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

Author: Mark Fletcher

The local community chips in

It’s the 10th anniversary of awful bushfires in Victoria. Tasmanian communities have been battling challenging bushfires and Townsville communities are dealing with awful floods.

It is in times like these that we see local Aussie communities pull together to support each other and people connected to communities through a shingle, suppliers and more also chip in to help.

We are seeing it this week in the newsagency channel just as we saw it ten years ago in Victoria.

Local matters in good and bad times.

My thoughts are with those challenged in recent days by flooding and bushfires as well as with those confronting awful memories from ten years ago.

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Social responsibility

We miss the Chinese New Year opportunity

Happy New Year especially to the piggies out there.

While interest in Chinese New Year has grown, opportunities for engagement by retailers have not changed. It is a struggle to find good-fit products. I though this year, the Year of the Pig, might be different. Suppliers with good pig products did not engage.

I like the season because of the community engagement, the optimism and the family celebration aspects. I think these are where we as small business retailers can shine.

Our engagement could start with in-store celebration, to connect the business with the occasion, and it could build from there. In some parts of Australia I suspect you could see more engagement for this than Valentine’s Day.

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Newsagency opportunities

Brilliant Washington Post ad

Here is an ad from The Washington Post, which ran during the Super Bowl. It is an excellent pitch for journalism and trusted news outlets. Democracy dies in darkness.

I note the ABC is the most trusted news outlet in Australia. It is unfortunate its budget has been cut so much in recent years. This matters because of the extraordinary concentration of media ownership in Australia.

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Media disruption

Newsagency sales benchmark study results beg the question: what is a newsagency?

Core newsagency categories continue to decline while most ‘new’ categories achieve growth. More new categories are emerging too, in more businesses. This is why I ask the question what is a newsagency?

In the data for the Oct-Dec 2018 quarter compared to the 2017 quarter for 149 newsagency businesses I can see more businesses with a sustained gift department than ever before. The same is true for toys. Books, coffee and services are emerging, too.

Whereas in the past I’d see evidence of small engagement in some of these, now I am more likely to see a separate strong department delivering between 5% and 10% of non-agency revenue to the business, seeing the percentage contribution from traditional fall further.

I don’t think it matters at this point that a business identifying as a newsagency strays far from what that type of business once was. More so than the shingle or the self-identified type is products sold. For example, a business with lotteries is, in my view, more identified for that than anything else they sell.

At some point, however, business owners willneed to make a decision about identity.
For the purposes of these studies, I’ll continue to look at this as a newsagency channel, even though there are fewer products unifying the businesses in the channel than ever before.

Here is what I see in the latest benchmark data. Note: Each data point is the average, mean, of all data for the data point.

OVERALL BUSINESS PERFORMANCE METRICS.

  • Customer traffic. Down 1%.
  • Overall sales. Down .5%.
  • Basket depth.Flat.
  • Basket dollar value.Flat.

CORE PRODUCTS.

  • Newspapers. Unit sales. Down 9.5%.
  • Magazines. Unit sales. Down 11%.
  • Greeting cards. Revenue. Up 2%.
  • Stationery. Revenue. Down 11%
  • Lotteries. Revenue. Flat.
  • Tobacco. Revenue. Down 14%.
  • Agency. Parcels, gift cards, betting account top-up. Down 7%.

SPECIALTY PRODUCTS.

  • Gifts. Revenue. Up 4%.
  • Toys. Revenue. Up 3%.
  • Plush. Revenue. Up 4%.
  • Collectibles. Revenue. Up 3%.
  • Craft. Revenue. Up 2%.
  • Coffee. Revenue. Up 13%.
  • Books. Revenue. Up 7%.
  • Calendars. Revenue. Up 9%.

Magazines.
A big hit this quarter is in partworks results with revenue declines of 50% and more. That is to be expected given business problems with partworks in Australia. Weekly magazines lead the core category decline with many reporting 10% and more year on year decline in unit sales. This sits are the heart of magazine challenges in newsagencies.

