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newsagency of the future

State of the news media 2008

News is shifting from being a product — today’s newspaper, Web site or newscast — to becoming a service — how can you help me, even empower me? There is no single or finished news product anymore. As news consumption becomes continual, more new effort is put into producing incremental updates, as brief as 40-character e-mails sent from reporters directly to consumers without editing.

This is an extract of one of the top line trends from the State of the News Media 2008 by the Project for Excellence in Journalism. It is a sobering analysis of not only the state of journalism but also the products which rely on journalists for content.

The newspaper trend is gloomy:

Circulation continues to fall at about 2.5% year-to-year for dailies and 3.3% for Sunday editions.

Magazines don’t fare much better in the analysis. What interested me was the optimism around efforts being made by some publishers and others to navigate the challenges. Successful media brands will survive the distribution challenge (print versus online) and they will do this by riding the change wave. This is what newsagents need to do.

Newsagents ought to read the report and make notes on changes which can be implemented in their businesses right away. Many newsagents won’t take this initiative – I think they are waiting for suppliers to lead them.

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Media disruption

The retail experience

One of the most important lessons applicable to newsagencies from our opening of the Sophie Randall stores is the importance of the retail experience. Even today, in our our first store which opened thirteen months ago, around half the customers who visit comment on how much theny enjoy shopping in the store. This is not something I hear often in our newsagencies – probably because newsagencies are built for speed and function more than for feelings. Yet most of our customers are women and I’d guess that half of what we sell is around feelings cards, gift lines and even some magazines.

We are experimenting with the Sophie learnings. They guided our concept store at Watergardens – many newsagents tell me it’s not a newsagency, I like it when they say that. The easiest category to play with in our two more traditional newsagencies has been the plush. Not in the full on way of a Sophie Randall store though…

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No, more in the form of trying several lines and creating zones of warmth amid the hustle and bustle of the newsagencies. It’s working, sales are growing – so much so that we are encouraged to incorporate more ideas into the fit itself. Look at the Peter Rabbit in the photo – he is a magnet, drawing people over. Once there, they pick up other items. The challenge is to find enough space in a newsagency to bring this level of display in.

Playing with plush is not for everyone. The key is to play – way outside the square we know as a newsagency.

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newsagency of the future

Off to the Gift Fair

Along with thousands of others I am in Sydney today for the Gift Fair. Actually, there are three fairs in three locations. I’ll be there for the day. Others from our retail businesses will spend longer.

What’s interesting about Gift Fair is how the retailers interact with suppliers. They are in a marketplace where the retailer chooses what they want to sell, how much of the range and they control display and price. The fair is a true marketplace. Buyers and sellers are excited. Businesses live or die based on the decisions made.

Newsagents, for significant parts of their businesses, don’t have this control. It shows at trade show in those product categories and in the way newsagents and suppliers interact with each other. If only all a newsagency was as commercial and free as in the gift space. I think you’d find many more entrepreneurial newsagents.

I’m excited about today. We are looking for products for our Sophie Randall gift shops as well as our three newsagencies. It’s going to be a fun!

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Newsagency challenges

Newsroom cuts

File this under sobering news item of the day: The New York Times is shedding 7.5% of its newsroom workforce. PaidContent has more. The January 15, 2005 edition of Business Week quotes Arthur Sulzberger, Publisher of the New York Times:

“Within our lifetimes, the distribution of news and information is going to shift to broadband,” Sulzberger says. “We must enter the broadband world having mastered the three key skill sets — print, Internet, and video — because that’s what’s going to ensure the future of this news organization in the years ahead.”

Newsagents can read stories like this and feel no connection. Or, they can read stories like this and think, we’re doomed! Or, they can see the waves, grab the surfboard and ride the wave. This latter alternative is the choice to make.

For over 100 years the direction of our channel has been set by suppliers. In 2008, the direction is entirely up to us. The future for entrepreneurial newsagents is wonderful. That future can include newspapers and magazines, greeting cards and lotteries. It can also include other categories which enhance our relevance.

These are the challenges newsagents need to talk about today.

