Newsagency management

In December 20223 a number of newsagents reported issues accessing magazine supply electronic invoices. The issue was quickly isolated to being experienced by those with a specific model of Telstra modem. The specific problem was tracked back to having been caused by a Telstra initiated update.

Here we are in April 2024 and some newsagents continue to have problems. Most recently, it has related to the v7610 modem.

The challenge for impacted newsagents is that it an issue for Telstra to resolve, and their resolution has not been as forthcoming as it could be. Their call centra process is not geared to discussion about a problem. rather, they have a series of narrow questions and if your words are outside what they expect you can find yourself down a time-wasting rabbit hole.

XchangeIT is the newsagent partner most impacted with their magazine electronic invoices not getting through via the usual automated route. While they have a backup process, their hours are not a good fit for hours when newsagents might be doing this work. That said, their communication to newsagents on the issue has been excellent, as has their communication with newsagency software companies.

Sometimes, the road ahead can appear to have so many obstacles and the air heavy with fog that a pathway can be hard to find.

If you feel like closing is your only option, I am writing this for you. It’s an update to something I have shared before. I share it today as a supplier asked me to remind folks here.

If you feel like closing your newsagency is the option, ask for a second opinion. I and plenty of others in our channel will do this, based on your business data: sales data, P&L, and more.

Usually, in the evidence of data is opportunity. The challenge is that often opportunities cannot be seen because of the noise of obstacles and fog.

My hope is that in your evidence there is sufficient opportunity to find a path forward for the business, and for you.

Turning a situation away from closing is my only option can only come about by one or a mix of:

• attracting new shoppers
• getting existing shoppers purchasing more
• making more from some of what you sell
• reducing costs

It’s pretty simple when you read the list. The hard part is the action, that’s where retailers can get stuck. I mean, attracting new shoppers is difficult, especially in small business where the levers we can pull are limited.

The best way to attract new shoppers is to introduce new product categories and to pitch these outside of the business.

I get that it may be challenging to find the energy and money to make things work with new products. If the survival of your business matters you’ll find a way.

The best way to get existing shoppers spending more is through a smart loyalty mechanic and having a shop people enjoy.

The best way to make more from what you sell is by charging more or buying better, or both. Don’t go crazy. A modest increase in GP% could work wonders.

While doing these things you also need to work on reducing costs. That’s a common approach to saving a business. While it could help, rarely in my experience have I seen reducing costs alone be enough to save a business. Sure, it can be in the mix, but it alone is not enough.

Key to the success of any turnaround is starting on the road early, before fog and debris block the past. It’s important to all of us who own businesses to be looking well ahead, over the horizon, cultivating assets we can deploy when we think change may be needed.

If you think closing your newsagency is the only option, reach out. There are plenty of us in the newsagency channel who will listen, and offer advice if you’d like it.

You are not alone.

Mark Fletcher
mark@towersystems.com.au mark@newsxpress.com.au
https://www.linkedin.com/in/mark-fletcher-tower/

The recent announcement by Dollar Tree, Inc., the parent company of Family Dollar, to close 600 stores has sent ripples through the retail industry in the US. I am sure it has plenty of Aussie retailers watching on with interest.

Not only are they closing 600 stores, the company announced will also shut down 370 Family Dollar and 30 Dollar Tree stores when each store’s current lease ends. That’s a lot of closures for a business that is a significant player in the deep discount space.

This move has many wondering: Is this the end of the deep discount retail model, or just a strategic shift for Family Dollar?

In Australia, deep discount is national represented by the Reject Shop. Locally, the model is represented by the many of what we call $2 shops, or junk retail is , I suspect unfairly, call them.

I think we are seeing a shift in this deep discount space. Online is playing a role, especially Temu from China.

I do note that Dollar Tree itself remains committed to the deep discount market. They’ve emphasised that the closures are designed to strengthen Family Dollar, not abandon the concept entirely. But they have also said they want to drive business financial performance.

It’s possible the deep discount space might be reaching a saturation point. With so many discount retailers vying for customers, some consolidation may be inevitable.