Christmas.
The channel had a good Christmas overall. Christmas card unit sales were up 2% year on year on average while revenue was up 4% for the same period. Christmas boxed card sales were up 5%. Those who track seasonal gifts separately recorded 10% or more growth.
The results I have seen indicate a better Christmas than data published in news outlets a few weeks ago.

What does this mean?
It was a tough quarter for core categories but a good quarter for non-core.

There are businesses in the study that achieved double digit growth and others with double digit declines across the board.

The decline in traffic the core of papers, magazines, stationery and tobacco is not being replaced with sufficient new traffic. This matter needs urgent attention. Otherwise, we will see hundreds of more closures in 2019.

From what I can see, the newsagents doing best are those in control of their businesses. That is, those who do not rely on reps to order for them and those who do not rely on legacy newsagency channel suppliers.

The occupancy cost challenge continues.
Even in the best run newsagencies, the annual 5% increased in occupancy cost is not sustainable. In today’s market, I think 2% annual increases is fairer as that at least provides retailers an opportunity to keep up.

Landlords need to be aware of the changes in product mix, the challenges of low-margin core products and restrictions they place on what businesses can sell. They need to be flexible on rent so newsagency businesses can be sustained and thereby provide the service they want in their centre.

Looking at data for one store.
To address the point some make, usually people who have failed as newsagency business owners, here are some results for one business. Traffic: down 1%. Revenue: up 5%. Magazines: down 20%. Papers: down 19%. Cards: up 25% (33% of total revenue). Calendars: up 19%. Gifts: up 34% (11% of total revenue). Toys: up 61% (6% of revenue). Average sale value: $14.61, up 9%. Overall business GP 46%. This store is not alone with good numbers.

Mark Fletcher.
Email: mark@towersystems.com.au  Website: www.towersystems.com.au  Blog: www.newsagencyblog.com.au
M | 0418 321 338

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Newsagency benchmark

Galentine’s Day

Yes, this is a thing. It all started on the TV show Parks and Recreation. It’s a season within the season where gals appreciate their gal friends. Not overly commercial. More about fun and being social. newsXpress released to its members a pack of collateral and product opportunities. Here is one of the posters from the series.

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newsagency marketing

Now, Valentine’s starts

This weekend is the start of the real Valentine’s Day season in many retail situations. I know in my case that weekends are critical to purchase volume for the season. We have cards on the lease line. The photo shows what we have at one entrance.

This entrance display is for convenience and pitching range – it’s more that the two supermarkets nearest to us have.

We have our main Val offer pitched elsewhere too, providing an immersive and unique gift experience.

We also have a considerable range of non traditional Val, expanding the scope of the season into more of a fun offering, helping those who would not usually purchase for the season to consider it.

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Newsagency management

Has Tatts overreached in dealing with franchisees on retail employee conditions?

Tatts appears to be demanding retailers adhere to employee terms that are not required by FairWork. I have seen them do this either not back down or take months to back down even after being shown that their demands on the retailer are considerably beyond the scope of the legal obligation of the newsagent employer.

The situation has come about because of the legislation the parliament passed following the 7-Eleven employee scandal. It was designed to protect employees in franchisees. As the Tatts / retailer falls under the definition of a franchise, Tatts has certain rights /. obligations under the legislation.

I would argue that Tatts has been overs jealous in actions of which I am aware and that they have issued formal breach like notices for matters that have no support in FairWork mandated obligations for employers.

The result is considerable stress for retailers, plus costs in dealing with what Tatts puts them through.

To avoid being caught in a Tatts created and managed stressful situation:

  1. Ensure you pay everyone according to the award.
  2. Provide a complete payslip for every pay period, preferably directly out of a reputable accounting program.
  3. Pay on time.
  4. Have written time sheets.
  5. Do not pay employees in cash.
  6. Have your processes and records checked by your accountant or some other appropriately skilled person at least once a year.
  7. Treat family member employees as you would any employee.

A challenge with the Tatts approach is they will ask employees to complete a survey. One wrong answer to a misunderstood question could result in Tatts coming for you. This is why you need to be certain of your processes and be able to defend your position based on documentary evidence.

