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

Author: Mark Fletcher

Fairfax and News acquire online businesses

Courtesy of Andrew Pascoe’s under the rotunda Blog I found out that News and Fairfax have been buying another online business each:

News Digital Media has purchased Moshtix, the online ticketing business where patrons use their mobile phone as the ticket to enter events.

Fairfax Digital has bought Essential Baby, a parenting website.

While publishers have spent hundreds of millions acquiring online revenue streams, newsagents are yet to spend a cent. Am I alone in seeing a problem here for newsagents?

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Media disruption

Seller beware, maybe the buyer is not that interested

Several newsagents report being approached by business brokers looking to buy their newsagency. Upon suggesting they would be interested to talk further they are presented with a confidentiality agreement which is very skewed to the buyer.

If you are approached to discuss possibly selling your newsagency DO NOT sign any confidentiality agreement without getting independent legal advice first.

I have seen a situation where someone purporting to be interested in purchasing a business used this as a cover to find out more about the business so they could acquire the lease and pay nothing for the business.

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Newsagency challenges

Size does matter to the big American book store

A big book store put up a sign crowing about having 3,000 magazine titles in stock. The newsagent put up a sign saying they had more than 3,000 magazine titles in stock. The manager of the big book store complained to the newsagent saying the sign should come down. Hmmm, yes, it should come down. How dare a newsagent tell the truth that they have a better range of magazines than a US bookstore chasing after Australian small businesses?

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Newsagency challenges

Imported magazines out of date

import.JPGWe received stock of this issue of Crafts Beautiful on January 3, a week after Christmas.

Like many imported titles with a seasonal theme it can be out of date by the time it arrives in the shops.

While I like the point of difference stocking such titles offers newsagencies, it makes the shop look lazy to have such Christmas stock on the shelves.

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magazines

Integrating the newsagency sales counter

Newsagents need to take back control of their counter. The counter is the busiest part of any newsagency, the key profit generator, yet in many newsagencies it is suppliers who are in control. Lottery companies, magazine publishers, just about everyone, wants in on the action. They want their stands, display units and products at the counter. So much so that in an average newsagents the counter is mess of mixed messages.

Reclaiming the counter should start with the lotteries area. Lottery companies like a defined part of the counter where nothing but lottery product is sold. They tend to prefer the best counter location. It means customers wanting lottery product can make their purchase and leave – without being tempted to purchase other items. It also means that customers purchasing a newspaper, magazine or some other product are less likely to be tempted with a lottery product purchase.

I am all for integrating the counter, mixing lottery sales points and regular register points and merchandising the counter appropriately. A properly integrated counter, against the rules of some of the lottery organisations, should increase sales of lottery and non-lottery product.

In integrating the counter newsagents ought to focus on higher margin repeat business, thereby building the business so it can weather a downturn in newspaper and lottery sales – both categories of products are being impacted by online developments and are the top two traffic generators for newsagents. In other words, newsagents will be hit hard if/when traffic and sales from these two fall.

By leveraging existing lottery and counter traffic with an integrated counter, newsagents can start to reposition their business and re-educate customers about their offering. This is exactly what publishers are doing with their online and free models.

While some lottery companies will resist the integration I propose, newsagents need to put their business needs first.

Today we have great traffic, among the best in the country. By acting now and leveraging that more efficiently and across a broader range of better GP product at the counter we can weather generational change.

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Lotteries

Newsagents worried about free daily newspapers

The Sunday Herald in Scotland has a story about the possible impact of a recently announced free afternoon newspaper on newsagents. The UK newsagent association (NFRN) is holding meetings of members and with the publishers to discuss the lost of sales and customer traffic caused by free newspapers.

As data from Dr. Piet Bakker – published here just a few weeks ago – shows, free daily newspapers are growing. Even though Australia is behind Europe and the US, they are gaining traction. These free dailies provide publishers with an easy sell to advertisers and are being used in many situations to boost advertising sales for the paid for product. It makes sense. In Europe especially publishers have been very successful maintaining revenue through by launching free daily newspapers.

While it’s natural that newsagents will complain to publishers about the impact of these free newspapers, my view is that our energy is better spent expecting the move and adjusting our businesses today accordingly. Free newspapers are not new, we have seen them growing for the last five years. This is change we can prepare for today. Indeed, it is change we ought to have been preparing for long before now.

