The borders between retail channels are fuzzier than ever
The days of staying in your lane for specialty retailers is long over. Look at almost any specialty retailer and they earn from products outside the specialisation reflected in their single.
I was reminded of this recently when at a large bookshop. They had this massive wall of socks.
I don’t see a connection between books and socks except that people who read books also wear socks. It turns out the wall became free as a result of remodelling and they wanted a single category solution for the wall. Socks happened to fit. I am told the results have been terrific.
The sock wall i9n this awesome book shop was a reminder to not be constrained by the obligations of the shingle.
Magazine sales trials boost sales
It is terrific seeing magazine publishers trying different approaches to boost sales. I am aware of five different title-specific trials being run right now in selected newsagencies. Each is designed to achieve incremental purchases of the target title in the participating store. Each trial is being run in between 5 and 10 newsagencies.
I like the trials as they will provide experience and data soon which decisions can be made. I also like that the trans are different to what we have seen in the past for magazine promotions.
Unbranded Father’s Day video
Click here if you’d like to download and use an unbranded Father’s Day video I created using a platform I have access to.
ATO warns small businesses on sales suppression software
The ABC has reported the ATO is clamping down on small businesses using sales suppression software to minimise tax.
Ms Jenkins said the ATO was also cracking down on the use of sales suppression software that disguised the transactions within a company’s records.
“There is some really sophisticated software out there that is helping people avoid paying the right amount of tax.
“But whether it is cashless payments or whether it is the use of platforms or apps, it means there is really a trace of your transactions.
“We use merchant data and other sources of information to identify where things just don’t look right. Then we go and have a chat to them and say, ‘Hey, can you explain?’
In the mid 1990s there was sales suppression scam operating in the newsagency channel. I became aware of it because my newsagency software company lost businesses because we refused to offer such a facility.
There was a software program into which the retailer could enter a code and then an amount of cash they wanted to take out of the business unreported. A second set of records was maintained for the ATO and another records for the business owner.
I know because the software was demonstrated to me several times, by someone who had worked for the software company that created the software. They had approached me. I did some more checking with newsagents and discovered the facility in the software was being used.
The matter was reported to the ATO. At their then Box Hill office in Victoria they assembled a task force including representatives from the ATO, Federal Police, Federal Attorney General office. Victorian State Revenue and Victorian Attorney General office. Several of us with knowledge were brought in for a demonstration of the software. There were several follow up meetings with the ATO in Sydney.
Eventually, my software company stopped losing sales because we did not have the tax avoidance facility in our software.
Any retailer deliberately and systematically underreporting their income to avoid tax deserves what they get from the ATO and from any suppliers they impact through their actions.
Nine (Fairfax) disrespects newsagents in latest newspaper pricing move
Nine (Fairfax) has announced a 20 cent (6%) cover price increase for The Sydney Morning Herald yet only a 1 cent, or 1.6% increase in margin for the retailer. In my opinion, this further downgrade of margin for newsagents is disrespectful and offers retail newsagents encouragement to ditch the product category.
Here is the detail of what Nine has announced.
This move offers newsagents an appalling return on the space, labour and capital required to support the sale of newspapers in a newsagency.
I wonder if it is more evidence of a theory that the publishers want to move more retail of their product from newsagents to convenience stores, like 7-Eleven, supermarkets and petrol outlets.
Look at a general retailer. They will get 31.5 cents from a $3.40 item sold. That is 9.26%, down from 9.68% on the current price.
The massive Nine corporation is showing what it thinks of small business newsagents in this move.
What Nine is doing here, in my opinion, is like the federal government move to cut penalty rates. It is shameful, disrespectful and preys on the weak and vulnerable.
The question newsagents have to ask is: Is it worth stocking Fairfax titles or newspapers more broadly? The trajectory of margin is clear. The latest decline in real terms continues the trend.
How much longer will newsagents put up with being screwed over like this? I mean, seriously, how much longer?
Print newspapers, especially dailies, are dying. There is no upside. Newspaper publishers are managing their exit and they are doing this in a way that best suits them. Hence, these moves that disrespect newsagents.
I think the days for accepting their motherhood statements that newsagents are important them are over. If newspaper publishers thought newsagents were important to them they would actually respect them. They are doing the opposite – making more money for themselves while at the same time less for newsagents.
So, the product is dying. It is what it is. I think newsagents need to, for themselves, decide when they will exit the category. They can decide this on their terms, with their timing.
For me, this Nine announcement encourages the decision to quit the category.
