Another post it type ad stuck on The Age
Here is the front page of the A2 section of The Age newspaper today – the post it type ad which is often on the front page of The Age is now on the front page of the popular A2 section.
I pulled the fellow post it type ad for HBA and it ripped the page.
I overheard a couple of wait staff at a cafe this morning talking about the stuck on ads. One said to the other: I hate these. I wonder how much longer Fairfax will continue with ads newspaper readers hate.
Promoting magazines on an LCD screen
ACP magazines make it easy to maintain a relevant slide show on our LCD display at the counter. We have had the LCD in place for close to two years and for most of that time we created our own display. It was time consuming. For the moment we have switched to the ACP slideshow and are enjoying the time saving.
What we – the newsagents now using LCD displays – need is an easier way of merging content from Pacific Magazines, ACP Magazines and other publishers we want to promote – and in a way which more easily allows our content.
Customers notice these displays and I am certain the products promoted will benefit.
Partworks island on the dance floor
We have created an island display on our dance floor to support the Charmed, Fifi, Harry Potter, Felicity Wishers and Yu Gi Oh partworks. It’s in a high traffic area and is driving good impulse sales.
While we also promote these partworks in the appropriate categories in our magazine area, we always find that we get more business with this high traffic promotion – especially while the TV commercials are running.
The island display is a little smaller that when we started as we have sold plenty of stock this past week.
The newspaper home delivery subscription rip off
Newspaper home delivery in Australia is an addiction newspaper publishers cannot shake. They appear prepared to give away anything to get a customer on board. Then, once a customer has fallen off at the end of an offer, they go back with the same heavily discounted offer to win them back. With deals of 50% and more off cover price it is no wonder the home delivery deals are popular.
The problem is that small business newsagents are funding a disproportionate part of the subscription deals. Following my post a couple of weeks ago about newsagent concerns about the Home Delivery of the West Australian, I received several emails from newsagents in South Australia documenting the falling return achieved from home delivery of the Adelaide Advertiser.
Some Advertiser home delivery deals result in South Australian newsagents receiving 11 cents for the delivery. Out of this they have to fund delivery drivers, plastic wrap and other business overheads such as fuel, management time and collection expenses.
Years ago, the same newsagents would have received 25 cents plus a delivery fee of around 7 cents a day – 32 cents in total.
It is only since deregulation of the newspaper distribution arrangements, as instigated by the current Federal Government, that News Ltd has driven newsagent newspaper home delivery revenue down by, as the South Australian example shows, up to 65.6%. Newsagents cannot afford this. While News Ltd has been cutting newsagent revenue, wages, fuel and overheads paid by newsagents have risen.
Below is a table prepared by a newsagent showing the annual cost to South Australian newsagents of the News Ltd cuts in home delivery revenue. If the data feeding into this table is accurate, South Australian newsagents are $500,000 down annually. This is off the bottom line. Some have suggested to me that this analysis is conservative and that the numbers are worse.
What is happening in the newspaper home delivery space and to newsagents in particular demands a Government inquiry. In 2004 I called for a Productivity Commission inquiry to follow up the impact of deregulation on the newsagency channel. This latest data out of South Australia and the evidence that newsagents are 65.6% worse off today than prior to the Government driven changes suggests an inquiry is warranted.
While some will say that the reduction in revenue is a result of competition I would observe that there is no competition for home delivery of newspapers. I’d also note that while News Ltd has been charging less and less for home delivery of newspapers, advertising rates charged by News Ltd have increased annually. News Ltd is covered – newsagents, who have no control over their revenue are not.
Small business newsagents have been disempowered by government deregulation and one has to ask whether that is good competition policy at work.
Calling poor customer service what it is
Last year, at the urging of Victorian newsagents using the POS Solutions software, VANA, the local newsagent association, facilitated a POS Solutions user meeting at the VANA offices. I complained at the time as the announcement did not provide any background as to their involvement in the meeting. The VANA announcement read like an endorsement by VANA. Since then, VANA has facilitated several more POS Solutions user meeting, the most recent this week.
VANA continues to be less than clear in explaining that they are facilitating the meetings because POS has been unable or unwilling to host user meetings in the past. This maintains the air of endorsement.
Tower Systems, my software company, has run regular user meetings since the early 1980s. We fund these ourselves. We have never used VANA offices or resources to facilitate them. Further, we actively support VANA in a number of ways on a pro bono basis.
As a financial VANA member I am disappointed at the implicit endorsement of POS Solutions and frustrated that people who should know better at VANA do not understand that their involvement – even in providing an office and sending an email – implies endorsement.
