Newspapers

The Age in Melbourne yesterday (Good Friday) and today was pretty much the same newspaper except for the main news wraparound. Home delivery challenges of what is effectively a duplicate product notwithstanding, retail customers expressed their frustration in my shop today at the waste of paper and for being charged a premium Saturday rate for a product they already purchased the day before. The message from the customers I spoke with was if you’re going to sell on both days then product a different newspaper for each day.

Continuing noise among newsagents about the News Ltd deal to place their newspapers at Gloria Jeans outlets. Several newsagents have complained that the new arrangements not only take sales from their stores but are loss making in terms of labour cost. Newspaper publishers could achieve incremental sales if they treated newsagents as business partners, removed restrictive business rules and rewarded success. Incremental newspaper sales are available in newsagencies if the publishers want that.

I’ve been thinking more about the deal between News Limited and Gloria Jeans to sell their newspapers in the coffee outlets. Much has been made of leveraging off the “coffee experience” in pursuit of incremental sales for News. My feeling is that News sees newsagents playing less and less of a role in the retailing of their product. News has a right to draw such a conclusion and make appropriate changes to their retail strategy. However, as a newsagent partner I’d like them to let me know because in my small business I and my team are busy chasing same store growth. We’re winning too. Our biggest competitors and the outlets News is supporting with its initiatives.

I invite News Limited to engage in open dialogue about the role they see for newsagents in the future. Not through newsagent industry associations which are likely to filter information (like the Australian Newsagents Federation did in yesterday’s Gloria Jeans announcement). No, News should to talking direct with newsagents so that newsagents are appropriately informed when making business decisions. For example, Victorian newsagents are being told to put in a newspaper stand which costs upward of $3,000. Why invest such capital in a product being pushed to more and more retail outlets?

I know from my own experience that I can get a much better sales kick from a $200 stand than I would from the $3,000 stand.

Good luck to Gloria jeans. I just wish News would work more strategically with newsagents.

A few hours after my post this morning about how newspaper publishers might be damaging the golden goose by pursuing petrol and coffee outlets for newspaper sales, News Limited issued a press release trumpeting their relationship with Gloria Jeans. My view is that the News Ltd strategy is flawed on several fronts. It disrespects and diminishes the value of the newsagent retail channel and it increases browse without increasing sales.

In a newsagency newspapers are the premier product whereas in Gloria Jeans they are the low GP add on. Newsagents actively promote newspapers and all their promotions. At Gloria Jeans promotions will always be about margin, that is, coffee.

I don’t see the sense in creating specialist retailers (which newspapers did in newsagents in the 1800s) and then bring about their break up by facilitating more competition through deals like this one with Gloria jeans.

While News needs to put the needs of its shareholders first, newsagents need to do the same. This decision by News will make newsagents question the News commitment to the newsagency channel. News will make more if the release newsagents from stifling rules and reward newsagents for above average growth. Many newsagents will become entrepreneurial if these changes were made and the result would be solid sales growth.

Here’s the full press release.

Newspapers and coffee
Monday April 10, 2006.

Coffee and newspapers in the morning – it’s a combination that’s hard to beat. Now News Limited and Gloria Jean’s Coffees have teamed up to make it an even more irresistible way to start the day.

From today (Monday, April 10) The Australian, The Daily Telegraph, The Weekend Australian and The Sunday Telegraph will be for sale in over 120 Gloria Jean’s coffee houses across NSW.

This national program will see the 174 Gloria Jean’s coffee houses in other states progressively start to sell The Australian, The Weekend Australian and the News Limited metropolitan and regional newspapers in their area over the next six months.

“This deal gives the readers and coffee drinkers what they want,” said News Limited circulation director, Mr Mark Webster.

“Recent consumer research has identified that the growing numbers of Australian coffee drinkers are significant newspaper buyers and that at the same time, drinking coffee while reading the newspaper is a habitual pleasure. It is a formidable combination.”

