Stationery

I have learnt a lot about cardboard this week – the kind we newsagents sell by the truckload for school projects, welcome home signs, protests … all manner of signs and things. I always thought cardboard was cardboard.

This week I have learned about better quality product where the colour is all the way through – the process is called colour through the pulp. This stops the cardboard fading. I have heard about cardboard treated so as to not curl.

This is all important information because cardboard is an efficient and destination product for newsagents. Few businesses carry our range. The better the quality of what we offer the more we can charge and the greater the repeat business. The Canson product I have heard about this week is certainly impressive. Their knowledge will help better educate the retail team and better develop the value proposition for our customers.

Cardboard is pretty basic product yet it goes to the heart of the point of difference newsagents offer every day. We get to demonstrate our service levels, present the product well and make good a good return.

We’re well into the next round of ink promotions – it’s working well, driving new customers to us, brochure in hand and asking about specific product. Regular promotions are critical if newsagents are to overcome the view exposed in consumer research that newsagents are expensive. Most sales involve two cartridges or more.

We completed a relay of stationery at our Forest Hill store two weeks ago and while it is early days, we are seeing close to a 25% increase in sales on some days. As part of the relay we quit plenty of older stock and stock which represented brands we now wanted to carry and brought in new product – especially around the new brands. I expect the increase to settle at 40% long term once the makeover of stationery is complete.

The MPA drives newsagents to relay magazines in pursuit of sales growth. Why not stationery? If we can get such a kick from our small business – admittedly off a low base – then imagine what newsagents more successful in stationery could achieve. The kick has come without any promotional activity.

The project took two man weeks and a reasonable financial investment in new stock. The payback started almost immediately.

The image above is a clip from the latest Australia Post brochure which arrived in our PO box yesterday. If John Howard was as serious about small business as he claims to be, he would stop the 865 100% Government owned and protected Australia Post retail outlets from taking business from independent small businesses.

Australia Post used to be a Post Office. Under the stewardship Prime Minister Howard Australia Post has morphed its corporate stores into mini newsagencies – leveraging the lemming like conga line of customers into stationery sales.

The Government says Australia Post is operating within what is permitted under the Act. Since they control both houses of parliament they also control the Act. If they wanted to stop the retail network they own from taking sales from family run newsagencies then they could.

It all comes down to will and whether the commitment to small business is hot air.

The Post Office opposite my newsagency is Government owned. It competes aggressively in the ink and general stationery space.

As part of our focus on branded stationery items, we are giving preference to Marbig branded products. We like that they are not a one or two category company. We also like the quality of their product. There is no financial aspect to this decision – indeed I’d suspect that the folks at Marbig don’t even know since we are buying through a wholesaler and have had no direct contact with them.

Making a decision such as this around a brand brings clarity to other decisions in the stationery department.

I sold a customer a sheet of carbon paper on Saturday. While those working in a newsagency would not be surprised by the sale, others would be. Why buys a single sheet of carbon paper? Someone our Forest Hill way obviously. Actually, the customer wondered aloud how mush longer she would be able to buy the single sheet. Her open wondering was more an acknowledgment of times changing.

The business person in me says we should not sell single sheets of carbon paper unless we have a price model which makes carrying and caring for the stock viable. In a social responsibility sense we must offer single sheets of carbon paper – it is our role as independent small business retailers to carry these traditions as long as we are able.

This is a challenge newsagents face: we compete in a tough and rapidly changing commercial world yet many of us want to respect traditions as demonstrating our point of difference. For now we will continue to stock and sell single sheets of carbon paper.

We are tracking strong sales growth for ink as a result of this latest Hot Ink flyer. Customers come in with the flyer, head for the ink bar and make their selection – usually two or more items. It is good to be a destination in this category.

The Hot Ink brochure focuses only on brands: Epson, Lexmark, HP and Canon. This suits us since we ditched compatible inks a couple of months ago.

We have distributed the brochures to 20,000 houses around our centre. This is the third such campaign around ink this year. This consistent pitch, around brand names and at keen prices, breaks our newsagency out from others. In fact, it breaks the whole group participating.

Thinking back to my comments here yesterday about brand newsagency, focusing on consistent range and price for branded product across a group of stores is how marketing groups can break away … from brand newsagency.

Our Inkfast online ink and toner business is two years old. It continues to outperform ink and toner sales in our newsagency by a factor of four to one – even allowing for the good growth we have achieved in our newsagency over the last six months.

Inkfast serves a very different demographic to our newsagency – most Inkfast customers would not buy their ink and toner from a newsagency. Being purely online and with all customers paying in advance, the margin model is different to retail. I am certain that branding Inkfast in a way which connected it with a newsagency would have seen it fail. The newsagent shingle has baggage (good and bad) attached.