As I have written previously, the situation has come about because of the federal government passing vulnerable employee legislation following the 7-Eleven debacle. The Fair Work Ombudsman website sets the scene:

On 15 September 2017 the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 took effect. It makes the following changes to the Fair Work Act 2009external-icon.png (the Fair Work Act):

  • increase penalties for ‘serious contraventions’ of workplace laws

  • make it clear that employers can’t ask for ‘cashback’ from employees or prospective employees

  • increase penalties for breaches of record-keeping and pay slip obligations

  • employers who don’t meet record-keeping or pay slip obligations and can’t give a reasonable excuse will need to disprove wage claims made in a court (this is also referred to as a reverse onus of proof)

  • strengthen our powers to collect evidence in investigations

  • introduce new penalties for giving us false or misleading information, or hindering or obstructing our investigations.

Read what the Fair Work Ombudsman website has to say about franchisors that have a significant amount of influence or control over the business affairs of the franchisee:

These changes apply from 27 October 2017.

Franchisors and holding companies (a company that has control over subsidiary companies) can be held responsible if their franchisee or subsidiary doesn’t follow workplace laws about minimum entitlements, the National Employment Standards, awards, sham contracting, record-keeping and pay slips.

This will apply to franchisors that have a significant amount of influence or control over the business affairs of the franchisee.

Franchisors or holding companies could be liable for breaches or underpayments if:

  • they knew (or could have reasonably known) that a franchisee or subsidiary wasn’t following workplace laws
  • they didn’t take reasonable steps to prevent it.

We are working with franchisors, their advocate and advisers and will have more information in our Help for franchises section when the changes take effect.

Tatts is acting because of an understanding of that term – significant amount of influence or control over the business affairs of the franchisee.

I think  that in terms of tatts, they do have significant amount of influence or control over the business affairs of the franchisee.

There is plenty of advice online outlining the obligations for franchisors and organisations like Tatts outlets.

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Newsagency management

Decluttering the newsagency for a brighter 2019

Marie Kondo’s show on Netflix has spiked interest in decluttering. Applying her principles in business makes sense, especially in a visually and spatially busy business like a newsagency, even a former newsagency that identifies as something else today.

I especially like some of Marie’s mantras and their application to newsagencies such as Nostalgia is not your friend. I often see newsagents hang on to things because of nostalgia or do things because it what they have always done.

Part of decluttering in business is about doing what is right for the business, what moves the business forward, what makes the business more valuable the it comes time to sell.

Only you can work this out for your business. There are plenty who will try and tell you what to do and plenty of them are not newsagents. Listen to yourself.

Work out your own approach to decluttering the shop and the business. If you are not sure where to start, choose a category and focus on that. Or, choose a location, like the counter. Be single- minded in your focus on that. make a new experience, a new counter that focuses on the new view of the business: lean, efficient, happy, forward leaning.

A key rule Kondo applies is to keep things around you that spark joy. It would be interesting to contemplate what you keep in your business is that is your focus. Even considering this only from a product perspective. What products in your shop today spark joy? What would your business look like if you removed products that do not spark joy for you?

I am not writing this telling you what to do. Rather, I am posing questions so you can determine for yourself any changes you wish to make in your business. I have worked through this and found the results most interesting.

Decluttering is really about clearing a path forward, removing things, clutter, in the way of steps you can take. If you start with the counter and consider everything at and on the counter. If you apply Kondo’s principles you should end up with a very different counter for those who work in the business and those who shop with you.

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Newsagency management

Instant asset write off scope expanded

The Prime Minister has announced plans today to seek parliamentary approval for an expansion of the instant asset write opportunity for small business – extending it to June 2020 and increasing the invoice cap from $20,000 to $25,000.

This is a good move for businesses engaged in capital investment in their businesses.

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Newsagency management

Pitching Valentine’s Day behind the newsagency counter

Here’s the pitch for Valentine’s Day behind the counter ion one of my stores. There is also an impulse offer at the counter as well as the main display on the lease line, facing into the mall.

Here is a version we created for social media, leveraging the collateral and Beanie Boos:

Online and in-store, we are using consistent collateral to help drive shopper engagement. The Boo pitch online is one of many. In fact, our core online pitch is about creating memories. Oh, and educating guys to shop early so as to not miss out.