We need to rely less on newspapers for traffic and revenue. This means we need to build traffic from other categories. It also means we need to adjust the layout of our businesses and focus on higher margin traffic generating product toward the front of our shops. While publishers will resist such a fundamental change – given that newspapers have always had the best location in our shops – they need to allow us to respond to market trends just as they are through acquisition of online businesses, moving their product further outside the newsagent channel and by launching free newspapers.

The newsagent channel in Australia was created by publishers to serve their needs. In 2007, newsagents must put their needs ahead of publishers. Tough decisions face us and we must be businesslike and swift in making them.

For the record I am not advocating that newsagents get out of newspapers, rather that they invest real estate and labour in newspapers according to their anticipated return to the business.

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Media disruption

3loves free online dating passes 3,000

Our 3LOVES free online dating social media site has passed 3,000 profiles. We’re seeing over 500 messages shared between members each day and we’re receiving feedback from people who have been on dates as a result of the site.

The connection with newsagents is that media companies (News, PBL and Fairfax) are attracting eyeballs to their online offerings through dating sites. 3LOVES is a traffic generator for Find It – low cost classifieds we’re launching in partnership with newsagents.

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Online classifieds

Bill Express and bopo executives work with newsagents to mend bridges

I met with senior representatives of Bill Express and bopo (the Australian pre paid Visa card) for two hours on Thursday to discuss the charging of newsagents for training in selling bopo account top up. The meeting came about in part due to blogging here. It was a frank and fruitful discussion and, I’m pleased to report, not the only such consultation with newsagents on this matter. I am confident they will respond to newsagent concerns about the training and, at the same time, further guide newsagents as to the business opportunities of bopo.

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Bill Express

OK! weekly gaining traction

ok!-magazine.JPG

In the two and a half months since OK! moved from monthly to weekly sales have been growing from what I can see. This is due to its striking visual point of difference, consistent quality and, in my experience, consistent supply to newsagents – thus enabling us to better display the title. As the photo shows we have positioned OK! with New Idea, Woman’s Day, WHO and Famous. Being in such high traffic real estate, ensures browsing and, with OK!, browsing is key as it builds consumer recognition. We’re also achieving sales having OK! displayed toward the front of the shop near the lottery counter.

I’m not seeing any decline in sales of other weeklies in my newsagency and it is this growth of the category which is most welcome.

The challenge will come if the price moves, as it must. $2.95 for a weekly of this quality is not good for me. I also think it sends the worng message to the consumer once they see the production quality. Based on current sales I need to be making almost double what I am making at the moment to break even on my labour and real estate investment. That’s not a complaint as I’m happy, for the moment, to invest in extending the category.

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magazines

$2,000,000 in newsagent cash missing

Further my post earlier today – I’ve been contacted by enough newsagents to know that the slow down by Network (PBL) in handling magazine returns will cost the small business channel around $2 million in cash-flow. That is, a $2,000,000 cash liability to Network seems to have been shifted out by 30 days.

Nice work if you can get it.

The magazine returns process and cycle is well established. The change by Network, while permitted under their trading terms, is unexpected and unfair. It is hitting this small business channel at a time when many will not be in a position to carry the cost to their bank balance.

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Newsagency challenges

How NDD steals cashflow from newsagents

bargain.JPGLast year NDD sent us 64 copies of bargain shopper. We returned 34. Some weeks later they sent us another 40 of the same issue and we returned 30. Some weeks later they sent us 29 and we returned 18. In all, 133 supplied and 82 returned – a 38.3% sell through rate. Fast forward to this week, NDD, a company claiming to be magazine distribution experts, sent us 75 copies of the 2007 edition of Bargain Shopper.

This is unconscionable conduct by NDD. There is no support in our sales data, data they also have, to support such a scale out. In my store alone this title is costing me $559.68. Based on my sales history I can expect to return more than 60% of stock supplied. This means I will have $447.75 of my cash being held by NDD purely for their benefit. The cost of this cash, the real-estate taken and the cost of labour wipes out any profit from the title.

It is appalling that my newsagency and thousands of other newsagencies are being abused by NDD in this way. It is this behaviour which is killing our channel. I will lodge a complaint with the ACCC about this conduct. Hopefully other newsagents will as well.

