Author: Mark Fletcher

In its Annual Report released to Parliament yesterday, Australia Post spin achieves new heights. The spin starts with:

The core products and services offered through our postal outlets include letter and parcel services and a wide range of agency-based services, including bill payment, agency banking, money orders, passport interviews, personal identity and verification services, travellers’ cheques and money transfers.

We also offer a variety of merchandise that complements those core products and services, including packaging and philatelic products, stationery, communications products, office and computer products, and gifts and cards.

This is nonsense. Visit any of the Government owned 857 Post Shops and you will see what they consider to be core. Stationery, gifts, imported crap from China. Postal products are the poor cousin of their retail story. Most Post Shops don’t look like letter or mail services. Indeed, if you want to use these services you have to queue for too long for mediocre service – all the while being tempted with their newsagent like merchandise.

The Annual Report has been written as it has because of the requirements of the Act under which Australia Post operates.

Australia Post is abusing the provisions of the Act to take business from independent small retailers like newsagents. That our Government is competing with us in this way makes a mockery of their small business policy.

Try as we might, it’s been impossible to get Tattersalls, NSW Lotteries, SA Lotteries, Lottery West or the QLD Casket office to agree to feed sales data to our Point of Sale system. In my own newsagency this means double handling. When I sell a lottery ticket I complete the sale on the Tattersalls terminal and then have to ring the same data up on the point of sale screen. If I don’t do this I have less control over the cash and I have no way of tracking what is sold with the lottery ticket – this basket data is crucial to any retailer. The lottery businesses cite security as the reason for not agreeing to a link. I say this is nonsense. All I want is a one way data feed of the sale value to save manual entry at the POS screen.

If such a link were implemented by the lottery companies, newsagents and others would have better cash management and better basket data – both leading to an improvement in business. Now why would our lottery suppliers not want those outcomes?

Farmers have extracted yet more money from a willing government for drought relief while many newsagents continue to struggle with the impact of deregulation imposed in 1999. While I fervently believe in a free market, it is unreasonable that this was imposed on the newsagent channel without any assistance to adjust the 4,600 businesses for open competition. A key element of assistance ought to have been fixing the magazine supply model which continues to see newsagents supplied non top-200 selling titles on terms which are inequitable. These are titles those competing with newsagents refuse to carry. Try as they might, newsagents struggle daily with magazine distributors to achieve a net reduction in range.

Rod King and his team at Bingara Newsagency are the latest in a long line of newsagencies to be recognised in business awards. His country town newsagency is a finalist in the Champion of Champions Awards (Specialised Small Business category). I first noticed Bingara Newsagency when they were one of three equal winners of the Tower Systems Fast 3 Awards – awarded to the three fastest growing newsagencies based on year-on-year same store sales comparison. Well done Rod and the team!

News Ltd has botched its support of the Wildlife Warriors charity established by the late Steve Irwin and his wife Terri. News is promoting the sale a green band for $1.00 to raise funds for the charity. Newsagents in NSW report being provided too little stock to satisfy demand. Several I spoke with sold out by noon. With newsagents the only outlet, they ought to have been supplied more than the number of newspapers they sell. Instead, they were supplied less. Significantly less. Making matters worse is a slow backup stock system which means newsagents won’t have bands until Tuesday. Too late.

It’s in South Australia that News Ltd really stuffed up. They ignored newsagents and appointed BP the exclusive distributor of the bands. This is nuts. I’d expect they would have sold more bands and raised more funds had they used newsagents. The takeaway for newsagents has to be that News considers them less relevant than BP.

In Victoria, a week ago, the bands were handled better by the Herald and Weekly Times folks.

Newsagents are being paid ten cents for every band sold – to cover their administration costs. Newsagents I have spoken with would have been happy to receive nothing as long as they were given sufficient stock to make the fund raiser work for the charity and as long as others in the supply chain worked for no margin as well.

