A blog on issues affecting Australia's newsagents, media and small business generally. More ...

Author: Mark Fletcher

Suggestions for politicians on how to kick start small business retail in Australia

Every election, politicians say that small business is the lifeblood of Australia. Then, after the election, they forget about small business. No wonder trust in politicians by Australian voters is low.

Small businesses are the lifeblood of our economy.

Small business retailers are nimble and able to lift local economies faster than big businesses and certainly better than  online businesses.

Here are six tips for politicians on steps they can take, decisions they can make to help lift retail, especially small business retail.

  1. Direct all politician electorate Christmas spending to be with local small businesses. For gifts, parties, cards, everything for a year. Have the results assessed independently. Ensure that spending is fair, too, to benefit a variety of local businesses, and not dolled out as political favours. Shop local, shop small.
  2. Run a national shop small shop local ad campaign. Make it educational, smart, encouraging …, guiding Aussies on the value to them from shopping local, shopping small. Help to understand the true value of shopping local, shopping small compared to the alternatives. The ad campaign should run regionally across multiple media platforms, giving preference to locally owned platforms with a track record for not managing their business to minimise tax.
  3. Local shops refresh grant. Give every local retail business a grant of at least $10,000 with the stipulation that it is spent locally on capital works for the shop, to improve the shop. Proof of local spending is to be in the form of an invoice from a local tradesperson or company with and ABN and more than a year of trading as recognised by the ATO – to avoid fraud. Spending could be focussed: painting, electrical, carpentry, flooring, repairs. The management of this should be online with quick approval and payment. Note: the $10,000 is suggested as anything less could be cosmetic.
  4. Local artists grants. Offer cash grants to fund buskers for local high streets, to make shopping locally more entertaining. Make the application easy. Focus on local artists entertaining in their local community. This serves the dual purpose of injecting cash locally as well as fostering the local arts. The application process should be online, approval fast and payment immediate.
  5. Local visual merchandising supports. Keeping in-store displays can be a challenge for small business retailers. Fund a network of merchandisers to make a 2 hour call weekly on qualified independent small retail businesses, sub $1M turnover, ABN registered, trading for six months or more. With each visit to be about visual refresh of the shop. Cap the cam pain at three months assess the economic value. Only local merchandisers to be used – i.e. to an overseas agency who hires local contractors.
  6. Establish local currency systems. These work overseas on regional towns where local currency has more value than the national currency. It supports shopping local through a smart value structure. the government role could be on the tech back end to manage the currency – taking away capital cost from local councils. To find out more ab9out this, read up on the Bristol Pound.

This list could be much longer. It is offered here as a start, to gets people thinking of practical ways to support shopping small, shopping local.

The current disinterest by politicians in practical support for local small businesses has us on a path of business closures. Urgent action is needed to engage locals in supporting local businesses.

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Small Business

Fun sells for Christmas 2019

We have been featuring fun Christmas items at the front of the store in recent weeks and it has worked a treat, connecting with younger shoppers who look for less traditional Christmas related cards and gifts. They also work well with work colleague gifts where Christmas tradition is less formal.

There are many forms of Christmas celebration and having options that serve a variety is key to making the most of then traffic boost the season brings.

While we pitch traditional in our Christmas offers in-store, it is the fun and the non traditional that are working well early in Christmas 2019, and we are grateful for that.

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marketing

IGA / News Corp. free newspaper deal

People spending $20 or more at an IGA supermarket are offered a free newspaper.

I noticed it at an IGA in suburban Melbourne today, a store that is less than 10 metres from a newsagency.

A staffer at the IGA said most don’t want the free paper and that they have been told to throw left over papers in the trash.

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Newspapers

News Corp. results reflect challenges

News Corp. has released results for the latest quarter. Embedded in the results is this information relating, in part, to Australia.