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Media disruption

Gifts in newsagencies

We have changed the fixturing we use to display gifts at our newsXpress Watergardens location, drawing on learnings from our Sophie Randall business. The table in the photo below, buried by part of our plush range, offers multiple level and angles for displaying stock in an easily accessible form.

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Beyond efficiently displaying gist related stock, the table offers more efficient use of floorspace and maintains a low profile in the business, thereby supporting retail friendly sight lines.

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Gifts

Pop Princess, a nice look

Completely off topic, I love the look of this shop at Forest Hill Chase. See for yourself:

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From the outset it is visually appealing to its target market. Girls light up when they see it. Shopping looks like fun, certainly not a chore.

In newsagencies we tend to focus on shopping being a chore. The newsagency of the future has to be, in part at least, a pop princess type business, something completely fresh and appealing. yes, it will date. But, hey, good retail is about fashion.

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Newsagency challenges

Matt the milkman

I opened the door to face Matt, a young guy in his early twenties who was visiting houses in my street to announce that he had just taken over the delivery of milk and bread to my area – he promised on time delivery of fresh milk and bread every day and a couple of movie passes and a t-shirt if I signed up today.

Besides that he had taken the time to visit and ask for an order- I can’t ever remember a newsagent doing this anywhere I have lived, Matt was bright and cheery, he believed in his offer and he was dressed in a uniform appropriate to his generation and product which gave me the feeling that he could deliver on his promises.

Now, Matt could have been a paid recruiter who has nothing to do with the day to day business. Who cares? The key is that the shopfront presented well and this made the business offer more appealing. Building confidence is crucial in that first contact. This is why I bang on here about newsagents needing to look at their businesses from the outside in – from in the mall, across the road and even miles away in houses where advertising literature is received. What do our customers see? Are they as store blind to us as we are ourselves? Too many newsagents are living in the dark ages, running set-and-forget retail businesses where nothing changes

The company behind Matt had made sure that the detail was right – that he knew his products, looked good, have a special offer and and was well trained in making the pitch. It is this attention to detail which we newsagents often fail to address. In store, uniforms are often not enforced, name badges missing and the sales pitch across the counter confused. Outside our stores we often cover our windows, clutter our messages and allow suppliers to control how our businesses look.

Being visited by a milkman asking if I wanted milk home delivered was a surprise. The professionalism of the offer was even more of a surprise.

With more national retailers competing with our newsagencies than ever, we need to be energetic, focused and current in our approach to our customers – in-store and outside our bus8inesses. We need to be like Matt and make people take notice and realise that we do have a current an relevant offer. Otherwise, standing still will cause our relevance to fade.

Footnote: I didn’t order milk or bread as it does not fit my schedule.

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Newsagency challenges

Wish for newspapers to be more like Apple

Steve Yelvington has an excellent blog post on why newspapers ought to be more like Apple. Apple was in bad shape just a few years ago but turned the situation around by embracing change.

Yelvington’s wish applies as much to Australian newsagents as newspapers. Rather than embracing opportunities presented by change, the common newsagent approach is to blame someone else and complain.

The newsagent 2008 New Year resolution ought to be about reinventing the business.

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Newsagency challenges

Borders, Sony team and open e-book store

sonyreader2007.JPGBorders and Sony have launched a co-branded e-book store according to The Book Standard. People who buy a Sony reader (see photo) have access to the site.

With the Amazon Kindle and this Sony device leading the renewed e-book pitch, expect to see plenty of action in 2008. This action will flow over to electronic editions of magazines – as we have seen already with iPhone and iPod versions of more than 50 magazines available already in the US. While there are online magazines in Australia, none of our major titles are embracing the iPhone or iPod yet as far as I am aware.

The book and magazine supply chain has changed and our businesses – newsagencies – need to change too. By embracing change early – as Borders has – we are better positioned for the future. Given the lack of active discussion among newsagents about the disruption of the supply chain, I fear many will miss the opportunities change presents. There is nothing to fear from change in my view.