If News was serious about raising the maximum amount of funds it would have run the campaign on one day nationally and leveraged better PR as a result. It would have used newsagents and, indeed, all newspaper outlets. It would have ensured sufficient stock and a good backup plan. That’s if it wanted to raise the maximum funds for the charity possible. (I appreciate that marketing plans are set months in advance and not all states could agree on the one date – but this campaign was unexpected and important to Australians.)

Turning this fund raiser into a commercial strategy and cutting out your core distribution channel as happened in South Australia is poor form. I reckon Steve Irwin would have something to say about it.

Photo from Sunday Telegraph website.

I like that magazine publishers adjust the cover price of titles. Whatever their motivation it provides retailers like newsagents with extra revenue to cover increased rent, labour and other costs. Newspaper publishers, on the other hand, continue to hike up advertising rates while barely adjusting the cover price. Sure there has been some movement this year. However, looking at data for the last ten years the shift in the cover price of top selling magazines is more commercially attuned than what I see for newspapers. Some titles have increased by 25% while top selling papers are up by 10% in the same period. Labour and rent for many newsagents have increased by more than 40% in the same period.

Here is the poster we have created for our COOK book promotion. Remember, Big W are selling this for $36.95, less than our buy price. Our store is being dressed with A1 posters surrounding our stock with a hope that the stack em high watch em fly strategy works. Big W are demonstrating a lack of creativity in their approach, but they usually do. While discounting will move the stock, the question has to be what does this do for the brand and for Big W. Deep discounting is like a drug addiction. Either you continue or, through intervention, you clean up and see that there is a brighter future. Our approach is rooted in a longer term view which respects the product and our own brand.

Bloomberg is reporting that Pacific Equity Partners is in buyout talks with Australia’s biggest printer, PMP. PEP last week announced the formation a joint venture to take over the Supanews Newsagent group. The joint venture includes Angus and Robertson and Whitcoulls stores.

Not content with the challenges of a rapidly changing marketplace, some newsagents are engaged in a series of bitter and personality based fights which threaten to tear the channel apart. By newsagents, I mean the politicians, those elected to the Boards of the state associations and the national association.

In May of this year the ANF signed a Memorandum of Understanding with each of the state newsagent associations in Victoria, New South Wales and Queensland. Since then, in NSW and QLD, it’s been guns at 30 paces. The ANF has served breach notices on the states for the most minor of infractions. In Victoria, any minor infraction has been ignored.

The MOUs I have seen are convoluted and provide a basis of confusion for what was to be a harmonious marriage. I have seen breaches of the MOUs by both sides. It is nonsense to issue breaches when all newsagents want is robust membership on the issues that matter.

The battles, in my mind, are all about membership for it is membership which determines the make up of the Board and for some a Board position is all that gives their life meaning, or so it would seem.

There is a battle going between the ANF and one state at present which threatens to tear the fragile unity among newsagents apart. If newsagents knew the story they would lose all faith in their associations. State Associations must serve their members first and in doing so ought not be attacked by the ANF.

The participants need to pause for a moment and consider their various constituencies. How are newsagents best served by the time and money being spent on such a personal and spiteful battle? They are not. At the time the MOUs were being considered I said that immediately on signing all directors ought to have resigned and fresh blood brought in. That this did not happen has led to the current situation.

I was a Board member of the ANF in 2004. The concerns I expressed in my resignation letter of almost two years ago have not been addressed. They go to the heart of the current mess.

Newsagent associations are in need of strong experienced and independent thinking board members. Without this the current mess, which has provided for more than ten years of poor representation of newsagents, will continue.

Unless this mess is fixed in the next few days newsagents would be well served resigning from all industry Associations. The Catholic Church in Boston refused to address its scandals until it was affected at the collection plate. Newsagents withholding funds from their associations could have the same effect.

The report, Corporate Paedophilia
Sexualisation of children in Australia from The Australia Institute has received worlwide coverage this week and, from what I have read, much of it sensationalised. After hearing reports about Total Girl and Barbie Magazine were presented as evidence I wondered what that makes newsagents. Should we take the titles off our shelves?

