Author: Mark Fletcher

Further to my earlier post on shopping basket analysis in newsagencies, I have been breaking the basket data out by day of week and have found, among other things, that Sundays spike significantly in terms of basket penetration for newspapers.

I have seen newsagencies where Monday through Saturday the average basket penetration for newspapers is 35% where on a Sunday it spikes at 70%. Overall the Sunday spike averages at 70%. That is, newspapers make it into 70% more sales on a Sunday than any other day.

The kicker is that in 65% of newspaper sales on a Sunday they are sold alone. In the data I have seen so far, Sundays are the least efficient day for high street and shopping centre newsagencies.

Newsagents need to heed this data and work harder at achieving add on sales. Publishers could consider developing Sunday specific strategies which work in with their retail network since an inefficient network on a Sunday when labour rates are so high benefits no one.

This research project involves 8,000,000 shopping baskets of data from over 100 newsagencies spanning three years.

With the Government plans to sell its remaining shareholding in Telstra exploding on a variety of fronts this week (for example here and here and here, it was interesting to see Prime Minister Howard come out fighting on the 7:30 report on ABC TV tonight. In that stoush The Prime Minister said that the government had a “conflict of interest” owning the shares in Telstra and controlling the regulatory regime. This is the situation with Australia Post.

While the government hides behind the provision of postal services in its comments about why Australia Post cannot be privatised, it does not answer the charge of the conflict in controlling the regulatory regime which delivers exclusive and low cost consumer traffic to the Australia Post shops where the government also sells stationery, greeting cards and many other lines traditionally offered by independent newsagents.

The government is a very happy 100% shareholder of this retail driven business and seems to have no qualms that it is taking revenue from the struggling small business sector.

The government has double standards here. The argument it uses to support its sale of the remaining share of Telstra applies to the government owned Australia Post retail stores. The government has no business owning these and it ought to divest to individuals and small businesses as a matter of urgency.

I have no qualms with the Licenced Post Offices as they are owned and operated by small business people. My issue is with the government owned retail stores competing with newsagencies like mine and using their government ownership to provide an unfair advantage.

That’s a conflict of interest!

Rayma Creswell, CEO of the Australian Newsagents Federation was quoted in yesterday’s Australian Financial Review as saying “If you go into an Australia Post shop, you’ll see that the offerings they have are really computer consumables and telephony consumables, more than stationery, as we do.”

Ms Creswell is wrong in her assessment. In Government owned post offices around 40% of floor space is devoted to general stationery and another 20% devoted to greeting cards and related product. Less than 10% of floor space is given over to telephony product.

In three Post Offices I visited yesterday less than 5% of stationery lines were the computer consumables to which Ms Creswell refers.

It is disappointing that newsagents are so ignorantly represented on this matter. I am a member of the ANF and am frustrated at their lack of attention to the competition from Australia Post.

One only has to review the Australia Post annual report to understand the importance of the broad retail offering in Australia Post outlets.

Elsewhere in the article, Ms Creswell says the ANF represents 5,000 newsagents. The reality is that Australia has 4,600 newsagents (source: ANF Year Book) and of these around 1,000 are ANF members.

Australia Post is taking business from Australia’s independent newsagents by using the traffic generated by its stranglehold on postal items to sell traditional newsagent items such as pens, pencils, staples, paper, cards, paperclips and so on. This is our own government using the monopoly they control to take business from shops like mine. They have only been in this space for a short time compared to newsagents.

So much for their support for small business.

The Columbia Record is a citizen journalism initiative from Knight Ridder. Australian newspaper publishers would do well to take a look at what Knight Rider has done. It acknowledges the importance of citizen engagement in reporting and commenting on news. There is a business case and a social responsibility in this project. We need more sites like The Columbia Record.

A decision is expected very soon in the UK about changes to the distribution of magazines and as this report from the Financial Times shows, the proposals from the Office of Fair Trading are bringing together people usually at opposite sides of a debate.

What is happening in the UK is of interest in Australia not because we have a similar magazine distribution regime but because you have regulators playing with a model without consideration for the small businesses and their role in the community. My understanding is that if the FT rules are adopted we’re likely to see fewer independent retailers and more clone businesses.

“There is no doubt in my mind that podcasting is not only here to stay but will also shortly threaten established media broadcast systems. It’s not so much that they will all be destroyed by homebrew networks, but podcasts will be taking away just enough listeners to be a major concern.” John Dvorak writing at pcmag.com.

Dvorak is a well established and respected commentator. His column is further evidence that the impact of podcasting will be far reaching for existing media companies. While many in these same existing media companies disagree, the reach of podcasting in its one year of life so far is extraordinary.

While the implications are talked about in terms of broadcast media (TV, radio), I see implications for newspapers and magazines as stories lift off the page and present in a more emotive, more accessible and more connected way.

Good to see the Australian Financial Review provide some coverage to my call for the government to sell the Australia Post retail network. AFR, Sept. 6, pg 47. I’d link but it’s in the premium member area of the AFR website. This half page story picks up on some of the comments posted here.