If POS Solutions lets newsagents down by not providing user meetings, so be it. It is their commercial decision. Newsagents make a commercial choice as to the software they use and that choice should not be propped up by VANA in any way.
Tower Systems currently serves in excess of 1,400 newsagents. My understanding is that POS Solutions serves around 700 – this is based in part on information supplied by POS Solutions to one of their clients late last year.
With only one more Tower Newsagent user meeting to go – Darwin July 12 – let me recap some numbers. We visited 23 cities and met with hundreds of our customers. Our investment in travel, hotel rooms, meeting room hire and the like, we invested over $50,000 in these sessions. We will invest a similar amount in the second round later this year. The most common questions related to user of Retailer 2. We have received 20 suggestions for changes in the software and we will look at these as we consider future updates. In the early 1990s, when our support was not as good as it could be, we would face angry customers at user meetings. This time around, as has been the case for years, we faced happy customers. We’d like to especially single out our Sydney customers for turning up over several sessions – they usually have the worst attendance record. This time around was huge improvement!
National Geographic bag of shame
The National Geographic sells itself with stunning covers, usually. Some bright spark has decided that the cover is not as important as a two for one deal with the current issue.
The latest National Geographic has been delivered to newsagents in a plastic bag with a white sheet. At a glance it looks like an adult title. The bag of shame is a shame and will affect sales for this issue of National Geographic.
We usually place National Geographic in a good position – displaying the full cover. Not this time.
Newsagents chasing fairness in lotteries matter
The story about the newsagent losing a case brought about by NSW Lotteries following fraud by an employee gets another run in the Daily Telegraph today. Newsagents in the meantime are getting stirred up, realising that they face being cut loose by NSW Lotteries should their lax major prize claiming processes let a newsagent down again.
I am told that the NSW Newsagents Association, NANA, overnight organised blanked coverage for NSW newsagents for fidelity and errors and omissions insurance in relation to their lottery agencies. NANA has been actively assisting in relation to this matter since before the case became public.
Stung by cash change scam
We lost $150.00 in a cash-change scam in my Sophie Randall Cards and Gifts business yesterday. This is a photo taken from our security footage. We have blurred the face on advice – something about protecting the innocent. Anyway, the scam was straightforward – seeking to change notes mid way through a sale. We should have known better. As a result we are adjusting our processes and improving team training to ensure this does not happen again.
The raw security video files, from four angles, are crisp and enable easy identification. We are providing the files to the Police this afternoon. We have also made these available to security within our centre.
I may load the video footage tomorrow.
Business journalists move online
Respected journalists Alan Kohler and Stephen Bartholomeusz have quit Fairfax to focus on their online Eureka Report. The Eureka Report is an excellent example of online publishing in the business and investing space. A question for newsagents: how many people buy newspapers for their business news?
Newsagency of the future: stationery
Another newsagent is chasing business online using Google AdWords. The third sponsored link down on the image below – Stationery Supplies – is for a newsagency in Victoria. They have put their stationery department online under a different shingle – probably because consumers think newsagencies are expensive. This is a gutsy and smart move. While some newsagents will not be happy they are competing outside their geographic reach, I say good on them. We have to get away from thinking about borders and territories.
While using Google is expensive to attract business, it is essential if you want to build a client base quickly. This is what we did with our Inkfast business – we no longer use Google having established a big client base and good natural rankings in the search engine. Now, without any advertising or marketing expense, we sell between $30,000 and $50,000 in ink and toner a month on top of what we sell in our shop. Only rarely do we sell within our geographic reach.
What the folks at Stationers OnLine have done is show newsagents how a small business can compete against the likes of Officeworks.
Is this the newsagency of the future? Maybe, in part. Newsagents need to be entrepreneurial on their business decisions. This means backing yourself and taking risks.
Productivity Commission inquiry into retail tenancy leases
I am pleased that the Federal Government has asked the Productivity Commission to undertake an inquiry into the market for retail tenancy leases in Australia. The press release from Peter Costello outlines what the Commission has been asked to report on:
the structure and functioning of the retail tenancy market;
any competitive, regulatory and access constraints on the market;
the extent of information asymmetry between landlords and retail tenants;
scope for reform of retail tenancy regulation;
the appropriateness and transparency of provisions in leases to determine rights when the lease ends and factors that are taken into account in determining rents;
and,
any measures to improve overall transparency and competitiveness of the market for retail tenancy leases.
