad range, they still don’t carry the loose product you see in many newsagencies.

There was a time years ago when newsagents (me included) saw Officeworks as a competitor. Today’s visit reinforced that we, Officeworks and newsagents, play in different spaces.

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Stationery

Western Union results

Western Union has reported an increase in revenue of 8% to US$1.2 billion. Their margin fell from 29% to 27%. I guess this is reflected in lower commissions on transfers – we certainly see that at the store level. It is interesting to see the announcement lists Australia Post (among others) as a key agent renewing its agreement with Western Union.

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Uncategorized

Free daily update

Check out the July edition of the Free Daily Newspapers newsletter here for a brilliant roundup of what is happening around the globe. Among other things the newsletter reports a 62% increase in circulation in the Asia/Pacific/Africa region between 2005 and 2007. In that time we have seen MX launch in Sydney and Brisbane to great success.

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Newspapers

New Idea and Famous win with chocolate

new_idea_jul22.JPGPacific magazines has a good promotion running this week supporting Famous and New Idea with the free Bueno chocolate. The chocolate promotion provides an opportunity to push New Idea sales and pull Famous along too.

We’re promoting the titles at the front of the newsagency (see photo) as well as in the body of the shop.

What really excites me about New Idea this week is the start of a six part series on Diana. We are taking to opportunity to promote putaways – so our customers are not disappointed.

The weekly magazine space is noisy and anything to lock customers in for more than a weekly fix has to be good.

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magazines

More giving away runs

Nine newsagents have contacted me over the last three days to talk through the process of handing back their runs following my posts here a week ago. Most cite falling returns and heavy newspapers as their reasons. If the newsagents go through with their plans it will add to the woes of publishers in NSW with home delivery runs without a newsagent operator.

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Newsagency challenges

The privilege of Fortune magazine

fortune.JPGI felt special to receive this Fortune Privilege Card – until I realised the card itself gave me nothing. It is a bit of froth to make me feel special enough to sign up for 68% off the cover price of purchasing Fortune at a newsagency.

The first publisher to engage commercially with newsagents and offer attractive deals for long term newsagent putaway commitment will realise the value of locking in loyal retail customers. While some will argue that the retail supply chain has a higher cost than the direct subscription model, I suspect that the cost is far lower than the 68% the publisher claims to give away with this Fortune offer.

Smart newsagents offer a professionally managed putaway service which includes SMS alerts to customers when their titles arrive, care for the titles so they are in mint condition when collected, barcode tracking of each customer’s copy when collected and up sell offers driven by the technology to help increase customer spend.

Newsagents are smarter and more capable in the magazine putaway area than these expensive and almost random mailings from publishers such as Fortune.

My message for publishers – work direct with me so, together, we can sell more magazines.

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magazines

Hip Hop magazines in suburbia

hip-hop.JPGThese are four of the hip hop / urban music titles we carry. At any point in time we have as many as eight. We usually receive one or two copies of each title. Sales are no more than one and often none. We request that titles are stopped and, eventually, they come back.

There is nothing unusual in what I have described – every newsagent could tell the same story.

These hip hop titles are a perfect example of why we need to collude to drive a better magazine supply model. While individuals request titles are stopped, the weak model allows titles back there or in another newsagency.

I understand that the distributors are working with the MPA on an agreed supply code. Unless newsagents control the titles which have access to their real-estate and labour asset problems will continue. We need to assert ourselves on this issue. The result would be, I suspect, greater success for the top selling titles and death for the very bottom end of the marketplace in all but newsagencies where these ultra specialist titles work extremely well.

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magazines

Half a magazine czar

Interesting to see UK wholesaler Smiths News testing the supply of a fixed range of titles with a group of independent retailers. Like Australian newsagents, independent magazine retailers in the UK complain about range creep where more titles are pushed into a category than warranted to service consumer demand.

The only way such an arrangement would work in Australia is if the magazine distributors agreed to work together to rules established by newsagents.

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magazines

News Ltd kicks an own goal

News Ltd appears to gave kicked an own goal in NSW with their Travel Australia DVD giveaway at the weekend. Newsagents are hunting down space copies so they can satisfy customer requests. The TV advertising appears to have been less than clear as Jarryd Moore comments at his blog. Newspaper promotions are meant to support not damage a brand.

In Melbourne it was a different story – News Ltd gave away the Make Poverty History DVD with the Saturday Herald Sun. Customers loved it. In our newsagency we had plenty of stock and enough spares for customers coming in today even to collect their free copy – nothing unusual in that since most News Ltd Victorian promotions are well managed.

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Newspaper marketing

AFL Footy Cards 2007

afl_cards_2007.JPGWe were fortunate enough to take delivery of another five boxes of AFL Footy Cards late last week and we are almost out again. Had supply not restricted for the footy cards this year we could have easily sold three times what we have been supplied. While we understand that the nature of the cards requires that they are rationed, it is difficult to have to tell young kids that we are out of stock.

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Uncategorized
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