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

Author: Mark Fletcher

Borders up for sale in Australia?

I might have missed local media coverage of this announcement from Borders in the US about plans for its international stores including those in Australia. They have retained KPMG to assist in the processes outlined in their announcement.

This is big news given the considerable coverage given to the arrival and subsequent expansion of Borders here. The announcement does not suggest the brand will retreat, rather that they will seek strategic alternatives.

Newsagents need to read the entire announcement. It reflects knowledge of changes in categories or products and how consumers shop those categories which also impact newsagents. For example, that Borders is bullish about and expanding their Paperchase model is interesting – especially that they will be launching some standalone stores under this brand.

My view is that newsagents need to consider how e brand and the breadth of product categories behind the brand. We put considerable emphasis on a single brand to represent the whole of the store. It could be that that general store type approach is not working for us as well as several purpose created and small stores could.

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Newsagency challenges

Construction blocks access

Our landlord has constructed two of these rather large boxes in our newsagency, around 40 year old columns which need to be replaced. They will be in place for a month, blocking one aisle of stationery and an aisle of wrap and specialty papers.

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This box in the photo is an invitation for theft as customers can get behind it and pocket product without being caught. We will probably completely block this other aisle off Monday as the theft risk is too great.

We’re yet to resolve the issue of compensation for this three month intrusion into our floorspace.

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Uncategorized

Free sports newspaper model for Fairfax?

I have been wondering about the plan for The Form, the new racing guide published by Fairfax yesterday – separate for the first time from the Sydney Morning Herald.

One possibility is that they will make it a free weekly newspaper like Sport in London. Sport is distributed every Friday morning around London and while it has a broader focus than The Form, the free distribution model is one option available. The background material on their website provides a helpful insight into why they chose the free distribution model.

The UK Sports Journalists Association blog published a post April 19 about plans to launch Sportsnight, a free daily sports newspaper for London. This is an interesting and bold development – a daily (six days a week) sports newspaper.

This activity shows that the free newspaper distribution model is alive and well in niche areas. While Fairfax may have made some missteps with The Form yesterday, it shows them playing is a space which is working elsewhere. I would not be surprised to see them separate further from the SMH and pursue a broader audience.

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Newspaper marketing

The working poor

News Ltd’s Daily Telegraph has a cover price of $1.00. Over the many years the cover price has been $1.00, wages, rent and business costs for newsagents have risen at least 40%. The fixed low cover price means newsagents are far worse off today.

Newspaper publishers in their annual reports crow about advertising revenue growth. I’d told it accounts for in excess of 85% of revenue for a title and that he cover price is about recovering the cost of retail and home delivery distribution.

Newsagents are becoming the working poor with these low and unchanging cover prices. Our cost of doing business rises each year yet the return from a crucial core product such as newspapers remains flat – falling in real terms.

Newsagents are required to provide prime real estate, invest in display infrastructure, provide access to promotional space and carry the cost of rising wages, rents and overheads for a flat return. And to remain contented while the publishers push their product to more and more non newsagent outlets.

Publishers complain that newsagents are lazy, not compliant with their requirements and lack entrepreneurial drive. The compensation from newspapers does not motivate newsagents. Indeed, it de motivates.

If the publishers treated newsagents as business people and respected and rewarded entrepreneurial drive in a commercial way then more newsagents would demonstrate their business skills. When here is no such reward it is understandable that many newsagents channel their efforts elsewhere.

I urge the publishers to rediscover newsagents and reward entrepreneurial effort commercially.

The current behaviour toward newsagents is not socially responsible.

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Newsagency challenges

Another stuck on newspaper masthead ad

The Age today has another post it type ad – this time promoting weekend home delivery – $30 for twenty weeks. The bright ad pulls focus from the content of the front page and partially covers promotions for two features. When I pulled the ad off my copy, it tore the paper.

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As a retail only newsagent I’m not all that happy about the offer. I’d rather see more effort put into promoting impulse sales in my shop.

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Newspaper marketing

Toilet newspaper reading

Rydges Hotel in Canberra helps blokes pass the time while standing at the urinal by posting two full pages of the Canberra Times broadsheet. Today’s news selection was about the US shooting in Virginia. Heavy stuff while you’re on a rest break. Not sure if this makes me a pervert but here’s a photo of the toilet news offering.

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That’s a lot of reading.

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Newspaper marketing

Missteps by Fairfax with The Form

Newsagents are copping flack this morning from customers about The Form which launched today. I’m in Canberra today and noticed that at three non newsagent outlets the SMH is available but no copies of The Form. Here’s what newsagents are saying:

– The marketing material from Fairfax provided to some outlets does not make it clear that a purchase of the Sydney Morning Herald or the other participating papers.

