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

Author: Mark Fletcher

Making the decision to close on public holidays

More and more newsagents are deciding to close on public holidays given the high labour cost (or high family time cost), declining newspaper margin in real terms, often mediocre foot traffic, less destination traffic for magazines and active competition from others for core traffic categories in the daily or several times a week purchase category.

At least once a week a newsagent sends me sales data by day of week and time of day for a discussion about these and similar topics.

While my preferred option is to look for opportunities to make situations work trough recasting the appeal of the business, sometimes, a small retreat is what is needed.

I think this is why plenty of newsagents will be closed today, Queen’s Birthday (in most states).

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Newsagency management

Marketing tip: leverage local artists to drive traffic for the newsagency

Find a wall in your shop and turn it into a mini gallery space for local artists. Make it available at no cost.

Choose artists based on their social media following and the shoppers they could attract to your business. Check their Facebook and Instagram followings. Look at numbers as well as how they engage. This is important that new new traffic is key in business today.

The benefit for them is that you help them find new customers too. The relationship has to be mutually beneficial.

The photo is from a shop I have visited. On the wall they had a small showing of photos taken by a local young photographer. There was nothing commercial about it.

To me, this idea is a not brainer for any regional, rural or high street independent retail business. The more we support our local community the more likely the local community will support us.

The added benefit is the beauty you can bring to the shop.

Be a force for good: support local artists and give locals another reason to visit your business.

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marketing

Lottoland takes legal action against the federal government

Following the decision announced by ACMA yesterday, Lottoland has commenced proceedings against the federal government. This quote from Lottoland from the SMH story plays until current debate about freedom of expression and beliefs:

“We are fighting for freedom of choice.”

Talk about tugging at heartstrings. I hope people see this argument for what it is … nonsense. I think Lottoland is fighting to sell its gambling products. Punters are their customers, not a movement of people who feel aggrieved about their rights.

Here is a more complete statement from Lottoland at iGamingBusiness.com:

Lottoland is disputing the ACMA’s decision, and has launched legal proceedings.

“We have decided to challenge ACMA in the Supreme Court because we believe their view on jackpot betting is wrong,” Lottoland Australia chief executive Luke Brill said in a statement issued to iGamingBusiness.com.

“Lottoland’s jackpot betting products have been approved by the relevant licensing authorities, and we believe they are fully compliant with Australian law.

“We have worked hard to adapt to recent changes to the law, and we are committed to providing exciting new products that our customers love,” he explained. “By taking this stand against ACMA, we are fighting for the rights of hundreds of thousands of Australians who enjoy the occasional flutter. We are fighting for freedom of choice.”

It will be interesting to see how this plays out. I suspect the issue has a long way to go yet given the stakes and the apparent resources  of the international Lottoland business.

Remember, Lottoland launched in Australia mocking newsagents, denigrating our channel, those who worked in it and even some who shopped with us.

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Ethics

ACMA finds Lottoland in breach of the Interactive Gambling Act

AMCA, The Australian Communications and Media Authority, released this today:

ACMA finds Lottoland in breach of the Interactive Gambling Act

An Australian Communications and Media Authority (ACMA) investigation has found that Lottoland Australia Pty Ltd has breached the Interactive Gambling Act 2001 (the Act) by providing prohibited interactive gambling services.

The ACMA investigation found that several Lottoland online jackpot betting services were games of chance which are prohibited under the Act.

These included the Mon & Wed Jackpot, Tue Jackpot, Thu Jackpot, US Millions, and US Power jackpot betting services.

Lottoland disputes the ACMA’s findings and has commenced legal proceedings.

Lottoland’s service, Daily Millions, was not found to breach the Act.

The ACMA will not be making further comment while legal proceedings are on foot.

I am grateful to Ash Long from the Melbourne Observer, and friend of newsagents, for sharing this.

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Lotteries

How would you fare in a FairWork review of your business?

