Why I think the ANF advice on adult colouring is flawed
The ANF published an article this week about adult colouring that focused only on products from Gotch and Network. I hope newsagents do not rely on the ANF advice as it is flawed and late, many months late.
Adult colouring is not a recent craze. Newsagents in newsagency marketing groups or plugged to trends know this and have been making good money from adult colouring for months.
The most successful adult colouring titles provide newsagents with 50% and more GP, not the 25% we get from magazine companies. The ANF article ought to have been more complete in reporting on the opportunity.
While magazine distributor supplied adult colouring titles do have a place, I am not leading with them to drive traffic as they are not top of mind for shoppers in this space.
If the ANF is going to provide retail management advice for newsagents it ought to ensure the advice is timely and thoroughly researched. Further, it should consider how this advice sits with the advice from Newspower, the marketing group in which it has shares.
Cheap old magazines damage the newsagency brand
While for sure there is a debate about the Newsagency shingle, for the majority of newsagency businesses it remains the key identifier of the business. This is why it is frustrating to see a display like this outside a newsagency.
In my opinion this display damages the business and the broader newsagency brand.
I don’t care if the magazines were forgotten in the returns process and the newsagent is seeking to mitigate the situation. It looks cheap. It looks bad.
As for selling the freebies that come with magazines, this is a foolish and brand damaging act.
We ought to expect better from our colleagues with whom we share a shingle.
The ANF can’t hide forever
Ever since I and other newsagents started speaking about the poor representation of newsagents by the ANF on the proposed magazine supply rule change trial being organised by the MPA, representatives of the ANF have attacked some speaking out but refuses to engage in real dialogue.
There was Ann Nugent, QLD ANF staffer, reportedly speaking out about me at a public meeting, ANF Chair Stuart Kilborn on the phone to a newsagent he’d never spoken to complaining, ANF CEO Alf Maccioni responding to newsagents putting down those challenging the ANF approach and the ANF SA rep, Colin Shipton out in SA reportedly putting down any who disagree with the ANF.
While the ANF is entitled to say what it likes, this approach of attacking those questioning its strategy and then ducking for cover and not engaging reminds me of a propaganda film used in the US in the 1950s: Duck and Cover.
I proposed a debate with the ANF CEO so that newsagents could judge for themselves. Refusing this opportunity of transparency damages the ANF and opens for question among newsagents why it is not open to publicly talking about its policy position, a position it established without consultation of those it claims to represent.
The suggested debate (or discussion if you prefer as I don’t see it as adversarial) offers the ANF an excellent opportunity from which to show newsagents their approach is right, it shows them not ducking for cover.
More correspondence on the ANF handling of the MPA trial
Yesterday, I received an email from the ANF CEO despite the ANF Chairman saying ANF staff had been directed to not respond. Here is that email:
Mark
I am writing directly to you as I feel that I need to respond to your comments, in relation to what I have supposedly done.
Firstly I have not and do not talk behind people backs. Those who know me know that I am very direct and do not hide from confrontation; unlike you where you have apparently personally attacked me on your blog.
I responded to an email from a member. In this email I did not disparage you in any way. I have not gone around the country telling newsagents not to be part of Newsxpress once again unlike you.
I am happy to work and discuss issues with whoever but will not engage in a debate with someone who sole intent is to bring the ANF down.
In regards to the MPA trial, have you spoken with the whole MPA committee re your issues rather than just publish them on the blog? Have you requested to sit with them and express your views?
I am happy to see a trial taking place because at least we can use this to help newsagent’s get a better supply of magazines. Get the product they want and the quantities they need. Until now no publisher or distributor was willing even to discuss this, and now it is on the table, with not just one but all of them leading to the ACCCs involvement in the first place.
Mark I will not keep corresponding on this issue with you as you have made it clear that this is just an opportunity for you to attack the ANF, and to attack those newsagents who have put their hand up to help the channel. If you truly want to work on bettering the MPA trial then why not try to work with them rather than throw stones at everyone who does not agree with you views.
Alf
Here is my response:
Alf,
Thank you for your email.
You are wrong. This is not just an issue for me to attack the ANF. I would rather not have grounds to say you have not served newsagents well.
It is not my sole intent to bring the ANF down. I have told newsagents they should quit as it is a good way for you to understand that you don;t have their support. Stuart in his letter said you have grown in members as a result of the MPA issue. I am waiting for evidence of this.
If you go back and read the correspondence, I have documented to you and now to your Chairman concerns about reports of what Ann Nugent said about me recently in Queensland. Usually I would not worry about this but several newsagents coming to be with serious concerns encouraged me to bring it to Ann first and then you. I note that neither you nor Ann have responded on what she is reported to have said despite several emails on this. Either the newsagents have misrepresented Ann or Ann has attacked my character.
In your email to Yackandandah you were not as accurate in your responses as you could have been – but I understand you have to protect your turf.
In terms of correspondence with the ANF, I am concerned about the ANF handling of the MPA matter. It is flawed for the reasons I have explained: you have not consulted, you have not sought to have documented rule changes that you say will apply yet are not in the documentation submitted to the ACCC and you have not sought to thoroughly inform yourself about whether the trial is actually trialling real life situations as I understand it is not.
The MPA has been aware for almost two years concerns I have had about the trial. They were aware of this prior to their approach to the ACCC when I advised I would not be part of the trial given the rules it has been established to test.
Alf, this trial is not testing new supply rules that will make newsagents more competitive with magazines. Indeed, it is a trial of rules that continue to treat newsagents as we were treated prior to deregulation and that is, at its core, unfair and commercially disadvantaging. This is what the ANF ought to fight.
The final issue for the ANF is one of communication. Your email says it all. I don’t agree with you so you therefore refuse to discuss this with me. That does hot make sense.
I don’t know what you would be like in a public forum on this topic yet I have suggested we talk about it in front of newsagents. My view on any issue such as this – an issue at the very heart of newsagency management – is that each of us with an opinion ought to agree to have the opinion tested as much for us as for those we serve. That you will not do this ensures you remain less than open to the possibility that your approach on this issue of magazine supply is wrong.
I want to close with a comment abut newsXpress. newsXpress petitioning the ACCC led to the conference. This conference was an excellent first-time event for our channel. You do not even have the grace to say publicly that this is a good thing. That, to me, reflects a bias in your opinion and communication that I see elsewhere in your handling of this matter. The vie appears to be if you disagree with the ANF you are not relevant to the organisation.
Mark Fletcher
I have published this here as I think everyday newsagents are too often kept in the dark by people engaged on matters affecting them. There is nothing in the correspondence that is sensitive. I hope readers here find it helpful as they consider the issues discussed.
Correspondence with the ANF on the proposed magazine supply rule changes
I emailed the CEO of the ANF on May 31 after being shown correspondence between him and a newsagent in which he referred to me. Click here to see the text of my email.
The ANF chairman responded to me last week. Click here to see this letter
Here is my response sent yesterday to the ANF Chairman, Stuart Kilborn, on this matter of equitable magazine supply for newsagents.
