Newsagency management

Last week I shared the following advice with retailers using POS software from Tower Systems, the software company I own. With 60% of newsagents with POS software in their businesses using Tower, I thought I’d share the advice here. In a few minutes you can discover terrific opportunity in your business. Now, the software is called Retailer. Here’s the advice:

Open Retailer. Go to Reports. Select the last option, Insights Dashboard. Click on What’s Not Selling. This tab will list products not performing. You can adjust settings to suit your specific business.

Stock that is not selling is dead stock, capital tied up, space tied up.

Once you know what is not selling you have the opportunity to act in a targeted way to quit the dead stock and not order it again.

Many retailers ignore looking at dead stock. Some don’t want to know while others are scared to discover it and others don’t think it is important.

In our experience, a retailer looking at dead stock for the fist time will discover that around 20% of their total stock on hand is dead. In a business with $120,000 in stock, that’s $24,000 in capital at risk. Can you afford to have $24,000 doing nothing for your business?

Listing dead stock is one way you can make more money from your business by using your Retailer software.

The Insights dashboard provides easy access to actionable insights into your business. It helps you make more money.

Do it now: Open Retailer. Go to Reports. Select the last option, Insights Dashboard. Click on What’s Not Selling.

If you’d like help doing this or understanding, please reach out. Also, our knowledge base offers an awesome video about the Insights Dashboard. I have opened this video for anyone to watch – no need to log in.

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To me, in a newsagency, any stock item more than six months old could be considered dead. Certainly to anyone buying a newsagency it would be reasonable to consider such stock dead and therefore not worth paying full wholesale price at settlement.

Now if you think it best to not know about dead stock I’d say you are wrong because at some point in time the cost of dead stock will be an issue for you and you will want it resolved quickly. This is why checking now is good use of your time.

I see the Boxing Day sale as an opportunity to ditch dead stock and clear out any products we are discontinuing for whatever reason.

For me, it’s about decluttering the shop ahead of a reset for 2024, readying to lean into new opportunities in pursuit of new shoppers.

So, we price to quit. If the items on sale have long been paid for, the sale is about freeing cash for the business more so that chasing a profit. Stock sitting on the shelf not selling is not profitable.

With so many retailers doing sales this time of the year, it makes sense to ride on the back of their marketing coat tails and run a sale, even if in your location Boxing Day sales are not a thing.

There are people who have waited for this opportunity, and I’m happy to sell to them. Already this morning, up til 9:35am, $2,200 in sales of sale-priced items with nothing spent on marketing other than a bit of time on an email and some posters. The street is not busy, but people out are keen for deals.

On our street, we compete with Australia Post in the gift and greeting card space. They’re closed, which is good.

Online shoppers tend to be savvy, and vocal if things go wrong. Being on the front foot with communication is key. This story was viral online well before A Current Affair picked it up. Now, on social media since the ACA story, the pile-on has surged.

While their comms could have been better and their back-office more organised, plenty of responses go too far.

In the last two weeks our own online businesses have shipped thousands of orders with half of those sent Express Post because of a supplier screw up that saw product arrive late.

It seems more sales that Afterpay makes – the more challenging financially it is for the company:  Revenue $2Bn (From $43Bn transactions) – Merchant fees $1.65Bn – Late fees $211Million (Up from $87Million) Net Loss $615Million Bad debts $475Million.

The recent launch of the AfterPay credit card  and the clean out of the merchant and customer books will mean that AfterPay will look very different in 2024. It is expected to evolve into a more traditional consumer lending business with Buy Now – Pay Later being merely a feature.

Zip Pay has a big challenge in that it has to refinance $1.76B in debt next year and commentators say this will be a challenge for them. This article from 2 days ago is worth reading: https://www.bankingday.com/zip-refinancing-burden

So much for disrupting credit cards. 

Meanwhile, LayBy continues to be available from many local retail businesses. It is easy to manage in the software and can help people purchase from you within a cashflow budget.

The challenge with LayBy is that the purchase can be easily cancelled. But that is manageable if you factor it into your forecasting.

Through my software company I know of many retailers offering LayBy with terrific success. There are some doing thousands of LayBy transactions each year.

LayBy setup and management is easy, structured, dependable. While there is state / territory based legislation to follow, the business you can win makes offering LayBy worthwhile.

LayBy is another way local small business retailers can differentiate their businesses from big business competitors.

Given the continuing noise in the media about the economy, offering LayBy could be a a response from your business that resonates with some.

My advice is to ensure you have your processes down and your rules in place, and that they sit within the regulations for your jurisdiction. Consider a LayBy establishment fee. This can qualify the participants. What you do here depends of the products you offer and the margin with you operate.

If you compare LayBy with Buy Now Pay Later offers from AfterPay and Zip, it can look good for you.

