We display pens with crossword titles at our Watergardens store. The pens are changed regularly to give coverage to different brands. The clip on bin for the pens as shown in the photo is what makes this easy. We can use the bins in other magazine categories to promote similarly appropriate product. This is all about basket building – getting customers to spend as much as possible, not by being push but by putting offers in front of them for a subliminal pitch.
It struck me while walking around the GNS Market Fair in Melbourne how well our channel is catered for with suppliers providing stunning visual impact in their ranges. I saw national brands with excellent displays which would look fantastic in any newsagency. Something happens between the trade show and the shop floor. Only rarely do newsagents create a similarly stunning display around a brand or a grouping of brands. While space, demographics and capital can be a challenge, too often we don’t even get part of the way there.
Buying and merchandising for visual impact could lift many newsagencies. rebuilding stationery around brands which are advertised nationally could lift a business from looking second class to looking like it is a worthy competitor.
The Markt Fair shows we have suppliers ready to help with branded product. The key is in our buying.
There are radio ads running in Gippsland promoting Newsink and newsagents selling their ink and toner product. The value proposition is that if you can find ink cheaper elsewhere they will beat it by 5%. While it is great to hear newsagents being advertised on radio, I’d rather the pitch be one of leadership – this is our unique selling proposition, come and shop with us rather than think of us if you see a good price elsewhere.
A couple of marketing specialists I have spoken with say the low price guarantee approach works as it positions you as the place to go to when price is the key determinant. If the newsagents want to sell on price it is a good strategy. However, there are other ways to pitch on price without guaranteeing to be the lowest and without cutting margin in an already slim margin category. There are plenty of examples of clever use of hero products to drive price perception without being the cheapest on all products.
For ink and toner I am happy growing sales based on competitive (but not always the lowest) prices, a good range and great service. I like this approach because it is sustainable, it better fits with the newsagency model and reflects the approach national brands prefer – the last thing they want is to turn ink and toner into a liquor or soft drink price model where massive discounts are offered on a rotation basis. This will happen is we train people to buy this way.
At Forest Hill we have been playing in the ink space for more than three years. Growth continues to be excellent. It accounted for 40% of stationery sales on the 2007/08 financial year, up from 30% for the previous financial year. While we send our flyers, this is part of a co-ordinated campaign which pursues sustainable growth.
Disclosure: I am a Director of newsXpress which offers the Hot Ink ink and toner strategy. I am also a Director of Inkfast, an online ink and toner business.
Staples in Canada has announced plans to roll out what it is calling video agent customer service stations. Customers use these to speak with a call centre which directs the query. This is a big contrast to the personal service one receives in small business. Sure Staples is a huge retailer compared to, say, a newsagency. However, Officeworks, their Australian comparison, competes with us in the suburbs for stationery business. I am sure they will continue to hunt down ways they can cut labour costs – such as this video agent customer service station. Hence the importance of us concentrating on live in the flesh customer service.
Newsagencies should have a good range of pencil cases. Most don’t. While there are a couple of basic student pencil cases, few newsagents have a good range. The photo shows part of a new range we have found for our newsagencies. They are selling well, especially to girls. Their fashionable colours and designs make them an easy sell to this demographic.
More and more we are sourcing product from gift related suppliers as their stationery and related lines have greater consumer appeal than traditional newsagency stationery suppliers. Fashion can be more important than function to many stationery customers. hence the importance for us to have a broad and fashionable range in categories such as pencil cases.
Our team at Frankston has created a display for Sharpie pens near our Grazia feature display. This double-sided movable display is promoting the David Beckham competition supporting the Sharpie range. People drawn to the Grazia display (see the red carpet leading to this) see the Sharpie display as they head to the counter. Promoting outside the traditional category location is essential to maximising basket value. This is something newsagents don’t do well – primarily because we are supplied by some businesses which control with an iron fist what product we have where in our shops.
Newsagents ought to check out their nearest Office Choice outlet. The re-branding has brought new energy to the office supplies group. While in most cases, newsagents serve different customers in the stationery department than Office Choice, it is worth seeing the change then have undertake.