Revenues in the quarter decreased $99 million, or 8%, as compared to the prior year, reflecting a $35 million, or 3%, negative impact from foreign currency fluctuations. Within the segment, Dow Jones revenues grew 6%, while revenues at News America Marketing and News Corp Australia declined 10% and 11%, respectively. Revenues at News UK declined 22%, primarily due to the absence of the $48 million net benefit related to the exit from the gaming partnership in the prior year. Adjusted Revenues for the segment decreased 5% compared to the prior year.

Advertising revenues declined 8% compared to the prior year, of which $15 million, or 3%, was related to the negative impact from foreign currency fluctuations. The remainder of the decline was driven by weakness in the print advertising market, primarily in Australia, and lower home delivered revenues, which include free-standing insert products, at News America Marketing.

No real surprise in the results. Publishing is tough. Print news is tough.

Glenn Dyer at Crikey provided some commentary:

There was nowhere to hide for the Murdochs’ News Corp in the three months to September 30.

Every part of the business saw double digit falls in earnings as a perfect storm of negatives hit the company hard, including, as CEO Robert Thomson described it, “a sluggish Australian economy” and “harsh economic conditions”.

It was not a quarter to boast about, with some of the only positives being a rise in digital subscriptions for Dow Jones and for the Foxtel streaming service Kayo.

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Newspapers

Is News Corp. pushing newspaper customers to digital with a 31.6% cover price increase?

The cover price of The Observer in Gladstone increases 60 cents, 31.6%, November 18, to $2.50. News Corp. announced this to newsagents on October 30.

This is an extraordinary move by  a company that for decades resisted calls from newsagents for price increases, a key mechanism through which newsagents could make more money from their product.

Now, with newspaper print sales in terminal decline and newsagent revenue increase disconnected from the cover price, the company announces this extraordinary price increase.

Maybe they are testing a higher price rise and customer reaction in this small market prior to roll-0ut elsewhere.

Maybe they are testing to see if it helps with migration to digital, which has to be a goal for any newspaper publisher these days and is certainly a goal for News if you look at their marketing focus on pitching digital.

Newsagent commission under the new price will be a paltry 17.2%, loess than a living wage from the sale of papers.

The letter from News Corp. to newsagents demonstrates, in my view, a detachment by the company from newsagents. There is no explanation, no nuance. It’s not a letter written to a partner.

News Corp. is not treating newsagents in a socially responsible way. A company that claims to be for everyday Australians in their pages are not for newsagents, who are everyday Australians, mum and dad small business owners.

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Newsagency challenges

30% cut in retail business insurance fees

We recently re-negotiated insurance coverage for your 3 retail shops and achieved a 30% cut in insurance costs. We reviewed the needs of each business and set about discussing these with our broker, the same broker we have used for years.

Here are some of the changes we made to coverage:

  1. Property Cover – Annual Turnover adjusted to reflect trading, Contents incl Re-Fit Costs adjusted, & Stock On Hand levels adjusted;
  2. Business Interruption –  Gross Profit levels adjusted;
  3. Money Cover – Level reduced from $20K blanket cover to $5K (lower limit); We bank daily so there is minimal cash on hand.
  4. Glass Cover – Removed for for one store as there now is no glass window as well as no internal/external glass;
  5. POS Equipment Breakdown – Removed;
  6. Excesses – Increased from $500 per claim to $1,000 per claim since we have not claimed, ever.

The critical factor for us was that in all our years in retail we have never made a claim on insurance. Then one time our shop was flooded, we claimed against the builder for the landlord for disruption and inventory damage.

The renegotiation process took an hour. Time well spent for the saving achieved.

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Management tip

My thoughts on the Award underpayment stories in the news

With the news last week of Woolworths reportedly underpaying employees by hundreds of millions of dollars, I published a thread on Twitter that seeks to bring some challenges relating to this matter into focus. You’ll need to click on the link to see all the tweets in the thread.

