Author: Mark Fletcher

Plenty of reports in the UK over the weekend about the bleak future for small retailers like newsagents as a result of tough competition from supermarkets. See: Mirror, Times, Guardian and our own Sydney Morning Herald. In fact a Google search reveals 45 articles related to this story.

The situation is not much different here in Australia. Coles and Woolworths have a voracious appetite and are pursuing product categories which small business channels like newsagents need to survive. They move in, take the cream business and leave newsagents with some action but at a much higher cost. Take stationery for example. Supermarkets and their associated retail outlets now own stationery yet their customer service is appalling., Range is poor and prices are high despite the consumer perception that they are lower. a cheaper pen, for example, is not always cheaper once you consider how long it lasts and whether it is the right pen for the job.

The challenge for newsagents is to get a consistent superior quality and service message out to consumers. Another challenge, too, is whether politicians are prepared to legislate to protect small business against the appetite big business has for their customers. And by protecting small business, like newsagents, I mean protecting them from clone businesses as well as the supermarkets.

Newsagents are important culturally to Australia and losing them from towns and high streets would be a big blow to the community let alone the loss of an entrepreneurial breeding ground.

News Ltd and Fairfax circulation experts around the country demonstrated their knowledge today by cutting back supplies such that many newsagents were sold out by mid morning. In NSW it was more News Ltd product affected whereas in Victoria it was more the Fairfax newspaper – The Age. In my own case I was sold out of The Age by 9:30 am and they had no spare stock anywhere to satisfy angry customers. Someone at The Age told me that one customer was so angry they had to send out someone to support the newsagent affected.

After all the efforts this year to boos newspaper sales it amazes me that publishers could be so stupid to burn consumer loyalty on a day like today.

The knock on effect on other categories in store was noticeable.

What publishers should have allowed for was the $32 million supre draw lottery tonight. Our lottery sales were up 400% so imagine what we could have done with papers if we had the stock.

Idiots!

PS. I received plenty of Herald Sun product from News Ltd but 20% was unsaleable because of poor production quality.

H A P P Y N E W Y E A R

Newsagents are certain to reflect on the passing of Kerry Packer as they trade today. His influence over their businesses was considerable.

His companies published our most successful magazines (Australian Women’s Weekly, Woman’s Day, TV Week, NW, Madison, Real Living, Take 5) and distributed many many others. There was not a day that would pass without contact between a newsagent and a Kerry Packer owned company.

As newsagents sell their newspapers today carrying Kerry Packer as front page news, some will hope for a happier relationship with his companies, others will worry that with his passing goes a support from within his companies for small business newsagents. While in recent times Packer companies have made some decisions which have hurt newsagents, they have, overall been very supportive of the channel – actively investing in marketing strategies designed to help newsagents compete with supermarkets and others moving into the magazine space. Indeed there are stories of Kerry Packer personally intervening and reversing at least one decision by his management team which would have hurt newsagents.

Publishing needs more people who have grown up with and have an affinity for “the business”. Kerry Packer was unique and I reckon newsagents will miss his influence.

In the days leading up to Christmas several times I heard customers in my shop comment to each other that they should hold off buying calendars because they’ll be half price after Christmas. The same comments were being made in stores around the country. Early discounters marked calendars down by 25% to 25% from November. That is what newsagents would usually mark them down to right after Christmas. The damage done to consumer perception about the price of calendars by discounters like Big W (Woolworths) and others we have to come out of Christmas Day at 50% off and then go to 60% from New Years Day.

Calendar publishers and retailers who rely on calendar revenue will need to take a very different approach to the 2006/07 season. We need strategies which take us out of the discount marketplace, strategies which result in a product/service mix which allows a premium price and which the discounters are less likely to follow.

Something must be done because left as is, there is no point in my newsagency and thousands like mine being =in the calendar space.

The only comfort I have is that Calendar Club and other similar specialist offerings are, anecdotally and off the record, making similar negative mutterings.