Since newsagents began 130 years ago newspapers have been the core product, the one item just about every customer visited to purchase. They drove the traffic. In 2005, however, we are seeing shopping basket penetration data for high street and shopping centre newsagencies which suggests a fall. This data, representing 8 million baskets worth, shows that in 2003 49.6% of all sales included at least one newspaper. In 2005 that figure has fallen to 40.4%.

This change can be attributed to newsagencies carrying a greater variety of product; that newspapers are available in more retail outlets; that over the counter sales for newspapers are falling; and/or that sales of other items in newsagencies (lotteries for example) have increased.

No matter what reason for the change, it is real and should be acted upon.

Whereas previously we used to use the newspaper traffic to try and leverage sales of other items, we have developed a strategy to try and leverage newspaper sales from other high traffic items. We see this as a tipping point, a realisation that newspapers are not the might traffic generator they once were.

Our goal is to lift basket penetration for newspapers in our newsagency to 2003 levels.

Talk to those who owned newsagencies up to the 1990s and they would respond saying that everyone who wants to buy a paper buys a paper. I don’t agree. Hence our strategy. We’ve been driving sales efforts at our lottery counter (a high traffic generator) and now plan to push elsewhere in our shop. I’m confident significant numbers of customers leave our shop who would buy a newspaper if we offered it to them. The challenge is to find the approach which works and which is cost effective.

Publishers need to engage as well. They need to develop in store marketing strategies beyond competitions which reward newsagent success and build a consumer connect with the newspaper as a newspaper again.

There is a certain arrogance among publishers that they are the heroes to newsagents and that it is their traffic which props up the struggling retail channel. More open and honest communication could navigate a win win here and engage newsagents in boosting over the counter sales of newspapers by leveraging other traffic.

The Media Center (at the American Press Institute) is holding what looks likely to be an exceptional one day conference event. As their literature says:

We Media fosters collaboration through conversations, connections and shared knowledge. We’ve organized conversations with individuals and organizations who are using the Internet as a collective force of unprecedented power. We’ve created a setting for you to talk to them and to each other – a day for learning, and sharing, ideas and opportunities.

No ordinary conference, We Media is about how we
create a better-informed society by collaborating with
each other. Arrange meetings in advance or during scheduled meet-ups at the conference

The day-long event will be held on Wednesday, October 5, hosted by The Associated Press at its world headquarters in New York City.

The web has plenty of coverage of Katrina and the dreadful aftermath. Some of the coverage demonstrates the importance and value of citizen reporting. Here are my top three picks for what it’s worth.

Ourmedia.

Wikipedia.

Nola.com. This one was based on New Orleans.

There are others but these are the very best.

CNN calling for stories from citizen journalists.

Thanks to mobile devices and some stumbles by some news organisations, citizens are more actively engaged in reporting news and providing commentary than ever. Here in Australia maybe a publisher could find a way to use our 4,600 newsagents to more closely connect with would be citizen journalists.

With faster, easier access and better quality mobile devices, consumers will be happy to pay to follow a story or areas of interest. This will give stories in popular magazines and newspapers life in another medium. It will also compete with those products.

iTunes in the US has shown that consumers want to buy individual songs so why not stories?

PayPal, the eBay company agrees. They are extending their micro-payments service to include forms of low-cost digital content beyond music. The PayPal announcement makes it a convenient and low cost payment option for greeting cards, magazine and newspaper stories, advertisement placement – individual items of content rather than aggregated product like a full magazine or newspaper.

CBS will commence podcasting, Guiding Light, a 68-year-old soap opera, Tuesday. Guiding Lightstarted as a radio series in 1937. It is the first podcast effort from CBS Netcast.

From the CBS press release:

“Podcasting has become one of the fastest growing programming and promotional tools in media today and with this dedicated site we plan to be part of this new medium in a big way,” commented Larry Kramer, President, CBS Digital Media. “With this move, we continue to expand our entertainment programming portfolio on CBS.com in way that engages the consumer with a unique experience that complements the broadcast on the Network.”

We don’t display the poster for The Age newspaper in our shop. Instead, we display the entire front page of the broadsheet. Since we’ve been doing this we’ve had more customer stop and take notice.

Our reasoning for this approach is two fold: the poster is a single subject; and, on a flat stack customers cannot see what’s below the fold. While we understand that editors create a front page to sell from above the fold, we’re experiencing a good reaction to the more complete display.

Even though it’s Father’s Day this is like any other Sunday. We’re open and trading. Carrying the heavily loaded hourly rate wages cost for employees. Sundays are good trading days but the extra cost make them a break even proposition. Right opposite our shop is the government owned Australia Post outlet. They’re not open. In fact they closed at lunch time yesterday and won’t open until 9am Monday. That’s how it is every week. While I don’t have a choice because of lease rules Australia Post chooses its trading times. Such are the benefits of government ownership.

If the government wants to be in retail it should face the same lease rules its small business competitors face.

Here’s another excellent event this month covering issues of online advertising and convergence.

Spend the Saturday before Mothers Day and Fathers Day in a newsagency and you soon realise that people care more about mothers. They buy more greeting cards and gifts and they spend more time on the purchase.