Valentine’s Day is one of those seasons where there is a rush in the last week. In my experience, you benefit in the rush by educating people weeks out that you are in this space.

A note on the collateral: is deliberately targets a younger demo for the season. That’s how we see a big opportunity for the season, targeting those who do not regularly buy cards.

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Greeting Cards

News Corp does a deal with Australia Post promoting literacy

News Corp has partnered with Australia Post on a literacy campaign. This, from the report at Mediaweek:

News Corp and Australia Post join forces to boost literacy levels

Raise A Reader is News Corp’s consumer education and advocacy campaign, designed to highlight the importance of developing early literacy skills among Australian children and the critical role parents play as educators and role models in demonstrating a love for reading.

Toni Hetherington, national education publisher, News Corp Australia said: “We are proud to partner with Australia Post in this important initiative with The Daily Telegraph, Herald Sun, The Courier-Mail and The Advertiser alongside our regional mastheads. News Corp Australia will proudly be supporting this campaign from both an editorial and retail perspective.

“Literacy skills are fundamental in ensuring future success in our country. At News Corp, we understand that it is our responsibility to utilise our platforms to inspire more children to enjoy reading.

“Our journalists around the country will encourage their audiences and communities to ‘Raise A Reader’ through this strong editorial campaign.”

Raise a Reader complements the launch of Australia Post’s Legends stamp series, which recognises living Australians who have made an outstanding and inspirational contribution to Australia’s communities and culture. In 2019 this series recognises Australia’s leading children’s authors.

An exclusive survey of 1000 parents and grandparents commissioned by News Corp Australia found 86% of respondents wanted their children to spend more time reading books with more than 88% reading to their child at least once a week.

UNICEF has rated Australia as 39 out of 41 countries “in achieving quality education”. Nearly one in five Australian children are not meeting international benchmarks for reading, according to the Progress in International Reading Literacy Study released in 2017 by the Australian Council for Educational Research, assessing grade four students from 50 countries around the world.

It feels like News Corp. no longer sees the newsagency channel as a channel.

There are plenty of newsagency businesses in the book space.

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newsagency of the future

News Corp. disrespects newsagents with Disney promotion

News Corp has announced details of a Disney book promotion to start in a week. This promotion is designed to sell more newspapers. While promotions like this often sell more papers while they run, I see no evidence of them delivering sustained sales growth for the associated newspapers.

What frustrates many newsagents is the disrespect shown by News Corp with the 7.5% margin offered. Factoring in labour, space, shrinkage, cashflow cost our to timing of payment, this promotion is loss-making for retail newsagents.

Here is the table showing margin from the News Corp. letter:

  1. Distributing Agents with a retail outlet – commission: 15%
  2. Retailer commission: 7.5%
  3. Direct Relationship Retailers & Sub Retailers will receive 7.5% commission for each book sold.
  4. Distributing Agents will receive 7.5% commission for each book sold by the participating outlets & sub retailers at the conclusion of the promotion.

The News Corp. response on the meagre commission could be – we are bringing in the traffic, it;’s up to you to sell them more. To that I would say: spend time in a shop, observing this traffic. See for yourselves how single minded these shoppers are, that they want something for free or next to free. There is no opportunity for up-sell, none at all.

Shoppers redeeming for the types of offers are not efficient or valuable for retailers. They are often rude, demanding and angry when you have exhausted your allocation because that is the fault of the newsagent.

There will be retail newsagents who have received all stock already and been billed for all of it, having to pay it by Monday. Whereas the distribution newsagents will be billed March 24, based on the letter from News Corp.

No wonder there are retail newsagents who refuse to participate.

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Newspapers

Lottoland blitzing social media for Australia Day

Lottoland blitzed Facebook and Instagram last week with an ad pitching an Australia Day promotion. This from a company federal politicians thought they had dealt with.

This company has not gone away. It is not going away. Lotteries, especially app / online access lotteries and ‘lotteries’ continue to be in play.