Stuart,
Thank you for your June 4 letter responding to my email to ANF CEO Alf Maccioni of May 31. I emailed Alf has he has been engaged in correspondence in which he comments about me and the Australian Newsagency Blog. While I am happy to respond to your letter, I am surprised that Alf did not respond to me as he is happy to talk about me behind my back.
Also, you write to me at Tower Systems. My agitation on behalf of newsagents and my own newsagency businesses on this issue is via the newsagency blog. The blog is a non commercial activity I spend my own time on publishing my opinions on matters I think will interest newsagents.
In your letter you say:
Whilst we habitually choose to focus on positive impacts for our channel the negative effect you are potentially causing the channel through misleading information requires us to respond. If what newsagents have told me is true, in this matter of the MPA trial the ANF has not been focussing on positive impacts as it has reportedly engaged in character assassination with no regard as to the facts.
I’ll not respond at this time to much of the first two pages of your letter as what you have written does not relate to the MPA trial whatsoever.
For the record, I first became involved in discussions on magazine supply rule changes in late 2013. These discussions, including consideration on the rules at the core of the MPA trial today, predated the involvement of the ANF. My position has not changed.
I have called for newsagents to withdraw support for the ANF on the matter of the MPA trial because I think the ANF is profoundly wrong. It is unfortunate that you label my disagreement as a lack of courage. You imply that it is courageous to support the ANF and not courageous to disagree with the ANF. So much for robust debate. So much for free will. Your statement is ignorant nonsense.
I have read the MPA submission to the ACCC. In your letter you go beyond this and appear to put the position of the small number of publishers in the MPA and the two major magazine distributors – ahead of the interests of your members.
You ignore that the ACCC conference attended by the ANF, newsagents, publishers and distributors was called for by newsXpress. The ANF could have called for this conference but it did not. Given what was discussed at the conference it was worthwhile for newsagents to have had the opportunity if only to speak directly to the ACCC about the unfairness of magazine supply to our channel compared to those with which we compete.
Left to ANF representation only the conference would not have occurred and newsagents would not have had the opportunity to, for the first time, speak directly to the ACCC about the matters covered. Shame on you and the ANF for not pursuing this opportunity for subsequently denigrating some of those newsagents who did participate.
At the ACCC conference, the CEO of the ANF said the organisation has consulted with newsagents. All I can find to support this claim is a brief mention in a note from the CEO in National Newsagent magazine and a brief mention in an ANF news email. As I have written previously, on this most vital of matters, the ANF ought to have hosted capital city and regional centre forums to canvass newsagent opinions. It ought to have conducted an industry wide survey on each of the rules to be tested as documented to the ACCC by the MPA.
The ANF did not do these things.
The claim by your CEO to the ACCC conference that the ANF consulted is not supported by the evidence available. If there is other evidence of newsagent consultation please share it.
You say Consultation is a word that is loosely thrown around, and often regarded as ticking a box then proceeding down your own path. Maybe that is what consultation means within the ANF. I disagree with your definition. Consultation is a process of actively engaging with those you say you represent to fully explore and understand their views prior to you forming your own views as to how to represent their interests. The ANF has not done this on this issue.
THE NEWSAGENCY BLOG
I do not use the blog to manufacture negative factors and am offended that you claim I do.
The Newsagency Blog publishes directly through my posts and through comments by readers items that are encouraging of newsagents and those who service and engage newsagents commercially. Sure it shines a light on negative issues. This is done with facts and in an effort to change behaviour.
My take is that if I write a post that is critical of the ANF you label it as negative for the channel. I disagree with such a position. The ANF has made its own failure of representation of newsagents. The failure is exacerbated because of poor communication and a refusal for open and public discussion on matters of importance.
THE ANF CHAIRMAN
In my email to your CEO I make the point that you, Stuart, called a newsagent with the sole purpose of speaking about me. This is a newsagent to whom you had never spoken before. To suggest otherwise as you do on page four of your letter is unfortunate spin that seeks to divert attention from your actions. I don’t care whether you are paid for your time. Your letter goes on to canvass issues not pertinent to this discussion. You did call at least one newsagent to agitate against me and that’s okay. My point on this in my email to your CEO is that you should have the guts to speak to me. That you went behind my back as a whiney school kid is like communication reportedly by other ANF staffers about me and this issue of magazine supply.
If you have an issue with me, confront me. I have written to the ANF about comments made by Ann Nugent in Queensland about me which upset several Queensland newsagents. I wrote to Ann and she did not respond. I wrote to Alf and he did not respond. If Ann did not make the comments she should say so and I can go back to the newsagents and ask whey they would make the allegation up. If Ann did make the comments then she need to answer for her behaviour. Remaining silent damaged the ANF.
Your letter then turns to the ACCC conference., noting that I say every newsagent who spoke at the conference disagreed with your CEO. To support your claim you include a note from the ACCC minutes. The quote you have included offers no support of the ANF’s position. Indeed, the minutes note the terms on which Ms Dixon agreed to participate in the trial, terms not reflected in the documentation submitted by the MPA to the ACCC.
PUBLIC DEBATE
The concerns in discussion between us relate to the poor performance of the ANF on this issue of magazine supply to newsagents and, most recently, the poor representation of newsagents on the issue of the MPA pilot of proposed new magazine supply rules.
The ANF says the trial is a good thing. I disagree. This is what I propose the ANF debates publicly with me. The worst outcome from such a public debate would be those attending agreeing that the ANF has not acted in the interests of members. The best outcome from an ANF perspective would be that those attending do agree with the position taken by the ANF. Either way newsagents benefit from a transparent exploration of how their interests have been represented and, more broadly, what is best for their representation on the issue of magazine oversupply.
I suggested a debate because it seems to me that the ANF has not debated the proposed rules for had it done this it would not have endorsed them. Remember, the documented rules are different to what the ANF claims the rules to be. For example, in the documented rules there is no provision for newsagents to control range and volume, no provision for early returns … yet the ANF says these benefits are part of the trial. As I noted at the conference, If this is the case why not document that.
A public debate would demonstrate to newsagents that the ANF is transparent and that it is consulting on this matter.
In your letter you say you have welcomed on many new members during this recent phase. Please advise your membership numbers prior to this phase and now. This is an invitation for you to be transparent.
CONCLUSION
If the ANF had professionally and thoroughly represented newsagents on this matter it would have:
- Ensured early returns were allowed in the proposed magazine supply rule changes.
- Ensured newsagents had control over range and volume in the proposed supply rule changes.
- Held public forums to harvest opinions from all newsagents.
- Engaged actively with all magazine publishers and not just the three members of the MPA on this issue.
- Stopped criticising personally anyone who criticised the performance of the ANF on this matter.
- Ensured that the trial is a real world trial testing processes and rules that can be applied channel wide rather the current trial involving a level of non real world support for some participants.
- Been more thorough in advising newsagents about the trial in its various channels of communication.
- Been more robust in demanding magazine distributors use the sales data provided by newsagents to set supply levels.
- Used the proposal of the trial as an opportunity to agitate on the proposed continuation of anti-competitive against newsagents by magazine distributors compared to their treatment of our competitors.
The ANF says the trial is necessary to provide an understanding of magazine performance and newsagent engagement with the category. I say that such an understanding can be gained today by a thorough analysis of the data.
