Newsagency management

Starbucks in Sydney is pulling out all stops in the quest to find employees. I thought the rapid interviews pitch was interesting since it is a race right now to find people. Good people in the hunt for a retail role are being snapped up quickly.

Here’s the pitch outside the front of their Town Hall location.

On that level of the mall a couple of days ago I counted more than 20 signs in shop windows offering jobs. The Starbucks approach was more enticing and more professionally pitched.

Newsagents looking for staff may want to look at what Starbucks and others are doing since they have set a high bar in a competitive jobs marketplace.

I published this blog post here in July 2005. I think it’s relevant today as habit based shoppers remain important to our businesses.

While I talk about newspapers, card customers are, in the main, habit based shoppers, as are plenty of our other shoppers.

CONSUMER HABIT IS THE RISK NEWSAGENTS NEED TO ADDRESS TO BUILD NEWSPAPER AND OTHER SALES

If you do not scan greeting cards that are being returned you negatively impact the quality of your stock on hand data. You also condemn the business to relying on card companies for performance data, when this should 100% be managed within your business.

It doesn’t take long and adds value to your data asset.

Once you take down cards for return, take a brief moment to scan them out using your POS software. Then, you can rely on your data for business planning and decisions.

Seriously, this is any easy win for any newsagent.

Newsagents who do not scan out returns out themselves as disinterested in accurate data and that lays a negative cloud over their business in my view, it leaves their card suppliers as having the most complete data, which may not always be in the best interests of the retail business.

Big W kicked off their annual toy sale yesterday with some massive discounts including claims of up to 50% off some LEGO, Barbie, NERF, Bluey, Disney, Marvel and more.

Their goals here are to drive traffic in a usually quiet time for retail, and to capture early Christmas shoppers.

Given the reach of the Big W marketing spend across a range of media, including a strong social media presence, the toy sale presents a challenge to indie retailers in the toy space.

I think this is what the back half of 2022 looks like: big retailers promotive massive sales. Advertising discounts is the only tool they seem to know.

At local indie retailer level there are smarter moves we can make. For example, offering genuine in-store experiences, safe LayBy, Christmas wrapping parties, special orders, local delivery and more.

It is easy to get caught up in a price fight. The thing is though, local indie retailers done;t win from a price fight. Discounting is a no-win situation.

If you sell products that compete with mass retailers, the next few months will be challenging. The more you play away from their red ocean the better.

The Fair Work Commission decision to increase award wages yesterday is being reported in some media outlets as a blow to small business owners.

The increase in wages is still less than the increase in rent. I mention that solely as a reference point – given that retailers sign leases with those increases locked in.

To deal with rising business costs, it’s appropriate that businesses increase what they charge where they can. Here are some things newsagents can do:

• Cards. review the average sell price of cards you stock and consider whether your supplier could help you stock more expensive cards without negatively impacting sales.
• Photocopying. Most newsagents undercharge for this. It’s a convenience service. Charge as such.
• Stationery. The common mark up is 100%. Consider increasing that to 105%. In many newsagencies, stationery sales are convenience based. Charging a convenience premium is fair.
• Gifts. Your target gift revenue should be at least 3 times your card revenue. This is a category over which you have more control on price. Reach beyond what you have been doing.
• Be serious about a loyalty offer. The more people purchase in a visit, the more valuable the visit. It takes work, but can easily fund itself and enhance the bottom line.
• Review the roster. An hour trimmed each week funds 20 hours of the increase.

This list is a start. Smart newsagents will already be doing these things and more.

On balance, the actions need to include increasing margin where you can, getting existing shoppers spending more, attracting new shoppers and driving total floorspace efficiency. These are all retail management 101 steps, all achievable. Those focussed as agents may struggle, but that is the lot of an agent. retailers, engaged retailers, will be in good shape.

Talk to your marketing group, seek their advice. They should already be onto this with you.

Any local retail business managed well can digest the modest hourly rate increase without missing a beat.

This is an opportunity for us to show some business journos and some in big business retail trade groups that dealing with the wage rise can be done successfully in local small business retail.

My advice to retailers is to never pay an outside party to do your stocktake and never do a stocktake outside of your POS software.

The most accurate stocktake result for any retail business is doing it yourself, using your POS software.

Recently, I got together with one of the stocktake experts at Tower Systems to discuss this and answer common stocktake questions we are asked.