– Customers expect The Form free with their paper and are annoyed it’s separate.

– Some newsagents have insufficient stock. UPDATE: make that: many newsagents have not received sufficient stock to cope with demand.

– Fairfax received too many requests for supply from SMH subscribers to get them processed in time leaving many home delivery customers without the race guide.

– Newsagents are copping flack because of these and other issues without compensation by Fairfax.

The Form doesn’t make sense. Why separate out of the newspaper a popular section and make customers jump through hoops to get access to it? One theory is that this sets the new title up for wider free distribution. But if that were the case then the launch would have been handled differently from the outset. As it is, Fairfax has got their customers and the supply chain offside. The title has a stink about it.

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Newspaper marketing

Intermedia disrespects newsagents

instyle.JPGA newsagent colleague contacted Intermedia yesterday wanting to purchase InStyle – for the Hairdressing Professional magazine for sale to a customer. The Intermedia representative said they would not supply the newsagent and that they wanted the customer direct – expecting the newsagent to hand over customer details. After further discussion agreement was reached to supply the title at full retail price to the newsagent.

So, the newsagent, providing exceptional customer service and hunting down the publisher, is rewarded with no commission. The usual commission for a magazine is 25% of cover price. Shame shame shame Intermedia.

Intermedia needs to decide whether they want newsagents to support their other titles such as Inside Film. Newsagents could be excused for pulling Inside Film if Intermedia does not change its approach.

Newsagents are the magazine experts. They offer a low cost road to market for publishers, especially Australian publishers. Companies like Intermedia need to respect newsagents and work with them on building sales rather than rejecting them.

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magazines

Isubscribe is bad for business

isubscribe.JPGFollowing my post this morning about the Mother’s Day magazine subscription deals at ACP’s magshop, tonight in the mail at home I find the twelve page mother’s day offer from isubscribe. I hope people don’t subscribe with this mob. If people want to get their magazine on time and in good order they ought to ask their local newsagent for a putaway. isubscribe has a sweetheart deal with publishers which gives them a wholesale price per title considerably less than small business newsagents. It sucks.

It is deals like this between publishers and isubscribe which lead to consumers thinking newsagents are expensive. Look at Good health. I get 25% off the cover price, I promote it actively in store with at least two major aisle end displays a year plus a multi pocket display every month. Isubscribe has this title for 33% off and they make money on top of that. reader’s Digest is worse – they have it for 50% off. Lovatts crosswords 30% off. National Geographic 45% off. Life Etc. from our ABC 44% off.

Magazine publishers will tell us they need a balanced supply chain – subscriptions, newsagents, majors and other retailers. Yet it is newsagents who invest the most in promoting these titles in terms of display and shelf space. It is newsagents who are compensated the least.

I wish publishers would compensate me as handsomely as they seem to compensate isubscribe. I wish they supported small business. Once day they will wish they did.

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magazines

Sydney Morning Herald supply problems tomorrow

Several newsagents have contacted us saying that there will be supply problems with the Sydney Morning Herald in regional areas tomorrow as a result of industrial action at their Chullora plant. The timing would be unfortunate because of the launch of The Form tomorrow – the free racing newspaper with the SMH – it used to be part of the paper and is now separate.

UPDATE: There is a stop work tonight from 10pm and another planned for tomorrow afternoon – this could impact Saturday’s paper.

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Newspapers

Is the Dolly naked pic marketing?

The publicity given to the ‘production error’ on page 24 of Dolly and the subsequent cover up of the image on copies sold through major retailers (and not newsagents) should result in bumper sales. An anonymous correspondent has suggested to me that the ‘error’ was made in marketing. I have no idea if it’s true and don’t really care. However it happened, sales are strong and that’s good for magazines.

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magazines

ACP Mother’s Day offer trades off newsagents

ACP Magazines has a great Mother’s Day magazine subscription offer with a First Class trip to Ireland as the prize.

I discovered the offer by searching for newsagents magazines in Google. Check out the results. The link to the promotion is an ad ACP is running – they pay Google per click on the ad. It’s disappointing that someone searching for magazines in newsagents gets an offer for direct supply from ACP.

While I appreciate ACP needs to promote its magazines any way it can, I wish I could offer this prize to the many customers who sign up for ‘subscriptions’ in my store – putaways we call them. We have around 200 customers who commit to collecting every issue of magazine(s) they like and every time they pay full price. So, because they don’t take the discount and don’t have the magazine delivered to their home, they miss out.