I believe in the newsagency channel and work hard in many ways outside your gaze and knowledge in support of newsagents, for the future of the channel. The MPA trial is trialing the wrong parameters in a wrong way. For newsagents to have a bright future they need fair and equitable supply of magazines – on terms that enable them to be commercially competitive with other retailers of magazines. Anything short of this is not a solution. The issue at hand here is not the trial so much as it is the proposed new supply rules being tested by the trial, rules the ANF has not challenged.
Remember, the ANF played a central role in the deregulation of magazine supply. Its representatives at that time failed newsagents miserably on this matter. They failed to seek and achieve for newsagents a change to the terms of supply to reflect a deregulated environment. Their failure in 1999 means that today our channel has magazine supply rules from the era of protection and regulation while our competitive benefit from supply rules designed for a competitive post-regulation marketplace. This is what must be fixed. I see no evidence in your correspondence and the ANF submission to the ACCC that the ANF gets this.
Stuart, you have to ask yourself, are you the right person to lead the ANF, are you the best the channel has available? Asking this question does not make me a bad person nor does it mean I am not courageous.
I am happy to meet to discuss this issue at any time face to face.
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Footnote: The MPA ought to have thoroughly analysed all data available on magazine supply, sales and returns prior to even considering this trial. They should have also discussed possible solutions with all stakeholders including other publishers outside their small group, all distributors, all newsagents and others involved directly in the magazine management within newsagencies.
This trial is ill-conceived because it was not properly researched prior to designing the proposed supply rules to be trialled.
As soon as it as invited to be involved last year, the ANF should have written extensively on the trial in its various communication platforms and actively sought newsagent feedback from far and wide. That it did not do this has left the ANF ill-informed and supporting a trial that does not address the fundamental challenges faced by newsagents, the uncompetitive terms of supply of magazines to our channel.
Newsagents sell close to 50% of all magazines in Australia. There are ways we can grow this. There are ways magazines can be profitable for us. A trial of the ways and processes that could be employed to achieve these outcomes is appropriate.
It seems to me that few involved in the MPA trial are actually interested in putting the interests of newsagents ahead of their own interests.
The ANF ignores questions about what its representatives have said about the MPA pilot
I have heard from several newsagents that representative of the ANF has been critical of me at public meetings and critical of what I have said about the MPA pilot of proposed new magazine supply rules.
The first time I heard this I contacted the ANF staffer who reportedly spoke about me, Ann Nugent in Queensland. Ann did not respond.
After a week or so I contacted ANF CEO Alf Maccioni about this and other comments reportedly made. I copied Ann in that email. Neither has responded.
If what I am told ANF staffers have been saying is true they have sought to damage my character. That they are not prepared to respond to my reasonable request to discuss this speaks volumes in my view.
Yes, I think their handling of the MPA trial is another example of the ANF being out of touch with newsagents. Their lack of consultation and communication is on the public record. Their failure to engage with those who criticise them served to fuel more criticism.
I’d like to publicly debate the CEO of the ANF on his handling of this matter. Such a debate would either reveal ore than newsagents have been told today and through that assuage their concerns. Alternatively, it could highlight the extend of the poor representation of newsagents by the ANF on this matter. I have emailed Alf suggesting a debate. I’ll let you know if he responds.
Further submission to the ACCC on proposed trial of magazine supply rule changes
Yesterday, I lodged another submission with the ACCC in relation to the application by the MPA to trial new magazine supply rules for newsagents. Click here to download the submission. The submission is also on the public register of the ACCC.
Like my first submission which the ACCC already has to consider, this submission was made on behalf of newsXpress members, based on my experience through Tower Systems serving 1,800+ newsagents and in pursuit of fairness for all newsagents. Here is the submission in full:
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Our view remains that the proposed MPA Pilot is ill-conceived, poorly constructed and not appropriate to meet the public benefit claims made in Section 4 of the application.
No information was presented at the Pre-Decision Conference or since to address the concerns raised in the newsXpress submission of April 23, 2015 nor the oral submissions newsagents at the Pre-Decision conference.
We urge the ACCC to embrace the opportunity to more thoroughly explore the anti-competitiveness of current and proposed magazine supply arrangements to newsagents compared to those applied to competitors of newsagents. While this issue is considerably larger than the issue of the Pilot, it goes to the heart of the future of the small business newsagency channel in Australia.
While the Pilot has been proposed to test what is claimed to be a new approach to the supply of magazines, we note it only relates to newsagents.
Competitors of newsagents are already treated with supply rules considerably more beneficial than the magazine supply rules the MPA proposes to trial for newsagents.
This difference between the supply of magazines to newsagents versus their competitors sits at the core of concerns held by newsXpress and newsagents more generally. The proposed Pilot does nothing to address these concerns.
At its heart, this Pilot seeks to test the continuation of magazine supply rules to newsagents that ensure their inability to compete with supermarkets, petrol outlets and convenience stores in the magazine category.
PRE-DECISION CONFERENCE
Every newsagent who presented to the conference spoke against the proposed magazine supply rules at the heart of the Pilot.
The MPA did not directly address any specific issue raised by newsagents nor did it directly address the comprehensive and specific complaints raised by newsXpress. Instead, the MPA relied on generalities.
Considering various points made by MPA and Bauer Media representatives at the conference, there is a gap between what has been documented to the ACCC about the Pilot and what has been said will be done as part of the Pilot.
For example, newsXpress and others expressed concern that the Pilot is to test rules that deny newsagents the opportunity to early return magazines. On page 4 of the minutes of the Pre-Decision conference we can see Mr Varricchio of Bauer Media and the MPA to say the MPA plans to allow early returns after 30 days. While we say the 30-day moratorium on early returns is unfair, it is not referred to in the documentation submitted to the ACCC for authorisation.
Mr Varricchio advised that newsagents participating in the pilot will have control over the range of magazines they stock. This is not covered in the submission from the MPA to the ACCC. There has been no evidence presented by the MPA as to the extent of control newsagents could have over the range of magazines they stock, whether the claimed control is being or can be applied uniformly, what the claimed engagement of participating newsagents looks like for them in the Pilot and in the future and or the magazine distributor processes to be put in place to enable such newsagent control over the range of magazines they stock.
Ms Azer, Director of the MPA, said the MPA would use POS data, among other data, to research how customers shop the magazine category. We note that while such data has been available for years, the MPA has made no effort to access same.
Mr Alf Maccioni, CEO of the Australian Newsagents’ Federation, told the Pre-Decision conference that the ANF had informed its members about the Pilot, with articles in newsagency magazines and newsletters. We can only find brief and passing comment about the Pilot by the ANF: to its members once in one paragraph in its magazine; and, once in as a topic in a general email to members. In neither case did the ANF adequately inform its members. We therefore say the ANF itself is not appropriately informed to speak on behalf of newsagents on this topic.
The most comprehensive information from the ANF information was published May 6, 2015. The ANF has not actively engaged with its members about the Pilot.
Every newsagent who spoke at the Pre-Decision conference spoke against the Pilot rules and the inequity of newsagent magazine distribution arrangements. No newsagent endorsed or supported the position taken by the ANF.