While affordability remains important, shoppers might be prioritising quality  over the rock-bottom prices traditionally associated with deep discount stores.

We will have to see what plays out in Australia.

Here’s what we know though – discount variety shops, $2 shops, deep discount shops, regardless of what you call them, focus on selling at the lowest price. That shopper will not be loyal unless your price remains low. So long as there is someone desperate enough to go lower, you’ll find shoppers today gone tomorrow. This is one reason I have never played in the discount space in retail. I don’t see how there is sustainable profitability in it frankly.

I think online, Temu and others, as well as local independent $2 shops will keep pressure on this slim margin channel. I think this means retailers in this space in Australia will find it tough. We can make it tougher for them if we continue to focus on quality products sold at a better price and likely a price that has a lower cost when you consider valuable product lifetime. People notice this.

For me, value is more about quality than the ticket price of the item. They key is for us to communicate this in an understood and cut through way to our shoppers in-store and those we seek to attract.

Pitching solely on price is weak, and we can exploit this.

First up: spend as little as possible with a shopfitter, preferably nothing. Shopfitters only make money from shopfits. What they make is purpose built and, naturally expensive.

Besides the people who work in the business, your products are what matter the most. People notice the products more than the fixtures. Shopfitters will tell you something different, of course.

Years ago, it was common for newsagents to spend $1,500 and more per square metre of leased retail space, and we would do this for fixtures made for the business. magazine specific fixtures, card specific fixtures. There was plenty of noise that the shift made the business, set the business for success. Some groups considered their shopfit to be valuable intellectual property. Even if that was true, it’s not true today.

Today, retail is about the feeling of the shop and nothing achieves feeling like furniture items that look everyday. Even better if they have some scars that bring some lived history to the shop. Indeed, some of the best fixtures I have seen have been found on the side of the road, at an old farm or in an op. shop.

The more fixtures in your shop the are sourced from these everyday situations, the lower the cost of fitting your shop.

Take this table and bench set. It costs only $179 from Fantastic Furniture. I suspect there may be secondhand ones out there for less and other pliers with similar for less.

It’s tremendously flexible. Here it is in the window of one of my shops right now.

The table and benches work hosting these ducks.

The best advice I can provide when it comes to shoplifting in a newsagency or and local retail business is to be frugal.

• Pre-loved is loved: Look for second-hand furniture and fixtures at op. shops,  garage sales, or online marketplaces.
• Upcycle & Repurpose: Get creative! Old pallets can become shelving, crates can be turned into displays, and pipes can make clothing racks.
• Think Multi-Functional: Invest in furniture that serves multiple purposes, like ottomans with storage or tables with built-in displays.
• Buy off the shelf rather than purpose built every time you can. This is the best way to save money.

There are some in our channel who boast about their shopfit, what it cost, what is unique about it. I suspect if they were as open about the financial performance of their business few of the boasters would have must to boast about.

While there are parts of the business over which you have control, like lotteries, there is plenty over which you do have control. Don’t overthink it. If you fit out frugally the cost pot changing your approach is not that much. Also, being able to financially justify constant change can help give the business a feel of regular change, which is good.

Oh, and if you really do need something made specifically for your shop, consider a local handyman (person) as they are likely to cost less.

Anything you spend on fittings or furniture for your shop needs to be fully recouped from sales in absolutely no more than three years, preferably less.

Look at your sales last Easter before setting the newsagency staff roster for this Easter. If you can’t cover your costs, including real labour costs regardless of whether you do the hours yourself or not, don’t open.

Back in the day, newsagents would open out of obligation, as a community service, or because of supplier dictates, or both.

While it is nice to run your business as a community service, that does not pay your bills nor does it support you as you may need.

With penalty rates, a casual employee working on a public holiday is paid 250% of their base hourly rate. Based on the current General Retail Award Rate that would be $57.78 an hour – plus superannuation, taking the hourly cost to $64.14. This is for a Level 3, which would apply if they are opening or closing.