While I will also early return the half of what I have been supplied and make a case to NOT pay for this excess stock, it is appalling that my time is wasted with this activity.

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magazines

PBL shifts magazine cash from newsagents

It’s January and time to process the return of unsold magazines from last month. I am hearing from newsagents that Network, the PBL magazine distribution business, is not wanting all last month’s unsold titles back yet. For example, in several cases, stores have been asked to return one week’s returns for Woman’s Day from December 2006 but no the others. This means the stores carry the cost of unsold product an extra month.

If the reports I have received are accurate and if it applies nationally, the bottom line benefit to Network could be over $2 million. That’s money sucked out of newsagencies, small businesses which cannot afford such a cost.

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magazines

US TV Guide digital edition 61% cheaper

TV Guide sells over the counter for US$2.49 and, as of this week, is available online for US$1.76 per issue through digital magazine vendor Zinio. It’s logical that TV Guide titles move online but, hey, as a retail newsagent I don’t want to lose these sales. Ah, change…

The Zinio TV Guide offer could be better – truly interactive. It could use the program guide as a navigation aid to drill into stories one would usually expect to find in other titles. Now, that would be disruptive.

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Media disruption

Telstra and Australia Post to take on eBay?

Fleur Layden at the Courier Mail has the story claiming that the Trading Post division of Telstra owned Sensis is in discussion with Australia Post about an escrow arrangement to offer buyer protection for expensive items.

While I don’t see this move as them taking on eBay, it would have been courteous if Trading Post had talked with newsagents, their more natural partners. While sales of the Trading Post have tanked, we all still carry it in our stores. Partnering with Australia Post is flawed because the 863 or so Government owned outlets are open 25 hours a week less than newsagencies.

To take on eBay, Trading Post needs to be more competitive on price, provide tools for better quality ads and address eBay’ weaknesses such as ticket scalping.

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Newsagency challenges

Newspaper home delivery woes

The theft of home delivered newspapers is a worldwide problem as this blog post by New York resident/writer/journalist Dimitry Kiper shows. No matter whether you’re in rural Australia or high rise New York, there are tight ar*se people who prefer to steal a newspaper than buy one. In our small newspaper distribution round it used to cost us at least two or three newspapers a day – newspapers our distribution people were certain they delivered.

I wish there was a way we could humiliate these petty criminals. Two hundred years ago people were transported from England to Australia and a life of hard labour for stealing less.

I found Dimity’s blog post courtesy of Jeff Jarvis’ BuzzMahcine.

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Newsagency challenges

Free WiFi trial at newsXpress Forest Hill

We will offer free WiFi access from our newsagency in Forest Hill Victoria on a trial basis from Monday next week. We’re working up promotional material which provides context for the trial. Part of our pitch will be that we’re helping our customers go beyond the pages. It will be interesting to see how it goes.

Forest Hill is way out in the suburbs of Melbourne. It is not a commuter heavy area so I’m not expecting huge numbers. This trial is more about seeing whether such a trial has any value in the ‘burbs.

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Media disruption

Marie Claire hides its brand

marieclaire.JPGOops. I reckon that’s what execs connected with Marie Claire will be saying when they see their product on in newsagencies this month. Check out the photo to the left. It’s a waterfall display of Marie Claire product in traditional newsagent magazine fixturing.

These free sunglasses hide the brand. They also require considerably more real-estate to display the product.

While the offer is good, the execution is poor. The publisher would have been better served providing newsagents sunglasses to hand out from the counter. In fact, this is what some newsagents are doing – it protects the giveaway product from damage and almost certain theft. While this initiative by newsagents takes time, it’s an example of them protecting the product and better serving their customers.

Suppliers complain about lack of compliance from newsagents on a range of fronts. Here’s an example of lack of compliance by a supplier.

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magazines

Next generation birth notices

fi_emma.JPG

Emma Riley Welsh is the first born of Simon and Julie Welsh. Simon is one of the software developers at Tower Systems. Click on Emma’s name and you’ll be taken to the birth notice Simon placed at our Find It our new online classifieds business. Birth Notices at Find It are free. This includes photos, video and sound. Newspapers ask the family welcoming a new born to fork out $50 to $70 for an old style birth notice. The guestbook also allows well wishers to make the Birth Notice living. This birth notice is another example of Web 2.0 at Find It.