Stationery can be a set and forget department with products rarely moved. Customers can become as store blind as newsagency staff. We are using a small screen placed within the stationery department to play TV commercails and other video content (with sound) to draw attention to products. The key to this is brand name suppliers being prepared to work direct with us on the in-store promotion opportunity as often they prefer traditional in-store marketing collateral.
The Australian yesterday reported that Harvey Norman’s new Ofis stationery business will not expand as rapidly as originally planned in the face of tough retail circumstances.
Private label strategy has been around for decades. Smart retailers use private labels to build loyalty and achieve better margin. Look at Woolworths, Australia Post and Officeworks – they all have well established and successful private label strategies. Newsagents do not. Our newsagent owned private label brand, Sovereign, is used on inferior product which does not deliver better margin and which is not restricted to our channel. All the tenets of private label are broken and we, the newsagent shareholders in the brand, miss an opportunity.
If we want to be considered serious competition to Australia Post, Big W, KMart, Officeworks and Ofis in the stationery stakes, we need a national private label strategy. This could range from no private label products (and focused 100% on brands) through to a fully integrated and researched private label offer.
We’re promoting the David Beckham Sharpie promotion in space we have reclaimed in front of our photocopier. With a trip to meet David Beckham up for grabs I expect this to be very popular.
What the photo does not show is the inflated Sharpie above the display and other features drawing attention to the offer.
Amazon, the world’s biggest online bookstore has announced the opening of an online office supplies business with more than 500,000 products available. Amazing.
We refreshed our Hot Ink ink and toner offer at Forest Hill last week, taking every product down and rebuilding the display and allocating position based on sales by brand. Nothing new in this, it’s smart retail. The latest Hot Ink flyer we have sent to thousands houses around our centre is driving excellent sales. Ink sales are growing well and, as I have noted here several times, are very efficient and profitabel.
This two metres of slat wall is the most profitable space in our broader stationery offer. Ink sales are up yet our stock investment is down – this is achieved thanks to good use of smart technology.
From data I am fortunate to see from a range of newsagencies, photocopying revenue is falling in our channel. It was down year-on-year in two thirds of newsagencies participating in the recent sales benchmark I undertook. The average fall was 20% with the lowest 5% and highest 48%. I put the fall down to the lower cost of computer printers, the lower ownership cost of copying machines and more players offering discounted copying.
For newsagents, the copying service is all about convenience and the personal service many of us provide. These are reasons why we can charge more than Officeworks and others. In my newsagencies we have established a common price list at the higher end of the usual newsagency offer. While it may seem counter intuitive to charge more for a service people are getting elsewhere based on price, we need to consider the cost of having the service and the reason people come to us.
In addition to the pricing issue is the efficiency of the product. Around 75% of copying in newsagencies for which I have data the service is provided with nothing else in the sale. This is what I mean by it being inefficient. You’d think that a service which usually involves conversation would result in up-sell. No, it does not in the majority of newsagencies.
We will watch the return achieved and if we don’t make what we need per square metre we will re-think cutting the service altogether.
The boxing match appears to be over and Staples has won its battle to acquire Corporate Express. I expect this to lead to the most significant shake up in the stationery offer Australia has seen since Officeworks first opened. Now is the time for newsagents to work on their stationery story, it will be too late in a year when we may be staring at Staples opening here.
Bic, the pen company, has ignored newsagents with their latest TV advertising. Their Brand Power ads promote supermarkets. Newsagents have been tremendous supporters of Bic. It is a pity the company did not return the favour and promote our channel when deciding where to place their marketing dollars. See the Bic advertisements at the Brand Power website.
The buying power of the Government owned Australia Post retail network is in plain view with their current offer of reflex for $4.95 a ream. While Big W and other retailers offer reflex for this price from time to time, only Australia Post pulls consumers in for such a low cost – thanks to their postal products monopoly.