FairWork is targeting several business channels to inspect employee records and employment terms. How any business fares will depend on how the business is run. The requirements on business owners are simple:

  1. Pay at least the aware rate this includes family members who are not documented shareholders in the business.
  2. Pay for all hours worked, including trial hours.
  3. Provide at no cost any required uniform.
  4. Have a structured roster and provide this in advance.
  5. Have a clear statement of duties.
  6. Provide a payslip with every pay.
  7. Pay on time.
  8. Pay super on time.
  9. Maintain work cover (or equivalent).
  10. Maintain proper records of compliance of the above.
  11. Maintain a policies document should you plan to rely on failure to follow a policy at some point in the future.
  12. Have a process employees can follow should they have any concerns or wish to raise a dispute.
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Newsagency management

WA Government announcement for Lotterywest retailers

The WA Premier made an announcement today of initiatives supporting lottery retailers.

  • Retailer commissions on Lotterywest sales to increase by 10.8 per cent from December

  • Lotterywest to roll out package of initiatives to boost sales and create long-term retailer sustainability for small businesses

  • New initiatives will ensure Lotterywest can continue to support WA community through grants program, which delivered $260 million back to the community in 2017-18

Premier Mark McGowan today announced that retailer commissions on Lotterywest sales will increase by 10.8 per cent from December this year, helping small businesses.

This will increase the total gross commission for retailers from nine per cent to 10 per cent, which is a 10.8 per cent increase overall, ensuring Lotterywest continues to pay the highest retailer commission in Australia.

The increase will form part of a package of initiatives designed to boost sales of Lotterywest products, ensuring long-term retailer sustainability and a strong return for the Western Australian community through Lotterywest grants.

Here is the email sent to Lotterywest retailers:

Dear

Today the McGowan Government announced that we are developing a package of initiatives to support retailers.

This includes an increase in gross retailer commissions from 9% to 10% for most games (excluding Cash 3, Super66 and Scratch’n’Win) which will come into effect from December 2019.

As a Lotterywest retailer, you are important to our business success and we are committed to assisting you where we can in these challenging economic times.

Over the coming months we will engage with you and other key stakeholders on the shared issue of sustainability, to work out what these initiatives will look like and seek feedback.

For more information, please read the full media statement. I have also included the Premier’s personal letter you received yesterday.

Your Retailer Relationship Officer is available to answer any questions you have. You can also contact our Customer Services team on 133 777 or contact@lotterywest.wa.gov.au.

This is a significant project for Lotterywest and we look forward to working together to build a sustainable retail network, so we can continue a strong return for the
WA community.

Kind regards

Susan Hunt PSM
CEO Lotterywest and Healthway

Questions and Answers

What is the new commission rate going to be?
The new gross commission will be 10% for all games excluding Cash 3, Super66
and Scratch’n’Win because these are inclusive of commission.

When will we find out more about the initiatives?
We will send you an information pack detailing these initiatives over the coming weeks.

Will there be a price rise and what should I tell my customers?
There will be a price rise from December 2019. Further information will be provided closer to this date, which will include what you need to tell customers and when.

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Lotteries

The loss making model of newspapers in retail newsagencies

News Corp earlier this week announced it’s latest commission rate for retail newsagents.

Making barely 12% of any product in retail today is nuts. While the year on year increase is 5%, it’s off a low low base and reinforces a fee that is below award rate level, below poverty line level.

An average suburban newsagency will sell, say, fifty papers Monday to Friday. That delivers $10.79 ex GST in margin. Out of that, the store has to fund labour, rent and other business costs. Selling fifty newspapers will take around twenty minutes. Twenty minutes will cost around $6.93 in labour costs. The space taken by papers will cost around $10.95.

Based on these two numbers alone, fifty newspapers sold a day provide a loss for the business. Add to this the labour cost of receiving inventory and managing returns, covering the cost of theft and dealing with other costs associated with newspapers.

This is the problem with newspapers in a retail newsagency today. The numbers do not work.

Some publisher reps say that the traffic generated is beneficial elsewhere in the business. There is no evidence in sales basket data to support this opinion.