While the Pre-Decision conference was a welcome airing of concerns, the disconnect between claims made by the MPA and the documentation supplied by the MPA is considerable. Newsagent concerns about the disconnect are heightened because of a lack of trust that has built up over decades of oversupply and anti-competitive treatment.
HOW NEWSXPRESS FORMED ITS VIEWS
newsXpress actively sought feedback from its members at face to face meetings, via a private online forum, through face to face in store visits and through thorough telephone consultations.
The concerns raised by newsXpress are the concerns of the vast majority of its members following this comprehensive consultation process.
Following the Pre-Decision conference, newsXpress invited further feedback from members and this feedback has helped inform the views reflected in this submission including our advice that all concerns in the initial submission remain of concern to us.
MPA NOT PRERESENTATIVE OF ALL PUBLISHERS
The MPA is made up of three publishers, less than 5% of all magazine publishers in Australia. The vast majority of publishers who supply magazines to the newsagency channel have not been consulted as part of this process yet the Pilot seeks to test magazine supply rules that will impact their businesses.
It appears to us the Pilot has been constructed for the benefit of MPA members to the possible detriment of newsagents and other magazine publishers.
The MPA developed its Pilot and associated rules without consultation with newsagents. While it sought endorsement from the ANF, there has been no consultation with newsagents by the MPA nor by the ANF.
Any Pilot ought to be constructed with a more representative group of stakeholders including more publisher representatives and more newsagents.
WHERE ARE THE SAVINGS?
The MPA says that the Pilot is about reducing costs. There is nothing in the Pilot that reduces costs for newsagents and no evidence was presented to the Pre-Decision conference about expected cost savings for newsagents. It appears to us that the cost savings will be to the benefit of the magazine distributors and some magazine publishers over others.
Whereas newsagent competitors can be certain they will not be supplied more magazines than they have space to display, newsagents have no such certainty.
The only way for newsagents to reduce costs associated with magazines would be for them to be supplied such that more than 60% of all stock of each magazine title supplied is sold within 30 days and that full copy returns are eliminated.
IF THE MPA WAS SERIOUS
If the MPA was serious about its intent to optimise the supply of magazines to newsagents and to assist newsagents to more efficiently manage the magazine category (MPA ACCC application 4.a) it would have undertaken a study of the current performance of newsagency businesses to uncover the most efficient, the most successful at year on year sales uplift and the most engaged with the category. It would have thoroughly analysed these businesses and provided best practice advice to the newsagency channel.
Coming at the problem as a supply problem but not looking completely at the supply challenges and issues, the MPA has come up with a draft set of rules, what they call a Code of Conduct, that inadequately address the key financial and operational concerns of newsagents, the key factors which drive current newsagent behavior.
If the MPA was serious about its intent to optimise the supply of magazines to newsagents and to assist newsagents to more efficiently manage the magazine category it would engage with the magazine distributors on:
- Supplying magazines based on actual sales data supplied by newsagents and to a sell-through target which makes these magazines financially viable for newsagents. As put already by newsXpress, the print run / supply matrix proposed in the draft rules are not viable for newsagents for most categories of titles noted.
- Understanding from each newsagent the total space available for magazines so as to put in place rules to ensure no supply beyond the physical space allocated to magazines.
- Ensuring newsagents had absolute control over all new titles to carry.
- Stopping the need for newsagents to return unsold stock. The current system requires many newsagents to pay to return stock that has not sold while not giving those newsagents the ability to control supply.
Instead, the MPA, and in particular the Bauer Media controlled Network Services, has participated in a process which as recently as this past week has seen newsagents reissued magazines which have failed, newsagents supplied magazines to a volume based on previous sales which will deliver a loss-making sell through rate of 40% or less and introduced new titles without any regard as to their appropriateness for the newsagent businesses to which they have been sent.
In short, for all its statements of wanting to help newsagents some organisation in the MPA have most recently been treating newsagents in ways which are contrary to what are claimed to be the goals of the Pilot.
THE DISCONNECT OF COMMERCIAL REQUIREMENTS
At the heart of the unprofitability of magazines for newsagents is the commercial requirements of the two main magazine distributors Network Services (owned by Bauer Media) and Gordon and Gotch (owned by PMP Limited).
Gotch and Network are effectively trucking companies – they make money on delivering bundles of magazines. They have complete control over what they ship to newsagents whereas they to not have the same control over what they ship to all other magazine retailers.
The ability of Gotch and Network to control magazine supply to newsagents is vital to their commercial performance. It is understandable that Gotch and Network make decisions to serve their commercial needs ahead of newsagents.
The supply decisions of Gotch and Network are the single biggest factor in the financial losses endured by newsagents from magazines as well as the single most significant driver of behavior of newsagents toward magazines.
The impact of deregulation has been Gotch and Network having less control over the volume of magazines distributed outside the newsagency channel. With newsagents the only channel over which they do have control through pre-deregulation contracts distributors engage in practices that have driven up costs to newsagents, creating the problem the MPA says it wants to address.
WHY THE IMPACT OF THE 1999 DEREGULATION NEEDS TO BE ASSESSED
At the heart of the Pilot is the goal to optimise the supply of magazines to newsagents and to assist newsagents to more efficiently manage the magazine category.
The situation today of magazine supply to newsagents being unfair and a hindrance to their ability to be competitive is a consequence of deregulation.
Given the ACCC role in deregulation, we consider it is appropriate for the ACCC to more completely assess the various magazine distribution models as we are certain that thorough research would reveal significant differences in the supply of magazines to newsagents compared to their competitors – differences that make newsagents less competitive, differences not addressed by the proposed Pilot.
THE MPA PILOT RELIES ON PROCESSES AND SERVICES THAT CANNOT BE REPEATED
newsXpress has become aware that some processes engaged in as part of the MPS Pilot will not be able to be part of any changes delivered outside of the pilot. These include personal in-store visits to change approaches to magazines and a level of labour involvement setting allocations.
Our concern is that the Pilot results could not be reasonably repeated unless equivalent in-store services and manpower are invested.
CONCLUSION
For newsagents to be viable with magazines, they need the access to business management levers that enable them to act in the interests of their businesses and in the efficient service of their customers.
The current magazine supply model applies what is effectively a tax on newsagents that is a major factor in the closure of many newsagencies in recent years. The proposed MPA Pilot does not address this unfair cost.
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This second submission runs to five pages. I wrote it to be read in-conjunction with the first submission. I encourage newsagents to read the entire document. I am not going to post it all here. Click here see the entire document.
The ANF fails newsagents on its loyalty promotion
The ANF appears confused about its support for the Rewardle loyalty program saying it is launching the program, then that it is not launching the program and then that it is launching the program. No wonder newsagents shake their heads in despair about this organisation.
Here is the headline of the ANF announcement on April 29:
ANF to launch nationwide rewards system for members
Here is the opening paragraph of the ANF statement from at around lunchtime May 6, 2015:
Re the announcement that the ANF is launching a rewards program Rewardle – this is not correct.