This is where they abuse the protection of Government ownership. The Government owned Post Office opposite my newsagency ought not be competing with me in stationery – a sentiment shared with many newsagents in my situation.
UPDATE: I am reliably informed that Licenced Post Offices buy Reflex for $4.82 including GST. Not happy I suspect.
BEAT THE TAX RUSH WITH THE LOWEST PRICES is the pitch screaming from the Officeworks website. The problem for Officeworks is that they do not have the lowest prices. Last week, one of their customers bought two packs of HP brand toner from us for 17% less than what they paid for the same product at Officeworks the day before. Our everyday price was lower than the Officeworks everyday price. The Officeworks pitch of the lowest prices is not true.
Businesses which want to save on stationery costs ought to check their local newsagency. I am sure our newsXpress Forest Hill store is not alone on beating Officeworks on price for some items.
Our customer was shocked at the 17% difference in price – hopefully enough to ditch the superstore and return to us next time for toner.
Financial year diaries have never been big for us at Forest Hill – our customers are mainly retired people happy to forget their need for such things. That said, we don’t ignore the opportunity and always carry a small selection. The key with anything like this is to buy appropriately. While suppliers pitched enticing deals, we bought based on our sales data and not their spin. We allowed for some growth.
The performance figures I see from many newsagencies suggest that in the stationery department newsagents are bad buyers. Stock turns are low and the cost of dead stock – items and whole categories which have not registered a sale in six months. Buying is too often based on supplier or sales rep hype rather than sales history of the same or similar products in the business.
Ideally I would like to see a code of practice by sales reps guiding them to use sales performance to guide the order they pitch. With new owners especially I often see sales reps overselling and then wondering why new newsagents struggle.
I am contacted at least once a week by a stationery supplier looking to get their product into the newsagency channel. Most have a story to tell about the challenges of dealing with the gatekeepers they encounter – stationery wholesalers, associations and marketing groups. The issues are either about refusal to carry a complete range, the cost of access, the challenges of 4,500 managing directors or other hurdles.
While some of the blocks are reasonable and do stop suppliers newsagents are better off without, there are some products which newsagents would like to stock and some complete ranges newsagents would like to stock.
For what it is worth, here are my suggestions for stationery suppliers looking to get gain access to the newsagency channel:
With fewer newsagents doing cash and carry shopping, suppliers need to be smarter in how they approach the channel. Newsagents are more discerning and want surety on the return on investment they can achieve. This is why more are buying outside the traditional newsagent supply chain.
The new brochure for the latest Hot Ink sale has not yet been delivered yet sales continue to be strong – weeks after the last flyer expired. On most days we do more from the two metres of wall space you can see in the photo than from the entire rest of the stationery department. While that could mean our broader stationery sales are awful, the reality is that ink has grown enormously for us over the last two years. We have tough competition in our centre and nearby yet we grow. We put this down to consistent ranging, consistent low pricing and great customer service. Ink sales are efficient because these customers do buy other items.
We have started the process of establishing an online stationery business under separate branding to our newsagencies, along the lines of our three year old Inkfast business. We will be chasing customers who are unlikely to think of visiting a newsagency for their stationery purchase. This approach has served us well with Inkfast where revenue is many times that of total stationery department revenue in either of our newsagencies – with a fraction of the overheads.
I’ll blog more details once we have launched the new website.
We decided to have another crack at party goods brought in the range from Alpen just over a month ago. We’ve placed this display behind our main newspaper stand, next to our card department. Sales are good, generating a good return on the space and sock investment.
The only downside about the move is Alpen themselves. They have refused a direct account saying they want newsagents to go through a wholesaler. This is after we agreed to their minimum order value and we explained that we wanted more of their range than we could easily get through a wholesaler. Their refusal to grant a direct relationship hs us looking elsewhere for party goods.
Retail is tough. We need to cut costs out of the supply chain. This is why direct relationships are important to newsagents – they provide us the best opportunity of reward for effort.
I was interested to see Office Depot and Google have teamed up to help small businesses use online tools in the US. It extends the reach (and relevance) of each company into the small business space.