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Media disruption

Pen cabinet difference

sr_mc_nov27b.JPGWe have a good range of premium pens in our newsXpress Forest Hill store. They are also in our card shop within a shop. We also have a good range of premium pens in our Sophie Randall shop in the same centre. It’s the extraordinary difference in the shopping experience which I want to blog about today.

In the newsagency time is an issue. I wish it were not, but it is. The shop has a high frequency of medium to low value transactions. Our average basket is just over $6.00. Lottery, newspaper and magazine customers tend to not want to wait for more than a few seconds for service. Premium pen sales take time: we need to unlock the cabinet and assist with the selection. Rents and wages being what they are we don’t run with sufficient loose staff to easily afford assisting a pen customer without it slowing the main counter.

In the Sophie Randall store we experience a different beat. Customers are not in a rush. They will wait at the counter while we serve a pen customer making a careful choice. This difference in attitude – in customers and in us – between the two businesses makes the premium pen category a better fit in the Sophie Randall store.

That is not to say we ought to get out of pens in the newsagency. Rather, I am saying that we are not getting it as right as we could. We need to create a premium pen display story which serves the shopping needs of newsagency customers more effectively without overburdening the sales team.

While what we have now would be considered best practice based on what I see in newsagencies around the country, I know from the Sophie experience that we are losing sales in the newsagency because of the conflict between the needs of a premium open customer and the bread and butter traffic customers in our newsagency. People would see that we’re busy and walk away. The only way to address that now is to have a spare person full time on the floor, loose. Frankly we are not big enough to justify that expense.

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newsagency of the future

Losing the newsagency

I was in a major shopping centre yesterday and could not find a newsagency. It seems the landlord decided to not renew the lease some months ago and has not let space for a newsagency since. The only outlets for magazines are supermarkets, Big W and newspapers the supermarkets and coffee chains. Lottery products are sold from a kiosk, cards are in several outlets and stationery is, well, everywhere.

All that is missing is the newsagency shingle.

I wonder what this says to newsagents about how their businesses are viewed by major shopping centre landlords. I wonder, too, what it says to consumers – do they miss a newsagency in the centre, are they being trained to shop elsewhere?

I also wonder how newspaper and magazine publishers feel about this. There was a time some years ago when a newspaper publi9sher would not allow their products to be sold in a shopping centre where a newsagency did not exist.

Is this the newsagency of the future? Extinct? I don’t think so, certainly not broadly speaking. I suspect this is just a rogue landlord.

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Newsagency challenges

US newspaper circulation falls, again

The US Audit Bureau of Circulations newspaper circulation data released overnight shows falls of close to 3% in circulation compared to the year before for most major US dailies. Read the New York Times report here or see a list of similar stories at other websites here. Publishers knew this was coming and have been busy putting out stories about growth in traffic to their masthead related websites.

While the US market is very different to Australia, we must expect similar falls here in 2008 and beyond – our strong home delivery penetration based on subscription deals can hold the dam wall for only so long.

Consumers have news and information channels which did not exist years ago. Australian publishers have demonstrated they understand this through their considerable investments in online and other businesses (free newspapers for example) in recent years.

Australian Newsagents, apparently, are yet to get it that newspapers are in decline. We need to reflect the decline in our capital investment programs. This is why the Watergardens concept store in which I am involved has not put newspapers at the heart of the business. We promote and sell them but not at the heart. We are at the heart – our brand as this is the one key aspect of the business we can control.

My view is that proactive entrepreneurial newsagents have a bright future. The news from the US of newspaper sales falling around 3% is disappointing but not unexpected and in line with what many expected. The decline will continue.

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Newsagency challenges

Great kids area at Newslink

I was in Adelaide today and noticed a wonderful kids area in the Newslink store at the Qantas end of the domestic terminal. What made this work compared to the many kids areas I have seen in other newsagency like businesses is the integration of the walls, floor and fixture story. They combined to support the product beautifully. It felt like a store within a store without distancing itself too far form the overall Newslink newsagency concept. I’d publish a photo but I was late for my flight.

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newsagency of the future

Will newspapers survive?

