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

Competition

WH Smith on the march in Australia, challenging newsagents

WH Smith, the UK public company operating newsagencies in high street, shopping centre, travel and other locations worldwide is expanding its presence in Australia.

Through its WH Smith branded businesses to company is delivering a best-practice retail experience. I anticipate we will see more of these stores open in malls and even on the high street as the company needs critical mass for its model to work in Australia.

The Wild branded businesses are changing too. WH Smith bought Wild well over a year ago and in the last few months the company has rolled out more changes through the group, most evident in company stores.

While not a gift shop I like personally, the WH Smith version of Wild appears to be popular from a mass perspective. It sells (bland?) safe mid range gifts.

Wild was at the Sydney gift fair chasing retailers to sign with the group. This is the strongest sign yet of their desire to expand the group in Australia.

I have heard of Wild franchisees who say they are unhappy with the direction of the group but that does not mean the model will not work in Australia. WH Smith appears to be backing the company with considerable resources to support expansion. You only have to visit the most recent store openings to see best-practice retail in action.

You can also see engagement by WH Smith and Wild through their supplier relationships. They are tapping into more local suppliers and this is creating competitive tension for nearby retailers and for the suppliers involved. I know of one supplier that could suffer as a consequence of their growing WH Smith relationship. It is affecting my own buying decisions for sure.

The part of the WH Smith business that appears to be shrinking is Supanews. This is to be expected given the state of Supanews when WH Smith purchased it from the Gaskin family. I guess the same is true with the Kennys / Giftology business as that was just about dead when purchased too.

From what I observe, the WH Smith and Wild businesses are the ones challenging newsagencies the most. Take time to check them out, especially if they trade near to you. Look at them carefully as they are well-structured businesses with sound processes, consistent buying and a growing presence that will build shopper recognition and confidence.

11 likes
Competition

Cheap Valentine’s Day cards at Woolworths

IMG_5422The stand of $3 Valentine’s Day cards at Woolworths that I saw yesterday was in the high traffic ground floor entrance location of the Sydney CBD business while the higher priced Valentine’s Day cards were in the second floor card department. While I get that supermarkets are interested in what they say is a ‘value’ pitch, it is not, in my view, value in that the cards look and feel cheap compared to the regular priced cards.

Unfortunately, I suspect we will see more and more of these ‘value’ pitches the greeting card category this year and beyond. It is an overseas trend retailers here will not want to ignore.

There are too many ‘value’ models in the UK and US for Australia to not be confronted by this phenomenon. It is only a matter of time before it hits here. I have looked at two of the models in detail may have more to say about them soon.

1 likes
Competition

Why we newsagents need to keep our eye on JB HiFi when it comes to greeting cards

IMG_2879Late in 2015 JB HiFi retail outlets started selling greeting cards. They put in a carefully selected range sourced from Hallmark.  Their hip looking purpose built card units have seen are usually placed in a high traffic location, near to the counter.

The THREE FOR $10 offer is compelling. The range carefully targeted at the typical JB shopper.

My understanding is that JB management made the decision to offer a selection of cards and then looked for a supplier. They designed the display unit internally and set their own pricing.

When I first saw the display in-store two months ago I was impressed with the range. It looked different, fresh. Then I realised we have access to all these cards – yet we display them in a more traditional (boring?) way that does not allow them to be realised as being as hip or on-trend as they appear in this purpose designed fixture from JB.

Here is an electronics and entertainment retailer stepping into our space and doing it well. It will be interesting to see how cards perform for them. My guess is they will do well as the stand appeals to their shopper demo. If they are successful, it will be a combination of range curation, fixture design and shop floor placement.

We can do this folks. We can create a secondary display of cards that reaches a shopper not entering our businesses to purchase cards. We can full the stand with a selection as carefully chosen as the range from JB. And, we can fund the price point – there is enough margin in cards to do this, especially if we achieve genuine incremental revenue.

While some will be angry about the JB move, the smarter response would be to engage with cards in a fresh way, like JB has, to make a pitch that reaches those shopping with us who do not purchase cards already. We can do this.

We are in a highly disrupted marketplace where the boundaries of speciality retail channels are more blurred than ever, where retailers are chasing revenue to achieve the deepest basket possible from the traffic they achieve in-store.

So, instead of being angry or frustrated about this move, think about what you can do to create similar opportunities in your newsagency.

It’s on you. This is not a supplier challenge to resolve. No, it is your challenge because it is your newsagency.

For too long we have approached greeting cards in the same boring way. Too many newsagents have stood by watching sales remain flat or decline. Our mediocrity has allowed others to enter the space. We should have been so on top of our game, so innovative, that competitors did not risk investing in cards.

That is irrelevant now. JB is here and others are coming. We need to be more focussed than ever on our card offer. We need to be innovative beyond our own imagination.