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Online classifieds

Free calendar gift wins praise

nxp_cal.JPGIn addition to selling almost 1,000 of these newsXpress calendars in our shop, we mailed 1,000 to our customers last week. The reaction has been fantastic, amazing, better than we ever expected. Customers have been coming in each day thanking us for the gift and our letter. Actually, we’re overwhelmed with the kind words coming back to us from across the counter.

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Calendars

Polarised retailing affects newsagents

The toughest part of retailing has been newsagents and book selling, where sales dived throughout 2006, with a 4.5 per cent drop since June. Mr Ganz said many of their sales had been cannibalised by supermarkets.

There are signs retailing is becoming increasingly polarised.

“Top-end and bottom-end retailers are doing well but those focused on the vague middle market are struggling,” said Andrew Cavanagh, of the Australian Centre of Retail Studies.

So reports David Uren in The Australian today. I know of newsagents who would agree with the report and others who would disagree. I’d like to see the data for city versus regional / rural and shopping centre versus high street and a comparison of socio-economic areas.

The newsagents doing well, and there are many, are those who make their businesses stand for something, where they control the business. We have to be bold, not necessarily big, but bold in making a statement about what our business stands for. The more valuable we are to our customers the more they will spend.

We must create our own businesses and turn our backs on the businesses our suppliers created for us more than 100 years ago.

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magazines

Free WiFi, yes please!

free_wifi.JPGInternet speed issues aside (due to the Dec. 26 earthquake) it’s good to see PCCW offering free WiFi access at Hong Kong airport.

As I noted here a few weeks ago, I’d like to see the Government roll out free WiFi access across Australia,. Newsagents would make ideal hotspot points. I’m sure you’d find the 4,600 business owners keen to support such a national project.

A smart country needs a smart infrastructure and free WiFi wound provide an excellent backbone.

While I don’t hold much hope of any politician understanding the importance of a national free WiFi network, I remain amazed that free WiFi is NOT available in our major airports. Instead, the owners prefer to use WiFi as another revenue opportunity. Most major international airports offer free WiFi. Not ours.

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Newsagency challenges

Size does matter for a newsagency

I really like the look of this Relay shop at Hong Kong airport. It’s efficient in its use of space and easy to shop. Being shallow there is none of the dead space at the back of the store we often see in shopping centre newsagencies.

relay3.JPG

Given the average shopping centre rents for newsagencies of between $900 and $2,000 a square metre and given our lower than average retailer margin (28% – 32%) it is time we thought more about our footprint. Sure this Relay store is not as impressive as a 250 sq metre store but I bet the return on floor space is better.

I know in my shop that only 20% of our total store traffic gets to the back 50% of our space. We have tried all manner of displays and promotions. Next time I think I’ll be looking for a shallow but wide shop.

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Newsagency challenges

This penguin would have made for happy feet

happy_feet.JPGHow great would it have been to have this fella in our stores leading up to Christmas and the launch of the Happy Feet movie. He could have been the prize in a giveaway. His presence in store would have been a magnet for the kids and kids at heart. The little penguins can be landed in Australia for just over $1. I reckon they’d retail for $9.95. The big fella could be landed for around $200 – the expensive stuffing is the killer.

This is an example of how we could better tie in with blockbuster movies and events – using stuffed characters and similar items for in store promotion and offering smaller versions for sale. It takes planning and being in the know about upcoming events.

It’s too late now for the penguin but the mainland China based manufacturer I spoke with yesterday already knows what they will focus on in 2007 based on planned movie releases.

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marketing

Free daily newspapers in McDonalds Hong Kong

McDonalds stores in Hong Kong are being used as distribution points for a free daily newspaper. Check out the orange stand in this photo.

maccas.JPG

Distribution is key for free daily newspapers as recent experience in London shows. That this publisher in Hong Kong is using McDonalds says something about their target demographic and the need for free daily newspapers to use distribution channels different to traditional newspaper channels.

While as a newspaper retailer I don’t like seeing newspaper product available through another retailer, I accept that it is a consequence of the challenges facing newspaper publishers. These free daily newspapers are critical to their revenue model – just look at the success of MX.

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Media disruption
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