Author: Mark Fletcher

Newsagents have received advice that their application for a fuel levy has been rejected by News Corp’s Australian subsidiaries in Queensland, Victoria and South Australia. Small business newsagents had sought relief from high fuel prices compared to the delivery fees which have not had a fuel adjustment for (I estimate) more than 10 years.

Newsagents do not control the delivery fee they are allowed to charge nor the cover price for the product they deliver. So any operational cost increase hits hard. With wages continuing to rise and fuel at an all time high they were hopeful that News Corp. would see its way clear to allowing them to recover some of the higher cost just as News Corp. itself does through its advertising pricing policy.

The rejection of the fuel levy application has hit newsagents hard and some are considering handing their delivery runs back because of the high price and the lack of business control they have over the operation.

Suppliers and others involved with Australian newsagents are calling for greater compliance in terms of shop presentation, services, operational standards etc. They see the lack of compliance as a key problem for the channel and talk as if fixing this will deliver a bright future for Australia’s 4,600 newsagents.

I am not sure if I agree with this. First up newsagents need to want to be compliant. This will only happen if they see a benefit. This will only happen if they (all) are businesslike in running their business. Also, newsagents need to have something to be compliant about.

From a supplier perspective compliance is more about carrying a certain range and displaying their product in a consistent way. Shackling all newsagents in this way will hold some back. It does not make sense, for example, for newsagents to spend $4,000 on a newspaper display stand for one part of their shop when their current (non compliant) retail strategy is delivering double digit growth.

Before we consider compliance I think our efforts would be better spent on understanding what consumers think about newsagencies today and researching what products we will have to offer in our stores in five and ten years time.

Right now our core traffic generator products in order of traffic volume are newspapers, lotteries, magazines, greeting cards and stationery. (For some cigarettes will be in there too.) What changes will occur with newspapers, lotteries and magazines in the next five and ten years which we need to consider in developing our retail story from today on? This is the question we should be drawing attention to.

Creating a model newsagency now, while interesting, will only be of value if it reflects current consumer research and considered predictions about what our retail network needs to look like in five and ten years. And then such a model newsagency needs to be underscored by a supply paradigm and operational model which is economically sustainable and which is attractive to newsagents.

Our businesses are shackled with too many pre deregulation rules and it is only once these are released that more newsagents will become businesslike.

Bill Express, a major trading partner of newsagents, has announced to the ASX today that they are providing electronic vouchers that can be used on the internet to acquire and download products from Apple’s iTunes Music Store.

While it is likely that Bill Express were brought to the table by Coles Myer after they did their deal with Apple, it is appalling that newsagents have been cut out of business which should be ours. We have the technology network and we have the connect with the iTunes demographic. What 15 year old wants to go to a supermarket to get an online voucher. They’d be happier in a newsagency where they can get music magazines and other products.

I hope that Bill Express robustly represented newsagents as a better recharge outlet than supermarkets.

Rather than just blog about the franchising of the Australia Post PostShop network and how the government owned business is taking sales from independent small businesses like mine I have written to Helen Coonan, Minister for Communication, Fran Bailey, Minister for Small Business, Phil Barresi, MHR for Deakin and the Chairman of Australia Post. I will be interested to read their responses.

Why is the government demanding that Telstra compete in an open marketplace while it protects the best stores in the Australia Post retail network from open competition?

Why has the government allowed Australia Post to aggressively pursue product lines sold by small business newsagents?

Why has the government demanded that newsagents deregulate (in 1999) yet refused to open the sale of postage stamps to the same retail competition?

Is the government prepared to compete with all small business sectors or will it restrict its enterprises to competing with newsagents?

How does the government feel when its employees visit small business newsagencies, note retail prices for items and return to their PostShop and adjust sales prices?

Does the government have a small business policy which is pro small business?

Why will the government not set a policy of selling off the PostShop retail businesses to local small business people?

Roger Corbett of Woolworths has been gracing TVs again reminding us that the Woolworths Big W network sells for less. I price checked ten stationery items yesterday and found that we beat their price on nine of the items. Based on this small sample I’d say that they don’t sell for less, certainly not on all lines as their advertising implies.

It is disappointing that Apple has chosen to partner with the giant Coles Myer retail chain for the sale of prepaid cards for its iTunes store than partner with small business newsagents. Apple has shunned a wonderful opportunity to demonstrate its support for independently owned small business stores but has instead decided to support Australia’s largest retailer.

