Author: Mark Fletcher

Having used newsagents to create one of the most successful magazine launches in Australian, News Ltd has done a deal with iSubscribe to make its Alpha sports magazine available by subscription. Newsagents have done the hard yards for News – giving up valuable in store promotional space, talking up the magazine across the counter, co-locating the magazine at the newspaper stand and in the sports section. Newsagents have also enforced the now ridiculous rule forcing people to purchase a News Ltd newspaper with each copy of Alpha sold. The iSubscribe offer has no such requirement.

While newsagents will fulfill delivery subscriptions sold through iSubscribe, opening this alternative sales route will dilute the newsagent offering for Alpha.

As a newsagent who has energetically supported Alpha and vigilantly adhered to the stringent rules laid down by News Ltd, I am offended at their disregard for my efforts and their desire to cut me out of profit now that I have helped make Alpha a success.

I have been at the GNS Newsagent Trade Show in Sydney this weekend and got to meet the team from the ANZ Bank. It’s not often you see a major bank so openly supporting of an independent retail channel. The ANZ team has done considerable homework on newsagencies nationally and are happy to provide funding for newsagency purchase and expansion. Well done ANZ for supporting the small business channel.

I was surprised to learn that an industry association considered the purchase of a software company supplying newsagents. Newsagents associations have enough challenges on their plate providing association services such as government and supplier representation to use all their time and resources. They have no role owning and operating commercial services which are well covered by independent companies already. Sure I am conflicted in this discussion – I have owned Tower Systems, the largest software company servicing newsagents, for 25 years. Just because a software company may be struggling and their possible demise might mean newsagents have an orphan computer system, there is no reason to bail them out. Such would be offensive to the newsagents using other systems.

The software companies supplying newsagents are bets left to compete on an even footing and on pure commercial terms. To intervene and proving a struggling and, in my view, technically weak player an insider advantage could see newsagents go for fourth best and ignore the leaders.

While I am glad that the suggestion will not be acted upon, once can never be sure the no is a long term no. That the idea was given any oxygen at all is most disturbing.

Disclosure: I am a member of two newsagent industry associations, owner of newsXpress Forest Hill and owner of Tower Systems – the biggest supplier of software to Australian newsagents.

I have spent two days in Queensland at the ACP Magazines Connections conference with 200+ other newsagents and it struck me how wide the gulf is between proactive newsagents building businesses by being entrepreneurial versus those who are process workers, expecting others to develop their business strategy and give them a future.

Deregulation in 1999 has meant that newsagents must see their own future and pursue it, individually and collectively.

The Connections Conference draws together more of the entrepreneurs and for that alone you leave feeling energised and renewed in faith in the newsagency channel.

A newsagent selling their home delivery business is required to provide a publisher with intricate details of the transaction including the amount the business is to be sold for before the publisher will approve the change of ownership. I can understand the publisher wanting to ensure that an appropriately skilled operator buys the business but to ask for confidential financial data? – it’s offensive they ask.

A colleague newsagent is refitting his shop and has temporarily relocated to the mall outside his major centre location. He has only 30% of the cigarette range and is achieving more sales and only 15% of his usual magazine range and achieving 80% of his usual sales.

Take a look at this ink display. It’s as good as you will find in any major retailer yet this photo is from a newsagency. More and more newsagents are carrying ink and toner and offering competitive prices.

In a break from the traditional entry here, my pitch to you is that next time you need ink for your printer at home or the office check your local newsagent. There’s a good chance they will offer what you want at a competitive price. You’re certainly like to get better service than at Australia Post, Officeworks or any of the other outlets you would think of ahead of newsagents.

Which magazine distributor was busy calling newsagents yesterday, three working days after their August statement arrived, reminding them that the bill had to be settled on the 20th of the month? For most newsagents the first they know about the amount owing is the arrival of the statement. In some cases, the amount owing is more than the value of magazines sold in the shop from that distributor in the last month. It is this cash-flow negative scenario which is causing some newsagents to bail out of the industry. You can only overload the channel with average to poor product, tighten payment requirements and push your best product to competitors so much.

Many newsagents are at breaking point. The current Federal Government “looked after newsagents” through deregulation in 1999. The ACCC oversaw this process. All stakeholders ought to reconvene and assess then impact of their efforts. Either that or read about more closures and bankruptcies. The same federal Government has presided over a reinvention of Australian Post with their 865 corporate stores taking millions of dollars in business from newsagents.

Many newsagents are thriving and new stores are opening. My concern is for those in areas of tougher competition and where magazine distributors have not adjusted supply of titles outside the top 200 to reflect falling traffic. Such is the impact of deregulation.

A better call from the distributor yesterday would have been a discussion about how they could scale out more equitably so the newsagent has a chance to become cash-flow positive from their supply. Such an arrangement would include payment for labour and real-estate for titles with a sell through rate of 50% or less or a shelf life beyond 30 days.

The government owned Australia Post shop opposite my newsagents is plastered with posters offering 10% off ink and toner in store. As a privately owned small business I cannot compete. One day the politicians will realise that their policies have participated in the closure of newsagencies.

PMP announced a $6 million turnaround yesterday for their magazine distribution division, Gordon and Gotch. The good news for newsagents is that Gotch has turned around in profit and service. Through 2004 newsagents were complaining that Gotch seriously oversupplied. In 2005 the company made some tough decisions on titles and improved the service they offer newsagents. That Gotch improved in newsagent eyes and at the bottom line an excellent result. Now, Gotch and all magazine distributors need to review titles they carry and either better compensate newsagents for titles which are cash-flow negative or cut titles which otherwise underperform.

Newsagents are only paid for titles which sell. Unlike magazine distributors they are not paid for stock they display and ultimately return as unsold.