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

Author: Mark Fletcher

Do newspapers need to exist?

RealMoney.com commentator Jim Cramersays that lack of financial acumen is burning newspapers:

All of these companies seem to be run, frankly, by jokers or dreamers who had no idea how to deploy capital.

These are diminishing assets. They don’t need to exist. Younger people rarely read them. And the companies acted like they would always be in demand and were simply misunderstood by Wall Street. Nope, Wall Street got it the whole time, except a couple of hedge and mutual funds that are trapped and trying to get managements to do something to bring out value.

No misunderstanding where he stands.

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Newspapers

Business round table for newsagents

I am hosting, through my software company, a series of business round table sessions for newsagents over the next few weeks. These will be proactive and open discussions among newsagents who want to achieve the best from their businesses. Free of politics, I am hoping the sessions will help those participating navigate challenging business issues – come along prepared to actively participate.

The round table discussions are being held prior to user meetings for newsagents using Tower software. Any newsagent is welcome to attend. I promise, it’s not a sales pitch.

The businesses round table starts at 10am (sharp!). The user meeting will start by 11:45am. Locations are: Sydney. Tuesday April 17; Brisbane. Wednesday April 18; Melbourne. Thursday April 19; Canberra. Friday April 20; Geelong. Tuesday April 2; Hobart. Thursday April 26; Adelaide. Tuesday May 1; Perth. Wednesday May 2; Newcastle. Tuesday May 8.

You can book by emailing bookings@towersystems.com.au. We need your business name, the session you are booking for and the number of attendees.

Based on bookings for this first set of dates we will add Cairns, Wollongong, Darwin and Gold Coast next week. We don’t announce all at once as the meetings are expensive in terms of labour, room hire and travel costs and we like to gauge interest in the series.

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Newsagency challenges

Ink and toner race hots up

It’s easier to copy than innovate I guess. Newsagents now have not one, not two but three major ink and toner campaigns running thanks to the launch last week of something called Inktek by the Victorian branch of the ANF newsagents association.

While the competition is healthy and will force the two established players Newsink and newsXpress (of which I am a shareholder) to be more competitive, I question whether it is smart to launch another newsagent connected ink and toner brand in what is a well serviced marketplace. If it were up to me I would guide the non Newsink and non newsXpress newsagents into equally profitable yet unchartered territory.

I know a bit about the ink and toner space having been involved with the original group out of which the Newsink group grew some years ago and having started Inkfast two years ago. Inkfast is a pure online play. It generates fifteen to twenty times more monthly ink and tiner revenue than my newsagency – orders are bigger and involve quite different product. On the downside the margin is slim, hence the focus on volume.

While ink is hot, newsagents are competing with Australia Post, Big W, K-Mart, Dick Smith and Harvey Norman. It is the categories these majors ignore which provide newsagents with better opportunities.

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Stationery

mX free daily newspaper seeks extension of time

The original consent granted for the distribution of mX, the free daily newspaper from News Ltd, in Sydney was for eighteen months. News’ subsidiary Nationwide News has applied to the Sydney Council seeking to modify the development consent to sixty months. Check out the documents available at the City of Sydney website. They list distribution points including newsagent kiosks. The documents make for interesting reading for anyone curious about the distribution of free daily newspapers.

A letter from News’ planning consultants notes that during the current period of consent Council has advised News of only one complaint and that related to litter at one location which was corrected. I am surprised that there have not been more complaints about litter on trains, buses or ferries.

Readers tell me that mX serves its mission well. I don’t find it satisfying but I am not in their demographic. My interest is more in the impact that mX and or any other free daily newspaper might have on newspaper sales in newsagencies, especially given that the same publisher dominates the paid and free channels.

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Newspapers

Another loss making magazine

kitchen.JPGNDD continues to demonstrate their skill at magazine distribution with the scale out of Kitchen Trends. This title has a low sell through and a shelf life of six months. It is loss making for us and, I suspect, many other newsagents.

If NDD were leading the way in magazine distribution, as they claim on their website, the quantity they send and the shelf life would be configured so as to be profitable.

Newsagents cannot afford this behaviour yet they are too time poor to follow up – a situation exploited by NDD in their model.