While I think the Government has taken too long to call this inquiry, I welcome it as should all small business tenants including newsagents.
I know of newsagents with occupancy costs of 16% and above. With retail newsagent GP averaging 29% there is little room for wages and other business expenses.
Newsagents ought to participate in this inquiry – personally and through industry associations. The more submissions the better the Commission will be informed as to the facts. The Productivity Commission website has a page from where you can find out more about the inquiry and register interest in making a submission.
One area the inquiry could report on – if there are submissions – is head lease arrangements which have seen the sub tenants removed and or locked out for matters unrelated to the lease. In such cases, the lease is the mechanism of control and can be layered with an overhead beyond the traditional direct lease arrangement.
Any newsagent who has recently complained about their landlord, especially a shopping centre landlord, must make a submission to the inquiry. To pass on this opportunity to have your voice heard would make your complaints a waste of breath. Get involved newsagents – this is your opportunity to be heard.
UFOlogist magazine out of this world
Do the math with me. 10 copies of UFOlogist magazine. Cover price $7.95. My buy price $5.96. On-sale period – three months. My real-estate and labour costs per pocket per month are close to $4.00 meaning that I need to sell two copies a month to break even. I am luck to sell two copies in three months. UFOlogist does not work for my newsagency on these numbers. Indeed, I suspect it does not work for the vast majorities of newsagencies receiving the title. A fairer arrangement would be billing based on sales – the distributor has our sales data and could easily handle this. Alternatively an agreed performance threshold of a 50% sell-through under which I am paid regardless.
These are the matters on which magazine distributors agree in their discussions with the Magazine Publishers of Australia in determining KPIs for magazines. In the meantime we will fight title by title for fair treatment including fair scale out based on sales data and not the cash requirements of the distributor.
Is there a magazine overload at Financial Year end?
Talk to any newsagent and they will complain that magazine distributors overload them with stock in the last week of the month and even more so in the last week of the last month of the Financial Year.
To help newsagents determine if this actually happens to them, my software company early last year released a report which tracks magazine supplies by distributor by week of the month. Here’s a small portion of the report (I have obscured the newsagency name):
Our analysis of this data from several newsagencies shows that one distributor is ahead of the pack in loading the last week, delivering 33% of their stock in the last week and in time for the end of month billing.
To be fair I would note that distributors do not always have control over when magazine are distributed with publishers the other key players in this timing.
By providing this reporting tool last year, Tower Newsagents were able to deal with facts surrounding end of Financial Year magazine scale out. In some cases I know that newsagents were able to negotiate fairer arrangements.
This report is an example of how newsagents can use technology to be better informed and therefore more factual in their public comments. It also drives newsagents to use their technology as more than a glorified cash register.
To the 1,400 Tower Newsagents my message is be vigilant and use the tools in your software. Check the report and please let me know if you have been overloaded in the last week or two of June 2007.
Starved of Delicious magazine
NDD demonstrates their magazine distribution prowess again today sending just 15 copies of Delicious magazine. As I blogged here last month, this is a 50% cut and we will, again sell out. What demonstrates the genius of the folks at NDD is that the extra copies of the June issue which we asked for a while back arrived today – the same day the new issue arrived.
NDD likes to have it both ways. They grossly oversupply with low volume titles and undersupply a successful title like Delicious. If they want to kill the sale of Delicious in my newsagency then they are going about it the right way. I will contact the publisher and ask what they think.
Signs, signs, everywhere signs
I was in a newsagency recently and counted eight signs directed at customers – not including promotional posters. Of the eight, five were negative – this is not a library, no bags, do not ask for credit. One was promoting an offer but was in the same font and style as the negative signs and would, I suspect, have been viewed as negative.
We have as few signs as possible in my newsagency – certainly no negative signs. The best sign is the one photographed at each register point. It promotes phone recharge and generates good business. Since we can sell recharge from each register it is an easy and fast upsell. The small sign at eye level at each register is an excellent opportunity to connect our newsXpress branding with the phone card offer – an ideal win win. It is he sort of sign newsagents need as opposed to the negative stuff.
MySpace the biggest threat to newspapers?
That is the question considered in this piece by Erik Sass at MediaPost. Sass refers to a report released last week by the World Association of Newspapers. The text of the WAN announcement can be found here. The headline finding from the WAN funded 10 focus groups in 10 countries researching how young people get their news is:
Young people perceive traditional media as more accurate, trustworthy and reliable than new media, but many get most of their news and information from another source entirely — family and friends.
The full report can be found here.