Gloria Jean’s Coffees is wholly Australian-owned and locally operated. It is the country’s largest specialty coffee retailer, and was recently awarded Australian ‘Franchisor of the Year’. Gloria Jean’s Coffees expert baristas serve nearly 1 million customers a week – whose favourite drinks are cappuccinos, lattes and gourmet iced chocolates.

More than 9,515,000 Australians aged 14 and over read at least one News Limited national, metropolitan or regional newspaper each week.

“Through our partnership with News Limited, we are enhancing the ‘coffee moment’ experience at Gloria Jean’s Coffees,” said Gloria Jean’s Coffees Australia CEO, Mr. Mike Devlin.

“Our coffee houses are a community meeting place where people come together to share delicious hand-crafted coffee in a warm, ambient setting and escape the daily grind. Now they can also relax with the very best in news, views, gossip and sport in Australia and from around the world.”

Mrs Rayma Creswell, CEO of the Australian Newsagents Federation, said the federation supported the initiative. Newsagents will have the opportunity to grow their overall sale by exclusively supplying Gloria Jean’s Coffee houses within their territories and sharing commissions as they currently do with other sub-agents such as service stations, convenience stores and supermarkets.

“We support this because it ensures newsagents will continue to play a pivotal role in the newspaper supply chain. This opportunity provides the majority of newsagents with opportunities for growth in their overall sales. This is about meeting consumer need, it’s about reacting to consumer trends and it’s about ensuring that we maintain involvement and grow our businesses – businesses we rely upon as a cornerstone to long term sustainability,” said Mrs Creswell.

Mark Webster said the goal was to make newspapers more accessible to consumers.

“We expect to increase impulse sales by encouraging new readers to give our newspapers a go whilst also increasing the frequency of sales to existing casual readers. Newsagents, News Limited, Gloria Jeans Coffees and our customers should all benefit from this initiative,” he said.

The Baltimore Examiner, the latest FREE home delivery daily in the US, is delivered daily to 250,000 homes – more than the 169-year-old Baltimore Sun. This strategy of free home delivery newspapers is scaring some publishers. The strategy seems to be working for consumers and advertisers. The Examiner owners have registered in 60 US cities. More at the Wall Street Journal.

It’s ten days since the Herald Sun increased by 10 cents to $1.10 (for the Monday to Friday edition) and customers still come in, lay $1.00 on the counter and walk out. You can almost see them walk fast in the hope of you not noticing their scam. When you call them back they claim no one told them of the price rise. Based on past experiences this game will continue for another couple of weeks.

Newspapers Association of America has released a report which says unique visitors to newspaper sites jumped 21 percent from January 2005 to December 2005 and that the number of page views soared by 43 percent over the same period.

University students can get daily newspapers on campus for an annual fee of between $7.00 and $20.00. At the start of the school year they buy a card and show that when they visit the campus bookshop (or some other central location depending on the campus) to collect their newspaper.

While I support the strategy of getting university students in the habit of reading the newspaper daily, it frustrates me that I don’t have a similar year in advance offering I can make to my customers. I am sure that if newsagents had an over the counter paid in advance offering they could lock in customers. I am not proposing $7.00 for a year of newspapers. No, the fee to a newsagent customer could be closer to the home delivery subscription offer which is generously discounted.,

I recall discussing this with a newspaper circulation executive in the early 1990s. His only concern was tracking the collection of the paper by the right customer. I know that at the universities they are not even verifying student cards. It is easy for one card to be shared among many since the subscriber card is not looked at.

In newsagencies it would be easy to give customers a card with a barcode and to scan that barcode each day to track that only one newspaper is collected.

Newsagents and newspaper publishers know that subscription customers are, in the main, loyal. Not addressing the loyal over the counter customers leaves their business vulnerable from a newsagent as well as publisher perspective.