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magazines

Replacing weekly magazines with a blog fix

The Internet is awash with non mainstream blogs and websites offering entertaining and alternative channels to the Woman’s Day, New Idea, Famous, NW and Who fix. Check out the offerings at The Superficial, Hot Momma Gossip, Perez Hilton, Handbag, MollyGood, Nicole Bitchy, Rope of Silicon, Hollywood Grind … there are plenty more. Just do a search under Google blogs and every gossip fetish will be satisfied.

My point is that gossip is hot online. It generates huge traffic. We (newsagents) rely on similar traffic in newsagencies with weekly magazine sales being the backbone of our magazine category. We ignore the online trend at our peril.

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magazines

High cost phone recharge

Big W offers 10% off for mobile phone recharge. This discount is greater than the commission newsagents receive from Vodafone and what they are about to receive from Optus. I suspect than Big W is on around 16% which newsagents are on 5% and, I suspect, falling.

There are 3,500 newsagent outlets offering phone recharge. If we cannot leverage that footprint and what must be considerable sales for a better outcome I expect newsagents will start to withdraw from offering the service given the considerable infrastructure cost.

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Newsagency challenges

Newsagents miss peace opportunity

I was surprised to see this story in The Australian today about a decision by the board of the Australian Newsagents Federation (ANF) to reject a proposal which could have unified newsagents into one national association by 2009. The proposal came out of a meeting held on March 14 and organised by the ANF.

The Australian story seems to me to have been ‘placed’ – some digging by Sally Jackson would have unearthed a more complete story.

I was invited by the ANF to participate in the March 14 meeting along with representatives of the Boards of the ANF and state based newsagent associations in NSW (NANA) and QLD (QNF) as well as the Chairman of the Victorian association (VANA).

The ANF goal was to seek out common ground with a view to ending years of fighting between the associations.

The six hour meeting involved frank discussion about issues which have seen the ANF fighting the states and vice versa for many years including the challenged of domineering personalities who have ‘led’ newsagents through this time. All participants talked openly and passionately about what they felt was best for newsagents. They remained focused on the goal of what is best for newsagents and the acceptance that bickering serves no purpose.

A common and unanimous position was reached at the meeting and documented in a letter of intent. All attending were confident that their Boards would agree and that at last fighting between the national and state associations would end.

The NANA and QNF Boards supported the letter of intent. The ANF Board decided to not support it, dashing the hopes of achieving unity among newsagents in the short to medium term.

The ANF must now actively compete with newsagent associations in NSW and QLD for members. To win, they must financially harm these newsagent owned bodies. Such a fight does not serve newsagents well. It will result in the loss of hundreds of thousands of dollars of newsagent funds.

The ANF Board, in rejecting unanimous position which was reached at the meeting it convened on March 14, has, in my view, demonstrated that personality politics is alive and well at its Board table as there is no other explanation for the rejection of the letter of intent. It has also demonstrated who controls the national body and it’s not the Directors who participated in the peace discussions.

Between them, NANA and QNF have 1,000 members. The ANF has around 1,750 members. Bringing the NSW and QLD members into that group immediately would provide the ANF with greater strength in negotiations with suppliers. The cost of this weakness will be felt by newsagents for years to come.

This is the story I would have liked to see run in The Australian today.

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Newsagency challenges

The future of books

The Economist has an excellent article on the future of books. It’s written against the backdrop of the Google book project which sees the company digitising 3,000 books a day from one university library alone.

The article draws parallels with music and that the album had died in favor of the song – people can purchase and listen to what they want as opposed the a complete package. I think there are considerations here for magazines and newspapers where single articles may be more valuable to some readers than the whole printed product we know today.

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Newsagency challenges

Construction noise turnoff

Noise from the construction for the new Target store next to my newsagency is making the back room an unsafe workplace and the shop uncomfortable for customers. I’ve sent the landlord these two recordings from Saturday from the two locations: inside the shop and the
back room.

The landlord promised that the work would be completed by 9am each day – it’s continuing until mid afternoon six days a week.

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Uncategorized

Sat nav giveaway stirs magazine sales

Jane and Damien have papered our entire display window with posters and put two small black ‘gates’ in front, guiding people to peer in and see a satellite navigation device lit up – it’s the prize on offer in a magazine promotion we are running.

sat-nav-window.JPG

With so many promotions visually noisy we decided to pare this one back and make the prize the star. Each magazine purchase results ina coupon for our customers. It’s stirred some good interest.

We were given the satellite navigation product by a supplier as a rebate for purchases.