Note: I have spoken with Fairwork folk about this several times, the most recent being 7pm Friday last week. That conversation was the clearest, the most unambiguous about classifications. The test is what they were hired for, what makes up most of their duties. If they fit with level 1, then that is their pay rate. However, nothing stops a challenge, where you will have to defend your position.

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Ethics

Video key to social media engagement for small business retailers

Videos rule on social media right now thanks to better facilities on Instagram and Facebook and exponential growth in platforms such as TicToc – even though this is not yet really being leveraged for business.

The best videos are those that are funny. Successful, too, are videos that do not overtly sell. In fact, selling should be the last goal you have – even though it is the business measure of success.

Create what people enjoy and love and selling will happen as a result.

I shoot videos on my iPhone and use different platforms and Apps for editing, depending on what I want to achieve. I don’t overthink them as all social media content is disposable – consumed quickly and moved on from, shared if you are lucky, to reach more people.

Here is a video I shot recently at one of my stores. I then used iView on my Mac to wash the video for a particular visual tint I felt was effective. I also used iMovie to remove the original sound recorded with the video. I then used a premium service, Promo, to add text and then lay an appropriate licence-free music track underneath to create what you can see and hear.

newsXpress Knox City – Christmas.

This video shows a decorated tree we have in-store. It is part of our entry into Christmas 2019, located on the lease line.

I made the video to demonstrate a different look for Christmas compared to what shoppers might expect from a newsagency. For my stores I am keen to embrace opportunities to pitch in ways that are not traditional for newsagency shingle businesses.

On Saturday while at the shop I shot videos for five topics / product categories. For three of these I shot two videos – to give be options for how I could use them. I mention this as some videos work well as a square frame while others work better in a landscape frame.

I appreciate all this feels like hard work. The thing is, it can be successful work. A video I shot a week ago and used during the week reached thousands of people and directly generated more than $1,000 in online revenue. All from a time investment of less than 15 minutes.

Okay, not all videos deliver this payback. indeed, not even a quarter. However, when it does happen it propels you to do more and do better.

If you are not using videos on social media I encourage you to experiment with the medium.

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marketing

The American Mall Act

Andrew Yang is running for the nomination of the Democratic Party for the upcoming US presidential election. He is not a politician. He has a business and not for profit background. One of his policies is interesting as it flows from challenges being experienced in retail in the US. He calls the policy The American Mall Act. I am sharing this here as there may be some interested in this topic.

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retail

Tips on calculating the best price for inventory items over which you have sale price control

Setting your sale price for new inventory items is challenging. There are many factors to consider: margin, what an item will sell for, your sales volume need, the labour cost of each sale and more.

In considering what to sell something for, ask your colleagues in-store how much would you pay for this? This can be a good guide, or at least a data point to add to your thinking.

Do your research, too, and see what others nearby sell the item or similar items for. Research online too, locally and elsewhere.

Finally, consider carefully your objectives for the product – is this a volume play or a margin play?

Your pricing choice may not be as clear-cut as it would seem. For example, you could set a high price knowing that with a discount voucher on purchase the item appears to cost less. You might have volume pricing: $xx.xx for one, $yy.yy for two. You could have the item bundled with another to differentiate your offer to that of a nearby competitor and thereby offering you the opportunity to break free on pricing.

Pricing is not black and white. Indeed, it plays to your advantage if it is not black and while as this makes price comparison more difficult, which is good for you. Zee my other notes on discount vouchers and multi-buy pricing.

Think carefully about where in a price band you price an item. For example, Items priced above $7.99 could probably sell at $9.99. Items above $19.99 should either be $24.99 or $29.99 and no other number in between. Above $29.99 more often you should target $39.99.

Avoid nothing prices that can cost GP. For example: $21.95 should be $24.99; $112.50 à$119.99; $6.50 à$7.99; $8.75 à$9.99; $132.50 à$139.99; $36.50 à$39.99, and so on.

