Note to newsagency suppliers: actions speak louder than words
There are some newsagency suppliers who regularly tell newsagents and those who represent newsagents how much they value newsagents and how important the newsagency channel is. They say that newsagents are important to their business. They sometimes throw out figures to support their argument.
My mum would say to us kids that actions speak louder than words. This is so true.
Suppliers who find themselves often telling newsagents how important we are and how much they value us could consider how they reflect their words in their actions. If we are the most important channel: show, don’t tell.
Eugene goes to Hollywood
Eugene Varricchio, Group General Manager – Retail & Distribution, ACP Magazines, was dragged on stage at the newsXpress National Conference a few weeks ago in Melbourne by performer Matt Hollywood to help with a comedy routine. Check out the footage captured on a mobile phone on the night and loaded to YouTube:
Eugene handled with good humour what many others would have refused. He gave many of us there the best laugh in ages. While I feel bad, thinking back, about laughing at what Matt put Eugene through, my overwhelming feeling is one of admiration for him playing along and letting us all have such a good laugh.
We do put our suppliers through crap sometimes. It is nights like this one with Eugene on stage where a supplier builds a unique connect with the newsagents in the room. His good grace at being set up, which we was, says a lot.
Some newsagent suppliers hold back sales
Some suppliers get in the way of achieving sales in newsagencies because of their rules about how and where they want their product displayed. I wish they would trust that I want what they want – their products sold as quickly as possible. Having a go at a newsagent because of a breach of the rules and with no regard to the sales achieved disrespects the role of the retailer.
It is extremely frustrating and demotivating to be treated as a process worked by these suppliers. They need to understand that newsagents have more financial risk in selling their products than they have as employees for the supplier.
Some days, I want to yetll, get out of the way and let me be a business person.
their excuse is that not all newsagents will do the right thing. So, their response is to treat us all as the lowest level. We miss out. They miss out.
Don Burke cuts through the pile of newsagent mail
Newsagents receive a ton of correspondence every week. Most of this communication is from suppliers telling us what to do, where to place product, what displays to create and the like. It is a pleasure to receive the letter we received from Don Burke. In the personally signed letter, Don thanked us for our support. Recognition like this encourages us to remember Burke’s Backyard and find other ways to support the title – because he acknowledges the support.
Before other publishers say what about me, I’ll acknowledge that we do receive recognition in other ways and I have blogged about that here before. What touched me about Don’s letter was its simplicity and the personal signature. It makes the recognition more personal and that is highly motivating.
Compendium loves their customers
Compendium is a great company to do business with. They always go above and beyond. Every order comes with something extra – either a small gift or something free to help you better promote their products in store. They think of every detail.
The photo shows the free easter egg we received with an order last week. Where others would put an egg in the package, Compendium bagged it and included a tag so we understood the context of the gift: we LOVE our customers. This gift and others show us with every order that they love us. It makes us feel better about their product.
The Compendium rage works well in a newsagency, as an add-on gift for card purchases especially.
It’s great when you have a supplier providing excellent products with a good margin and being an absolute delight to deal with. Compendium sets a high benchmark among newsagent suppliers.
The long Aussie summer
With retail now a 365 day a year proposition it is frustrating that so many suppliers to newsagents close this time of year. Here we are on January 4th and still suppliers are closed for Christmas / New Year. Some even have another week off and one or two don’t re-open until after Australia Day. Talk about the long Australian summer.
While suppliers currently on break would say we should have ordered stock to cover, the reality is that I should not be their warehouse. If they want to sell product to retailers they ought to be more responsible to the needs of retailers – like opening right after New Year.
I have opened an account with one supplier today simply because they are open and can deliver Monday. The early bird…
Shovel makers make more money than those who shovel
PaidContent has the story about Microsoft spending US$6 billion to purchase aQuantive a highly successful online advertising and marketing business. The Microsoft Board is smart. Just as the shovel makers found in the gold rush in Australia in the 1800s, there is plenty to be made by servicing those in a rush.