A few weeks ago it was a huge sales kick from the Simpson’s Pins, for the last two weeks it’s been Commonwealth Games coverage and promotions, last week the new issue of Alpha, the co-purchased sports magazine, was published, this week the AFL sticker promotion starts and on Monday this week the cover price went up 10 cents. It’s been a busy time for the Herald Sun. Their marketing effort will ensure there is no erosion in sales as a result of the cover price increase. All the marketing activity ensures consumer habit/loyalty. Even though newsagents only get 2.5 cents of the 10 cent price rise, it is the first such rise for the Monday to Friday paper in seven or eight years. It’s no surprise therefore that customers are not fussed by the increase.

Ben Compaine has written an excellent piece across at Corante (an excellent unbiased source) discussing how newspaper companies may respond to the continuing fall in advertising revenue. Of course, newspaper companies are responding. One only has to look at their spend in the last year. Locally, Fairfax and News have been very active with their cheque book. Their acquisitions make sense for them. I continue to worry about newsagents in that their channel was created by the publishers and continues to be treated in a servant like manner in key areas. Newsagents ought to have the freedom to develop their own entrepreneurial skills and they ought to be rewarded for success.

The Corante article is interesting in the context of the AAP story yesterday reporting that SEEK feels that online employment revenue could pass print in 5 to 10 years. I’d put my money on less than 5 years. Current online employment advertising is expensive. My companies have used SEEK exclusively for more than six years and while the service is excellent, a charge of $135.00 plus GST does not respect the operational cost model of the Internet fairly. But that’s a discussion for another day.

While newspaper publishers continue to pour resources into their online classified models, they would do well to invest in reinventing the print model if only to slow the impact of online. Australia, through its unique newsagent channel, would be an ideal place to experiment with an alternative newspaper classified offering. Engaging with newsagents on this could leverage a needed viable life extension.

My shops are 45 minutes from the city and we’re experiencing a solid sales Commonwealth games related sales kick. People are asking for the second edition of the Herald Sun with coverage of morning events. We’re seizing this an opportunity reinforce to consumers our position as the best outlet for up to date news.

Newspaper publishers are full of theories as to why sales are flat (in the case of some) or falling (others). Most theories, among those who accept that there is a fall, would blame disruption brought about by broadband, easier mobile access and online classifieds. Few would consider that sales are down because of the quality of the product. Newspaper publishers ought to visit newsagencies and talk with customers like ‘Joan’ a fifty something lady I talked with today. She has just stopped buying The Age after decades of loyalty. “It’s not a newspaper any more” she said to me. “All these competitions and giveaways, I have no interest”, she was on a roll. “I want news”, she said, as a demand “and when they start giving me news, real news, maybe I’ll come back.”

‘Joan’ now gets her news online but online services did not lure her from The Age. That came about because of the handling of several stories in The Age compared to what she was able to read online. In her view, The Age was not balanced in one story and its reports lacked reasonable depth in another and in the case of a third it’s story pandered to government rather than reporting facts which were negative.

While ‘Joan’ is one person, others would agree. She has not been pulled away from her favorite newspaper but, rather, pushed away. And she was sad about that. I reckon there are plenty of Joans who would be back in an instant if newspapers focused on content – hard hitting news which pursues the truth; analysis which is respected; and, less filler.

One only has to watch how much of a Saturday newspaper is thrown in the bin outside the shop to see first hand why people buy newspapers.

Since we installed the newspaper display unit at our Tattersalls counter our sales have increased 8% on top of the year on year increase we had been achieving until that point. In a flat newspaper market such a result is excellent.

Jay Rosen and fifteen of his students at New York University set out to determine the best blogging newspapers among the US major dailies. Their report names the Houston Chronicle as the best. The post is an excellent benchmark for any newspaper actively engaged in blogging. It also legitimises blogging for the newspapers yet to discover the medium and prods those who support what I’d call ghost blogs – blogs which are not the real deal.

Thanks to co-operation from News Ltd we have a new newspaper stand on trial at our lotteries counter and it’s working a treat. Getting a newspaper sales with a lottery sale is much better than just the lottery sale. It’s only been on the shop floor two weeks but indications are that the stand is worth between 5% and 10% in additional sales.