Choose to go to a higher price point rather than lower. Independent retail businesses, newsagencies especially, are expected to be more expensive. If you counter this with a consistently offered and generous discount voucher program then erring on the higher side of pricing works for you as your voucher sets value perception for your shoppers.

My recommendation is that you always end your prices with a .99 and price at above RRP. I see no value in a .00 price point. Indeed, I see that as an opportunity lost.

Here is what this post is really about: think about and determine the pricing policy you want for your specific business and establish this as a guide for your business. This can make it easier for anyone in the business faced with setting a sale price for new items. Without it, pricing will take longer. Worse, you could make mistakes

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Management tip

Woolworths to open a cashless store in Sydney

News is reporting that Woolworths is set to open a cashless store in Sydney.

If your usual idea of a Woolworths is a large store with multitudes of aisles, a deli, and a liquor store to the left as you leave, you may need to think again.

Woolworths is putting the finishing touches to a new concept store that is so tiny it has only a single aisle.

About 40 times more compact than a usual store, Australia’s smallest ever Woolworths has been shoe-horned into the site of a former coffee shop at the bottom of an office block.

The store will also be Woolies’ first ever completely cashless store – with no notes or coins accepted. But it’s slight nature means there is one big selling item that will be missing.

The company hadn’t made an official announcement, but news.com.au spied an under-construction store in inner city Sydney which sported the never seen before “Woolworths MetroGo” branding half hidden under plastic. Inside staff were scurrying to fill the shelves.

The next step will be no scanning of products by you or them, no counter. Walk in, take what you went, leave. This already exists in the US.

We have to keep up.

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retail

Tabcorp boosts Lucky Lotteries

Tabcorp has boosted the price money for Lucky Lotteries in a move that appears to seek to drive sales. The prize pool usually stars at $1M and increases $240,ooo each time it is not won. Tabcorp intervened at $2,680,000 and boosted the prize pool to more than $6M.

The unexpected boost makes the product more interesting, more easily pitched, and that’s mission critical for Tabcorp and, I am sure they hope, their retail partners. Certainly, plenty of retailers are pitching it one social media.

 

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Lotteries

A simple Halloween pitch in the newsagency

This display pitching Halloween Beanie Boos has been terrific showing off these popular kids products as being relevant to the Halloween shopper looking to dress the desk or home  of the the occasion. The display has also worked at pitching gift opportunities for grandparents and others in the shop looking for an easy low cost gift.

I like the display as it looks more effective than is usual in retail with products placed on a shelf. This display offers a sense of theatre, which attracts attention.

The display also pitches a Halloween difference in a centre with plenty of outlets offering the usual low price point Halloween items.

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marketing

New traffic: the mission critical need for newsagents and all small business retailers

Definition: New traffic for a retail business is shoppers who are new to the business. New traffic is traffic other than what you would receive simply by opening your doors.

Pursuing new traffic is the single most important business management activity for small business retailers today.

Why? because of the growth in online shopping, greater competition on the high street, consumer confidence challenges and growing business operational overheads. Oh, and because a more valuable business is easier to sell, when you decide to sell.

Please take a moment to think about that.

Pursuing new traffic is the single most important business management activity for you and your business.

Without wanting to sound weird or new-agey, I suggest this as a meditation point … new traffic, what it is, what it means and how you can attract it. 

When you approach any management or strategic activity in your business, think about what this task or activity will do to attract new shoppers.

It is not enough to do something in your shop for that is only seen by people in your shop.  What are you doing to promote this outside your shop?  … because that is where new traffic is to be found.

This is not something for your suppliers to do. It is up to you. Only you and your actions can attract new traffic.

I’d say that less than a third of  retail newsagents today are actively engaged in attracting genuine new traffic. While most will not adversely suffer in the short to medium term because of lack of engagement, they will at some point for sure. New shoppers are key to revenue, profit and upside for the business.