Nine will say the papers are losing money and they cannot give newsagents more. Who cares? Not me. I am a newsagent providing a service. Show me some respect or get out.
Oh, and what makes it worse is that newsagents have to pay for shrinkage. One paper stolen will take the sale of nine papers to cover that cost. I suspect supermarkets don’t pay for stolen papers. I suspect they pay only for scanned sales. I say this because I understand some are on this model for magazines.
Footnote: click on the image for a larger version.
The CDC in the US to investigate vaping
A person in the US has died from what the Centers for Disease Control and Prevention speculate is a vaping-related condition. This and data from around 200 cases has seen vaping getting a lot of media coverage this week.
The CDC is investigating whether more than 120 cases of lung disease are linked to vaping pic.twitter.com/VkFLdQgC7U
— NowThis (@nowthisnews) August 25, 2019
Why some bank manager’s don’t understand the value of a newsagency business
The views of bank managers are given too much attention in my view. However, sadly, they are the gatekeepers to business funding. So, they are listened too.
A bank manager recently said to someone why would you buy a newsagency, they are going nowhere. It was a generalisation, not based on any business financials, not considering the transition already achieved in a business. It was ignorant and unhelpful.
Why would you ever listen to a bank manager. They are idiots. Yes, another generalisation, which is equally unhelpful.
The challenge for our channel is that banks have models that are out of date, models based on an assumption that all newsagency businesses are the same – when they are not.
The value of a business flows from its P&L, the business plan and the track record of those seeking the loan. The historic performance of the channel is not relevant today.
I know of newsagents achieving excellent growth. Most would not identify as newsagents but they have enough elements of a newsagency for them to fall under that retail channel category. While the growth is coming from non traditional categories, it is sustaining legacy aspects of the business, keeping services and products represented in regional and rural locations.
This is why the out of date modelling by the banks as represented by their managers is unhelpful for the transformation many of us in our channel are passing through.
Bankers should understand this as they are transforming their model too. That is why the quote at the start of this post is frustrating. It is ignorant and harmful to all in our channel.
If a bank manager says there is no future in a newsagency consider saying: I agree, there is no future in the traditional newsagency you might be thinking of. But, hey, that type of business has not been our model for years. Yeah, we left it behind and embraced something with new categories, new traffic drivers, better margins and lower operating costs. That’s why your banker model of a newsagency does not apply to our business.
Newsagents who are looking to sell their business should lean into this line of thinking. They should be on the front foot, addressing this issue before it is brought to them.
Bankers are frustrating. I remember a time when their opinions were based on what they saw and who they met outside their office. Today, their opinions are fed from out of date business modelling that is certainly not relevant to what may newsagencies are.
Footnote: in the headline I say some because there are some bank managers who think for themselves. They are a rare breed that we should cherish should we be lucky to find them.
Why a newsagency can be a good business to buy
I am often asked if a newsagency is a good type of business to buy.
Any newsagency is a good business to buy to the right purchaser, the person most suited for that business.
The answer really does come back to the purchaser because they may have skills ideal for a specific business. Equally, they may lack skills essential to a particular business – making them not the right purchaser.
Its also depends on the specific situation of the businesses and the opportunities for it.
The question demands a thoughtful answer and the answer will depend on who is asking, their skills, their resources, their experience, their fitness, their desire and their hopes and plans for the future.
While the business they are asking about is important, I see the answer as relying more on the person themselves. This is why I say any newsagency can be a good business to buy and often is.
I have a lot of confidence in the channel even though what the channel stood for in the past is changing rapidly, faster than ever before, to the extent that the channel is not the channel. But all of that is good in my view for I love change and the opportunities in change.
So what if we are not called newsagents. Our roots are our roots. What we are called tomorrow is of little matter.
There are plenty of good newsagency businesses for sale today with good financials and good upside prospects.
Tough trading results for Reject Shop
The Reject Shop has had a tough year. Their annual results indicate a sales decline of .8% and a decline in profit from $16M last year to -$16.9M this year. While some of the loss is due to write downs, trading appears to be challenging for the group.
I think any business that pitches low prices on known brands as the key reason to shop with them will always be vulnerable to attack from others playing the same game.
Genuine differentiation is key in retail. The best differentiation is one where you have control, where it is your asset and therefore is not easily copied.