Do your homework and see if LayBy could be good for your customers and for your business.

You know the posts on social media I mean here, the ones reminding people about the importance of shopping local. They often clumsily pressure people to shop local, as if that matters more than other factors.If you pitch shop local on social media, be ready to demonstrate your local credentials with locally sourced product.

If you do this, use social media to tell people to shop local, this is for you.

Do you source locally for your business every opportunity you have? I look at product source hone in a business that tells me to shop local. I did this recently in a clothing shop and not one of the 25 items I checked was sourced from within Australia. So, or their business, shop local looked particularly selfish in my view.

Now, local could be made in town, in your state or in your country depending on the type of product.

It is vital that everyone in the business knows where you source your products. Being able to share information about genuinely locally made products can help you win sales.

If you have products from several suppliers, location source could be a differentiating factor. Knowing the location and pitching this could win business.

When you do source locally, ensure everyone in the business knows, and that your shoppers know. Use signage to remind shoppers. Smart suppliers help you with this pitch.

In good economic times and bad, locally made has remained a constant. We know from research that this is especially true among younger shoppers.

So, be sure of the source of what you sell and leverage this when possible to reinforce the localness of your business.

Shop local has a place in local indie retail promotion if it is supported by sourcing decisions within the business. This is where you can be active in your decision making and supportive in-store with backing-up your shop local pitch with proof of your own actions.

It’s not enough to leverage a social responsibility without demonstration your engagement with it. It’s hard work, challenging, but worth it if you commit to walking the walk.

Stock in boxes in the back room, in a garage or under tables in the shop will not sell unless it is displayed.

While this will be obvious to most, there are some retailers who don’t get it.

If you do have stock in boxes and no room to display it, consider pausing spending to give you time to convert those purchases to cash.

The alternative is that you do nothing, and your ability to pay bills is impacted.

It’s your business. You choose when to spend and when to not spend.

Some retailers buy friendship through their purchasing. Others like to look busy with a shop bursting with stock. Others buy to feel better about themselves. Spending for any of these wrong is not helpful to the business, not helpful top you.

There are sales reps who would know they are selling stock to a business that does not need it. Shame on them. Shame on them putting their own financial rewards ahead of the evidence of an overstocked and financially stressed business. Sales people doing this are no friend of the business owner.

If you don’t know the current value of the stock in your business, it’s likely you have too much stock.

So, what’s the value of your current stock on hand?

If the value of your non circulation product (magazines and newspapers) stock right now is more than 20% of the total revenue you will make from it in a year, you probably have too much stock. The actual percentage will vary by product category.

There will be some who say the 20% figure is inaccurate and unhelpful. I have tested it in a few businesses and it is a reasonable first step guide.

So, what’s the value of your current stock on hand? Start there. Then look at your non circulation product revenue for the last year. The numbers will support what you currently see in your shop.

If you have boxes of stock that you’ve not opened for six months or more, you have too much stock. If your back room, garage and or under display table space is filled with boxes you have a problem.

The best way to address being overstocked is to stop buying and sell down what you have, and to do so without emotion.

The alternative is that you do not address the issue and the issue swamps you and your business.

It’s black and white – in your numbers and in your business.

A newsagent today in Australia is not what it was a few years ago. The Australian newsagent business, or newsagency as many prefer, is an evolving business selling cards, magazines, papers, stationery, gifts and, usually lottery products.

It is rare you will find tobacco products in a newsagency business. Many of us ditched that category years ago.

A newsagent in Australia today is more likely to look like a gift shop. Fresh. Innovative. Inviting. Very different to the type of business you would have seen as a newsagency years ago.

Most newsagents don’t deliver newspapers, the publishers took that from them.

What is the definition of a newsagent? is a question often put into search engines by people in Australia. I hope this post indexes in search results to provide a better answer that the current one.

Some people also ask Is it newsagent or newsagents? I would say to this that it is newsagency if you are referring to the business. But, really, the shop can be called whatever the local owner wants. The days of putting the word newsagency above the entrance are gone since that term is loaded with history that’s not relevant to what we do today.

Writing for a chapter contribution to a book on  the history of Australian media I noted:

Since 2011, the pace of change in retail newsagency businesses has increased considerably, driven by declining sales of print media products, increased retail real estate and labour costs, a higher cost of capital and a greater penetration of franchise groups providing newsagents with management and marketing advice. 

By 2012, there was a growing separation between distribution newsagencies and retail newsagencies, as well as a growing gulf among retail newsagencies. This was encouraged by News Limited with a trial project called T2020, intended to force newspaper distribution consolidation among newsagents. While T2020 failed to go beyond trial, newspaper publishers continued to encourage newsagents to consolidate to drive operational efficiency. 