No wonder some newsagents are quitting the category.

What would I like to see newspaper publishers do? Simple, be respectful with margin. Double it immediately as a start. This would encourage newsagent engagement. I am confident it would lift sales. This would serve publishers well.

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newsagency of the future

Australia’s tough magazine market

New Bauer CEO, Brendan Hill visiting Bauer Media Group COO Veit Dengler spoke with Hannah Blackiston for Mumbrella. Here are some quotes that may interest…

“We’ve made no secret of the fact that we’re going to keep growing our audiences and we also believe the data that will come out of it that will put us in good stead for the future. The business has been transitioning for sometime and globally we’re getting very serious about these different revenue streams and different areas for the business to grow,” says Hill.

…

“I think if you look worldwide you will certainly see that some magazine publishers have disappeared or been acquired, that is a trend. But three is actually not that many players, in most big markets around the world there are more publishers than that. So I would say it’s actually already a fairly consolidated market,” says Dengler.

…

“Media is always changing, as anyone in this game can tell you, but that’s the fun. That’s why we are into it, that’s why passionate people work in our industry. There are absolutely going to be changes, do we know exactly how the business will continue? No. But many big publishing houses are doing this globally, changing plans, acquiring, launching, closing. It’s the nature of media.

“So yeah, there will also be change. But we’re really excited for the core portfolio we have now and there’s a real focus on the executive team who are very strong and a good group of people in terms of innovation and looking at the business a different way,” says Hill.

…

“I think Australia is probably one of the toughest markets for magazines worldwide. I think the advertising decline was faster and earlier than elsewhere. And if you look at the share of advertising dollars that go to magazines of the whole advertising pie it’s one of the lowest in the developed economies. And because of your geography, distribution costs are very high compared to other markets.”

Just as magazine publishers are confronted by challenges of change and lean into them, so should we.

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magazines

Newsagency marketing tip: discount vouchers drive revenue and return visits

More than six years in and the discount voucher loyalty program continues to be the best loyalty offering for newsagents. Sales reports show the value of the vouchers at marketing local newsagency businesses to locals as well as to one time only shoppers.

I mention discount vouchers today a reminder to newsagents that in thier newsagency software they have an awesome and proven tool for showing local shopper appreciation and driving local business engagement all at once.

Here are some data points based on an assessment of discount voucher engagement across a cross-section of newsagency businesses:

  • 19.5% of all vouchers handed out are redeemed.
  • 33% are redeemed the day of handing out.
  • 33% are redeemed within a week.
  • 33% are redeemed within 28 days.
  • 18% of voucher redemption is for items priced at $25+ with a GP of 50%+.
  • Magazines benefit the most from voucher use with magazines in 15% of baskets for which a voucher is handed out and magazines in 43% of baskets in which a voucher is redeemed.
  • In every business instance assessed, the discount voucher loyalty program delivered a net revenue benefit to the business equal to around sx times the cost of the voucher value redeemed.

This is a business growth opportunity that is easy to setup and run, that genuinely differentiates your business and that provides you with a net financial benefit.

Here is an example of how it works…

I had a shopper who purchased a bag and a bow and received a voucher for $1.00. They used that to purchase two cards and with that they received another $1 voucher. They used that to purchase a  $20.00 item for a future birthday.

The business gave away $2.00 for an additional $33.00 in revenue to a customer who is not local and will not be back in the centre any time soon. The additional GP earned was $18.45. I am happy for this to cost $2.00 as banking $16.45 is better than banking nothing.

It is common for one time only or infrequent shoppers to end up with three transactions in a visit because of the vouchers.

Things are moving faster. Shoppers want more and sooner. Social media has educated people to seek instant gratification. Discount vouchers provide this.

Bottom line: this is something you can do for your business and your customers.

It can differentiate your business.

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Management tip

News Corp. fails newsagents on Paddington Bear opportunity

It is frustrating that News Corp. advised retail newsagents late about their Paddington Bear promotion. Their notification was too late for retail newsagents to fully leverage the opportunity to its potential. It’s a missed opportunity.