The Reject Shop plays in a range of categories important to newsagents. It is worth taking the time to read their annual report and to look carefully at their businesses. It includes this from the Acting CEO:
The sales decline was compounded by a reduction in our gross margin which reduced through the second half. The reduction in margin was the result of the following factors:
- a response to competitive price pressures which resulted in price roll backs;
- increased markdowns to clear product in support of simplifying the shopping experience; and
- as a result of responding to the shift in elements of the merchandise strategy which resulted in clearance activity.
Additionally, we experienced a significant increase in our shrink results on the prior year. We are progressing through a plan to reduce the impact of shrink.
Promoting a raunch title available in some UK newsagents
I noticed this tweet today promoting an R rated title that is available in the UK. Most Australian newsagents I know got out of adult titles years ago.
Out Now!!! Club DVD 12.7 featuring Beth & @Jasmineewebb & Rahyndee & Tiffany James from https://t.co/90sV2b1sB9 ! Available from most newsagents or garages Today !! pic.twitter.com/68tpRN34cL
— Paul Raymond Publications (PRP) (@paulraymondmag) August 22, 2019
Check that you are backing up your data
Another newsagent this week has to rebuild their business data from scratch because they did not have a back-up and their old computer died. They didn’t have a backup because they couldn’t bothered doing it every day.
Now, their hope of selling the business is at risk because they cannot prove their sales claims.
Not backing up every day is stupid. The cost of cover from this could be thousands in terms of IT expert fees or even more if you are looking to sell your business in the next year and do not have current business performance data on which to set a price.
Oh, and if you are backing up every day, have it checked to make sure you are actually backing up.
By backup I mean taking a copy of data on a USB stick or some other device for safe keeping or, better still, a cloud backup facility whereby a perpetual offsite backup us undertaken.
Afterpay Touch has let newsagents down
The customer service from the team at Afterpay Touch over the last week has been dreadful. While they fell victim to problems caused by updates to windows by Microsoft, the communication from Touch has been slow coming and inadequate in content. This has pushed newsagents to others for help that should have come from the company itself.
Like so many big suppliers to our channel, Afterpay Touch has not provided care small business retailers as it should.
Father’s Day front of store
We have been rotating product categories through with our Father’s Day card pitch. Our most recent category focus with two of our four bays of Father’s Day cards is jigsaws. What you can see in the photo is on the lease line – with two cards of cards behind.
This particular shop is located in the busiest entrance / exit arm of the shopping centre, making lease line placement critical.
If we don’t see measurable take up in two or three days of a pitch, we replace it.
The jigsaw category is strong net traffic driver for us, hence this placement with Father’s Day cards.
Business guru Mark Bouris: small business retailers will be winners from a retail recession
The opinion piece from Mark Bouris published at news.com.au over the weekend should encourage small business retailers. It is a reminder of what is unique and valuable about small business retailers, local retailers.
Bouris notes the indicators of a coming retail recession and explains why local small businesses should do well from it. He compares the local shopping experience with online:
But contrast that with the last time you popped into your local butcher, for example. The person behind the counter probably knew your name, knew what you wanted, and was in a position to offer you expert advice on what was fresh, what to buy, and how to cook it. That’s the kind of personalised service that goes a long way to convincing a shopper to part with their hard-earned, and it’s the kind of shopping experience that only small retailers can provide.
And it’s not just butchers, of course. I was walking down Glebe Point Rd in Sydney the other day and spotted bookstores, cycle shops, boutiques and antique stores, all staffed by experts in their field, ready and waiting to assist customers in any way they can. And happily, there were plenty of customers, too.
The mistake I most often see small businesses make is trying to compete with the giants of their industry. But it’s actually what sets you apart from the big boys that makes the difference. And that’s more true now than ever.
This goes back to the three questions I asked last week as they relate to differences small businesses can bring and evolve, to differentiate to big businesses as well as online businesses…
Tabcorp reports 39.8% growth in online lottery ticket purchases
The Tabcorp 2018/19 Annual Report will be sobering reading for any lottery retailer for in that year, revenue from online lottery ticket purchases rose 39.8% from the previous year. For reference, online revenue grew 22.6% in the FY17/18 year over the FY16/17 year.
While the company refers to this shift in revenue source as part of its omnichannel, I see it as a migration from in-store purchase to online.
They have sought to support retailers with a modest increase in income, which has complex strings that keep retailers positioned more as servants than partners.
The size of the increase in Tabcorp’s own direct sales does not directly correlate with a decline in sales in-store. However, it is happening from what I can see at some stores. As a lottery customer, the benefits of online and in-app purchases far outweigh the in-store.