Jeff Jacoby writing at The Boston Globe over the weekend writes about this. It’s a thoughtful piece – in a newspaper of all mediums. Howard Owens and others have some interesting observations on the same topic at his blog.

Discussion of the future of newspapers is important yet pretty much neglected here in Australia. Either we’re in denial or the challenges playing out overseas will pass us by.

Given the importance of newspapers to newsagents, it is vital we engage in the conversation about the future of the product in its current form. Such engagement will, hopefully, guide our commercial considerations about our own future. Our retail and distribution businesses were, after all, created by publishers to serve their needs.

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Media disruption

CityLink, Skybus and more added to eziPass

ep_logo.JPGeziPass, the new and free electronic voucher platform for newsagents got better overnight with then release of additional product. CityLink tollway passes, Skybus airport transfer tickets and Fishing Licences for Victorian and New South Wales have been added to the eziPass inventory. more products are on the way.

Newsagents can sell vouchers direct through the exclusive link in their Tower Systems point of sale software. A free stand alone version which any newsagent is welcome to use will be released in the next week.

Click here to access the eziPass sign up process.

We have created eziPass to provide newsagents with an easy to use platform through which phone recharge and other electronic voucher product can be sold. There is no long contract to sign and no complex hardware to install at your sales counter. Plus, on some products, margin is better.

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Newsagency challenges

Seductive benchmarking

Owning two newsagencies (Forest Hill and Frankston) and a shareholding in another (Watergardens) provides me with access to up to the minute intimate data about the businesses. This abundance of data from three different newsagencies is seductive and the learnings considerable.

Take magazines, we can see a category up in one store and flat or down in the others. We dig deeper and find out why and make some changes. Another example is diaries. In two stores we’re seeing excellent sales while the third is yet to get the diary story out. When they saw the data from the other two they actioned it right away.

Being able to easily compare across a common IT platform and using common department and category structure is fantastic.

I can see all three newsagencies significantly benefiting from access to the pool of data – the key is to not be seduced too deeply into analysis.

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Newsagency challenges

Demonstrating faith in newsagencies

quayside.JPGWe settled yesterday on the purchase of Quayside Newsagency in Frankston.

My purchase of this business is evidence of my faith in newsagencies and my commitment to serve newsagents as they (we) navigate complex challenges. Yes, I complain about these challenges newsagents face – I still like the channel and am glad to have this opportunity to extend my investment.

Quayside Newsagency is a retail only newsagency is in an excellent location outside Coles in the busy Bayside centre. Currently badged as Newspower, we will replace this with newsXpress branding externally and internally – hopefully prior to Christmas.

The settlement process has taken twice as long as expected but we’re in now and pleased to have an opportunity experience a different demographic and work with a new team of people. Most of all, we are thrilled to have another newsagency location where we can experiment on our mission in search of the newsagency of the future.

Simon Frost has moved from the Tower Systems Help Desk to manage this business. While such a step is a considerable challenge, Simon was keen for the change. I am glad to extend the Tower / newsagency bridge through Simon’s experience.

Having spent time in the business yesterday I have noticed considerable differences between Frankston and Forest Hill and while some differences are demographic, others are not and may well lead to new opportunities for each location being uncovered.

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Newsagency challenges

Walking customer’s shoes

Roy Peter Clark has written an excellent essay published at Poynter exhorting journalists to read newspapers – for the future of newspapers. Clark says journalists are probably out of touch by not engaging with the product they help create.

I wonder if this is true with newsagencies. How much do we engage with our channel as a customer? With the hours newsagents work it can be difficult but it is essential. This experience of shopping other newsagencies might be what we need to navigate our own future.

Clark writes about spending 15 minutes a in the morning reading newspapers and more time in the afternoon on feature articles. If we are to engage with our channel, as a customer, it needs to be as structured.

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Newsagency challenges

Kristin Hersh, middlemen and newsagents

hirsch.JPGI was fortunate to see Kristin Hersh perform last night at The Palais in Daylesford last night.