The connecting for newsagents and the Microsoft story is that circulation, a core product in our business models, is changing. Unless we start to manage our real-estate asset as if we have control, we will make less and less. We need to pursue strategic moves such as that announced yesterday by Microsoft.
Inspector Morse partworks stuff up
Gordon and Gotch, in their wisdom, decided to not allocate us any copies of the new Inspector Morse partworks released this week by Bissett Magazines. We discovered that we had been left out of this opportunity when the Gotch merchandiser visited us yesterday to put up a display. Our enquiries revealed that this was not a missed delivery by Gotch – they had not allocated any of this new partwork series to us.
We escalated the issue through Gotch and were asked later in the day by Gotch representative if we would like to be put on their list of newsagents who support partworks and therefore want good quantities of new releases. We were surprised to discover that such a list exists. Our partworks interest has been well established, or so we thought. Consider this:
I have blogged here before and spoken at newsagent conferences about the importance of partworks to newsagents – urging newsagents to take up partworks.
I have shared sales data with Gotch management about the efficiency of partworks customers – baskets with partwork product are more efficient than almost any other category we carry.
Ben Kay, Manager of my newsagency, and I have met with Peter Bissett, owner of Bissett Magazines, and discussed partworks at length and out commitment.
Ben and I have had discussions up and down Gotch chasing more and more partworks product , impressing on them the sales we can achieve with the right stock. These discussions have been from the GM down.
Through my software company, Tower Systems, we created some exclusive partworks specifics enhancements and advised the folk at Gotch and Bissett about these – enhancements which help newsagents better manage partworks with a view to better customer service and lower time cost management. The enhancements were delivered to Tower Newsagents free.
I launched the newsagency industry’s first ever magazine loyalty card in 2004 in part as a result of our partworks success and to drive even greater success. Gotch was made aware of this at the time.
Peter Bissett recently brought a UK executive to our store (and others) to show best practice.
Our commitment to partworks is absolute. We only wish we had more new releases to promote.
This time around like others Gotch will blame others, Bissett will blame others. In the meantime TV hits, customers come to us looking for the product, we look like hopeless retailers and we lose them to someone else. These are sales worth fighting for.
Obviously someone at Gordon and Gotch is not across any of this so they cut us out of the Inspector Morse game.
And magazine distributors wonder why newsagents complain about them. Sure we will get Inspector Morse. The ‘system’ which took us off the list is flawed and no one cares enough to fix it.
Footnote: I wrote this blog entry last night but did not click PUBLISH. Just as well as today I’ve been able to edit out some of the more colourful passages. The facts are colourful enough without me needing use more robust language to make my point here. Maybe I should have slept on the email I sent to Gotch but then maybe they will understand how upset people like me get when we are denied an opportunity to do what our newsagencies have been created to do.
Australia Day newspaper bumper edition frustrates newsagents and customers
I’ve heard that Fairfax in NSW will publish a ‘bumper edition’ Sydney Morning Herald on Friday January 26 and to be on sale for the entire Australia Day long weekend for the usual Saturday price of $2.20. I would have thought that in the current newspaper market – challenged at best and decaying at worst – Fairfax would do everything possible to not upset customers. Their customers will be upset by yet another lazy Bumper Edition. Newsagents will bear the brunt of customer anger. Talk to any newsagent and they will tell you of the frustration expressed across the counter and on the phone explaining the pricing and the convoluted rules associated with the Bumper Editions this past Christmas. Bumper Editions are not good customer service.
Everywhere you turn there are reports of sales declines being experienced by newspapers. Newspapers themselves are regularly running naval gazing pieces about their own future. Publishers like Fairfax have invested hundreds of millions of dollars in online businesses which are speeding the decline. It is odd to me therefore that Fairfax would ‘play’ with their customers in this way. If they want to delay the decline they would publish each day of the Australia Day weekend. But then, maybe the financial return is better if they run a Bumper Edition and that’s more important than what the customers want.
Memo to Fairfax: You might want to let the computer companies know about your Bumper Edition plans so that they can provide advice in advance to their newsagent clients and thereby save the hundreds of phone calls which would be made otherwise.