For its future, Tabcorp needs to continue to push growth in online purchases as they are, I suspect, more valuable to the company than in-store purchases. With retailers playing such an important part in brand awareness and facilitating access to online, the company needs to keep them in check.
I don’t have lotteries in the newsagency businesses I have today. I did have years ago, but not today.
At some point, decisions will be made by retailers along the lines of decisions some of made many years ago about our home delivery runs. There will be a point when the requirements, price retail space cost and all the hoop jumping is not financially worth it.
What can help retailers today with a decision they may wish to make in the future is success at attracting new shoppers for purposes other than to buy a lottery ticket.
Tabcorp’s latest results are to me a strong call to retailers to relentlessly pursue non lottery new traffic opportunities cities through their businesses. Lottery retailers who do not do this will see their business results perform in line with the results achieved by Tabcorp. If the company continues to successfully grow online purchases and if that is achieved at a cost to in-store purchases then lottery focussed retailers will lose revenue and business value.
To be clear – I am not criticising Tabcorp. If I was a shareholder, which I am not, I would applaud their strategy. My criticism, if there is one, would be at retailers who are not acting already to make their businesses more relevant outside of lotteries. This is mission critical in my view.
Note: the image is from the Tabcorp published investor presentation.
Leveraging mindfulness in the newsagency
We have given the expanded range of mindfulness magazine titles better positioning and less noise nearby, to make the most of growing interest in this topic.
This move, which we made on the weekend, was a no-brainer given the increase in sales of mindfulness related products. The move also lends itself to social media support, to pitch to folks in the area who may want to check out these titles.
While, for sure, the low margin on magazines is frustrating, a move like this we have done for mindfulness required minimal time and no capital. It’s a small-step reminder that we are relevant magazine specialists, even if our range is less today than a year ago.
The power of social media
Social media gives everyone a voice. This is one reason why we retailers need to engage with it, to understand this, to leverage it ourselves and to be aware of hour it is used. Here is one example from the latest Alan Jones scandal. He made an appalling comment about the NZ Prime Minister and some on social media called for people to boycott advertisers on his show. Regardless of where you sit on the issue about which Jones spoke, this tweet is democracy in action.
Hey @HarveyNormanAU, I was going to buy a printer from your Balgowlah store today. However I decided to buy the printer from @Officeworks instead after I found out that you advertise with @2GB873 & @AlanJones. @slpng_giants_oz pic.twitter.com/9Um1nWvH2Q
— Sam (@sammy5997) August 17, 2019
One of the best Father’s Day cards
When you combine dogs and the Star Wars licence franchise you have a winner and that is what we have with this Father’s Day card from Hallmark.
We are featuring it full face for impulse purchase as people need to see the whole card and not just the top 20% as is often the case with regular card fixturing.
I expect this card to sell out.
The value of pre-orders
We have a pre-order opportunity we are running right now for items that will sell out quite fast. By offering pre-order, we are paid in full weeks before we take delivery and two months before we pay for the goods.
Retail today, in-store and online, is a race to the cash. A well managed pre-order process is key to success with this race.
Microsoft confirms Visual Basic issue
Related to the Touch challenges being experienced by newsagents, Microsoft has confirmed it as a Visual Basic issue.
Retail turnaround tips for newsagents experiencing flat sales – small business retail advice
In May 2010, I posted Retail turnaround tips for newsagents experiencing flat sales. This was a post in response to reported flat retail sales.
We are at that place today. retail sales are flat. There is plenty of bad news being reported.
Here is an updated version of that 2010 post…
If your retail sales are flat and you are doing the same things today that you have been doing for the last year it is not good enough.
Business will not come to you. You have to go out and find it – often through a series of small steps as opposed to a big bold move. You have to obsess about presenting a compelling offer to everyone walking through your door.
Price is not a point of difference. Shoppers expect us to be expensive. That has been shown in plenty of consumer surveys. Railing against this is a challenge. We can do this for some categories and at seasons but not across the board.
Being unique differentiates. The mix requirements of our shingle make that a challenge.
Here are some tips for retailer newsagents on responding to flat sales:
- Refresh your head. Work out what you want for your business and those who rely on it. Make a plan. Live the plan. Success is in your hands.
- Lock the office door. Only rarely do you make retail sales from the office. The shop floor is where the action is. Play there.
- Refresh what you sell.