The relevance of this report for newsagents is that we rely on newspaper sales – anything which affects, today or into the future, newspaper sales is relevant to us and must b factored into our business planning. What mainstream media is experiencing is generational change. The community, particularly the younger community, is moving from an aggregated media platform to no platform as such.
Find It online classifieds surge
Find It online classifieds now has 17,301 live ads, 11,120 of which are for vehicles. This is an ad medium which will save Australians millions and generate revenue for newsagents – for no capital outlay.
I am backing Find It as a means of helping newsagents tap into online revenue and find commercial relevance from the online world.
Software for newsagents
I get queries from many people through this blog asking about software for newsagents. Click here for current pricing from my Tower Systems business. More than 1,400 newsagents use this software. We also have pricing for newsagents switching from other systems.
Newsagents reject competition
GNS, the major stationery wholesaler used by newsagents on the eastern seaboard, has advised newsXpress that it is banned from exhibiting at the annual GNS trade shows in Melbourne, Sydney and Brisbane this year.
GNS controls the Newspower marketing group and says that it has banned newsXpress because it competes with Newspower. This is despite many newsXpress newsagents sourcing stationery from GNS, myself included. I am a shareholder in GNS as are many newsagents. Acquiring shares, or units as they were known, was part of the requirement for opening an account.
newsXpress has exhibited at the GNS trade show in Brisbane for five years and Victoria and New South Wales for two.
This decision by the Board of GNS demonstrates that key stakeholders in the newsagency channel do not understand the importance of competition. It will not help the broader newsagency cause when it lobbies government on competition related matters.
Banning newsXpress could be seen by some as an indication of fear among GNS Board members about the success of newsXpress over Newspower. In reality, these marketing groups serve different constituencies. newsXpress will only ever be a boutique marketing group with no more than 250 members. With 110 members today, it is a long way off the 1,000+ members of Newspower. That difference alone makes the decision by the Board of GNS even more curious.
I will continue to purchase stationery from GNS and support its seasonal marketing activities – despite this unfortunate and ignorant snub.
Poor newspaper and magazine retailing
I am in Sydney this morning and was struck by the difference in news and magazine retailing on the streets here compared to what I saw in Hong Kong last week. While there are some excellent newsagencies in Sydney, few are on the streets, street front real-estate is left to convenience stores such as this one I walked past this morning. Newspapers and magazines are represented but they are cramped – you need to climb over a photocopier to get into the tiny browse space.
This is a space newsagents could own – street level news and magazine retailing in our capital cities. All it would take is the development of a plug and play format built around convenience but with news and magazines as a key product offering. This is what Circle K and 7-Eleven do well in Hong Kong.
Handing back newspaper home delivery
Two more newsagents have contacted me yesterday to advise that they are handing their runs back to the publishers, each saying they can no longer afford to run the home delivery side of their business. Each cited the drop in delivery fees and little change to cover price in ten years as the cause. One has exceptional data to backup his claim, showing that the home delivery side of his business is 23% worse off today than it was ten years ago and that it is losing more than $300 a week.
It would be appropriate for representatives of all parties who care about the newspaper home delivery system – newsagents, industry associations, delivery contractors, publishers and home delivery customers – to resolve the issue of falling net return before more newsagents decide it is no longer a viable business.
To balance this report, I’d note that in some states groups of newsagents are getting together and evolving a new model buying up territories. These are the businesses to watch – smart operators better managing costs and leveraging economies of scale from a more modern home delivery model.
Court finds againt newsagent in lotto case
The Daily Telegraph reports that the District court in NSW has found that a newsagent was negligent in his obligations surrounding handling a division 1 prize and is therefore liable for the $500,000 prize.
While I do not know the detail of this case, I do know that NSW Lotteries following best practice for managing large prizes could have seen this problem avoided. In Victoria, for example, lottery agents are not involved in processing large prize claims – the screen does not even show the value of the prize when the ticket is scanned. In NSW, the process is more lax and even though it has been changed, it remains easy for fraud. I would have thought that since NSW Lotteries controlled the process it had some obligation in relation to this case in that it could have adopted worldwide best practice and removed the temptation altogether.
It is good to see the NSW newsagents association supporting the newsagent involved.
The media revolution
First there was EPIC, a cool short that predicted the future of media. Now, a couple of years on, comes Prometeus: The Media Revolution, a short from Casaleggio Associates in Italy – taking us up to 2027 and a world where Google owns Microsoft, Amazon has acquired Yahoo… Click the image, it’s worth a watch, if you,re game.