The image above is from an ANF email sent to newsagents later on May 6, 2015 – after the statement that it is not launching reward.
Maybe once the ANF has sorted out its position on Rewardle it could let newsagents know.
To me, this flip flopping is yet another reason for newsagents to stop supporting the ANF. Paying fees to them only encourages them.
The ANF needs to explain its relationship with Rewardle. If it is commercial, if the ANF is making a commission, it ought to disclose this to newsagents.
The ASX website has an announcement from reward (ASX code RXH) indicating that the ANF has entered into a Channel Partnership Agreement. That sounds commercial. the announcement notes that the Rewardle was introduced to the ANF by a leading national publisher. Nothing wrong with that except that this ought to have been disclosed by the ANF if it is committed to transparency – along with details on any payments they ANF is to receive.
I wish I did not have to write this post. I wish the ANF was transparent, did not flip flop and did thoroughly engage products and services before it launches them to newsagents. It’s easy to get it right. It takes poor leadership to get it this wrong.
On Rewardle itself, it will suit some newsagents but not others. Our channel is already awash with loyalty offers such as those funded and run by Bauer Media, John Sands and Hallmark and several other suppliers plush those run within newsagency marketing groups such as Nextra, TLC and newsXpress and then there are the many loyalty offers run by newsagents from the traditional points based programs through to the discount voucher front-end loyalty I have discussed.
Newsagents need to research carefully any loyalty program to ensure its appropriateness to the needs of their businesses. They need to ask whether the proposed program offers the point of difference they want and whether it engages deeply within their business. I do wonder if the ANF has looked at Rewardle carefully and considered all of the alternatives. I suspect not.
If you think I am writing this because I have a competitive offer you would be wrong. What my newsagency software offeres is different to Rewardle – I would not compare them.
Mumbrella covers MPA newsagent magazine supply rule change proposal
Media news website Mumbrella yesterday covered the ACCC conference held last week to consider the application by the MPA to trial new magazine supply rules. I appreciate the time they took to learn about the proposed trial and the concerns it represents for newsagents.
This the first time I can recall such public coverage of the uncompetitiveness of magazine supply to newsagents compared to our competitors. It is good to see the story out there.
Newsagents interested in the issue of magazine supply should read the Mumbrella report.
I wish the ANF would be more complete in its coverage, more transparent with newsagents. Yesterday, they published a post which I say shows the ANF acting as a mouthpiece for the MPA when they should be the mouthpiece for newsagents. In a comment to the post the ANF says: there are no plans to disallow early returns. The problem for the ANF is that rule 4 from the MPA says:
A Distributor will not be required to accept Early Returns from Retailers, except where such Early Return is made by a Retailer to correct an error in allocations quantity.
The ANF needs to stop defending the trial by saying any trial is better than no change. They need to robustly represent newsagents if they are to recover credibility from their current low point. They need to demonstrate to newsagents that they are fighting for them and not publishers.
As I told Mumbrella yesterday:
“Newsagents want to be magazine specialists, they want to be the go to place for all your special interests. That is only going to continue if we can find a way for that to be economically viable,” he said.
People at the ANF seem to think I am against change in magazine supply. Not true – I am all for change, fair change. It is unreasonable for newsagents to accept anything which does not improve our ability to compete as that is of no benefit to us.
The folks at the ANF need to realise that newsagents deserve professional, thorough and energetic leadership – backed with open communication.
On the ANF website yesterday the ANF appeared to suggest the no early returns was for the purpose of this trial only. The documentation submitted to the ACCC by the MPA does not indicate that. Further, if this was the case the MPA members could have ensured fair supply and therefore seen early returns decline – and negated the need for the trial. Publishers do not trust this will happen because magazine distributors Gotch and Network have driven newsagents to use early returns as the only reasonable in-store magazine management tactic.
Finally, I have heard from several newsagents that they have been approached by ANF representatives to discuss this matter and the ANF reps comment about what I have written here. To date, no one from the ANF has contacted me on this issue.
Newsagents are being let down by their associations on magazine supply rule trial
I am disappointed in the poor reporting by the ANF of the ACCC conference held Thursday last week to consider issues raised about the proposed trial of new magazine supply rules.
The note published does not accurately report what happened. Nor does it accurately inform newsagents about the trial. My view is that the reporting reflects an ignorance these associations bring to their roles of serving newsagents.
Had these associations been doing their job they would have petitioned the ACCC for the conference. Instead, it fell to newsXpress to do this for newsagents. You are welcome ANF and NANA.
Several ANF representatives have reportedly complained to newsagents that I am wrong to have written to the ACCC about the issue and wrong about specifics. I say reportedly because no ANF representative has said this to me. But that’s typical – they will complain about you behind your back and act as if nothing is wrong to your face.
Reps of the ANF have reportedly said the trial rules allow newsagents to early return. Anyone at the ANF who had read the trial rules would have seen that newsagents are not permitted to early return. Here is what the rules say:
4. Early Returns
A Distributor will not be required to accept Early Returns from Retailers, except where such Early Return is
made by a Retailer to correct an error in allocations quantity.
There is no mention in the rules of newsagents having control over supply – meaning you have to rely on what the distributors do and their track record is less than idea on this front.
The ANF has failed newsagents o this issue and now it is engaged in spin which fails to fully inform newsagents about the proposed new rules.
Every dollar newsagents pay the ANF directly or indirectly extends this inadequate representation of the channel.
ACCC conference listens to newsagent concerns over proposed magazine supply changes
The ACCC conference to consider a trial of new magazine supply rules held yesterday in response to a request I submitted on behalf of newsXpress was well attended. Major magazine publishers attended along with the MPA, lawyers, the ANF, VANA and NANA, several newsagents and a rep from POS Solutions.
While the main conference room was at the ACCC offices in Sydney, there were video links to Melbourne, Brisbane, Canberra, Adelaide and Darwin. There were six newsXpress newsagents who participated from five states and four independent newsagents. Nextra, The Lucky Charm, Supanews and Newspower were not represented.
This conference was a first for our channel. I cannot recall newsagents ever having this type of opportunity to speak directly to the ACCC on the issue of the magazine supply model or to confront magazine publishers and distributors directly on the damage to newsagency businesses of the magazine supply model.
I applaud those newsagents who participated. Our channel is full of people who complain and lacking people prepared to act rather than complain. Participating yesterday meant a day out of the business and being put in a situation which, for some, was confronting as you are face to face with suppliers which historically have done more to harm our channel than most others.
It is disappointing that associations presenting newsagents have failed to achieve this previously. Newsagents participating yesterday demonstrated that they can speak confidently and personally about the matter without getting too bogged down in minutia.
The conference went for two hours with around half in attendance speaking on the proposed magazine supply rule changes.
As I had requested the conference I was invited to make an opening statement. Click here to see the submission I made on behalf of newsXpress – my opening statement was a summary of this submission. I encourage all newsagents to read this as it summarises the concerns I have with the proposed magazine supply rule changes. Also read the MPA submission to which I was responding.
MPA and Bauer Media representatives at the conference said that the concerns raised were ill-founded in that newsagents would have control over supply and would be able to undertake early returns. My response was that if this is the case then why is it not reflected in the proposed supply rules put to the ACCC for its consideration.