Opening because you think shoppers may expect you to open is not reason enough, nor is opening because you always have. The only reason to open is because it commercially viable.

Now, to newspaper and magazine publishers and staff reading this, you are part of the problem here. Your paltry margins are insufficient on a regular day let alone on a trading day attracting a 250% hike in the hourly cost of labour.

The release by the government of the new Buy Now Pay Later (BNPL) regulations proposed, the retreat from offering BNPL products is expected to be swift.  BNPL businesses lose access to some of their revenue drivers:

• Late fees capped at $10 per month (Afterpay currently $68).
• Annual fees capped at $200 in year 1 ($125 thereafter).
• Australian Credit Licence required.
• Real credit and affordability checks.

We have already seen moves of retreat. Humm, for example.

Click here for the explanatory document from Treasury explaining the changes. Click here to see the draft legislation.

What does this mean for us? BNPL helped people purchase who didn’t want to use traditional credit or LayBy. To retain these shoppers retailers will need alternatives. While the banks have adjusted and are planning more in this space, we could consider refreshing our approach to LayBy. Doing nothing is not an ideal approach.

I am grateful for the opportunity to visit the UK Spring fair last week in Birmingham.

Several times the size of Australia’s largest gift fair, we got to see suppliers not currently represented in Australia as well as broader ranges from suppliers already represented. It was also good to meet Aussie suppliers to show what we liked.

It was wonderful seeing how suppliers presented their ranges, like Paper Salad, which is available in Australia via Waterlyn. The stand was stunning and inspiring.

Spring Fair is far more diverse in product categories than we see in Australia. We bought from several suppliers not represented locally. We also picked up some visual merchandising as well as product ranging tips that I think we will be able to use in-store.

A big trend at the fair was British made. This was good to see. While cheaper offshore sourced products from bigger companies tended to have bigger stands, the British made message did stand out. Another noticeable trend was ethically copurced, sustainably sourced. These trends of product source and sustainable supply matter especially to Gen Alpha and Gen Z – important co-horts to our businesses.

I appreciate not everyone can get to overseas trade shows. If you can, go. If you can’t see if your marketing group has people who go and can share their insights.

Retail continues to evolve apace, especially in our channel. What we are and what we can sell continues to change and in this there are many opportunities. Getting offshore to see some ahead of us can be helpful, advantageous.

As trade shows kick off in Australia for 2024, it’s a good time to contemplate the value of these events for suppliers and retailers.

I’ve already been to three trade shows overseas this year and several suppliers at two of these shows have told me that the trade shows are not what they used to be, that they have not bounced back post-Covid.

One supplier I spoke to earlier this week told me they were ending their 15-year commitment to the UK Spring Fair trade show. The A$10,000 stand cost and associated costs of A$4,000 plus the 4 days away were not generating sufficient return. This supplier has found plenty of new customers in other places thanks to tech innovation and change in how, where and when retailers purchase inventory.

I think how we discover new products for our shops and how we buy them has fundamentally changed for many of us. Whereas in the past getting to trade shows was the must do thing in the year, it is no longer the case.

For sure, there are some retailers who rely on and will continue to rely on trade shows. I think those less likely to are those chasing newer products, those chasing retail innovation.

As a supplier to several retail channels, I can share that in my own case the percentage of the marketing budget committed to trade shows in 2024 will be barely 10% of what it was in 2019 and new customer business will be considerably more than 2019. We, like so many suppliers, have found other ways to discover and connect with new customers.

From a retailer perspective it means we need to be engaged with other places where we can discover new suppliers. There are new online platforms. Smart marketing groups are pitching products in different ways. We are able to easily source more products from overseas than before.

For the newsagency channel, the value of trade shows has changed in part because of changes to our product mix.

I am not saying that trade shows are dead. Rather, the engagement of some suppliers and retailers with them has changed. No longer, for example, do we need 3 or 4 days at a Gift Fair. It can be a 1 or 2 day thing. Smart suppliers use the trade shows to showcase and back this with tech that enables easy purchasing online.