I’d never thought about it that much until I encountered several customers yesterday. One mother said to her teenage son “just pick a card, any card”. Another daughter didn’t seem to stop as she grabbed a card almost randomly to purchase. Now there may be explanations but I’ve never seen anything like this happen on Mothers Day.

Maybe my perception is wrong. I suspect not. Certainly the sales for Fathers Day are considerably less than Mothers Day.

PS. The top selling Fathers day gift – Darrell Lea Dad’s Bags – full of chocolate, licorice and candy delights from Darrell Lea.

This looks like a brilliant conference on digital led convergence in media. Hmmm, Las Vegas in September!

Despite strong in store displays from newsagents and an excellent price point, $2.00, issue #2 of Alpha, the new sports magazine from News Ltd is not tracking as well as newsagents had hoped.

In my own shop I’m seeing a sell through rate of 35% so far and the shelf life is already halfway through. While Alpha does not have the same sales decay of other high volume monthlies, sales are not where I need them to be to justify the significant real-estate given over to promoting the title.

Other newsagents I have talked with have made similar comments.

If you offer it to customers when they by a paper there is more interest. However, with two or three products we could offer this way, and with so little time per sale, it’s a challenge.

If I were in charge of Alpha I would increase the cover price to $7.95 – the quality of the product supports such a price – and I would include, say, teaser articles some of the features in the News Ltd newspapers with a coupon at the bottom of the article encouraging an Alpha purchase for $5.95 discount.

This approach does two things. First, it pitches the price of the product where it should be based on quality. Second, rewards the consumer for their interest.

Okay, since the magazine is publishers by a newspaper publisher I’d do something else. My third strategy would be to offer a competition entry with purchase of the magazine and I’d promote this on the coupon in the newspaper. Maybe a car giveaway each issue or a holiday or a hit out with a tennis star or a training run with a footy club. Who knows what the prize should be.

As it stands Alpha will die unless there is a more integrated and considered marketing strategy. Newsagents are working hard but the $2.00 cover price and lack of support for building what is a new niche is making it challenging. I want it to work.

This is the cover of one of a series of four new titles sent to newsagents by newspaper publisher Fairfax in August. These pocket size ‘magazines’ represent significant challenges for newsagents.

They are of a non standard size and therefore do not work with existing newsagent fixturing. The only reasonable place is the counter and this means product will be quickly dog eared.

There is no category for these products within newsagent ranges.

The covers are not clear about the offering inside.

Point of sale material was only a poster. Completely inadequate to launch a new category.

They are over priced.

Newsagents have been sent the stock without it being requested. No recall date has been provided meaning it will sit on newsagent shelves until recalled by the publisher.

These four new titles were sent at the same time as three new crossword/quiz related titles. While crosswords are a strong category, newspaper related titles don’t sell that well.

In my case between the new titles from this one newspaper publisher, I received $1,000 worth of stock of which I reasonable expect to sell $100.00 worth over a two month period. That’s a $25.00 return. In the same period I would expect theft to cost between $10.00 and $20.00 given the size of the products. Since I have to pay based on returned quantities and not scanned sales data, I have to carry the cost of theft of this unordered product.

Maybe some open newsagent/publisher dialogue prior to the release of these new products could have avoided what will be a frustrating and possibly expensive problem for newsagents. I have access to extensive sales data which could have guided a better outcome for my business and Fairfax.

The geeks at my software company have successfully interfaced our newspaper home delivery management software to the new Sony PSP device to create electronic delivery records for easy in vehicle use.

NPR, the US National Public Radio network, has made its long awaited jump into podcasting. Their podcast directory lists the shows available for download.

MediaPost reports that the Washingtonpost.com has negotiated a link with Technorati to facilitate reader access to blog entries about Post stories. This is a clever link between a traditional news source and the blogosphere.

I’ve received several calls in the last 24 hours from newsagents who are angered by demands they install new newspaper display stands. Each is a high performing newsagent achieving above average year on year sales growth for their main newspaper titles yet each has been told that they must install these new units at a cost of around $3,500.00. There is implied threat if they do not install the units.

This must be a business decision by and for newsagents, especially if what they are currently doing is successful in growing sales. To force them to take a step because of under achievers is a backward step.

Great to see the craigslist effort in response to the devastation by Katrina. At their New Orleans page there are several links for those wanting to donate money or goods. There is this list of people offering temporary accomodation.

It is the community connect of efforts such as this which sets Craigslist apart from newspapers and why, when it comes to classifieds, that Craigslist is winning in so many cities across the world. People like the community connect, they trust it and it’s free. There is no underlying commercial pressure to purchase in order to keep it free.

There’s also a link to the excellent Wikipedia coverage of Katrina and the aftermath.

If you’re reading this and wondering what Craigslist in, read about it here.

In today’s crikey.com.au email, Stephen Mayne writes about why Australia Post should be sold. His story includes this: “If anything, Australia Post should be privatised because it has so successfully used the power of its basic letter service monopoly and branch network to take huge share from its commercial competitors.”

Here here.

The government has no business owning an enterprise which leverages its monopoly traffic to the detriment of small businesses like mine.