There is a disconnect between what the MPA stated at the conference and what is in its submission to the ACCC for the magazine supply trial. I hope the ACCC considers this. It is covered by my submission to the ACCC.
There was considerable discussion about the failure of the magazine distributors to use the sales data provided by newsagents to set supply figures. In discussing data, a Bauer representative commented that there were many newsagency software packages, inferring working with them was difficult. I pointed out that they, Bauer, played a direct role in approving each newsagency software package for us.
Several newsagents challenged the ANF endorsement of the proposed new supply rule trial and that there had been no consultation. To this, the ANF CEO said there had been consultation citing an article in National Newsagent and a mention in an email to its members.
Had the ANF done its job it would have hosted national meetings where any newsagent could comment on the proposed trial. Indeed, the MPA could have organised such consultation. Instead, it relied on casual discussions with a select group of people and the submitted to the ACCC that it had consulted widely with all stakeholders.
I was given an opportunity toward the end of the ACCC conference to revisit some points made by others. At this time I asked the MPA if they had sought to understand what newsagents who are growing magazine sales had done/ The MPA representative said they had not and that it was not part of this trial.
My view is that this trial is about researching efficiency gain opportunities for magazine distributors and publishers. Those goals are wrapped up to look like there is a benefit for newsagents.
The new magazine supply model outlined by the MPA in their submission to the ACCC does not provide newsagents with any significant benefits, it will not make us more competitive, it will not stop oversupply, it will not make magazines more profitable for us, it will not stop newsagents reducing their commitment to magazines.
If the MPA did research newsagents who are growing magazine sales they would discover learnings which would be of more commercial benefit to the newsagency channel and magazine publishers.
Yesterday’s conference was another step in the process of consideration by the ACCC of the application by the MPA for authorisation for a trial of new magazine supply rules. The ACCC will consider yesterday’s conference, written submissions including the one I linked to above and any other submissions between now and mid May.
This is a vitally important matter for newsagents. If you have an opinion about the magazine supply model you need for magazines to be viable in your newsagency, I urge you to read the MPA application, my submission and consider engaging yourself. The more newsagents who engage the better regardless of your position.
There were some good discussions outside the ACCC meeting which gave me confidence that newsagents have got attention on this matter. Discussions over the next couple of weeks will demonstrate if progress can be made outside of the framework of what has been put to the ACCC on this.
Westpac to quit small business agency outlets for Australia Post
Small business newsagents and other retailers operating a Westpac banking agency within in their retail business heard in a phone hookup with Westpac yesterday that they are to lose their agency business.
Westpac has contracted with Australia Post to take over local Westpac agency operations.
This is a blow to these locally owned newsagencies and other small retail businesses. Losing this vital revenue is challenge enough, that they are losing it to a government agency is leading to anger. In several cases I have heard of the Westpac agency is moving to a government owned Post Office and not a LPO.
I am not affected in my newsagencies. If I was, I’d advise my customers that Westpac is putting profit ahead of small business and if it was being taken by a government owned Post Office I’d note that the federal government is is putting their profit ahead of good small business policy.
Newsagents in rural and regional situations are more affected than in the city as this is where Westpac agencies are more likely to be located.
In the phone hook-up, Westpac advised that retailers would have around a year an a half to adjust prior to losing an agency. One newsagent I heard from yesterday advised that in their case they have have been given just four months.
Westpac has advised of an ex-gratia payment to facilitate a make-good in the stores losing the agency. However, from what I understand, the amount mentioned is considerably less than what such make-good would reasonably cost in many situations.
Different newsagents affected by this move will have different reactions. I am writing about it today to give people a place to comment an to bring public attention to the Westpac / Australia Post deal.
Anyone affected and unhappy with the Westpac proposal could take the matter up with a local disputes tribunal list VCAT or QCAT. They could also seek mediation through their local Small Business Commissioner.
ACCC sets details for conference on proposed magazine rule changes
Following a request I wrote on behalf of newsXpress newsagents, the ACCC has decided to hold a pre decision conference with newsXpress and other interested parties about the MPA proposed trial of magazine supply rule changes. This is an opportunity for newsagents to be heard on the proposed magazine supply changes, an opportunity missed by those engaged with this project to now. Here is part of what the ACCC letter to newsXpress said:
As you may be aware, newsXpress Pty Ltd has requested that the Australian Competition & Consumer Commission (the ACCC) convene a conference in relation to the draft determination issued by the ACCC on 12 March 2015 proposing to grant authorisation A91472.
The ACCC will hold the conference on Thursday, 23 April 2015, at the ACCC’s Sydney office (Level 20, 175 Pitt Street, Sydney). Interested parties may also attend the conference via video link from ACCC offices in Melbourne, Adelaide, Brisbane, Perth, Hobart and Canberra. The conference will commence at 12pm AEST. ACCC Commissioner Dr Jill Walker will chair the conference.
I am sharing this to update to keep all newsagents abreast of representations being made in pursuit of a more equitable supply model for all newsagents.
The best source for labour rate and public holiday information
Some newsagents retain association membership to access labour rate and public holiday information. If this is you, save yourself the money.
- Click here for an accurate public holiday list.
- Click here to access the Fair Work Ombudsman Award finder.
Here are other free resources some newsagents use associations for:
- Advice on checking shopper bags for possible theft.
- Advice from the Federal Police on reducing the impact of theft.
- How to do a magazine relay in your newsagency.
- How to address magazine oversupply.
I think newsagency associations are out of touch with the needs of newsagents. Also, given they serve two different businesses, they are conflicted and less effective for each.
Save your money – invest it in your business.
ACCC schedules a pre-decision conference of MPA magazine supply pilot in response to newsXpress submission
I received this from the ACCC today as I suspect others who made submissions did. I am pleased they have responded positively to the newsXpress request for a pre-decision conference.
Dear Sir or Madam,
I write in relation to the authorisation application lodged by the Magazine Publishers of Australia (A91472). A pre-decision conference has been called by the newsXpress buying group of newsagents in relation to the application. The conference will provide the opportunity for applicants and interested parties to make oral submissions to the ACCC about the draft determination.
The conference has been tentatively booked to be held on Thursday, 23 April 2015 from 12pm. It is hoped that video link ups will be available for interested parties to attend the conference from ACCC offices in the capital city of each state and territory.
If you think you may wish to attend the conference, please express your interest by COB Wednesday 8 April 2015, and advise which city you would be attending from.
I will be in touch with parties who express interest in attending with further details in due course.
Further information about the MPA’s authorisation application is available on the public register:http://registers.accc.gov.au/content/index.phtml/itemId/1183386/fromItemId/278039. Further detail about the pre-decision conference procedure is available in the ACCC’s publication Authorisation Guidelines: http://www.accc.gov.au/publications/authorisation-guidelines-2013.
Involving newsagents in matters such as these is important, especially since the ANF appears to not have.
One newsagent’s plea on lotteries and supermarkets
Here’s a letter published in The Land from newsagent Rod King at Bingara, making his case on supermarkets and lotteries. I’m glad Rod wrote the letter and that The Land published it for the argument it makes about excessing supermarket power in Australia. The reach of Coles and Woolworths is, as I understand it, greater than most other supermarket groups in the western world.