Integrating the newsagency sales counter
Newsagents need to take back control of their counter. The counter is the busiest part of any newsagency, the key profit generator, yet in many newsagencies it is suppliers who are in control. Lottery companies, magazine publishers, just about everyone, wants in on the action. They want their stands, display units and products at the counter. So much so that in an average newsagents the counter is mess of mixed messages.
Reclaiming the counter should start with the lotteries area. Lottery companies like a defined part of the counter where nothing but lottery product is sold. They tend to prefer the best counter location. It means customers wanting lottery product can make their purchase and leave – without being tempted to purchase other items. It also means that customers purchasing a newspaper, magazine or some other product are less likely to be tempted with a lottery product purchase.
I am all for integrating the counter, mixing lottery sales points and regular register points and merchandising the counter appropriately. A properly integrated counter, against the rules of some of the lottery organisations, should increase sales of lottery and non-lottery product.
In integrating the counter newsagents ought to focus on higher margin repeat business, thereby building the business so it can weather a downturn in newspaper and lottery sales – both categories of products are being impacted by online developments and are the top two traffic generators for newsagents. In other words, newsagents will be hit hard if/when traffic and sales from these two fall.
By leveraging existing lottery and counter traffic with an integrated counter, newsagents can start to reposition their business and re-educate customers about their offering. This is exactly what publishers are doing with their online and free models.
While some lottery companies will resist the integration I propose, newsagents need to put their business needs first.
Today we have great traffic, among the best in the country. By acting now and leveraging that more efficiently and across a broader range of better GP product at the counter we can weather generational change.
Polarised retailing affects newsagents
The toughest part of retailing has been newsagents and book selling, where sales dived throughout 2006, with a 4.5 per cent drop since June. Mr Ganz said many of their sales had been cannibalised by supermarkets.
There are signs retailing is becoming increasingly polarised.
“Top-end and bottom-end retailers are doing well but those focused on the vague middle market are struggling,” said Andrew Cavanagh, of the Australian Centre of Retail Studies.
So reports David Uren in The Australian today. I know of newsagents who would agree with the report and others who would disagree. I’d like to see the data for city versus regional / rural and shopping centre versus high street and a comparison of socio-economic areas.
The newsagents doing well, and there are many, are those who make their businesses stand for something, where they control the business. We have to be bold, not necessarily big, but bold in making a statement about what our business stands for. The more valuable we are to our customers the more they will spend.
We must create our own businesses and turn our backs on the businesses our suppliers created for us more than 100 years ago.
Virgin Mobile cuts newsagent commission and forgets the little guy
Virgin Mobile, an Optus company, yesterday advised newsagents that commission on the sale of Virgin mobile phone recharge product is to be cut again. What used to be profitable business for newsagents is now of questionable worth. Consider this, a recharge transaction takes between one and three minutes and newsagents make, on average, a dollar gross profit. Once you allow for card fees and overheads it is, as I say, questionable business.
Virgin has a responsibility to answer the following questions for newsagents:
Has Virgin cut the commission it pays to Coles, Woolworths and Australia Post?
What commission is Coles, Woolworths and Australia Post on? (I ask because of evidence published here last year of Vodafone paying Coles 16% when it cut newsagent commission to 5%.)
Has commission to wholesalers and any other middlemen between Virgin and newsagents been equally cut?
What is Virgin’s justification given that its profits are strong and given that newsagents do not have any means of reducing the cost of providing the service?
Under corporate responsibility at the Virgin Mobile website, there is nothing about fair treatment of its retail network or respect for those who have helped build its brand.
I understand that commissions on telco recharge are falling globally. This does not make Virgin Mobile’s move acceptable. Newsagents need to achieve a fair return on labour for all services offered.
The lemming like approach of telcos to drive commissions down and down, once newsagents have invested tens of thousands of dollars in equipment to be able to do the recharge, is disrespectful. If their profit situation demanded it, okay, but it does not. Companies like Virgin have been happy to use newsagents to gain market share and now it is achieved they cut newsagents out of the game.