Again …

• Don’t use an external stocktaker.
• Do your stocktake yourself.
• Use your POS software to record, live, m the stock count.

This is the best approach for maintaining accurate stock on hand data and for valuing stock prior to a change of hands of the business.

I am seeing more and more retail businesses going cashless. While some make the move without explaining why, others, like this bakery I saw in the US, provide the narrative.

I like this approach.

If it were solely up to me, we’d be cashless in at least 2 of more stores. I am keen to avoid the costs associated with cash: end of shift balancing, banking, making change.

So many Aussie media outlets trade off speculation, especially speculation about economy-related numbers, like interest rates.

For several weeks now it’s a lead story for many news outlets, speculation about an interest rate rise, with many expecting the Reserve bank board to make a decision at their monthly meeting tomorrow.

The volume of the speculation makes the possibility off interest rate rises a topic of discussion in retail. The speculation worries people, it negatively impacts consumer confidence.

I wish news outlets would stick to reporting news, and stop covering speculation as if it is news.

Here in our local small business newsagencies, we can’t control interest rate movements, but we can buttress our own businesses to enable them to be less impacted by interest rate increases. There are plenty of moves we can make so our businesses rely less one month that has an interest cost. We can also not engage with the speculation in-store or on socials.

Consumer confidence is vital to local retail, especially in these mid-year wasteland months.

I have been thinking about how small business retailers can deal with interest rate rises when preparing advice for my POS software company customers recently. Freeing up dead cash remains the most vital, and immediate, move any local retailer cam make:

We help retailers free up cash in their businesses. And, this can help reduce their reliance on loan funds, which means a lower impact of rising interest rates. now, how do we help retailers free up cash. We do this in a range of ways, through smart tools in our POS software. We helped one business release more than $20,000 of hitherto dead money. The released funds helped them reduce their overdraft and that reduced the amount of interest the business was paying. It all comes back to using business data.

If you are concerns about the speculation, it’s better to act rather than amplify what might be.

I know plenty of newsagents are keen for more of the AFL team Coach product following sell-out sales. I reached out to a members of the leadership team at Are Direct yesterday and can share this update from them with you.

I have spoken to the Account Manager for the Team Zone AFL cards. I can confirm no state is being given priority on stock and the % of stock distributed to date is equal. The publisher prints the cards locally here, waits until the final team photos in mid-March then commences production.

There has been a delay in the production and the amount of stock we would normally have by the end of April but more stock is going out tomorrow and also next week. We understand the frustration but we allocate stock as evenly as possible and as quick as it is coming in the door. We do have more overall stock this year than last year so when initial allocations are completed by mid-May there will be larger amounts of stock available for stores that are selling well / sold out.

This is good news. It gives us specific information to share with customers.

The latest sales data from across a diverse range of toy retailers indicate plush as a super category. To be clear, this is across different types of shops, different banners, using different POS software. This broad cross section makes it reliable and useful. The performance of plush is a stand out.

I am happy about this news as there are still some in the newsagency channel who mock plush, say it doesn’t make money, say it’s had its day. This evidence indicates otherwise. It indicates that those talking down plush have not looked at the evidence, for the evidence shows success.

Now, of course, plush can mean a range of different things, from sub $10.00 items through to $200.00 items, and more.

I have a good range of plush in each of my shops, from a range of different suppliers. It is performing well, delivering growth, driving net new traffic.

I introduced it to the newsagency I bought in malvern just before Christmas. They had not stocked it before. It’s now at $3,000 a month in revenue, and bringing in new shoppers. It’s a good news story from my personal experience – just as I expected it.

What is especially interesting about plush in newsagencies is what is bought with it. That mix is diverse. rarely do you have a single plush item in the purchase. Usually it is 2 or more, and 1 or 2 other items. Plush is a basket means it is a deeper than is often the case basket.

The bonus with plush is the margin. 55% and more GP% is a good number. Plus, the plush shopper is more likely to be back as plush purchases tend to be habit based purchases, making the ‘lifetime’ value of the shopper something to crave and appreciate.

In my experience, the keys to success with plush are having an evolving range, front of store placement, constant change to displays, full displays and the right touch to shopper engagement. Those buying for themselves are collectors and they appreciate being treated as such. Plush is not a toy, buying plush can be like buying a pet.