I look carefully at shopping basket data for my newsagency and others and an particularly interested in the basket depth achieved from newspaper customers. The industry average in suburban (high street and mall) newsagencies is 65% to 70% of newspapers being sold alone. The Melbourne Observer, a weekly newspaper aimed at the older reader, is sold alone 35% to 40% of the time. It’s an add-on sale in many cases and the traffic driver leading to more business in others. Our Melbourne Observer sales are at 80 to 100 a week and in a challenged newspaper marketplace this growth has to be appreciated. Theirs is a niche publication which serves the niche extremely well. It’s more efficient in terms of inventory, real-estate and labour than half the magazines I sell. I’d note that my sales team reckon the Melbourne Observer customers are happier than most!

Network Ten gave away a DVD with episodes of three programs with News Ltd newspapers last Sunday. It’s the only newspaper giveaway in the last year I can recall where we had half allocated giveaway stock left at the end of the day. (My ealrier entry incorrectly noted Fairfax newspapers as the related product.)

In Sydney yesterday no matter where I looked every copy of the Sydney Morning Herald I could find had a post it note from Roses Only. The note headline read FREE LOVE! It says something about the strength and relevance (still) of the newspaper for carrying such a timely message.

The Simpson’s pin offer with the Herald Sun is a great promotion. It’s driving sales of the newspaper with many stores like mine selling out. The promotion is good because of the long run and the opportunity for habit forming. My only wish is that News Limited would have liked a cover price rise with the promotion. The Monday to Friday Herald Sun has been $1.00 for around 8 years. In that time wages for retailers have gone up by more than 50% and retail tenancy costs by more than 40%.

The Economist has excellent coverage on old media and the challenges of today. In the same issue is this piece on News Corporation and this excellent piece on newspaper giveaways. I’ve commented here before about giveaways. Consumers focus on giveaways and not the newspaper and the sooner advertisers realise the con of this game to boost audit figures the better. Giveaways to support a price change are fine with me, it’s the sustained and seemingly irrelevant campaigns at audit time which cause retailers pain and result in skewed figures.

Headline Poetry is of daily poems made up of headlines from the three main dailies from Melbourne Australia: the Herald Sun, The Age and The Australian. Here’s a link of the description of the project.

Excellent coverage at Washingtonpost.com of a blogger’s roundtable on Wednesday this week involving some of the most respected media related bloggers. The round table came about because of disrespectful reader comments posted at post.blog. The Washington Post is to be applauded for its transparency. The transcript provides an excellent insight into the challenges of blogs and comments. Well worth reading.

ONLINE advertising, despite phenomenal growth over the past three years, is at least a decade away from catching up to newspapers, and a further five years from generating the revenues of commercial television.

This is the opening paragraph from a story in The Age (Melbourne, Australia Jan. 21) by Christian Catalano. The story quotes a report by Foad Fadaghi of the industry consultancy Frost & Sullivan .

I guess data can tell any story you require of it.

My concern with this report is that the industry is using it to say, hey, we’re okay, we’re okay. I guess if you repeat the mantra often enough you don’t need to plan for change.

If the report is accurate and balanced then why is News Corp. rushing online, why is Fairfax looking at more online purchases, why has PBL invested strategically in online. Newsagents, the people at the end of the newspaper food chain need to look at what the publishers are doing rather than what they are printing in their paper.

Ken Sand’s post, 10 Things Editors Should Do In 2006, (Journal Sentinel, Milwaukee), is an excellent post for Editors and equally excellent for newsagents and other retailers who rely on newspapers for half their foot traffic. We’ve been insulated in Australia from the waves of change which have hit US and European newspapers. I, reluctantly, forecast that insulation will fade in 2006 as new technology offerings impact newspapers and sales are flatter than forecast.

Trading Post has beefed up its online offering with BUY NOW features. It’s still frustrating that you have to register before you can actually do anything. This is a huge turn off. Trading Post needs to decide if it’s an online or over the counter offering. Once it works that out the road forward will be clearer for their business and for consumers.