I’d prefer to see ACP invest marketing dollars in newsagent putaways. Newsagents, in turn, could provide good in store support for this exclusive retail offering. This seems to me to be a win win for the taking.

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Newsagency challenges

Dolly magazine image cover up

Merchandisers are reportedly visiting major retailers to cover up some offending (explicit) images in the current issue of Dolly from ACP Magazines. Newsagents are not receiving the same service and when they contact the distributor (Network Services) wanting to early return the title because of they problem they are refused. I haven’t seen the images myself and cannot comment specifically. If the distributor is involved in cover up action then this ought to be in all retail outlets and at their cost.

UPDATE: (11:56am) I’ve now seen the image at the Newslink store at Brisbane airport. Hmmm … that’s some production error. Yes it needs to be covered or pulled from the shelves.

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magazines

Are we the first carbon neutral newsagency?

Since we made the commitment and purchased carbon credits a couple of weeks ago we have been trying to find out if we are first – not because we want kudos but because we want to connect with other newsagents who have taken this step. If your newsagency is carbon neutral please email me as I’d like to compare notes and see how we can encourage more newsagents to take this step.

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Social responsibility

Friday 13th follow up

Our instant scratch lottery ticket promotion last Friday increased sales by 80% on the day. It’s a sales kick benchmark we hope to pass next week when we run an over the counter promotion with an iPod as a prize.

Australians are not great at the over the counter upsell. In newsagencies this is, in part, due to how business the counter is. But it’s also because we’re not that pushy. While I don’t want to make my newsagency like those awful Coles and Woolworths / Safeway petrol outlets where you are virtually berated into purchasing junk candy, I do want us to interact more. Our iPod giveaway will focus on this.

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marketing

Who owns the newspaper customer?

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I met with a group of newsagents in Sydney yesterday and the issue of who owns the home delivery customer came up. It’s a question newsagents have had since newspaper distribution was deregulated in 1999.

Newsagents believe that a customer they convince to take on home delivery is theirs. Publishers believe that anyone receiving home delivery of their product is theirs – regardless of how the customer was acquired.

A lawyer friend told me today that in his view, the 1999 contracts are vague on this point.

It’s an issue right now because publishers want newsagents to pass on more data about home delivery customers. They want customer name, address and the days on which the customer gets their particular newspaper. In many cases this is data about customers the publishers have never heard of before, customers won by the newsagent’s own efforts.

My lawyer friend tells me that privacy laws come into play on this issue and that newsagents need to be very careful about what information they provide to publishers. He even suggested that newsagents need to write to their customers seeking permission before passing on any home delivery customer information.

All the legal mumbo jumbo aside, where else can a business acquire customers at their cost and then be required to provide sufficient details to their supplier (for no compensation) to enable the supplier to undertake direct contact and fulfillment if they wish.

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Newsagency challenges

Online classifieds failure

Jobs.com.au hit our TV screens a few months ago with a loud colourful ad promoting its new employment website. After spending what I suspect is a million or two on TV and outdoor media I read in today’s Australian Financial Review (p20) that administrators have been appointed. It was always going to be tough for jobs.com.au as they were playing in a crowded marketplace with some very successful operators, especially Seek. Jobs’ mistake was that they did not offer a point of difference, they brought online an expensive offline model.

What’s this got to do with newsagents? Our Find It online classifieds model is close to coming out of beta. Unlike Jobs, we’re horizontal, mainly free and providing a point of difference to traditional classifieds. Our retail partners are newsagents and here is the rub. Most newsagents are not engaging with us. Few have loaded their free business ad. Fewer have promoted the site. So, the T intersection I face requires a choice – to continue to develop Find It to provide, in part, a revenue stream for newsagents, or to ignore them and develop without them. Based on the 11,000 ads so far, newsagents are not crucial to the model. In the next two weeks I will decide which turn at the T intersection we will take.

That Find It has 11,000 ads and is growing pageviews daily is healthy for us.

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Online classifieds

Newspaper home delivery consolidation

Victoria is a hive of activity as newsagents sell, licence or lease off their newspaper home delivery territories. By my reckoning there have been more deals in the first three months of this year than all of last year and even that is probably understating the situation. Some of the deals are long term newsagencies getting out of home delivery.

There are three types of deals: outright sale of the territory (as I did in my newsagency); contracting another party to undertake the physical delivery while you maintain the accounts; contracting and or licensing the entire delivery business including accounting for a fixed term. There are other variations but these three are the most common.