Today, two years on, Inkfast is still growing – organically, without any marketing spend. We spent heard in our first year to attract customers but that stopped a year ago. Today, it’s natural search results and word of mouth.

Like any business, customer service is key – the value proposition is built into our name.

Stack em high, watch em fly – it’s the mantra most often repeated in retail. Since we are revamping stationery and art supplies, we are quitting some now discontinued brands. Hence the SALE tabl to the left of the photo. To balance this, we have placed our Double A paper display. We have been running this every four weeks or so since we started selling Double A paper earlier this year. A large display like this at the front of the newsagency works well – and proves the stack em high motto. While many newsagents will say they donlt have space for a display like this, we see having it as essential if we are to leverage the traffic into the shop.

The box of five reams of paper sells very well, often with a newspaper.

As part of our mission to bring in strong brands as we rebuild our stationery department, we have made a considerable space and stock investment in Crayola. Here’s how it looks in store as of this morning:

This display is at the end of one of stationery aisles and has been created to draw people in.

In rebuilding our stationery department we have chosen Duracell as our core brand of batteries. We have committed to a decent range. An unexpected surprise was the gift of the Duracell bunny in the photo. Given the legendary status of the bunny, we are going to run a competition and give the large bunny to a lucky customer.

Our commitment to Duracell has come out of our commitment to the best brands in each category. I see little value in newsagents promoting house brands when we cannot match the multi million dollar house brand campaigns of the majors. We will do better riding on the coat-tails of major brands by stocking their product instead of a newsagent house brand which means nothing. While this will cost us some business at the low end of the market, it will win us business at the top end.

I was in our local Reject shop yesterday and they cover the low end well. I think it dishonours the Newsagency shingle if we try and compete with the reject shop.

Ofis, the new stationery business coming out of Harvey Norman is to open locations prior to Christmas according to a report on Sky News this morning.

A report at the Sydney Morning Herald site has more background on the move including this:

Having mused out loud that he might start a rival business to Officeworks, the king of big-box retailing has not only gone and registered the brand name “Ofis”, he has also secured several well-placed sites on which he can open stores of between 1000 and 2000 square metres. (The average size of an Officeworks outlet is 1300 square metres.

While it will not be an immediate threat to the much larger Coles subsidiary, with its 100 stores nationwide, Harvey has shown himself to be a formidable competitor and his arrival on Officeworks’ doorstep will be an unwelcome distraction for a revamped management team.

What ought to shock newsagents into action more than the story of Harvey’s plans is the lack of any reference to newsagents in the reports. Every story about Ofis references Officeworks as the rival, no mention of newsagents. That is either because journalists see this as a big business vs big business battle or because we are irrelevant in the stationery space.

The independence of newsagents is what draws people to our channel. It is what brings us undone in categories like stationery where we each range, price, display and promote differently. Big operators like Officeworks and Gerry Harvey understand the importance of consistency behind a shingle.

The lack of consistency behind the newsagent shingle makes consumers confused and drives our growing irrelevance in the stationery space.

As part of comprehensively rebuilding our stationery story around brands we have decided on Bostik over UHU for glue.

The photo shows the start of our work around the Bostik brand – by blocking the display.

We are stocking glue items traditionally sold in newsagencies as well as several new lines. The glue gun and associated glue sticks are certainly new.

Once we have brought in all the new ranges, throughout stationery, we will then work on display. We know, for example, that we can better display this Bostik product but we’d rather get the one and half pallets of additional product in store before we make it all look sexy.

The brand choice was made around depth of range and ease of service supporting the brand.

The stationery makeover is seeing us move every item in the stationery department, quitting around 30% of what we have and bringing in two pallets of new product. It was long overdue but delayed because of the major works being done to refurbish the shopping centre.

The project should be completed within two weeks.

I was working with a newsagent a couple of days ago, looking at the performance of some categories of stationery. They were clearly overloaded – the stock turn for this particular category was a third of stationery overall. The problem was with the buying, some very bad and expensive decisions had been made.

It turned out that the representative for the supplier calls on the newsagency every few weeks and does an order. The newsagent would have none of my view that the rep was part of the problem. “He’s a good bloke” , the newsagent said to me. Well, he is a supplier and only makes money when he does an order with you. We’re mates. Maybe, but he is a supplier. He wouldn’t do wrong by me. He is – you don’t pay his wage.

Too often reps overload newsagents with stock. The great deals are designed to shift product to the retail floor. Occasionally there is a flow on for the consumer but more often the deals lead to more stock and stock on its own does not move any faster.