Beyond her songwriting and wonderful performance ability, Kristin Hersh is experimenting with a new model for sharing her music with the world.

Gone is the big record company, middlemen and fees for music. She has handed her future to the people by establishing the Coalition of Artists & Stake Holders, or the “CASH Music Project”.

As her website declares:

We’re committed to not holding music hostage, the music will be free. We’ll be asking for donations and offer you the opportunity to subscribe to Kristin’s career – past, present and future.

It struck me on the drive home from Daylesford last night that the challenge faced by Hirsch and the entire music industry is not dissimilar to one of the challenges faced by newsagents. The traditional model has become so disrupted so as to compromise its viability in its current form. Rather than react, Hirsch and her team are evolving a new model – in consultation with old and new fans.

Newsagents need to act as boldly if they (we) are to enjoy a bright future. This means breaking with tradition and listening to ourselves and our customers more than our suppliers. If we do not do this, our future will be dictated by others whose long-term needs most likely do not match our own. Our channel is riddled with middlemen and processes which make money for others and not for us. While they cut costs our of their supply chain, we are burdened with more costs. As Kristin Hirsch has done with her music, we need to seize control, for ourselves.

If you get a chance to see Kristin Hersh on her remaining Australian tour dates, it’s well worth it.

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Newsagency challenges

Bookazine, the magazine specialist in Hong Kong

bookazine1.JPGIn a city with street-level newsstands every 200 metres packed with top selling magazines and newspapers and every other block boasting a 7-Eleven or Circle K (or both) with a strong newspaper and magazine story right at the front, it was a surprise to look down the entrance corridor to one office building on Queens Road, Hong Kong and see this sign for Bookazine.

Down the corridor and down a flight of stairs we entered the narrow door and were in another world. Besides small (by Australian newsagency standards) ranges of greeting cards and stationery, there was a good range of books and an excellent range of magazines. Bookazine is clearly a specialist in these two categories.

Their range of magazines was fanned out across shelves in two aisles with covers overlapping and only a small quantity of each title on display. This is a range story and not about volume. It is Long Tail retailing but without a massive distribution network.

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Bookazine felt like a honey pot, drawing people in who really wanted to be there – to buy a book, a magazine, a card or stationery. In our brief time there, most browsers bought something. The staff sounded knowledgeable and, as you’d expect to see in a magazine specialist, they were working on the constant flow of new stock arriving.

The magazine category in Bookazine reminded me of Magnation, the NZ magazine retail model which opened in Melbourne a couple of years ago. Both businesses are not focused on the top selling titles as we are in newsagencies. They exist for the special interest title. This is why Bookazine can thrive in what appears to be an out of the way location.

They have built success, as has Magnation, around ensuring a broad range. To them, range is king. In newsagencies, I suspect because of how our model has evolved, many of us are not there in the range discussion – we need the volume titles to pay the shopping centre rent given that we are on fixed margin. Bookazine, because they are the magazine specialist, can charge a premium. This is where they can achieve a better return.

I left the Bookazine store thinking that we have too many full service newsagents in Australia. We have in almost every town, shopping centre and high street situation magazine specialists with a Long Tail type range but done in a way it does not feel special. Freer newsagencies with specialist grade ranges would help those focusiong on the top sellers to handle that well and those who truly specialise to handle that well. Right now we are in both worlds and have little control over them.

I found the honey pot approach to magazines in Bookazine is food for thought and am grateful for the time there.

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magazines

The power of the window

We have learnt about the power of the window since we opened our Sophie Randall card and gift shop eight months ago. We change the window display at least every two weeks with significant tweaks every other week. Our range of Gund plush is the most successful product in the window. Sales can triple when we put this on display.

While we have done adult themes for Father’s Day and Mother’s Day, it is windows based around children’s product which works the best. Below is the main window currently on display – we have three window displays in this store and the one below is the biggest:

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You can see from this that we are focused on respected brands – Peter Rabbit, Noddy, Pooh and Gund – and that even though we have a bold window display, we don’t let it become a barrier to seeing into the store. The top of the display is chest height.