- Refresh the counter. Many newsagency counters look the same, boring, what you see in other stores. Create something different and fresh. Take everything off and rebuild the counter with the purpose of selling product on impulse. Make strategic choices. Your counter should NOT look like a newsagency counter.
- Refresh the window. Tell a story. have fun. Cause people to stop and look.
- Refresh the shop. Change change and change. Move departments and categories. Make the shop feel fresh to regular customers and to your team. Make strategic choices about what products go where. Use dump bins for specials. Place impulse products next to high traffic products. Once you have undertaken the big moves, create a plan for continual change each week. Change shows that the business is a, living and breathing thing. It can make the shop appealing to new visitors. Newsagents who don’ change their business reinforce that the model is a retail dinosaur.
- Refresh the team. Let your team know than business is tough. Ask for their ideas. Take some time out of the business to relax over a meal or drink or some other social activity (mini golf, go kart racing, fishing, bushwalking) and share an adventure outside the business. Sometimes getting away like this can get creative juices flowing about changes which can be made back at the business.
- Ask suppliers for help. If your business is slow it is likely that your suppliers are finding it slow too. Ask them for some good value deals – not the stock they can’t sell but the stock they have plenty of and which sells well.
- Lure customers back. Look at the top selling items in your businesses. Create a strategy for getting these customers back. Create a small flyer offering a discount on something if they come back in, say, a couple of days. Do this leveraging your top traffic products.
- Create events. Give people more reasons to visit your shop other than to specifically buy something.
- Use social media properly. be your platform for marketing.
- Connect with the community. Go to community clubs and offer a discount to members and a rebate back to the club for business their marketing efforts on your behalf deliver. This is easy to setup and manage. The more people you have in the community saying to their friends that they should shop with you the better.
- Ode to you. Run a competiton to find the best poem which reflects why your business is important to the local community. Get the finalists in to read them live and get your customers to vote. Maybe the local newspaper will run the winner?
- Crazy ideas. Think outside the norm. Nude day has been done so has the underpants idea where customers get a discount for shopping only wearing underwear.
Stop talking about it. Yes, retail is tough. Talking about will not improve your situation. Doing something is better than talk.
Change is oxygen to any retail business regardless of its current sales health. Doing nothing in tough times will make the tough times tougher for you.
Personally, I am optimistic about the future for newsagents … that is from 2010. It is true today.
Urgent Touch Networks Support Bulletin
There is a problem affecting all AfterpayTouch customers, regardless of what POS system they use. It is apparently an issue between Visual Basic and Windows. The Touch software is written in Visual Basic.
Touch is un-commissioned when attempting to sell vouchers. It seems to have occurred after the latest round of Windows updates.
The Tower help desk has received more than 30 calls so far. We have been in contact with Touch and are awaiting an update from them.
For Tower Systems customers please keep an eye on our private Facebook group and your email for an update once we have heard from Touch. We anticipate they will release an update to address the issue.
If you run any other software written in Visual Basic this may be affected. Note: the Tower newsagency software is not written in Visual Basic.
Crikey: Could a boycott of News Corp work?
A report from Chris Woods at Crikey Tuesday about whether a boycott of News Corp. titles could work is interesting reading, especially for newsagents and other retailers of newspapers. Click here to access the report. Here are the opening pars of the article…
Over the weekend, two major things happened in the News Corp universe.
First, The Australian launched a new page technically titled “gender issues” that, coincidentally, is 99% directed at trans people. Of those, the majority either focus on the Prime Minister’s squeamishness about trans people playing cricket, fear-mongering over Victoria’s new birth certificate laws, or flat-out lies about people “castrating children”. The folks at Junkee go into this further, but the short story is that no, neither early childhood support or latter-stage puberty blockers are anywhere near the same thing as castration.
Secondly, journalist Rick Morton published his first major story since leaving The Australian, which, not for nothing, covers a world-first study examining how News Corp papers embolden far-right groups that use stories around safe schools and immigration as recruitment tools. Morton joins a growing stable of journalists and editors who have left the media giant.
Both these events didn’t come from nowhere — and they have both helped spur existing campaigns against News Corp, each targeting different facets of the organisation. But can they work? Crikey looks into the realities of such a disparate push.
What interests me is that social media has evolved into an easy to access protect platform through which people can organise. This is a risk for News Corp and its use of its newspapers and other media outlets to yell at people. push agendas and tell people how to vote.
Regulars here will know I have been interested in the newsagent boycott of The Sun in the UK. I wonder if that could happen here now that there are more respected former News journalists outside of News Corp.