I suggest to newsagents that they put a stop to reps calling unless the data the newsagent has supports regular visits and agrees with proposed purchases. Otherwise, you’ll end up like my friend – with boxes of stock which will need considerable discounting to move.

Sales reps are your suppliers first, chasing a buck, and your mate second.

Jarryd Moore has a timely and welcome poll at his news4newsagents blog asking whether the generic Sovereign branded product should be included in the GNS Christmas catalogue.

Regular readers here would know that I would prefer to see all newsagent stationery warehouses provide better support for national brands and less for house brands. Newsagents would be better served leaving the house brand game to the majors. Consumers think we are expensive so they are less likely to visit our shops looking for a lower cost house brand.

For decades cigarette sales have provided regular customer traffic to many newsagencies. Now, thanks to tougher regulation, tight margins and risk of theft, more newsagents are quitting selling cigarettes. We stopped over ten years ago in my newsagency and have never looked back. Many newsagents who are quitting the category today are moving into ink and toner. While not driving the same level of traffic, there is considerable loyalty among ink and toner customers. Once you prove you have good product at a fair price customers come back and back.

Ink and toner sales in my newsagency account for 35.75% of all stationery sales – this does not include sales through Inkfast, my online ink and toner business.

I have received considerable offline feedback following my post earlier this week about our new display around the Scotch brand. The month common questions is: where can I get the range since my warehouse does not have this? The question has come from various states and not just one warehouse.

We have done some more work on our Scotch story. Here is where we are at today:

While there is plenty more work to do, already the broader offering is working for us.

Brands offer newsagents a wonderful point of difference opportunity. It is important that our suppliers – wholesalers – support brands and allow us to engage in this point of difference.

GNS Market Fair (VIC) started today in Melbourne. Tower Systems has been exhibiting at this trade show it started in 1982 or 1983. Back then desiko ran the event for VANA and Victorian newsagents. This is the first year GNS has had complete control over the event. We’re at stand 1.

These trade shows are a good opportunity to connect with existing customers and help others make the switch – this is why it is good we are away from other software companies. Already, by lunchtime, we’re generating excellent interest.

While I remain disappointed that GNS banned newsXpress from the event, it was good to see so many newsXpress members there this morning.

With my newsagent hat on I talked to a couple of suppliers displaying product which is not available through GNS. If we are to champion brands, our wholesalers need to carry the range.

The rebuilding of our stationery offering has begun with this new display of Scotch tape from 3M. While our tape range has been good, it has not been brand focused and this has meant a mixed message to our customers.

We selected Scotch after researching the various consumer brands, the breadth of their range and the marketing behind the brands. Scotch won on all fronts.

Having made the decision to focus on Scotch we needed to find a supplier who could match our commitment. Too many newsagent stationery suppliers do not commit to brands as much as we want – making creating brand centered displays challenging.

What we have on display now of Scotch product is about 70% of where we want to be. Once we are satisfied, we will be framing and capping the range to boldly proclaim the brand. Then, we will move onto our next brand focus in a different category.

GNS, the newsagent owned stationery warehouse serving the eastern Seaboard, has released another offer exclusive to newsagents in Victoria who belong to the Newspower marketing group. I received my copy in the GNS newsletter this month.

newsXpress sought to talk with GNS management about commercial terms. GNS refused and at the time said it would be unfair for them to treat one group of its customers differently. GNS in Victoria is now doing what it said it would never do.

As a GNS shareholder I am disappointed about the exclusive assistance for Newspower newsagents. I would like transparency as to how this Newspower activity is funded. It could be that such transparency answers the questions I have. Until GNS is more open all I and other shareholders can do is wonder why GNS is treating Newspower newsagents in Victoria so favorably.

Someone at Christina Re decided to change their stock codes without warning – meaning that the order we brought in last week took considerably longer to process. This may seem picky but we rely on supplier stock codes to manage stock – it is the common link between our business and suppliers. Stock codes ought to be sacrosanct. National retailers would not permit a supplier to make a change like this without discussion.

For us it is another frustration from the Christina Re relationship. We have been with them for close to four years as one of their first newsagent outlets. Just over a year ago they put their product into another shop in our centre which is their right but probably not a smart more. They also promised some marketing support which did not eventuate.

This stock code botch up has us looking elsewhere.

We have been promoting storage boxes at the front of our newsagency for the last few weeks – as a give away with each box of Double-A paper purchased.

I was surprised today to see the Government owned Australia Post store opposite us promoting the sale of storage boxes. Huh! Was the display there previously? I don’t know. I am usually up to speed with what they display so I suspect it is new. Good on them – anything promoting plastic storage systems can only help our pitch.