While I understand Rod’s argument, it is another example of talking down the channel and that, to me, is a big risk. If Australia really would lose half its rural newsagents in supermarkets got lotteries then the channel is in serious trouble. Surviving on the back of a single product category is no plan for the future in my view.
On the matter of politicians, the party which has consistently spoken out against Coles and Woolworths is The Greens. You can see their position here.
If your newsagency is one that would close if the supermarkets got lotteries, act now, exert your own control over your future, own it.
ANF suppliers conference
I have been asked by several people if the newsagent supplier forums I am hosting are in response to the ANF suppliers conference. The answer is no. I was not aware of this ANF suppliers conference until yesterday. I received from the ANF to newsXpress last year about an event it was planning but that event seemed to be more about propping up Newspower and I wrote to the ANF about it at that time. Tower Systems received no invitation. The forums I have planned are attracting a wider base of present day and future suppliers to the channel.
Why do people buy more Back To School items at supermarkets than newsagents?
Woolworths and Coles are doing well with Back to School because they do it well. Just check out your local Woolworths to see the consistency in all their floor display units.
Their consistent corporate branding takes precedence with the product brand secondary. There is an excellent visual connection between the units and this strengthens the shop floor presence. It says – we own this space.
Compare this to a local newsagency with six to eight posters and no visual consistency between displays and it makes sense that the supermarkets are doing well.
I wish this was not the case. The best way for us as a channel to compete with the big supermarket chains is to do it better and this means a consistency shop floor pitch across the channel.
Hang on, we are 3,500 businesses with 3,500 companies each owned separately and each not wanting to be told what to do. The independence we love is our weakness.
Unhelpful commentary from Michael Pascoe on newsagents
Fairfax published a comment piece today by Michael Pascoe, BusinessDay Contributing Editor, about the decision being faced by the NSW government on where Tatts lottery products can be sold and the lobbying by NSW newsagents for continued protection.
While I agree with some of what Pascoe writes on this topic, his commentary is ignorant in some areas. For example:
Newsagencies are blighted businesses, hundreds joining the thousands of newspaper company employees who have lost their jobs. That’s capitalism for you – things changes, markets are disrupted, opportunities arise and fall. Like the local Blockbuster store, they are collateral damage of our technological evolution. They are no more special than every other business that is special in its way.
I’d prefer Pascoe to have commented that there are newsagents with growing businesses, newsagents who saw the changes coming and fundamentally changed their businesses. In the hands of a good retailer, a newsagency is not a blighted business.
For a long time, the newsagencies were a protected species – as pharmacies still are. They enjoyed a monopoly on newspaper distribution that was eventually broken down by the newspaper publishers. That the business of publishing physical newspapers also is rapidly breaking down is immaterial.
I’d prefer Pascoe to note: deregulation of print media left newsagents disadvantaged, with less control over supply than those they now compete with. We have gone from being protected to being deliberately disadvantaged.
Newsagents used to be a powerful little lobby group, as pharmacy owners still are. They’re not any more, but might be worth a few votes for a policy as vague as an “extended moratorium”.
Pascoe could have noted: attention newsagents have attracted on this issue is more than achieved in recent years.
On the central issue in Pascoe’s piece, I agree – lottery sales need to be considered in the context of a tax, revenue raising for the government. Governments will ultimately choose revenue.
Newsagents will close unless… stories unhelpful
The stories in media outlets this week that newsagents will close unless they are protected on the matter of lottery ticket sales are unhelpful in my view.
Research by journalists would reveal that in states where there is no such protection newsagencies not have closed as a result. research would also indicate that there are many growing newsagencies without lottery product whatsoever.
I don’t want to be part of channel that survives because of protection just as I do not want to be of a minority and only get a job because of that and not because of my skills.
The stories infer that our businesses are uncompetitive and need help, weak and need life support are out of date yet don’t want to be relevant to today.
The bigger challenge newsagents with lotteries face is not from other retailers getting the products, it is from online. Win the political lobbying on retail and it’s no win at all given the extraordinary growth of online sales and the better service experience for things like ticket checking online.
The newsagents who think their business would close if other retailers like supermarkets got lotteries should think now about how they would react, about the business plans they would implement to survive. Indeed, this is what they should have been doing for years.
Protection is dangerous. It can make you lazy. It can make you feel entitled.
I run businesses in unprotected marketplaces. Competition makes me more focussed and more committed to my own actions for the success of the business. Competition drives me to explore efficient new customer generation – so I am not relying on one path to my door.
By all means lobby the politicians – but in the meantime, act like a professional retailer, make your business more appealing, generate net new traffic for other products and services, make your current traffic more valuable and exert more control over your future than ever before.
While the history of our channel as protected businesses is rich and wonderful, it is history. Our future is in an unprotected market where we are successful because of what we do and not because a politician wants the small business vote.
Newsagents having trouble handing back Hubbed equipment and cancelling the contracts?
I have been contacted by three newsagents in the last two weeks seeking advice and assistance on handing back their Hubbed equipment. each had reached the decision to not continue with Hubbed because of lack of customer interest and lack of revenue. They say that Hubbed is not honouring a promise to take back equipment when the service is not commercially viable.
One newsagent yesterday shared details of discussions with the Hubbed CEO that started well but soon went nowhere with a reported retreat from a claimed pre-installation promise they would take it back. As this newsagent acted on endorsement fro the ANF I suggested they make contact with them.
As I noted at the time of the gushing yet ill considered ANF endorsement of Hubbed, all that matters is what is in any contract you ultimately sign. If what I am being told is true, the contracts as proving problematic for newsagents who want to leave Hubbed. I am told there is a contract for Hubbed and an equipment lease contract in some cases.
I’d urge Hubbed to let newsagents out, take back any hardware and relive newsagents of their contracts.
The case for newsagents newsagents receiving more margin from magazines
Australian retail newsagents is a direct account with magazine distributors make 25% of the cover price of a magazine.
Distribution newsagents make 25% and have to share that with retailers they supply. The share they make can range from 12.5% to as high as 5% depending on terms negotiated.
Newsagents want more than 25%.
While some cover prices have increased, overall they have not kept up with CPI – meaning in real terms our gross profit is lower today than last year and prior.
The gross profit from magazines has not kept pace with the increases in rent, labour and other business costs. Rent increases at least 5% a year and labour closer to 4%.
The freight cost of handling returns has also increased.
Many newsagents say that while magazine sales have been declining on average by 8% year on year for the last three years, their magazine bill remains the same. The reality of the sales decline should be that magazine supply bills decline. That they are not declining in line with the decline in circulation speaks to the unfairness of the magazine supply model to newsagents.
Distributors would say that newsagents knowingly signed their contracts. Fair enough – but since then they have started supplying new channels and they have changed how they deal with other retailers that benefits other channels and disadvantages newsagents.
Magazine publishers would say that they have no financial capacity to pay newsagents more. To those who supply supermarkets I’d say you do have capacity given rack fees, promotion fees, zero returns and other costs of handling the supermarket channel. To those not in supermarkets, I’d say our channel offers the most cost effective way of reaching new eyeballs even if you were paying us 40% of retail sales.