Pursuing new traffic is about far more than putting new products in your store. Indeed, stock is only one of several steps that are all connected in pursuing new traffic. However, stock is the start. Stocking new lines never offered in the business are the best first step to take too bring in people who do not shop with you today.

A New Traffic Strategy relies on you in actively reaching outside your four walls and deep into your catchment area, the area from which you can attract shoppers, to bring people to your business who other might not visit … to generate for you new traffic.

Footnote: this is the opening section of a broader paper on the opportunity of new traffic for newsagents.

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Newsagency management

Every retailer can embrace Halloween

This Halloween pitch from Koala mattresses is a reminder that Halloween is a season any retailer can engage with. It is a good excuse for a flash sale or similar. It works because it is date related and because the occasion is visual, enabling you to have fun . What Koala has done here is perfect for connecting the business with a season for which you might think they would have no connection.

Here are the details of the simple offer:

So, even if you have no Halloween specific products, this is a season with which you can engage.

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marketing

Christmas 2020 already

While Christmas 2019 is ramping up, I have been finalising orders with some suppliers for Christmas 2020 – for products where we can join production runs for retailers in other countries and leverage their volume for better pricing.

The challenge of ordering so early is the lack of data on trend opportunities appropriate top Christmas 2020. The thing is, we are not alone in the challenge. So, seeing what others are going harder on can be instructing to purchasing.

With our major and large competitors ordering this way, for independent small business retailers to be competitive on price and hero product and brand access we need to engage early as well. This is why I have been focussed on it over the last week with several suppliers.

This is an area in which the larger groups can play by leveraging critical mass of 200 or more retailers to order centrally and at sufficient volume to enable access to products that otherwise might not be available in less volume. Anything less and you are too small. While suppliers will order this way, it is less likely that they pass on benefits to individual stores at the time of offering access because of the cost of warehousing, pre-payment and more.

What has been particularly interesting through the process is the storyboarding by some suppliers, sharing access to forecasts of colour and texture trends for the 2020 Christmas season.

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Newsagency management

Responsiveness key to online

I wanted to purchase from a US based online coffee related store but they did not ship to Australia. They had figured it was too hard and that Aussies would not pay shipping.

I sent them an email and 24 hors later Australia was added as a shipping destination. I placed my order.

They emailed me to say that in that same day, three others ordered. They had not realised the sales they were missing until they turned on Aussie shipping.

In business, we don’t know what we don’t know often.

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Management tip

Great to see ABC Grandstand supporting local Aussie newsagents to 143,000 followers

Not just one here:

But, here too:

It is terrific to see publishers directly promote the channel.

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marketing

Drop in magazine titles helps retailers better focus

At the Bauer Media Connections conference on the Gold Coast yesterday I was interested to see data shared by Ovato about the reduction in magazine titles being circulated over the last 3 years. I appreciated seeing the drop broken down by local / UK / US.

While there have been some magazine launches over the 3 years, the reality is we have less titles in circulation today compared to 3 years ago. This is a good thing in my view.

Shopper interest in special interest and more m mainstream titles is easily satisfied by the reduced range on offer today. Indeed, we could see a cut of, say, 25% in some segments without a negative impact on sales.

What often happens in a business with more titles in the same segment is a more diverse mix of titles sold rather than a desired increase in total revenue for the segment. Competing titles can cannibalise each other. Retailers do not benefit from this.

So, I am pleased to see this data from Ovato showing a net reduction in the range of titles available.

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magazine distribution

Full face Christmas cards on the lease line attract shoppers

We are appreciating the terrific reaction from shoppers to the placement of single Christmas cards full face on the lease line. While this is one of four placements of Christmas cards in this particular shop, it is the only one on the lease line for attracting passers-by and pitching Christmas cards.

Impulse and early Christmas card purchases are valuable.

We made the stand to have 100% control over what cards are placed here.