The Australian Government owns Australia Post. Of its 4,474 outlets, 863 are government owned and operated. These PostShops don’t look like a post office. They look like a stationery / greeting card / services shop. In fact, many look like a newsagency. Except that newsagencies are privately owned and have been in the greeting card and stationery space decades more than Australia Post.

The current Federal Government has presided over Australia Post dramatically increasing its competition against small business newsagents. Not good credentials for a Government which claims to care about small business. Last week it was revealed that in the 2004/05 financial year Australia Post increased revenue in this area including stationery and greeting cards by 8.0%. Some of that increase will have been at a cost of small business newsagents.

Yesterday in (I estimate) tens of thousands of mail boxes Australia Post increased the pressure. It came in the form of a glossy eight page catalogue. This catalogue is promoting “big savings” on printer ink, computer printers, copy paper, printer toner, shredders, calculators, blank CDs, blank DVDs and phones. Not one postal item. Now their “big savings” are not that big for the items I checked. For example, we beat them on price for the toner, paper and blank CDs. Good I hear you say, that’s competition. True except that I do not have guaranteed traffic. I do not have any exclusive products or services in my shop. Australia Post has stamps and a range of postal related services. This guarantees foot traffic and while people are there in line down the middle of the store they are faced with all these products and posters saying “big savings” and, well, people being people they will think it’s a good deal.

This is my government promoting these “big savings” when newsagents near these post offices probably offer better prices like mine. But our voice is tiny compared to the might of the government owned Australia Post.

These Federal Government owned PostShops are trading off their exclusive and protected postal services traffic and reputation and turning into stationery and greeting card businesses. The only difference between their business and mine is that I have newspapers, magazines and lottery products. But hey, they have been chasing magazines so don’t think the current situation will last forever.

The move revealed over the weekend of Australia Post franchising some of its PostShops does not address the situation. The Federal Government is still profiting from competing against small businesses. They are still allowing the postal service well deserved and good name to be used to support the development of their general merchandise retail network.

This is a policy issue for the Government. The Government has no businesses owning these retail businesses.

Here’s what I want to happen: Australia Post to immediately stop its franchising moves; PostShop businesses to be put to tender for nearby similar small businesses to purchase and integrate with their businesses; the Government to exit the retail channel; Australia Post to focus on postal services and leave stationery, greeting card and other retail products and services to private enterprise.

I don’t hold much hope as the Government does not seem to care about small businesses.

Maybe the closure of some small businesses as a result of Australia Post competition will get them to take notice.

So, the Government owned Australia Post is franchising it’s PostShop network. Is this a Government privatisation when you’re not having a privatisation?

The Government owned Australia Post retail network is being franchised, or at least parts of it, according to this announcement on their website. While I am sure the Government and Australia Post management will have reasons for franchising as opposed to selling – to maintain control over the brand, to ensure service obligations are met etc. – this move further demonstrates a lack of support for small business by the Government.

Australia Post has, over the last 10 years or so moved into areas well served by private enterprise, especially small business newsagents. They actively price compare and compete with newsagents in general stationery. They range compete in greeting cards and many other categories. It is bad policy that the Government competes with small business in this way and that they refuse to engage in dialogue on the matter.

In my own situation I have a government owned Post Office opposite my shop. Two thirds of their floor space is taken up with products which compete with my offerings. They get better rent, better opening hours and better concessions from the landlord because they are government owned. Good on them for achieving this. However, it provides them with an unfair advantage. Punters line up in their shop to buy stamps, because of their monopoly, and while in the line they are presented with products I carry. But since I don’t have stamps I don’t have guaranteed foot traffic. There is not a product in a newsagency which is exclusive. Australia Post has stamps and related product and they are leveraging this exclusive category to achieve consider other business. I’d do the same. However, if I were in Government I would have a small business policy which is real. I would ensure that my Government owned enterprises do not use their exclusivity to unfairly compete with private enterprise – especially at the small business end.

What Australia Post should have considered before this move into franchising is the offering of these businesses to nearby suitable small businesses – to help build back up the businesses hurt the most by Australia Post’s predatory practices. I am sure the business owners would pay a reasonable price. I would.

The Government ought to adopt a policy of withdrawing Australia Post government owned and controlled stores from all retail categories other than those they offer exclusively. Further, they ought to put the new franchising project on hold until they consider whether it reflects the small business friendly policies they claim to have.