12 likes
Competition

Newsagents doing Back To School need to visit Officeworks

IMG_3423I spent time at Officeworks in Richmond  yesterday, looking their approach to Back To School 2016. I decided on the visit having been inundated with BTS advertising on TV, online and in print.

Newsagents tend to love to hate Officeworks – often ignoring strengths that make them a compelling competitor.

If you have an Officeworks nearby, they are the benchmark for Back To School and here is why:

From inside the front door they have excellent value deals that cannot be beaten – like the Cruzer Facet 8GB USB stick for $2.73. The best price I can find elsewhere is $6.00. I go through USB stick like candy so I purchased ten.

It is the six or each dump bin deals like this USB stick that tell you this is a good place to shop – and you are only a few steps inside the front door. They have just as good deals dotted through the business, especially where BTS shoppers are likely to shop.

There were more staff on the floor that I usually see at this Officeworks – customer service attention is heightened because of BTS. The quality of customer service is good too based on answers I got to a couple of questions.

The store is well laid out, well sign posted. There is a consistent BTS message throughout that connects with all their advertising.

At the counter they offer multiple options for donations to The Smith Family BTS campaign helping needy kids and families.

I suspect I could go into almost any Officeworks right now and have a similar experience. This would have to be the case for their national advertising to leverage maximum value for the national chain. From the product mix to pricing to their charity connection, there is a consistency that newsagents are challenged to match.

If you think poorly of Officeworks and if you are doing Back To School this year, I urge you to visit an Officeworks. Look carefully at what they are doing. Pick up ideas you could leverage for your own business. Even their use of dump bins for compelling offers is something newsagents could do through BTS to pitch a value proposition from inside the front door.

8 likes
Competition

How can Coles offer half price Bauer Media magazine titles?

Screen Shot 2015-12-08 at 10.07.57 amColes Express is promoting half price Bauer Media magazines: Woman’s Day, OK!, NW and The Australian Women’s Weekly.

This extraordinary deal is available with any fuel purchase, yes, any fuel purchase. The AIP says retailers make around 5% on fuel sales so they can’t be funding this deal.

While I understand there is a difference between the magazine shopper in a newsagency and someone buying a magazine, this type of promotion encourages shoppers to expect to purchase magazines at half price. I say this because the campaign is running for two months. People purchase fuel, say, weekly. This campaign has the right triggers and is running long enough to educate the weekly magazine shopper to switch from their current retailer to the Coles Express outlet.

I think the only way to see this campaign is to drive people to choose Coles express for their weekly magazine purchase. Sure, there will be some incremental business – but I doubt this will amount to much.

Weekly magazine shoppers are not as loyal as they were – because of price games like these,

I’d love someone from magazine publishing or distribution to tell me that I am wrong, that this two month long half price campaign for the Bauer titles is not designed to change shopper behaviour like I suspect it is.

This supermarket chain campaign is the type of campaign I hate to see. It makes us look expensive. Hell, we are expensive when we charge double for these participating Bauer titles. Where is the sense in that?

Based on a network size of 650 stores and considering the titles involved, allowing for conservative sales numbers, I’d expect this campaign to have a cost of at least $15,000 a week in terms of what is being given away. Whoever is funding this must be expecting a return on this investment for the titles being promoted.

With newsagents selling close to 50% of all magazines sold in Australia, why run a campaign that makes them look expensive compared to Coles?

Would Bauer fund a campaign like this in newsagencies? If they want us to grow magazine sales they would as they would want us to be seen as competitive.

My supermarket contacts say they expect Coles Express will make full margin on all titles if this campaign is run in the same way other magazine campaigns are run. That would make it an expensive for whoever is funding the campaign. I would love to see that level of investment made in selling these magazines in newsagencies.

What do others think?

25 likes
Competition

Independence Studios product in Target?

IMG_2004Newsagents who have been bi supporters of Independence Studios will do a double take at this range of product now available in target stores in Australia. While the packaging is different, the products look to be exactly the same as items we sell in the candy-lane.

2 likes
Competition

Is the Dymocks discount strategy an indicator of an Adult colouring slowdown and, if so, what should newsagents do?

IMG_1317Dymocks is pitching two adult colouring titles for $30. As the poster in the photo notes – shoppers can choose from 20 different adult colouring titles.

This discount pitch by Dymocks is unfortunate as to tells shoppers to expect to pay less for these titles than usual full price.  It could also be a marker of a downturn in sales of adult colouring titles. Why else would Dymocks make such an offer? Unless it is a spoiler move on their part?

Regardless of the reason for the Dymocks promotion, newsagents need be aware of the move and watch other retailers as their actions will impact on sales in newsagencies.

In the magazine space, magazine publishers and distributors need to be aware as well. It is bad enough being loaded with products from which we make a paltry 25% gross profit (from which to pay rent, labour and other costs) when we have plenty of stock in the same segment from which we make 50% … but now, while magazine supplies are increasing, a major competitor who does not stock magazines, is discounting the better margin product.