Trade shows are expensive for suppliers and for retailers. The cost of space has continued to rise while the foot traffic attracted has been flat, in decline or, at the very least, less commercially valuable than in the past.

I think the changes we are seeing here are reflective of changes we are seeing elsewhere in business. Ultimately, the changes are good, healthy, as they help us see changes we can make.

I spent two days at the huge Spring Fair in Birmingham UK and I am grateful to have connected with several new suppliers and to have met some Australian suppliers to talk with them about what they found and what we found. It is in this type of networking that one of the values of trade shows remains.

Are trade shows less important to retailers and suppliers? For some, yes, while for others, no. It’s worth contemplating the return on the investment.

Some suppliers really do waste our time with bloated communications and out of date ordering practices. They don’t realise that each out of date practice gives retailers a reason to not order from them.

If suppliers do these things, they will get better attention:

1. Stop sending bloated communications. Thoughtfully edit. Tell me what I need to know in order to make a decision. Back it with evidence.
2. Have all ordering done either via digital forms or online – with a copy of each order sent by email back to the retailer for their records. Having to download, print and hand complete a PDF is ridiculous. It’s 2024.
3. Have all contracts and agreements completed online via DocuSign or similar.
4. Provide a digital product catalogue from which retailers can order in one-click.
5. Provide electronic invoices.
6. Produce easy access to professional product images.
7. List your retail stockists on your website.
8. If you use reps, ensure they make appointments first and stick to allotted time.
9. Stop cold-calling.

Some of our oldest suppliers are the worst at these things. They waste too much time.

The revenue opportunities of online present the biggest opportunities for newsagents in 2024 I think, regardless of whether you already have a website or not.

The latest benchmark for Aussie retail reports online as 10% of total business revenue.

In the Aussie newsagency channel, the average figure for those with a website is just under 5%. If you don’t have a website, what would a 5% bump in revenue feel like?

There are newsagents doing plenty more online.

The thing about online is that the opportunities are limitless. You are not constrained by your location or what you sell. You can mine success by leveraging your time and pursuing what people are searching for.

Through my Tower Systems software company and the newsXpress newsagency marketing group and through my own shops I have many years experience in online B2C sales.

If you can’t increase local physical shopper traffic, online is a smart move to improve business reach and profitability.

One newsXpress member launched a website with us last year and added $50,000 in good margin revenue in six months.

Another newsXpress member used their website to pitch an entirely new product category and found a profitable second business as a result, using existing labour and facilities in the shop.

Here are the top reasons why I think every retail business needs a website:

1. Capture sales when you are closed. Typically, more than 50% of online purchases are then the brick and mortar business is closed.
2. Engage when you are closed. Use chat to answer questions from anywhere, or you geek-out and have an AI chatbot do this.
3. Reach people not currently shopping with you. Typically, 75% of sales are from people located nowhere near your shop.
4. Have a second outlet for quitting stock.
5. Have a place where you can experiment.
6. Playing with a plan Bin case your shop finds itself in choppy waters.
7. To learn. A website, especially your first website, teaches you so much: What people want. What they could pay. Haw awful some people are.
8. To get you out of a rut. If you’ve been in your shop for ages and are mailing it in each day, a website could put a spring in your step.
9. To make your shop more valuable. Having a website can make your shop more appealing when you decide to sell.
10. To find a secondary brand. Could be the first step in a shop rebrand.
11. To drive traffic to the shop. People will find products on your website and visit as a result, for sure.
12. To give you another source of revenue that is completely unrelated to anything you do in your shop.
13. To harvest email addresses. Email marketing from Shopify is a breeze.

Getting online can feel daunting. It can be expensive if you choose a web developer who does not understand your business and your needs. Too many of them push what they want on a business, often resulting in a failure of a website.

It’s important you know what you want and that you understand that a website is a hungry beast, which will soak up time and cash in pursuit of finding new shoppers. Get it right, and the payoff can be wonderful.

If you don’t have a website for your newsagency business, make it your goal for 2024. There are many opportunities out there for the taking, plenty you can pursue on a tight budget.