Looking to get behind mediocre reporting I read the report last night. While I disagree with some points, it is entirely appropriate that the report is authored and published. Poor reporting by some media outlets denies sections of the public from understanding the core thesis of the report.

It is unfair to target a single corporation or magazine title as being guilty of ‘corporate paedophilia’ ever if the label is used as a metaphor. The problem needs to be considered as a whole – magazine content coupled with online content, TV programs, fashion advertising and even news reports in a variety of media. As the paper says in its summary: There has as yet been no sustained public debate about the sexualisation of children in
Australia. For this to happen we need more thorough reporting, beyond the screeching of the last few days.

COOK is an excellent new cookbook. 600 pages of recipes from The Australian Women’s Weekly. COOK is beautifully printed. The Recommended Retail Price is $69.95. I ordered 100 copies even though my newsagency is big in books – I was glad to have the opportunity to play in a new space – especially with such a premium product and in the lead up to Christmas.

Then gorilla retailer, Big W changed my plans. In my centre they are selling COOK for $36.95. This is less than our buy price. Even before COOK is advertised by the publisher, Big W (Woolworths) is ruining the market for everyone. Dymocks has COOK at $59.95. That makes more sense – it’s where we expected to be. I’d have accepted Big W selling COOK for, say, $49.95, given their focus on being cheap. $36.95 is nuts.

The Big W strategy is to grab attention with a loss leader regardless of the damage done to a product along the way. Their pricing of COOK at $36.95 is arrogant. But, I have to cop it – such is competition. It reminds me of why I hate businesses like Big W. They are a cancer in the retail channel. They screw with consumer’s minds. They disrespect brands. They kill off the creativity of their employees. They squash small businesses – the standard bearers of community among retailers.

Gorillas in the jungle would have better manners.

Now, let’s see if we can be smart in how we compete.

It’s taken three years to build but newsagents now have a viable retail network for bill payment and prepaid recharge product. Like any new kid on the block, all stakeholders have worked together to ensure that there are no barriers. Our service costs the same or less (in the case of some billers) than that offered by Australia Post. There are no extra fees for payment type, until now. Newsagents have just been advised that from November there will be a 14 cent fee for debit card payment. While we’re not the first with such a charge, the challenge for newsagents will be the seamless implementation of this charge on to the customer so that newsagents themselves are not left funding this. It is something else to track, claw back and process.

I expect some newsagents to levy a fee which compensates for the extra work while others will pass on the 14 cents. I wonder how customers will react. My sense is that our network is not strong enough to sustain a levy like this. Newsagents are not expected to be as fee hungry as Australia Post.

We cannot afford the 14 cent fee to be a tipping point against the growth we have achieved so far in this area.

David and Michele Heinrich of newsXpress Clare have posted the following email to colleague newsagents:

Are there any other Newsagents in rural areas staring to feel the affects of the drought, covering all Australia, we are currently 1100 customers down since July 1st 2006, thanks to working smarter with a progressive marketing group we are only approximately $6000 in turnover down. I fear that this could have been worse had we not adopted different practices over the last few months,

I would like to ask this question, who will ask magazine distributors to help ease our overload that WILL put us under pressure during this time, we are awash with oversupply and those affected areas will need some assistance, again the top 200 sellers are ok it’s the rest that will cause pain.

I notice with interest how the farmers are given assistance ( great lobbyists), I don’t need government handouts , just some understanding of the situation by our government (magazine distributors) of the pressure they will put rural newsagents under.

Please other rural newsagents let your situation been known so we can start to gather information to present to our ANF friends to lobby on our behalf.

I have suggested to the magazine distributors (Gotch, Network and NDD) that they participate in a conference call or some other urgent event to agree on a strategy to assist drought affected newsagents. Such assistance could be increasing time to settle accounts; faster processing of returns credits; more accurate supply quantities; local marketing to support the newsagent as opposed to other outlets.

David and Michele are right to bring attention to this problem. Newsagents and other small local businesses are doing it tough as are the farmers.

The photo is from a CSIRO report on El Nino.