The learnings from Sophie for our newsagency continue – in terms of range, display and even margin on some products.

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newsagency marketing

New Phone Recharge and Electronic Voucher Platform for Newsagents

ezipass.JPGNew technology launched today allows all newsagents to sell phone recharge and other electronic voucher products direct from their point-of-sale computer, without the need for a complex long-term contract.

Developed exclusively for newsagents by Tower Systems, eziPass works on computers with broadband internet access.

eziPass supplies the same Touch suite of products as offered by major banks and retailers. Excellent commission is provided – up to 33% extra commission on some mobile recharge products.

“Newsagents told us they wanted an alternative to the Bill Express / DialTime contract and a simpler, more robust, operation at the sales counter,” commented Mark Fletcher, Managing Director of Tower Systems.

“We only agreed to become involved if there was absolutely NO margin or commission for us. The last thing newsagents need is another middleman making money from what is already a slim-margin business.”

eziPass has initially been launched to existing Tower Systems’ customers. And within the coming weeks, Tower expects to provide a free copy of the eziPass software to all newsagents.

Vouchers for more than 30 telco products are part of the launch range. Tourist attraction tickets, flower deliveries, magazine subscriptions and tollway passes will be added in coming weeks.

“eziPass provides a low-risk, low-overhead option for newsagents considering whether to extend their Bill Express / DialTime contracts,” said Mark Fletcher. “There is no lease to pay, no long-term contract to sign and newsagent bank accounts are swept once a week – greatly assisting cash-flow.”


www.ezipass.com.au

Tower Systems was founded in 1981 by Mark Fletcher. Today, the company serves in excess of 1,400 newsagents nationally – more than 50% of all newsagents with a computer system. It wholly owns one newsagency and is a major shareholder in another.

Touch Networks Pty Ltd provides over 200 products and services and is available over EFTPOS terminals and retail point-of-sale systems.

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Newsagency challenges

Financial Times goes free online

The Financial Times has decided to make access to its online content free of charge. This follows the about-face at the New York Times last month. As Eric Sass says at Media Daily News:

And in late September, Fitch Ratings issued a report endorsing free, ad-supported content as the most profitable approach for newspaper companies.

There you have it, cover price matters no more online. Make it free, get eyeballs and charge advertisers. This should not be a surprise to newsagents. The cover price of newspapers has not kept pace with CPI. In some cases, 10% in 10 years – while advertising has jumped more than CPI every year.

The more news is available online free, the more over the counter customers will migrate online. This is another disruption to the newsagent model which we need to understand and plan for. Publishers love the online model as it eliminates much of the cost of distribution – the only reason they have a cover price for the print edition.

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Media disruption

Newsagent ditches newspapers

Dominic Rushe writes at Times Online about the newsagent no longer selling newspapers. Here’s part of what Rushe has written:

When I asked in a state of shock where the papers were, he told me his days of selling newspapers were over. It was “too much bother” and “not worth it”, he said. I started to feel nauseous. Admittedly, I hadn’t had my breakfast, or a coffee, but this was too much.

“But you are a newsagent,” I stammered. “Where are the newspapers?” I left in a state of confusion, then doubled back to get to the bottom of this horror.

The people who distribute newspapers in New York are always late, said our man. “And they rip me off.” He was making 2c on a Post (cover price 25c), 5c on a Daily News (25c) and 9c on a New York Times ($1.25, or about €0.9). A plastic bag costs him 3c.

Be sure to read the rest here.

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Newsagency challenges

iPod moment for newspapers

Mindy McAdams timely and thoughtful blog post, Looking ahead to the ‘iPod moment’ for newspapers and it’s excellent inspiration, a blog post by Charles Arthur ought to be read by Australian newsagents.

The iPod moment, when it arrives, will eliminate the current distribution model. Not this year or next but it will come. This is why newsagents need to be reinventing their businesses today – so we are less reliant on core traffic generates. not just newspapers but also lotteries and magazines. Our suppliers want to cut costs from the supply chain, they must to survive in a rapidly changing world.

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Newsagency challenges
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