I hope people in our supplier business are thinking about these things. Based on current supply, over which newsagents have little or no control, there is little evidence of thinking of newsagents.

14 likes
Competition

New adult colouring titles at Coles

IMG_1066Coles supermarkets have introduced a new range of adult colouring titles from harlequin prices at $9.00.

I had a good look at them last night. Based on what we have in the newsagency these books are, in my view, not worth $9.00. They appear to have been developed to meet a price point with little regard to what people into adult colouring look for. Newsagents in the adult colouring space need to be aware of what Coles is doing.

1 likes
Competition

Now this is competition!

IMG_9958This photo shows two convenience stores on George Street in Sydney, next to each other. What makes this direct competition even more surprising is that there are eight other convenience stores within a two minute walk of these two shops.

While Sydney is busy, it feels like there are too many convenience stores. Two next to each other in the photo is extraordinary.

Imagine this type of competitive situation for your business – a retailer next to you selling 80% of what you sell, one the same hours. How do you compete? What differentiates your business from theirs?

Convenience stores have no protection. Suppliers want their products everywhere – for convenience.

I mention this today as there are newsagents who continue to push for protection. I think that is a hard push to make where we see small businesses,like these convenience stores, apparently surviving without any protection.

While there may be other factors in play with these convenience stores, factors beyond the competitive products that help them survive – but such factors are not obvious to me.

8 likes
Competition

Some suppliers have themselves to blame when newsagents stop offering their product

IMG_9173 (2)Reflex copy paper is regularly advertised as a brand consumers can trust yet in Coles this week you can see it discounted to below wholesale at $3.49. While the discounting may suit the Coles price positioning strategy, it does not respect the brand nor the retailers who respect the brand.

Major brands that allow their products to be discounted as Coles has done this week with Reflex risk losing the interest and support of independent and small business retailers.

I want to stock brands in my newsagency that respect themselves and their retail partners, brands that value long term relationships.

25 likes
Competition

Tatts scratchie game on your mobile

IMG_7811Tatts has launched Scratch & Match play on mobile devices. While a promotional game without cost at this stage, it demonstrates how mobile based games can be played.

This is not an unexpected move by Tatts. I have written here many times that digital is the biggest threat to in-store purchases of lottery product – far more so than supermarkets getting lottery products.

You can check out the game here: http://bit.ly/1LbvjQH

Players can access more games by answering survey questions. I expect Tatts would say this is the purpose of the game at this stage. I think it is more a proof of concept.

8 likes
Competition

WH Smith taking over Knox Wild location

The Wild store at Westfield Knox in Victoria, where I have a newsagency, is closing this weekend. WH Smith is reportedly taking over the location. If this is so, it will be interesting to see what they use the spot for – whether it is a Wild store refreshed or one of the other brands they trade under in Australia. Either way it will be good to see up close how they position a corporate store in what is a big and busy shopping centre.

6 likes
Competition

Bagged Take 5 offer frustrating

IMG_8652We early returned this bagged Take 5 offer because it requires an additional pocket and because it’s a lame offer when compared to the broader offer in Woolworths. Sending them unannounced as Bauer does makes space planning difficult – hence the decision to early return. My view is if we are to pitch magazines at a discount we ought to be funded margin as if the titles are sold at full price.

4 likes
Competition

Woolworths promotion of Bauer titles makes it tough for newsagents

11406833_367807720075676_7221817184947567036_n (1)Here’s an example of a publisher and supermarket giant working together to devalue magazine brands in a campaign that must reduce newsagent magazine sales.

The Relax & Save campaign offering two Bauer titles for $7 is an enticing offer for price conscious shoppers.

The folks from Bauer will tell Connections members at their national conference soon how much they love newsagents and remind them of their support for newsagents. The evidence in this photo pitches a different story – it is a story of favouring one channel in a way than can only hurt the larger channel, newsagents.

I wonder if Bauer is funding the discount being given to Woolworths for this deal or whether there is financial support flowing in some other way.

12 likes
Competition

WH Smith UK sales results reveal gap in locations

One the 13 weeks to May 30, sales in WH Smith businesses grew 1%. As Marketwatch reports, the story is different for two important channels for the group:

Same store sales for the company’s travel division grew 4%, while the high street division recorded a 4% fall in like-for-like sales during the 13 week period.

The WH Smith high street model is closed to the Australian high street newsagency model. The Guardian has in-depth analysis from BESI Research which includes a note about improving margins. This is key in retail today – your overall gross profit for if you can grow this you are better prepared to weather and traffic or revenue decline.

2 likes
Competition

More WH Smith locations coming?