How socially responsible is that?
Reader’s Digest oversupply: unconscionable conduct
In April this year I blogged about gross oversupply of Reader’s Digest by their distributor NDD. At the time, my supply had been increased without justification. As a result of my blogging, supply was reduced to a more reasonable level. Last week my supply quantity for Reader’s Digest was increased to a gross oversupply level again. I have been supplied more than three times what I will sell even in a good month. NDD and its computer systems know this. They have knowingly taken advantage of my newsagency and, I suspect, many other newsagencies. This is unconscionable conduct. It is the type of magazine supplier behaviour that newsagents ought to complain to the ACCC about. It is the type of conduct which places newsagents at a disadvantage as it removes cash from small businesses as they have to fund this gross over supply.
Newsagent competitors in the magazine category control what they receive. Newsagents do not. NDD will say that I’m wrong on this and cite many examples of how newsagents can control supply. My questions is how is such control evident in the supply quantity for Reader’s Digest this month? Following my blogging in April this year I reached agreement with NDD about supply quantity for Reader’s Digest. Barely eight months on and it is being ignored. I do not control what I receive. This disadvantages my newsagency.
Data I see suggests that Reader’s Digest sales are falling. If we allow for shrinkage (theft and other loss) the sales fall looks worse. Reader’s Digest is easy to steal given its size so I’d suggest shrinkage is above the average of 2% I see for magazines.
Photo source: reader’s Digest website.
News and Fairfax contemplate sharing logistics and more
On the surface it makes sense, Fairfax and News sharing trucks for newspaper distribution. It would be good if newsagents could unlock similar rationalisation so that they too could drive costs down and thereby achieve a better return. For example, it would be good is the rules of the newspaper distribution system allowed newsagents to include other products in a bag delivered to a doorstep with a newspaper.
Newsagents in some states have just been permitted their first delivery fee increase in years – these fees are set by publishers. Data suggests that in real terms newsagent compensation for each newspaper home delivered is considerably lower today than prior to deregulation. With newspaper cover prices – a key determinant of newsagent revenue – showing less than CPI increases, newsagents scramble to make more than a meager income from the delivery of newspapers. Hence the need to unlock their local distribution network for the delivery of other products at the same time as delivering the newspaper. The lack of return is one reason more newsagents are exiting from home delivery than at any time in the past.
It would be appropriate, if the discussions between Fairfax and News proceed further, that the ACCC considers the proposal at the same time as conducting a review of the impact of the 1999 deregulation of the distribution of newspapers and magazines overseen by the ACCC at the behest of the Federal Government.
Prior to deregulation, newsagents operated under a territorial system. Deregulation took that away and while we have an appropriately more competitive environment, newsagents ought to have been compensated by the Government for having their exclusivity unilaterally taken from them.
If newsagents were auto workers, farmers or chemists, the Government would most likely have thrown millions their way as it has done regularly to those industries to facilitate restructuring.
While not wanting necessarily to reopen the deregulation can of worms, there is no denying that newsagents did have something valuable taken from them by Government action without compensation.
Magazine publishers and distributors abuse Australian newsagents
Newsstands like this are dotted around Vienna. Further out of the city they become more traditional shops but all carry a similar range of products: newspapers, magazines, confectionery and cigarettes. Usually, only the top ten titles are displayed full face – the rest are fanned along shelves, almost on top of each other with two or three centimeters of the cover showing. Many are displayed this way behind the counter. One news vendor told me this was the tradition. People know what they want and if they don’t he finds it for them. When I asked about browsing he exclaimed – “this is a shop!”.
The newsstand in the photo carries around 750 titles. He chooses what he carries and reviews new titles before deciding if he wants them. He can cut a title at any time. Being in the city with many tourists means a broader range suits him.