We launched a new online business four months ago. We set out to create a sustainable business focusing on one category of product and with our entire marketing spend to be focused online. Four months on, our monthly marketing spend as a ratio of sales is falling nicely, repeat business is growing and new customers are landing on our website each day as a result of effective keyword advertising partnerships. We could not have achieved anywhere near the same result through advertising in more traditional media of newspapers, radio and TV. This is why newspaper publishers are reinventing themselves. It is also why newsagents need to reposition themselves. Our online experience is helping refocus our retail newsagency so that it is more relevent for the over the counter opportunity.

First I noticed it in data from my shop and now I’ve seen it in several newsagencies. Magazine sales are down more than 20% in the special interest category. Special interest magazines cover: buses, woodworking, railways, family history, UFOs, horoscopes and westerns among other interests. These titles account for around 15% of all magazine sales yet they take up around 35% of shelf space. So, there will be a tipping point where the real estate, labour and logistics costs are such that they are eliminated from allocation.

There was a time when these specialist titles were crucial to the success of retail newsagents. Our stores were the only place where such specialised information could be obtained. Of course the Internet has changed all that.

I’m thinking that I’ll be better off cutting some of these titles than have then fade away slowly and cost me more money in the meantime. I could sure use the space to better promote the magazine categories where I’m seeing significant growth.

Australia cannot afford the luxury of 4,600 newsagents carrying such a vast range of specialist magazine titles any more.

At 2 pm today in my shopping mall the government owned PostShop, where more than 70% of floor space is dedicated to Christmas gifts and the like, closed for the day. Small businesses like mine are not allowed to close. Our lease precludes it. The PostShop can close because it’s government owned and an essential service. While I doubt I would want to close, my point is that the management of Australia Post uses its essential service facilities when it wants and ignores them when it wants. Independent businesses do not have that luxury.

The Herald Sun ran a promotion last month – a free Kath and Kim DVD with the paper. They provided newsagents what they thought would be enough stock and told us to take orders if we needed more. Today, more than a month on, we are still waiting for the new stock. This is a free service we provide the publisher and the consumer. The people coming into newsagencies every day asking for the DVD are getting angrier and they are taking it our on newsagents – especially since the Herald Sun reported that additional stock was not available.

Rather than adding value to the masthead this promotion, or the way it has been managed, is damaging the masthead and the reputation of newsagent retailers who are at the coal face. It’s taking some of the shine off the season.

The Kath and Kim DVD promotion is the type of promotion you need to under promise and over deliver.

Spare a thought for small business newsagents in Victoria and South Australia who are being forced to open on Christmas Day to deliver and retail Christmas Day editions of News Corporation product. This is despite News deciding to not publish in New South Wales on Christmas Day and despite some newsagents facing $55.00 an hour in wages for people to work on that day. Thanks to the News contracts newsagents are not in a position to pass on additional Christmas day costs whereas News can charge a holiday loading for advertising. Most newsagents will lose money for their Christmas day efforts.

Newsagents are happy that fairfax has decided to not publish on Christmas Day.

We have a killer magazine loyalty program in our store and which is driving well above average sales growth. It’s also causing problems with sell outs and near sell outs to the extent that customers cannot see the product.

This week is a good example of the problem. Woman’s Day is out, same with Take 5. Despite early please for extra stock we can’t get it. We ordered Woman’s Day stock Monday evening and were told Tuesday that they were out of stock. Yet there is excess stock in supermarkets around my shop – so much stock that I am certain they will return this.

My magazine customers want to purchase from me because of the Magazine Club Card. Some will miss Woman’s Day this week because they don’t want to pay the price ast Coles or Safeway.

This is where there needs to be a mechanism to move stock 100 metres or so from Coles or Safeway to my stock so I can satisfy my customers and so the publishers can get sales they might otherwise miss.

Our magazine distribution system is too inflexible and the silo supply chain approach does not allow cross silo support. Publishers and small retailers like me are the losers.