While the campaign may drive some incremental newspaper sales, it will not deliver the commercial benefit it could have delivered.

There are several suppliers in Australia with terrific Paddington Bear products, which we could have ranged to coincide with the promotion, This would have made it commercially viable to pitch the offer in prime space, front of store.

The poor communication from News Corp., is another example of supplier selfishness and ignorance as to the financial model for retailers today.

News should have communicated their plans between four and six months ago, to allow retailers time to plan the offer into their local business ranging and marketing plans.

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Newspapers

Harry Potter products shine in the newsagency

This is our latest Harry Potter pitch in the newsagency. It is in a prime location and attracting plenty of shopper interest, and purchases. The display header was created by our graphic design team specifically for this in-store location.

With the Harry Potter play on in Melbourne right now at the massive Princess Theatre and the franchise of books and movies continuing to do well and the new Pokemon game, Harry Potter reaches many people, multiple generations. This is what makes it a successful licence for us to leverage in retail.

We source products from multiple suppliers and bring them together to branded location in-store you can see in the photo.

Harry Potter items are bought for gifts but also by lovers of the brand. This helps make it a valuable licence.

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marketing

Gifts for guys in the newsagency

Newsagents often tell me that sourcing gifts for guys is difficult. An approach I favour is to not make one pitch of gifts for guys. Instead, I prefer multiple, smaller, pitches. This makes it easier to range and easier for the shopper to shop. We can move the smaller ranges around easily, bring some into better focus for a promotion, thereby offering a fresher view guy gifts.

Here is one of several gifts for guys pitches we have in-store now. The products are the banner, the lure. We figured that if we need to put up a sign saying gifts for guys we have got it wrong.

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Gifts

No escaping the newspaper publisher push to end seven day print

You can’t escape the the promotion of digital subscriptions and weekend only delivery from News Corp. with their now regular pitch printed next to the masthead.

It is odd selling a product for a meagre margin that actively says stop buying from here and, in fact, stop buying the physical product.

Previously, one could rip off the post-it note ad promoting deals like this. You can’t now that it is part of the newspaper itself.

It is actions like this pitch from News Corp, actions that show our shops as being expensive and irrelevant that get retail newsagents wondering if they should cut the paper before the paper cuts them.

The Australian has a similar pitch in print as well as online:

There is no upside for print newspapers. What we are seeing now is the management of their decline and, for some, demise. Publishers will make moves that serve their needs and the needs of their shareholders. Newsagents are far removed from consideration despite what any publisher rep says.

Hence, the active consideration – when do we quit newspapers in our shops?

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Media disruption

Advice on how you could grow crossword sales in your newsagency

Crossword sales are strong in Australia. The segment is performing well, delivering year on year growth for many newsagency businesses. It is the magazine segment that offers the best opportunity for growth based on my experience in-store and broader channel data analysis.

The crossword category is the easiest category in which to grow sales. Here are some ideas with which you can engage to achieve this.

  1. Move the entire crossword segment next to weeklies. Every time I have seen this done there is a measurable sales jump.
  2. Place crossword titles with their parent brand: Better Homes and Gardens and Australian Women’s Weekly, for example. This could be done as co-location – in addition to regular placement.
  3. Call out a crossword title as a staff member fave and note why with a small sign in front. This type of personal recommendation works well in book retailing.
  4. In front of Take 5 and That’s Life, place a plastic or acrylic pocket with A5 titles from the same brand as both titles are bought by the same shopper.
  5. Pitch a crossword or two at the counter.
  6. Pitch crosswords with jigsaws – they are often the same shopper.
  7. Consider a crossword themed front window.
  8. Consider a crossword lovers event. It could be a simple afternoon team with the idea of them meeting each other and sharing stories. Your focus could be to thank them for their love of crosswords.
  9. Trial placing your most popular two crosswords next to daily newspapers. Count how many you place so that you can measure the success.
  10. Run a loyalty program for magazines. Crossword shoppers will appreciate this and drive more whole of business shopping as a result.
  11. If you have a table where shoppers can sit for a while, consider opening a crossword and placing some pens nearby so people can engage.
  12. Shine a light on your range on social media – let locals know that your business is the local destination from crosswords.