The most common reason newsagents cite for getting out of home delivery is that the economics no longer work for the average size newsagency. Given that the net return from delivering a newspaper has not increased in more than fifteen years and given that newsagents have few options for reducing costs there is no choice for many but to quit. It is only when an operator manages 2,500+ home deliveries a day out of a warehouse that they can start to make progress on their net return.

I’d be surprised if the newspaper publishers – Fairfax and News – are not concerned about this trend. As these distribution businesses become bigger and stronger they will be more demanding of the publishers. The publishers must also be concerned about their fading connect with retail newsagents. In fact, the situation is so dynamic at present that I would suggest it is time for a forum where newsagents openly discuss the various models. One was held over a year ago – the world has changed considerably since then.

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Newspapers

Hot moves on the dance floor

Between our counter, our newspaper stand and our card display is what we call the dance floor. This is our highest traffic display area so we change the display regularly and actively promote categories which would otherwise be visited by destination shoppers.

The dance floor is great for displaying promotions such as the hot stationery deals promotion we have running at the moment. We pick up impulse sales and remind everyone that we have keen prices on stationery.

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When this campaign comes down in a week we will replace it with our Mother’s Day offering. While the weekly or fortnightly change is time consuming, it is the best way to demonstrate to our customers that our business is moving and that we have deals. Newsagents are thought to be expensive so anything we can do to counter that is a win for us.

Evey newsagency needs a dance floor and they need fancy footwork to make it work.

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marketing

Tattersalls and Golden Casket moves good for newsagents

The announcement today that they have purchased the Golden Casket lotteries business is significant for newsagents in Victoria, Tasmania, Northern Territory and Queensland.

The management of Tattersalls’ lottery business is to move to Queensland under the management of Bill Thorburn. Thorburn is well regarded in the retail network and, obviously, by Tattersalls. This is a difference in practical retailer support offered by Tattersalls compared to Golden Casket – if the Casket approach is adopted across the Tattersalls network. For example, the Golden Casket in store collateral supporting instant lottery ticket sales and superdraws is more plentiful and robust than that from Tattersalls. Don’t get me wrong – I’m happy with what Tattersalls provides but I know that in this case the grass is greener…

Golden Casket pays a trail commission to retail outlets from online sales. Tattersalls does not pay such a commission. This trail commission was well negotiated by the Casket Agents Association in Queensland. Hopefully their successful approach can influence the seemingly ineffective Victorian Lottery Agents Association.

Another difference is in the area of who sells the products. In Queensland, the Government has enshrined legislation that latter products can only be sold by small business – with a definition tied to number of employees. Elsewhere in Australia no such protection of small business exists. Through this transaction there is an opportunity to focus the attention of other state governments on the leadership position taken by the Queensland government.

Now all we in Victoria need is certainty that Tattersalls retains its current licences.

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Lotteries

Windows Vista magazine rip off

windows-vista-mag.JPGNDD has distributed the launch issue of this Windows Vista magazine. They probably already know the Network has distributed this same title – as Australian magazine. So, once again, we have two versions of the same magazine. It’s pretty much only the cover which is different.

I wish that the magazine distributors would stop abusing newsagents by distributing identical titles in this way.

Something else which irks me about the NDD title is that this first issue is 99 pence in the UK yet A$15.95 here. Someone along the way is making a ton of money. Not the newsagents. The yellow new launch issue sticker covers the 99p price promotion on the front cover. Astute Australian consumers know they are being ripped off.

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magazines

Mass media era ending?

“We’re in a transformative media age. We’re seeing the vanishing of mass media. Mass media is being replaced by customized, targeted media….The old adage ‘adapt or die’ has never been more pressing.”

That’s Jordan Levin speaking at the Museum of Television & Radio in Beverly Hills. Variety has the story. The newsagency channel was created by mass media companies.

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Newsagency challenges

UK magazines clogging Australian shelves

uk-mags.JPGDo we really need these UK weekly magazines taking up shelf space in newsagencies? With their low cover prices and single digit sales, the titles are break even at best. In many newsagencies they are loss making. This is not good economics for newsagents.

Being imported, the titles are always out of date. Valentine’s Day was two months ago yet here we have Pick Me Up with a Valentines promotion. Plus, their promotions don’t work here as we don’t get the give away items promoted.

Newsagents are being told to position some of these titles next to more popular titles like Take 5 or next to confectionery – both premium locations not justified by the low cover price and therefore low margin for newsagents.

If distributors want newsagents to act commercially with these titles they need to be commercial in providing financial incentive. Guarantee me a a minimum profitable return per pocket and I’ll promote any magazine anywhere.

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magazines