Author: Mark Fletcher

Kudos to the Herald Sun for their Phar Lap poster promotion today. Giving away a poster of this champion racehorse reinforces the newspaper’s connect at the start of the Spring Racing Carnival in Melbourne. Well Done. Customers loved it.

Brickbats to the people selling space at the Herald Sun website. They are promoting (above) Tattersalls online – a direct competitor to the in store Tattersalls business operated by newsagents. Newspaper publishers need newsagents to maintain and or grow sales. The fewer who visit newsagencies the fewer newspapers they will sell. So why promote an online business pulling people away from newsagencies? Nuts.

This is a peak inside the Australia Post shop opposite my newsagency. This shop is owned by the Federal Government. They compete more aggressively than others with us for stationery, greeting card, phone recharge, money transfer and calendar business. These government owned shops are taking business from independent small business newsagents through the monopoly they have on postal products and the fact that you have to walk through the store to get to the counter. The Federal Government is happy to sell off Telstra and remove their conflict but they refuse to even consider selling the Australia Post retail network. I wonder how much economic damage will have to be experiences by small businesses before the Government realises the damage their policy is doing.

I received a call from a colleague yesterday saying that Vodafone was offering recharge at 10% off through the Woolworths stores if you purchase a one of their SIMs. While Vodafone are welcome to do whatever deal they want to attract new business, that they can offer 10% off recharge through a big business channel and nothing through a small business channel bothers me. Vodafone will say that the Woolworths stores are building the Vodafone customer base. Newsagents do as well through signage and adding to the Vodafone convenience factor – given our locations and the hours we are open. Vodafone recently announced a 37.5% cut in newsagent commissions for Vodafone recharge to 5% making it of doubtful economic value.

Australia’s 4,600 newsagents are often told by publishers that they are important to them. Why then is News Corp. testing its capital city dailies in the Civic Video chain. Civic has over 300 stores and most would be close to a newsagent. While Civic stores might be open longer in the evenings, newsagents open earlier and this is when the majority of newspapers are sold.

The move by News Corp. is disrespectful of newsagents; it tells newsagents they are not a sales growth channel for publishers; it encourages newsagents to look for alternative traffic generators; it makes the newspaper less of a specialist product; it dilutes the connect consumers make between newspapers and newsagents.

My newsagency is proof that same store newsagent sales growth is achievable. News Corp. would be better served working with newsagents to achieve this than pushing product elsewhere.

This graph shows average daily over the seven days for Take 5 magazine for 3 months (red) in 2005 compared to the same period (black) in 2004. The graph shows the critical importance of day of issue (far greater than many in the industry think). The graph also compares average daily sales from 2005 with 2004. You can see the sales growth we have achieved: most of this is on the first day. Our growth is due to our magazine club card promotion and we expected to see growth spread across the seven day shelf life.

While Limelight magazine from the ABC is sold through newsagents, the ABC does not note them as an outlet in TV commercials. Their commercials promote Limelight Newsagents carry by my very rough) guess 50,000 copies and generate sales of 35,000 copies. Imagine the result if the ABC promoted newsagents as carrying Limelight. If they want newsagents to carry the title they need to promote the newsagent channel.

Someone asked my why I complain here so much about Australia Post. It’s simple, they are 100% government owned and operate government owned retail stores which compete with small business stores like mine for stationery, Western Union, greeting card and bill payment business.

Here’s a photo peeking in at the government owned Australia Post store opposite my shop. For the most part it looks and feels like a newsagency in the first half. I wouldn’t mind this competition if they were not government owned and if they did not have their monopoly over postal services. This monopoly gives them cheaper rent, lower customer acquisition cost and greater control over their future.

OK magazine has a chocolate bar; Good Taste a Lindt chocolate bar; recipes+ a pack of raspberry bullets. All this free chocolate for purchasing a magazine is great even though it’s a challenge to stack and keep tidy. It annoys me though when publishers get it wrong – as has happened with Good Taste. Their chocolate bar has been glued badly and we’re spending too much time every day re-sticking the bars on the cover. This may seem like a whinge and it probably is. However, the free gift looks like crap when glued badly and this becomes a turn off for customers. Over at OK they have got it right: a strong glue and good product presentation. As a result sales are great.

Received reports this morning of newspapers being put into Civic Video outlets. Not sure if it’s a national strategy but already there are reports of three Civic Video stores involved. In two cases the Video outlets are next to newsagencies. News Ltd seems to be the publisher involved. The same publisher pushing their newspaper product into Big W and McDonalds. (Fairfax have their relationship with Starbucks.)

I could understand newspaper publishers pursuing these non traditional outlets if they were likely to get their product in front of eyeballs new to their product that day. However, given the broad retail availability of newspapers already this is unlikely.

Recent experience suggests that this move will not achieve incremental sales. Existing channels will suffer with the moat pain inflicted on newsagents – the only specialist newspaper retail channel in Australia. But taking sales from newsagents publishers play with the fine balance of these quintessentially Australian businesses and pressure a domino impact across magazines, greeting cards, lottery products and stationery.

Newspaper publishers would be better advised to focus on their product, make it even more appealing and driving traffic to the specialist retailers who will support their initiatives with bold in store displays and added value marketing strategies. There are plenty of newsagents demonstrating that above average sales growth can be achieved in same store situations.

Turning the newspaper purchase into an impulse purchase (through Civic Video) as opposed to a destination purchase (in a newsagency) demonstrates, in my view, a shift in respect for the newspaper product.

While newspapers run stories daily on the impact of skyrocketing fuel prices on families and small businesses, the publishers of these same newspapers continue to refuse to allow Australia’s small business newsagents to pass on the additional costs. In some cases newsagents are spending $100 a day extra in fuel and they are denied the opportunity to pass on this additional cost.

Australia Post passes on the higher fuel costs. Qantas does too. Newsagents are precluded from doing it because of contracts which were negotiated in 1999 as a result of Howard Government pressure and under the watchful eye of the ACCC.

Newsagents cannot control margin on the product nor recovery of higher costs of distribution of the product. This denies them the opportunity to run their business properly. While the publishers can reasonably argue that newsagents have been given an exclusive home delivery territory and therefore need to operate with some price control, the current fuel price crisis has turned some newsagencies into loss making businesses.

It would be good to see a newspaper cover the impact of high fuel prices on small business newsagencies to demonstrate transparency and to give oxygen to the pain being felt.