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Greeting Cards

Picture and People magazine to close

This report, from Amanda Meade at Guardian Australia on the closure of Picture and People:

Softcore magazines the Picture and People to close amid sale ban and falling circulation

Exclusive: Hundreds of service stations recently banned the magazines from sale, saying they demeaned women and girls.

Australian men’s magazine the Picture and the 69 year-old People magazine will close at the end of the year, ending decades of printed weeklies featuring topless models and readers’ sex stories.

Publisher Bauer Media was forced to axe the magazines after retailers lined up to ban them from sale at service stations; and readership fell to 0.02% of the population over 14 for People magazine and 0.01% for The Picture. They are already banned from sale in supermarkets.

“Discussions to close the Picture and People magazines have been taking place, as the magazines have lost ranging [visibility], which has affected their commercial viability,” a spokeswoman for Bauer Media told Guardian Australia.

“As closures impact a number of people, including some staff and suppliers, they need to be well considered and timed appropriately.

“The magazines will be closing at the end of the year and we’re working closely with staff to find suitable redeployment.”

I expect minimal impact on the newsagency channel from the closure of these two titles.

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magazines

How one publisher encourages print to digital migration

The cover price for the UK Autosport magazine has been more than doubled for over the counter purchase in a move that appears designed to drive migration from print to online.

Magazine cover prices need to increase to reflect cost increases for retailers. Or, newsagents ought be paid a higher percentage of cover price.

The price increase for Autosport, however, is nuts.

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magazines

What could the Bauer Media acquisition of Pacific Magazines mean for newsagents?

While there are regulatory processes to play out and finalisation is anticipated to be months away, the news yesterday that Bauer Media and Seven West Media had reached agreement for Bauer to acquire Pacific has captured the attention of plenty in our channel.

Bauer media and Pacific Magazines are the two largest magazine publishers in Australia.

The most common question in emails and calls that I received yesterday from newsagents was what does this mean for us?

I think asking this question now is late. I say this because rationalisation of print media businesses has been happening for some years and has been discussed widely here and elsewhere in our channel.

If you are asking today what it means, you are already behind. If this is you, I encourage you to invest time now to catch up.

If the Bauer / Pacific news has come at a shock and you are wondering about the impact, act now, make decisions that focus on propelling your business forward. No supplier will do this for you – putting your business first in every decision.

While I don’t know what a Bauer acquisition of Pacific will or could mean, we can reasonably speculate that there will be changes over time. It cannot 100% be business as usual.There will have to be changes given the challenges faced by some of the titles involved. One benefit of single ownership of an expanded stable of titles at Bauer would be co-ordinated management of all titles. This could mean less cannibalisation between competing titles through more thoughtful and complementary coverage.

Many of us in the newsagency channel have been actively working on chasing net new traffic for categories outside of legacy product categories for our channel for years. There have been hits and misses through. Such is the experience of chasing change.

There is no doubt we are in a period of extraordinary change in print media. Change is being driven by how news is delivered into our hands, how and when we engage with news and information, what constitutes news and entertainment, what people will and will not pay for, who is a publisher (all of us?) and how print mastheads and stories are packaged and priced.

The Australian market is small. I think that is a factor playing out here too. Print media products need critical mass. We miss that in some markets here.

Thinking about what could change as a result of the announced acquisition… It would not surprise me to see: the days of magazine delivery changed, maybe to one a week; the closure of some weekly titles; the launch of a new weekly title; changes in monthly titles; greater accessibility for over the counter purchase of titles.

What should matter most to newsagents today is focus of the business changing net new shopper traffic, broadening the shopper appeal through new products, driving overall business GP%, growing online sales so the business is less reliant on local shoppers and chasing opportunities through pursuing what we don’t know our businesses can achieve.

The Bauer / Pacific announcement is an encouragement for us to work on our businesses, to pursue change, to make our businesses more valuable in the future.

All of this, of course, means more focus away from the newsagency shingle.

23 likes
magazines
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