I am yet to see a newsagency business properly introduce plush and fail.

Yes, I own Tower Systems, the company that serves more newsagents with newsagency software than any other and, yes, this is a video I made to promote Tower Systems. It is also a video that shines a light on sky information that is too often ignores by retailers and POS software companies:

Buy Now Pay Later became a thing for retailers, online and in-store. It wads a way to reach shoppers who otherwise may not shop. We all raced to offer it, and promote it.

Humm, Afterpay, Zip and others made it easy, even though the cost to sales was significant, often as high as 6%.

We chased the cult-like BNPL shoppers without a care about what happened down the road.

The trailblazing BNPL companies have plenty of competitors now with PayPal, credit card companies and banks out with competitive offerings. The BNPL road is becoming rocky with consumer organisations and regulators in several countries calling for regulation of the fintech BNPL operators.

With BNPL maturing, there is data as to consumer behaviour, a better understanding as to how the BNPL businesses make money and the role fees, such as late fees, play for consumers who use BNPL.

These and related factors are likely to be behind share price falls for Afterpay:

And ZIP:

These charts are from www.fool.com.

Does any of this impact retailers offering BNPL? The increased competition does in that if you want to serve that shopper who relies on these delayed payment terms you are likely to need to expand your offering.

There is commentary that some BNPL businesses are looking at retailers playing a role in responsibility for payment. I am not sure how that could work.

That said, I can understand that their model needs to change, because the current share price trajectory is problematic for them.

Retailers liked BNPL because it did (does?) attract new shoppers and it offered a replacement to LayBy. But the explosion of BNPL is driving issues for the model.

My local coffee shop offers BNPL payment through Payo for a coffee and food. Petrol stations have partnered to offer BNPL for petrol and everyday necessities.

In my own shops I am not a fan of the more extensible BNPL offerings,l like Afterpay. Losing ten percent of margin dollars in a purchase make that purchase less valuable. It’s been a topic at a couple of retailer conferences this year.

While I am no expert, to me it looks like a dramatic increase in BNPL competition, the prospect of regulation and pushback from retailers as to the cost of a BNPL transaction are all impacting the share price, and tarnishing the gloss of the BNPL temple.

I expect there to be a shake out, which is likely to be disruptive for retailers. Eventually, I expect the larger and more traditional financial players to stabilise the BNPL model.

Our job as retailers is to offer what shoppers want, when they want it … and to take payment through any form that works for them and us. So, yeah, just as change is an everyday opportunity in retail, it is thus in terms of how we are paid.

I guess the key point I’d make to retailers about BNPL is be aware of the disruption and be curious and cautious about pitches to take on new payment methods.

Talking with retailers in the US this past week it is surprising how many in a broad range of retail sectors have gone cash free during Covid and have remained so.

Signs like this are common in stores I saw in Los Angeles and Las Vegas. The photo is from a gift shop in West Hollywood.

This is a trend that has been evolving for several years. But, pre Covid, it was primarily limited to food outlets. Now, I have seen it in bookshops, fashion, gift, homewares, as well as food. It is common.

Personally, I like the idea of being cashless as it offers less fraud, lower money handling costs, roster time saving, less data handling and fewer mistakes.

In the budget last night were measures that will benefit newsagents investing in a technology update. This is covered in detailed reporting from the ABC.

Instead, the government is offering a new, temporary tax break for businesses that invest in either new technology or employee training and skills development.

“Starting tonight, for every hundred dollars a small business spends on training their employees, they will get a $120 tax deduction, helping them become more productive and competitive,” Treasurer Josh Frydenberg said in his speech.

This means employee training gets a bonus tax break. It respects the value of training. There are rules, of course, but they focus on training people. It will be interesting to see if any software companies now introduce a training cost.

“From tonight, every hundred dollars these small businesses spend on digital technologies — like cloud computing, e-invoicing, cyber security and web design — will see them get a $120 tax deduction.

This is a clear message about digital transformation, something newsagents need to embrace, urgently.

Of course I am biased in commenting that these moves are good, I own Tower Systems, the company serving around 60% of all newsagents in Australia with cloud based newsagency software and the company that has already developed websites for many newsagents.

But realistically, incentivising digital transformation in small business is a good move.

I don’t think a change of government would change this initiative.