Range is a critical issue for Australian newsagents – our lack (or perceived lack) of choice in the magazine titles we carry. We have been conned with a half pregnant deregulation and have not been smart on how to deal with such a biased and broken system. Magazines in the top 100 are fine, I am happy with them and my cut from the cover price. My issue is with titles outside the top 100. Like these newsstands in Austria we need the right to choose the titles we carry. Magazine distributors need to advise details of new titles before they are shipped and we need the ability to set our own supply level. The alternative I see to this is that newsagents charge a weekly flat fee for handling titles, based on the quantity of a title received, for each week of the on-sale period. Of course, we could consider a higher margin for low volume titles but I’d rather see the margin remain the same and us compensated for the assets we bring to the table regardless of sales success.
Every minute and every dollar newsagents spend on titles outside the top 100 – many of which have a sell through of 40% or less – is a minute and a dollar less available for the top selling titles, the titles delivering customers to the shop and good sales growth.
Newsagents are kidding themselves with the current system. We are being abused by some publishers and compliant magazine distributors who often get paid regardless of whether a title sells. The sooner we take control of our magazine real-estate and labour assets and run them like a business the better. The sooner we manage the range in our stores the sooner we will start to increase magazine sales.
My friend in Vienna was surprised to hear how many newsagents there are in Australia and how the magazine supply model works. He laughed at how easy it was for publishers to get “rubbish” into the shops. As I walked away I thought he was probably laughing at me too.
Newsagents v. Vodafone; small business protests arrogant decision by major telco
Newsagents continue to vent their anger at the decision by Vodafone to cut their commission by 37.5% to 5%. The Vodafone decision is making many newsagents reconsider their position in terms of selling Vodafone product.
I have reviewed shopping basket data for over 30 newsagencies covering sales from June 1 through September 24. In all the data covered represents close to 2 million shopping baskets. On average in a suburban newsagency, phone recharge product is sold alone 77% of the time. In rural/regional newsagencies that figure falls to 65%.
This data tells us that phone recharge is not efficient in drawing consumer traffic which purchases other product. While this may be a commentary about newsagencies, it may equally be a commentary about the mindset of recharge customers.
It is important that newsagents understand the broader value of recharge sales. With 77% of sales being single item sales – that is a recharge purchase and nothing else – we need these sales to be time efficient, and business efficient (i.e. cash flow beneficial and little or no error). We need to measure the economic benefit on the sale of the recharge itself.
A $30.00 recharge generates $1.50 in commission (based on 5%). Allowing for credit card charges (data suggests 50% are purchased with credit), the $1.50 falls to $1.20. At 1 minute sale time $1.20 is okay. Anything longer than 1 minute and I’m losing money. This does not factor in the cost of the infrastructure, counter real estate and display real estate necessary to support sales.
These are point to make to Vodafone. The economic viability. While I can understand the drop in commission from 11% to 8%, this fall to 5% in the face of record profits is a tipping point. It pushes newsagents to the edge. It makes selling Vodafone recharge product of doubtful value in an average newsagency. Sure there is the traffic argument. I suggest there is reasonable data now to suggest that this is a phurphy. Recharge traffic is busy work and not all that profitable for us.
This is an arrogant decision by Vodafone against their small business partners, one they need to reconsider.
Newsagents are forced to fund the gas (fuel) price increases out of their pockets while big businesses add surcharges
The whole world is suffering as a result of high fuel prices. Here in Australia the impact is exacerbated because of the Federal Government taxing regime.
While many businesses levy fuel surcharges (airlines, freight companies etc), Australia’s independent newsagents, who deliver newspapers and magazines to millions of homes and businesses every day, are being blocked from charging a levy by the newspaper publishers.
The high price of fuel is hurting newsagents and they are blocked from doing anything about it.
Publishers will claim that the recent delivery fee increase helps offset the increase in the cost of fuel. That’s not true. The recent delivery fee increase, in the case of Victoria, was the first for at least seven years and did not even catch up with the increases in labour and other costs over that time.
Publishers who care about the economic well being of their independent newsagent channel will allow the immediate introduction of a fuel surcharge or they will provide rebates themselves. Either way, many newsagents cannot continue to fund these costs from their own pockets.
Fuel is a cost to my business and it’s time I was allowed to be business like in dealing with this.