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magazines

Sophie Randall Cards and Gifts – one week on

Our Sophie Randall start up card and gift shop is a week old this morning. While we are yet to undertake any marketing or even hold an opening event, sales are strong. We took in our first week 80% of what we budgeted for weekly takings three months in. So, the signs are good – but we don’t want to get ahead of ourselves.

The experience behind the counter in this 100 square metre shop is very different to what we experience in the card and gift space – shop within a shop – in our newsagency on the floor above. Here in Sophie’s space customers are friendlier, they take more time, they’re happy to wait to be served. In the newsagency if there is a line (which we don’t like) it is not uncommon for customers to let us know they are annoyed – usually over a $1.10 newspaper purchase.

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Beyond happier customers, we are surprised at the products which are selling. $49.95 paperweights for example, cows, Beatrix Potter product and high price point cards. We knew the products would move but not in the numbers achieved in the first week. There are some categories we expected to do well which have not moved at all. But, as they say, it’s early days.

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As we move between the two stores we have to change our mindset. In Sophie’s place we’re in control, not one supplier is dictating rules to us – we choose the products, pricing and how we display. In the newsagency, for two thirds of what we sell, suppliers are in control of range, price point and, often, how we display. I am not complaining about this but, rather, observing the difference between the two.

Suppliers often complain that newsagents are lazy, don’t engage with campaigns and are not ‘compliant’. Associations complain about this too. My view is that this comes about because of the rules suppliers impose. They train newsagents to NOT think for themselves and then complain when they do what they are trained to do. While newsagents can be entrepreneurial, it is a challenge with so many rules to live by.

In the meantime, we’re enjoying navigating the freedom of the Sophie Randall playground.

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Greeting Cards

Servo savers chasing newsagents

Servo Savers seem to be chasing newsagents to join their loyalty scheme again. When they approached me in 2005 I was turned off by the aggressive tactics used by the person representing their company. They said all manner of bad karma would fall on my business by saying no since they were about to such with some big retailers in my centre and I would be locked out.
Two newsagent colleagues have told me of approaches to them in the past week – both along similar lines. One said the pitch was quite threatening.

It makes no sense to reward customer loyalty in my business by sending those loyal customers elsewhere for their ‘reward’ – especially when that other business sells products I sell. I prefer to reward loyalty in my business with more genuine rewards in my business. Besides, every man and his dog offers fuel discounts.

In checking out Servo Savers this morning I found this story from New Zealand about disgruntled Servo Savers customers. I also found this ad offering $150,000 for a sales person for the company. This demonstrates why participating is expensive for small business – they pay a lot to their member acquisition team.

If a newsagent asks me about Servo Savers I suggest they develop their own in house loyalty scheme which drives customers back into their business. The magazine club card I run in my newsagency is a good example of this.

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Customer loyalty

$21 million superdraw traffic surge

The $21 million lottery superdraw (megadraw in some states) looked like being soft but then traffic increased Wednesday. Yesterday it was up further and today has been excellent. It still baffles me that non lottery newsagent suppliers do not provide tie-in product to push at the times of these traffic surges. We have our own promotions but would prefer something more national.

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Lotteries

Green green green

Today’s Sydney Morning Herald is printed on green paper. I’m surprised they did not green up the website as well. Time magazine on Monday publishes a special Earth day issue. Sydney tomorrow night turns off the lights for an hour – Earth Hour. Newsagents in NSW especially could leverage all this activity in around the various titles and products which relate to global warming and climate change and demonstrate relevance on such an important topic.

I’m in Canberra today and was disappointed to see the green Sydney Morning Herald being treated at the airport Newslink store no different to usual.

Newsagencies are small and, mostly, local businesses. We need to demonstrate our local credentials by connecting with local issues. Okay, airport stores are not local but on this issue I expected to see some effort.

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Uncategorized

Chinese language investment magazine

informed.JPGInformed Investors magazine is the kind of title newsagents need to cultivate. It’s locally published and focused on a specific and loyal demographic – Asian investors. It’s is the only comprehensive Australian wealth and financial magazine published in the Chinese language.

I have been talking by email with Mike Wang, the publisher of Informed Investors. He contacted me through this blog, asking how to achieve better placement in newsagencies. Informed Investors needs to be placed next to Chinese newspapers. Newsagents who sell Chinese newspapers ought to talk to Wrapaway in NSW or Informed Investor direct in other states about getting the title. We currently offer over thirty foreign language titles in my newsagency and we’re a suburban business thirty minutes out of Melbourne.

