Author: Mark Fletcher

I have received letter from the Herald and Weekly Times, my local News Ltd company, inviting me to extend my distribution agreement for a further twelve months. I expect that other newsagents have received similar letters. This extension of time is most likely due to more time being needed for News to assess the preferred future structure of newspaper distribution in Australia.

I will accept the extension gladly. However, I’d like the year to be used by newsagents as much as News to determine the best road forward.

I’d like a success based agreement with News which rewards me for above average sales growth. Treat me like a business person and not an ‘agent’. Release me from the shackles of current retailing rules. Put some money on the table for real and consistent sales growth. Let me prove what I can do and allow other proactive newsagents to do the same.

Such an investment by News would, in my view, deliver better results than they have achieved recently by putting newspapers in to McDonalds and Big W.

I have five strategies I would implement right away if I were allowed, strategies I am sure most retailers would like to use if they were not hamstrung by a contract and associated rules which have their genesis decades ago when the distribution and retail of newspapers was tightly regulated under an ACCC authorisation.

If I am right and can achieve above average growth for News Ltd newspapers then I become more valuable to them. Surely there is less cost to the company in gaining greater sales from their newsagent channel than placing their product in other retail channels?

If I don’t achieve above average sales growth it costs News Ltd nothing. On the other hand, if I am successful they will reward me for my success and have some learnings to pass on. All I want is to sell more newspapers. Oh, and not have News Ltd appointing more stores near mine to compete while I prove what I can do.

Is News Ltd prepared to unshackle newsagents so they can achieve their full potential? I hope so. This next year is the perfect opportunity.

Mark Pincus, founder of Tribe.net comments about the Adam Lashinsky’s piece in Fortune about News Corp.’s online strategy. Pincus ‘advises’ Rupert Murdoch to throw a ton of money at Craigslist. While publishers around the world would celebrate the move, if it were successful – because of the impact Craigslist is having on classified revenues – it would be a huge risk for News since much of the success of the not for profit Craigslist is due to social goals rather than commercial goals. Translating that into a commercial venture would be an enormous challenge and the Craigslist community would soon find or create another free and socially focused place in which to play.

As a goal though it makes sense for News as do some of the other strategies proposed by Pincus such as using local papers to drive the online business; unleashing existing News media businesses (Fox etc) to leverage citizen content.

I started thinking of what I would do if I was in control of News and quickly my mind turned to what I should do through my newsagency and other newsagencies I might influence as News will take care of itself. (Australia has 4,600 newsagencies. 50% of our revenue comes from newspapers and magazines and around of other sales are as a result of newspaper generated traffic. We have no online component yet.) So, what I would do? Play online; make myself indispensable to publishers; dramatically improve customer service; take a lead on citizen journalism and become a gateway for people to get published; shift my reliance onto other product categories less likely to be impacted by an online model.

While it is interesting to speculate about how publishers should respond to the disruption caused by new technologies, it is equally important to consider how those at the end of the news and information supply chain should/could respond.

In a rebuff to the newsagent retail network, Fairfax is promoting Ad Online – a Fairfax website through which advertisers can place ads directly. In their flyer Fairfax promotes that Ad Online is available 24/7, flexible and convenient. They even offer free on site training. But to get to Ad Online you have to call – not the best start of an online offering supposed to make things easier.

While I can understand Fairfax wanting to strengthen their direct connect with advertisers, an investment in training newsagents in selling and placing classifieds would engage an army, in Victoria and New South Wales, of 1,700 businesses. Newsagents see potential advertisers every day.

I’m leaving the UK concerned at the gulf between what I’d call convenience newsagents and destination newsagents. While there was a time when all newsagents (or the vast majority of them) in the UK were destination newsagents that’s changed and the convenience newsagents dominate the newsagent channel. The losers have been the business owners themselves and suppliers. I’ve been in many of the convenience newsagents and some are close to being ghetto businesses. Limited range, little compliance and clearly selling anything to make money no matter how far it strays from the core you’d expect from a business calling itself “newsagent”.

In Australia we risk developing these ‘ghetto’ newsagencies. We risk it because of suppliers pushing newsagency product lines elsewhere. While that may provide a short term sales kick it does not provide long term sales growth. We risk it because we (newsagents, suppliers, associations) do not well define what a newsagency is. We’ve allowed the politically correct deregulation to overtake what was a valuable channel.

The newsagency retail network in Australia is unique. While there are some compliance challenges, overall the network of 4,600 stores is an asset to suppliers, consumers and indeed the newsagents themselves. Suppliers would be well served building customer driving strategies with newsagents to underpin the network of stores and to ensure their relevance into the future. This will encourage more newsagents to reinvest in their businesses and therefore underpin customer traffic. At the moment one can understand why newsagents balk at reinvestment when they see top selling newspapers and magazines in more and more outlets. Respect newsagents with commitment and newsagents will respond with capital investment. A good win win.

For every magazine, newspaper, greeting card or lottery product purchase made outside the channel we risk losing a customer from the channel and this hurts not just the newsagents but also the suppliers who rely on newsagents to build business. While I appreciate the need for suppliers to have a balance of retail channels offering their product, it is in newsagencies in the newspaper, magazine and greeting card categories where suppliers get strong in store support. K-Mart, Coles, Safeway and Woolworths may sell more product in some categories but they don’t even take a phone call unless a supplier pays them to. Newsagents provide space and over the counter promotion support which is unique. Every sales lost to a non newsagency outlet puts that support at risk and takes us closer to the convenience newsagent model in the UK.

In the UK, out of 25,000 newsagents, you have, I am guessing, around 2,000 who comply and run solid newsagent businesses. The rest fall into the convenience newsagent category. This situation has evolved through, in part, lack of supplier support for the channel and now it is suppliers who complain about the state of the UK channel. It is crucial we do not make that mistake here.

Consumers are happy shopping in newsagencies, we’re conveniently located and operate at convenient hours. There are enough newsagents demonstrating excellent year on year sales growth in magazines, newspapers, lottery products and greeting cards to support by claim that stronger business support for newsagents will reap the sales growth some of these suppliers are seeking outside the newsagency channel. For example, in my newsagency women’s weekly magazine sales (Woman’s Day, New Idea, TV Week etc) sales are up by more than 50% year on year. Reward me for that rather than by helping the petrol and convenience stores near mine take some of the business away from me.

Suppliers could start with rewards based on sales success. As soon as newsagents see they can go beyond the traditional fixed GP on these core categories suppliers will see a higher and more successful level of engagement. It will take newsagents from being ‘agents’ to being business people. And that’s where there is more money for both sides.

While it may sound melodramatic, what I have seen in the UK is a future we could have unless we (all of us, newsagents and suppliers) recommit to strengthening the channel and ensuring we have the tools and incentives necessary to move forward rather than fighting a rear guard action as has been all too often the case since deregulation in 1999.

I didn’t like what I saw in the UK and will work hard to ensure newsagents don’t become ghetto retailers in Australia.