Why do this given that you only make 25% from crossword titles? Because crossword shoppers are loyal. The better you serve them and the more you appreciate them the more return business you will achieve.

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crosswords

When a newsagent receives details of a Woolworths exclusive offer

I get that publishers need to make channel specific pitches. And, I get that supermarkets offer far more discipline that newsagents.

What I do not get is that publishers pay supermarkets for discipline while they pay our channel nothing. I am confident Woolworths is receiving a fee, in one for or another, for this six week exclusive promotion.

Space is everything to supermarkets. I have been told previously of how they monetise aisle ends, counter positions and other high traffic positions.

Imagine the discipline magazine publishers could garner from our channel if they financially respected us as they do the supermarkets. While there will be excuses, no has seriously tested this. I suspect, however, that it is too late to test it.

To be fair to magazine publishers, I am aware of newsagent exclusive deals being early returned the day of on sale, deals that subsequently sold out in less than a week. I am also aware of exclusive to newsagent floor units with a valuable gift with purchase not being put on the shop floor.

Publishers notice these things. Discipline matters to them if they are running an integrated campaign.

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magazines

News Corp closes some newspapers in Queensland

Mumbrella has this story.

News Corp has further removed itself from the regional media market, selling the remaining 50.1% stake in Community Newspaper Group to Seven West Media.

The sale comes as the publisher also closes two Quest titles in Queensland, and after last week’s announcement that it would be shuttering the print operations on a Victorian Leader title.

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Media disruption

Ovato needs to let newsagents cancel a magazine title, forever

Newsagents have never had the ability to permanently cancel a magazine title.

Sure, you can cancel a title. However, three months later, it could appear again, thanks to the Ovato processes. Indeed, if often does appear again at some point.

While it does not happen as much today as it used to happen, it does happen, and it should not happen.

If newsagents are to be responsible for their magazine bills, they should have control over what is supplied.

This is not a difficult question – that we have the opportunity to manage our level of indebtedness, the cost of theft, the cost of labour … indeed, all costs associated with magazines.

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magazine distribution

Put the current issue of Mindfood on the counter

The current issue of Mindfood magazine, with Julia Louis-Dreyfus on the cover is worth pitching at the counter. With her acclaimed, funny, insightful and searing  VEEP TV series coming to an end, this star is in the news. VEEP has done well in Australia. I think Julia being on the cover could be enough to age people who would not usually buy the title to at least consider it.

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magazines

Take care before entering into a high interest loan for your newsagency business

The easier it is to arrange finance for a business the greater the likelihood that the finance offer is not a good deal.

I saw this recently when asked for help by a newsagent who had entered into a loan with a loan business. They borrowed $60.000. They had an urgent need for $35,000 but took the higher amount following a pitch from the finance company. They expected to be able to pay it off ahead of the due date.

In the contract, which they did not read because they were in a hurry, was a condition that while they could pay it off before the due date, the full interest for the original period was payable and that, in fact, interest was paid first before principal.

The interest rate was 18%. Fees to establish the loan were 5%.

In my review of the situation, there were alternatives to solving the $35,000 problem that could have been better than the high interest cost and high cash flow impact that had a knock-on effect in the business.

While I am not an accountant or a financier, my suggestions to newsagents or any small business retailer looking at urgent funding needs are:

  • Look at alternatives.
  • Take time.
  • Get a second opinion.
  • Be absolutely sure of all of the terms and conditions.
  • Borrow only what you need.
  • Never miss a payment.

There are companies promoting their services to small business retailers, offering fast and easy access to finance that is not good finance.

Buyer beware.

12 likes
Newsagency management
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