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Lotteries

Will harmonised commission from News Corp. cut newsagent revenue in some areas

I have heard from plenty of newsagents following my post earlier this week about harmonised commission, which News Corp has announced in some regions is coming.

Every newsagent has the same explanation, that where News Corp has two or more titles on different commission for newsagents, the lower will be the selected harmonised commission for all titles.

Until News makes its announcement, all we have is speculation … and nervousness, concern and, for some, stress.

The company has been walking toward this for two years. I can’t see any reason for it to delay telling newsagents what it plans to do, and why.

If the speculation is right, it will be another example of the company sprouting one view in its papers and another to the small businesses with which it partners.

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Newspapers

My 2009 (and beyond) story

Given some recent comments here, I have decided to share here a video that I shot, unscripted and in one take, in my office early on April 13, 2017, and shared that day with newsXpress members and selected others. It was also placed on a video platform, accessible to the public.

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About us

Harmonised commission coming from News Corp

In an announcement about cover price increases to regional Queensland newsagents earlier this week, News Corp amounted that a harmonised commission structure is coming. Here is that part of the announcement.

Additionally, as part of the ongoing integration of the Australian Regional Media Publications which merged with News Corp Australia in early 2017, a new harmonised and consistent commission structure is planned to be introduced in May 2019. 

This harmonisation forms part of an ongoing commitment to progressively achieve full systems and process integration across all mastheads. 

All Newsagents and Retailers will receive an individual communication early in 2019, outlining the specific details of any adjustments relating to your business and the publications you currently range. 

Several newsagents have contacted me, concerned as to what harmonised means. Like any corporate-speak, it does not sound good.

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Newsagency management

Unfortunate news coverage for the newsagency shingle

The news coverage this week of the arrest of a newsagent in Sydney in relation to a crime syndicate is unfortunate for the channel. While I don’t have media monitor data, I suspect we have seen more mainstream media stories published with the newsagency keyword already this week than in all of 2018.

While people are smart enough to not connect the whole channel with the actions of one, I have heard from a couple of newsagents about comments being make across the counter already.

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Ethics

Lottery vending machines

I am back from being part of a retail study tour covering four major cities in the US and in each I saw lottery vending machines like these. Usually in public places, often outside of shops. You can buy game tickets as well as scratch tickets.

While Australia is way ahead of the rest of the world in terms of online lottery ticket purchase options, the US is way ahead in terms of self serve physical ticket / game purchase.

No matter how you look at it, the route to market disruption is supplier driven in this space.

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Lotteries

7-Eleven offers delivery in the US

7-Eleven offers a delivery service in the US. The products are not just convenience lines such as drinks, donuts, bananas, candy and similar. No, the range includes frozen food, stationery, gadgets, personal care, health and more categories. The range is quite broad.

Offering delivery makes sense in this era of considerably disrupted retail and in a time when people have been educated to have prepared meals delivered to them for minimal fees with minimal fuss, through App access, like 7-Eleven offers.

To get people engaged, the priest three deliveries are delivered free.

The service is broadly available, including in  cities smaller than some Australian cities:

The App was launched mid last year and I am told the uptake has been terrific and let to market expansion for the offer.

As has happened with Uber Eats, retailers in the convenience space will need to be aware and engaged.

This move shifts what it means to be convenience. Location is not necessarily everything.

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Competition

Why some people only make negative comments on this blog

I was asked last week why some people make negative comments here, especially on innocuous posts that others find useful. Here are some reasons I think some come here only to mock, criticise or denigrate:

  1. They failed in their newsagency business.
  2. They failed in their newsagency supply business.
  3. They could not raise the money to buy a newsagency
  4. They own a newsagency and hate it.
  5. They are a competitor of a newsagency.
  6. They are a supplier representative I have pissed off at some point.
  7. They get off trolling.
  8. They are a competitor.

Trolls are easy to pick. They do not use real names. Most have commented here under multiple names. None has ever taken up my offer to talk through their concerns or disagreements.

The majority of comments are from people who use their real name.

I welcome criticism / debate as this is essential to success. If I didn’t, I’d moderate comments, or have no comments at all.

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Ethics
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