Two suppliers have mentioned that they have been told WH Smith is close to adding between 20 and 25 newsagency locations to its Australian store fleet. That is the extent of the information – so no clarity whether the new rooftops are through acquisition or store openings.

Another supplier mentioned losing considerable business as a result of acquisition by WH Smith as the company had its own sources for products usually supplied by this supplier. They were left with considerable staccato shift.

0 likes
Competition

Indie musicians and small business newsagents have a lot in common

Screen Shot 2015-06-02 at 12.13.10 amFinding fans is tough for indie musicians as they don’t have the support of the marketing machines of massive labels to drive airplay and attract fans. Their success comes from many small steps, plenty of ‘local’ activity.  The same is true for us small business newsagents in our competition with supermarkets and others who sell what we sell but in a mass way.

I was thinking about this just now when I saw this tweet from south-west London indie band Elephant & Castles following a small item in the UK music magazine NME:

We got some love this week. Read it the old fashioned way from your newsagents. Thanks

I love their support of newsagents.

Their success will come from many small steps – lots of playing gigs in small locations, getting their name out fan by fan. It’s true for us. Greater success for us will come from many small steps attracting shoppers for unique and special interests.

The challenge for our channel is that we have many newsagents who have not had to do this and here they are toward the end of their time owning a business having to learn new skills and reinvent their businesses.  That is a difference between many newsagents and indie musicians – for the indie musician they are starting out and stepping into their challenges of their own accord.

I know I am getting a bit off track here. The point I want to make is we can be successful if we rely on many small steps for our success rather than fewer big things. Like the indie band playing many gigs to find their success.

You can catch Elephants & Castles on soundcloud.

5 likes
Competition

The lottery challenge for SA newsagents

Screen Shot 2015-05-22 at 7.25.50 pmOn the Run is a strong petrol and convenience group in South Australia. Their tag line is compelling: we never close! This must be confronting for newsagents nearby to OTR outlets as they offer more newsagency lines. Their magazine range is broader than is usual for a petrol or convenience outlet. They have lotteries too. Plus bread and other daily staples. I’ve also seen cards and some gift lines.

I am not sure when they first got lotteries or how the move was ‘sold’ to newsagents. The OTR approach is far superior to what 7-Eleven did and what Coles Express has in some stores.

To me, the best approach for competing with OTR is to not swim in the same ocean, to not play in the convenience space.

4 likes
Competition

WH Smith discounting magazines

IMG_6710I noticed a WH Smith store here in Australia last week discounting titles from several publishers if purchased as a bundle. I’ve not seen this before as discounting is usually only within the portfolio of a single publisher. This offer is not from a single publisher which makes me wonder if WH Smith is funding it.

I expect we will see more deals like this as WH Smith expands – and expand they will. I am told an announcement is imminent about further expansion in Australia through acquisition. One report is 20 stores while another is double that. Only time will tell how their expansion plays out as well as they approach to bundled pricing.

0 likes
Competition

WH Smith products in Whitcoulls in New Zealand

IMG_6501While we are still to see what WH Smith will more fully look like and do in retail in Australia, in New Zealand I see plenty of WH Smith branded products available. In the Whitcoulls bookshop / newsagency businesses, for example, they are a considerable range of WH Smith products.

I think this is the key interest of WH Smith in Australia – retail outlets for items they source directly from factories around the world. It is why I think the current number of stores they have is not enough for their longer term plans.

3 likes
Competition

Coles shift in magazine and newspaper pitch a challenge for newsagents

ColesThis photo shows a new approach in a Coles supermarket to newspapers and magazines. This stand is located inside the main door with another near a rear checkout and more magazines located in their traditional magazine department.

This front entrance placement serves the shopper not going deeper into the business, the type of shopper who may usually have purchased these top selling everyday titles from the newsagency a few doors away.

If your newsagency is near a Coles, check whether they have made any changes like this and consider whether you should respond to ensure the relevance of your offer of top selling magazines and newspapers.

While it frustrates me to see what Coles has done here, it is competition – we have to compete more effectively.

2 likes
Competition

Typo selling wrapping paper

IMG_5882I noticed Typo is selling wrapping paper from the card stand they have placed at the entrance to their stores.

Newsagents with a Typo store in their area ought to take a careful look not only at their cards and wrap but also at their stationery lines as this is a competitor to be reckoned with.

The typical Typo shopper is female from mid teens through to thirtysomething. It is a loved brand.

The Typo pitch is all around value – giving theimperession shoppers save when they purchase there. Having tracked back a couple of items, Typo is not cheap. But thanks to excellent marketing and a terrific in-store experience that is not noticed.

1 likes
Competition
Trending Articles

Fairfax changes approach to TV Guide, disrespects newsagents

Published on April 20, 2011

What do you think of the Powerball changes?

Published on February 16, 2018

IPS releases new magazine contracts

Published on June 21, 2011