What I like about Informed Investor is that it is niche focused and that it compliments a category which does well for us and many newsagencies.

It’s interesting to see how Mike and his team are promoting this title compared to, say, BRW. Both are in the same space yet go about their business quite differently. Informed Investor seems more closely connected with its readers, more practical if you will. That is not to be critical of BRW – the difference is one of style I guess.

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magazines

Will the widget trend hurt crossword magazines?

nyt-cross.JPGThe folks at the New York Times announced yesterday a widget providing access from your Google homepage to Times’ classic crosswords. They have an archive of over 1,000 of these and will release new content each Monday.

It’s a great idea and will extend the reach of the Times’ brand. There are hundreds of other crossword widgets already available but with the Times joining the game more mainstream newspaper brands will undoubtedly make the move.

I wonder if there will be an impact on crossword sales from this. I doubt we will notice it this year but it must have an impact at some point. If people can get satisfaction from an online crossword, why pay for a magazine or book? Especially if that satisfaction came through branded and trusted crosswords available on mobile devices which provide the flexibility of a magazine.

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Uncategorized

Traffic jam for caravans and camping

caravan.JPG

Driving toward Caulfield Racecourse today I noticed a long line of cars, snaking back well over a kilometre. The car parks were almost full and the traffic was stopped. It turns out that they were headed to the racecourse for the Caravan Camping and Touring Supershow. I had no idea that caravans and camping were so popular. We sell caravan and camping magazines and sales are okay but not as good as the traffic jam suggested. It’s got me wondering what the disconnect is here because I want the people in the traffic jam coming to my shop to buy their magazines.

The traffic jam shows there is a market and I am sure these people want to connect with their interests outside of the show season. I can help with that through the magazines I have. Hmmm…

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magazines

Explode magazine could have done well online

Meredith Corp in the US is closing the print edition of Child magazine and folding this into an online parenting-and-family portal that will also include content from American Baby, Family Circle and Parents. MediaPost has the rest of the story.

Maybe that’s what Pacific Magazines ought to have done with Explode – the teen boys magazine they closed after a few months publication. My blog entry from November 2005 remains one of the a frequently entry out of Google searches, meaning that plenty of people are looking for Explode – for a short lived brand it sure is popular. Check out the comments – I’ve received three times this privately from people enquiring about the title.

Following the example of Meredith and others of recent times, magazines no longer close, they go online and, most likely, find a more profitable existence.

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magazines

Warren Buffet gloomy on newspapers

Not all of our businesses are destined to increase profits. When an industry’s underlying economics are crumbling, talented management may slow the rate of decline. Eventually, though, eroding fundamentals will overwhelm managerial brilliance. (As a wise friend told me long ago, “If you want to get a reputation as a good businessman, be sure to get into a good business.”) And fundamentals are definitely eroding in the newspaper industry, a trend that has caused the profits of our Buffalo News to decline. The skid will almost certainly continue.

These are the words of Warren Buffet in his letter to shareholders published earlier this month and reviewing 2006. If you want to read Buffet’s comments on the newspaper business (2 pages out of the 25 in the letter), the Australian Investment News is a better source.

Buffet is an extraordinarily successful business person. It would be foolhardy to dismiss his views on newspapers. Yet that is what some publishers seem to do in their representations to newsagents – they still want the best retail position and ask for a hefty capital investment in fixtures and do this while cutting margin and pushing more costs onto newsagents – they say that newspapers have a bright future.

Recent sales data for newspapers in Australia is okay – flat and even small growth. No US like downturn. My view is that we are around two years behind the US and that a downturn is inevitable. The publishers demonstrate they believe this by investing so aggressively in online business models and cutting costs in the print operation.

While Buffet is retaining his modest investment in newspapers, newsagents – with a higher proportion of their capital invested in the category – need to consider their position more carefully, just as publishers have been doing.

Newspapers are important to retail newsagencies – but not as much as previously. We need to carefully consider capital and real-estate investment in the context of shrinking returns and more retail outlets in the space. For example: should they have the best real-estate? Should they be given expensive fittings? While the answer is probably yes, we need to ensure that we leverage newspaper traffic better and to do this we need to ignore some rules publishers have set for us.

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Newsagency challenges