In 2013, around 7 per cent of retail newsagencies closed, due to a lack of newspaper home delivery revenue and falling newspaper and magazine retail income. Today, while a typical high street newsagency has a floor space similar to that of 30 years ago, the average shopping centre newsagency has a more diverse product offering. 

Things have changed so much since 2013. Indeed, the Aussie newsagency today, ten years on, is more different than the 2013 version compared to 20 years prior.

Here’s advice shared with Tower Systems newsagency software customers Friday last week following the Optus outage.
Lessons from the recent Optus outage.

While the actual cause of the Optus outage on has not yet been detailed, the outage itself encourages us to work on our businesses, to ensure we are better protected.

1. Check your network. Make sure routers are current. Talk to your ISP about a more current replacement.
2. Check your computers. Dust is a killer. Power off, remove the cover, take it outside and use a can of air to clean.
3. Document your computers and network. List everything you have and who is responsible for each. We often receive support calls for items not supplied by us and not known about by us.
4. Check your backups. Get the most recent one restored to ensure it is backing up everything you need.
5. Use a cloud backup service for in-store and offsite storage.
6. Have a plan. If your network, computer system or EFTPOS is down, what’s your plan? Document it. Train staff. Ensure everyone knows the plan and where it is.
7. Consider redundancies, like a mobile phone on a different network in case your main network is down, a secondary EFTPOS for payments should it be down.

First responders are good at what they do because they plan and drill, such that responding is muscle-memory. What happened with Optus is a reminder to be prepared in local retail so you are less impacted.

Too often, small business owners do not have a plan in place for outages and disasters. A small investment of time in planning and prepping could made overcoming obstacles related to outages easier, less stressful.

XchangeIT surveyed newsagents recently on behind of the ALNA Think Tank. I’m grateful for the opportunity to be part of a recent Think Tank supplier meeting. The results are interesting.

The variety of suppliers in a store is concerning. In successful and transformed newsagencies I see, the typical supplier mix is 65+.

A massive pain point that is easily resolved is the elimination of paperwork from all suppliers – moving 100% digital for order forms, contracts and the like, using an e-sign platform. Saves time. Saves paper. Increases sales.

The 36.3 hours a week spent on processes suggests something is wrong. I have businesses under management spending far less.

I’d love the survey to drilled down into questions about magazine management as the out of date tech and expenses imposed on newsagents by this is a drain to local newsagency businesses. Fix that and you improve productivity in newsagencies and increase magazine sales.

That said, the survey is helpful, as is the follow-up survey. Suppliers should take note.

Appeal to more shoppers. This starts with offering products beyond what have been traditional, products people will seek out, and return for again and again. It is important when choosing products to not be bound by the shingle of the business.

Offering cards that sell. Assess card performance pocket by pocket, design by design. You need at least 2 pocket turns a year. In a typical newsagency, 75% of card pockets are not achieving 2 turns a year. Cards are your most profitable department. Work on it. Nurture it. Make your business more valuable as a result.

Quit what’s not working. be ruthless. Act on your data. If products are not paying their way, quit them. It’s black and white.

Getting online. This dramatically broadens the geographic reach of your business, even more so if you do wit with products you’d never sell in your shop.

Manage your costs, including your own time. Business overheads and labour costs need to be tightly managed. I mention your own time here because in plenty of failed retail businesses I have looked at have high owner labour costs for minimal measurable return.

Of course, there are plenty more areas you can and should work on than these five. They are a good start though, low hanging fruit I see them as, easy wins based on my experience helping newsagents.

I recommend these 5 as a good starting point.

If you are struggling in your newsagency, finding it tough, not getting the return you want or need, start here.

If I can help in any way, reach out.

mark@towersystems.com.au
0418 321 338

Toy Fair in New York this past week was excellent. So many new products from large and small brands and so many insights from individual retailers to key partner brands.

This really is an important show for any retailer relying on toys for a key portion of revenue. I say this for a few reasons: you’ll see products well ahead of Australian release, you’ll get context that does not often travel, you can see broader trends beyond single brands.

While seeing new products is a delight, it’s the insights I appreciate the most, and sometimes it is not the most obvious insights that land the best. These can be small insights through to bigger.

Booth to booth and talking in the aisles, this trade show was terrific. US retailers are open to talking to folks from out of the country. They share terrific insights.

I have been for a few years and found this years Toy fair particularly useful.

It was good seeing more Australians there than I’ve seen in the past.

One frustration is arrogant brands that don’t let you in if you are not an existing customer and have not made an appointment. While there aren’t many of these, there were enough to annoy me.

There were a few small makers at the trade show, which was interesting. A family making child products because of personal experience, a couple of game makers trying to pitch their games, and some slime . dough type products made in small batches with interesting stories.

While my key insights will be for newsXpress members, I’d note that there is a trend for indie retailers for small batch more locally made products, to differentiate from the mega brands that love big retailers so much.