Paying newsagents more could open up more certainty around shelf life, in-store promotion and overall shop floor engagement. It stands to reason … let’s say I have two product categories generating roughly the same in revenue but one delivers 25% gross profit and the other delivers 55% gross profit, both have similar space requirements and similar labour requirements. High will I focus on? 55% GP of course.
Magazine publishers should embrace our channel, give us a better margin, eliminate the need to return unsold stock and free us from the restrictions of the current supply model. Do this and entrepreneurial newsagents would emerge with a focus on magazines. I suspect they would drive sales increases.
Magazine publishers who want newsagents to be more commercial with their products need to treat us more commercially. This is what it comes down to.
Magazine Publishers Australia has been working on a code of conduct which they think will make newsagents happy – I have written about it here and I have written about it here. If you compare this code of conduct to my suggested magazine supply KPIs you will see the MPA draft is biased to serve the publisher whereas mine is biased to serve the newsagent. I think the MPA code needs some more work but it is a start. For example, the financial viability of a title in a newsagency has nothing to do with the size of the print run … the ideal sales efficiency has nothing to do with the size of a print run.
I’d also note: early returns are essential to cash-flow management in newsagencies. If Network and Gotch want to be paid they must allow early returns. If a title has not sold in two weeks it ought to be a reasonable candidate for early return.
The challenge for newsagents is what to do about magazines. If you decline your range too low you stop being a destination for the shopper who likes to browse and this could have a knock-on effect for other parts of your business, you stop being a newsagent. You would need to be bringing traffic in for other reasons.
Take a look at stand-alone businesses around you like gift shops, toy shops, stationery shops and card shops. They struggle with this single category attracting traffic. One thing that works for newsagents is the multiple reasons people come through our door.
Our businesses are very layered with different departments relying on each other for support. This is why cutting magazines too far is a serious danger for us. Magazine publishers and distributors know this and I suspect that is one reason they have not moved on offering fair compensation for our services.
The magazine supply model which makes newsagents the least competitive of all channels and the compensation paid to newsagents for magazines are issues the ANF could have and should have owned. They have failed us over and over. Most recently the ANF represented newsagents at a magazine publishers conference and if what I am told is right – they failed us abysmally. The ANF handling of the matter is a reason newsagents should stop funding the organisation in my view.
What’s the answer, what should newsagents do?
While I don’t have the answers and am not in a position to tell newsagents what to do, where is what I’d suggest are reasonable action items:
- Trim your magazine space to what is financially viable in your shop but not lower than 650 titles.
- In appropriate categories display three titles where you would in the past have displayed two. Get more value from your real estate.
- Write to your distributors with a copy of your own sell through rates report showing their gross oversupply over a twelve month period and put them on notice that you will act.
- Lodge a complaint with a government authority and ask for mediation. See my previous advice here.
- Write to publishers explaining what you would do if you received higher margin. Be specific.
It’s on you to act as no one is doing it more you. Complaining about it achieves nothing. Act, and act now.
Careful what you wish for though as we are dealing with businesses that have bullied our channel for many decades. They can be spiteful and bullying. Approach this in the wrong way and you could find yourself without magazines and what does that business look like?
I have written about this topic many times in my team years of blogging and which there have been some changes, they are not sufficient. I really do think that achieving a good outcome for newsagents depends on newsagents acting themselves.
ANF seeks help from newsagent suppliers on commercial matters
The ANF CEO has written to selected newsagent suppliers seeking participation in a workshop in February 2015 to discuss matters relating to the future of the channel.
While the idea of the ANF workshop sounds good, there are challenges. The most significant challenge is the conflict of interest of the ANF. It is a commercial player in the channel, competing with some it has invited to the workshop.
The ANF is a significant shareholder in Newspower. The areas it wants to cover in the workshop are areas of immediate interest and concern to Newspower. Indeed, the ANF participated in a similarly themed Newspower strategy workshop a couple of months ago. That workshop resulted in decisions by Newspower that they say place it on a strong footing. If this is the case, why this ANF workshop now, why not tap into the Newspower plans?
While Newspower is in decline, reportedly dropping to half the membership it had three years ago, the ANF is participating in trying to arrest the situation. It’s very ownership of a stake in Newspower is a conflict with the goals of the proposed workshop. Surely those running the ANF see this?!
The ANF also has a commercial interest in the Hubbed Connect parcel service (if it’s still operating). It also owns the Western Union agency newsagents use. Plus, though its VANA and NANA connections it has interests in insurance, training, other parcel ventures, stationery wholesaling and providing other services.
Why would a supplier connected, even vaguely, with any of these areas want to participate in the ANF workshop when they ANF could leverage their intellectual property for its own gain?
While the ANF says it’s an association, it is primarily a supplier to newsagents. You only have to look at how it uses its pages in National Newsagents to promote its commercial partners – Hubbed most recently and Bill Express years ago with gushing reviews yet without reasonable due diligence one should reasonably expect from an industry association. There are suppliers to newsagents who find themselves competing with the ANF directly or indirectly. I suspect they will not participate.
Another challenge for the ANF is its failure to act on behalf of newsagents. Three years ago it hosted a two-day workshop on problems with the newsagent magazine supply model. To my knowledge, not one recommendation from this workshop has been acted on by the ANF. While they may claim the draft code of conduct from magazine publishers and distributors is an outcome – I’d reject this as the code of conduct was initiated by publishers separately (and it is inadequate for newsagents anyway).
A third challenge is that the ANF has no mechanism for driving compliance by newsagents. There is no point in agreeing anything with the ANF as it has no means of delivery.
The fourth and probably most significant challenge is the relevance of the ANF. The most valuable opportunities for newsagents lie outside of circulation product and lottery product. The ANF has no experience in these new, high GP and highly competitive areas. If it is seeking to become involved in these product categories in some way it is late, years late. This is why I say the ANF lacks relevance.
Newsagents seeking leadership on new traffic better margin opportunities have been engaging with the marketing groups and working on their own. Those asking the ANF are late to the party and are asking the wrong body for assistance.
The ANF directors and those who work for the organisation have failed newsagents on dealing with changes to retail, disruption to print and disruption to gambling products. This workshop will not rectify the failure.
Video: How magazine publishers and distributors make newsagents less competitive for magazines
Here’s a short video about the impact of magazine oversupply and why newsagents early return. It was shot in my newsagency on Thursday last week.
If you work for a magazine publisher or distributor, please watch this video and learn more about the #1 issue that makes newsagents less competitive than they could be, the #1 issue that leads newsagents to quit their businesses.
I made the video because I care about the channel and I care about magazines and the vital role they play in the channel.
While I write about oversupply often, the here are not getting through, the problem we see today is worse in my view than ten years ago as we are made to look worse that our competitors.
Through the video, I am hopeful that showing is more effective than telling.
This video is the type of communication newsagent associations ought to produce. Instead, they attend meetings that achieve little or nothing for newsagents on this mission-critical issue.
We are approaching a tipping point on this.