Stationery

The Source newsagency in Melbourne was lauded fifteen years ago as an innovative newsagency. It offered a fresh approach back in the mid 2000s. In recent years it was not as innovative. I was in the city Monday and stopped by The Source and discovered it had closed.

After following the online trail from The Source to its ‘sister’ online shop NoteMaker I then find Milligram, a group of several stores in the stationery space. It’s at Milligram where you can see retail innovation in stationery and associated categories. It’s worth checking out.

A colleague shopped one of the Millgram stores this week, in Chadstone., They were very impressed. They said the store is a representation of several leading niche retailers in this space in the US.

I get questions about GNS every few days, even though I have no knowledge about the business other than what any newsagent can access.

Paul Yardley, GNS CEO, was quoted in an article at Office Products News a few days ago about the business and GNS strategy:

GNS means business with dealer groups.

ommercial sales now account for around half of the national distribution company’s $70 million turnover.

While COVID-19 has put a dent in commercial sales in recent months, GNS Wholesale is on track to increase its share of the office and business products channel, which it has grown from nothing to more than $33 million over the past 10 years.

The well-documented decline of the newsagency market has seen GNS develop into a two-sided business of roughly equal size: the retail side comprising newsagencies and post offices; and the commercial side, skewed towards the two major dealer groups – Office Choice, for which GNS is the preferred supplier, and Office Brands.

Sales are about equal between the two groups although Office Brands has shown the most growth over the past year, which was reflected in GNS winning the group’s ‘General Office Products Supplier of the Year award’ in 2020.

GNS was also named runner-up in last year’s Office Choice “Supplier of the Year’ award.

Interestingly, the pandemic has resulted in a spike in sales among the three to four thousand newsagencies serviced by GNS, driven by more consumers shopping locally during lockdowns.

“Sales on the commercial side have been flat since the sanitiser and mask gold rush – or bubble – at the start of the pandemic,” Paul Yardley (pictured), CEO of GNS, told Office Products News.

“Dealers generally struggled in metro areas and the CBD but the regional businesses have done OK,” he said.

Office Products News understands GNS’ first half revenue decreased by 3 per cent. while profit before tax grew to $1.6m (significantly improved versus the prior year’s breakeven position), a strong result considering the impact of COVID-19.

Central to GNS’s pitch to the dealer channel is the fact that the company (which incidentally is owned by 300 newsagent shareholders) is Australia’s largest stationery and office products wholesaler, bigger than all of its competitors combined.

GNS has five warehouses – in Sydney, Melbourne, Brisbane, Adelaide and Perth – the latter two coming on board with respective acquisitions of SATEX in South Australia (in 2018) and WA Stationery in Western Australia (in 2017).

GNS currently employs a national field sales force of 12 and customer service team of eight.

The business has a senior management team of four – Yardley, Nerolee Conaghan (head of sales and customer service), Adam Wedge (head of merchandise) and Peter King (chief operating officer) – who run the business “leanly”, with the customer experience foremost.

“We are a low-cost operator with around 16,000 SKUs, all held in every shed,” Yardley said.

As for stock availability, Yardley said this was a key focus. “If we have it, we’ll deliver it,” he said. “Our DIFOT rating (Delivered in Full, On Time) has improved to around 97 per cent.” Yardley added that COVID and port/shipping issues had meant supplier out-of-stocks were worse than usual industry-wide.

GNS supports national brands that “invest in brand equity”, according to Yardley but it also has stable of four private label brands that account for less than 10 per cent of its total revenue.

Through Neon Orient, GNS sources and supplies around 40 of 270 Office Brands’ Initiative products.

Sovereign, once the major own brand at GNS but now limited to exercise books, has been superseded by the Stat range of around 170 stationery products.

GNS also offers a small number of generic ‘white label’ products on seasonal and everyday items.

Since joining GNS in 2016, Yardley has held the view that the dealer channel has the same “transition issues” as other markets in terms of succession.

He believes that as the industry transitions down a generation, the new owners will not want to run a warehouse, with its added costs and operational issues.

“Over the next five or so years a large proportion of dealers in Australia will change ownership – that’s an opportunity for us,” he said.

Meantime, Yardley is hoping the pandemic will ease off enough this year so that GNS and Office Choice can re-schedule their combined trade show OPIX.

“If not, we’ll probably run some smaller state roadshows,” he said.

GNS has been a ‘whipping-boy’ of newsagents for years, decades even. This article outlines news that should appeal to GNS shareholders. It also outlines pathway opportunities for newsagents keen to grow stationery revenue.

If you are shopping for back to school supplies, please shop your local newsagency, yes your local newsagency.

Your local newsagency will be most likely locally owned and locally connected and supportive of local community groups.

Sure some overseas companies and big national retailers will claim their products are cheaper. Sometimes, price does not make something cheaper. One shopper told me recently about a stationery item they bought a while from a national retailer than was 10% cheaper than our price. The item broke after a few days. They then bought from us and the replaced item is still going strong, months later.

Oh, and if you think the local newsagency is some old and out of date shop from the past, think again. Many local Aussie newsagencies have changed, offering brand name stationery you can trust, on-trend gifts you will love to give and the most amazing range of cards you will see.

Yes, the local Australian newsagency has changed. Well, most have changed. They are fun places to shop, fresh, current and relevant to the needs of 2021.

For back to school stationery needs, start at your local newsagency. Supporting them helps them support your local school community. You see that every day through local newsagent support for school students, school groups. Every day newsagents are asked for support and donations for local community groups, including school groups. They can only do this if there is robust local support for their businesses.

Please don’t be duped by the truckloads of cash poured into advertising by competitors chasing your back to school spend. They have the cash to do this, to make it look like they have good products and good prices. Often, when they say they will price match, they don’t sell the same brands, often selling cheap imported products only available through them.

Your local newsagent is a perfect place to shop for back to school for quality, service and community connection.

Now, if you are preparing to comment to say that the local newsagency is dead, out of date, expensive or in some other way failed, please don’t. Too often, former newsagents and failed newsagents hop on here to try and bring down the channel they left.

Your local Australian newsagency is most likely offering a fresh retail experience to the one you remember. If you are looking for back to school products, start there, start local, at your local Aussie newsagency.

Several newsagents have sent me the GNS annual report for the year to June 30, 2020. It details a decline in revenue and an increase in losses.

With all newsagents remaining open through Covid and many doing so well that they did not qualify for JobKeeper, it is surprising to see the extent of the GNS losses. But … the business is going through realignment so time may show these results to be transitory.

The note in the annual report about the reduction in the number of newsagencies cited as a material risk needs to be noted:

For what it’s worth, I think the company continues fail on the technology front. Smarter and more modern engagement with retailers, including newsagents could reduce leakage to other suppliers, increase purchase, and provide data that can be leveraged to help newsagents increase stationery sales.

Here is their consumer price, for a 4-pack.

Here is the Spotlight price for the same product.

I could not find any newsagency online with a 4-pack and only a couple with singles, prices at double the Amazon per stick price.

Online is where people price compare. Take UHU, in Australia yesterday, there were 7,600 UHU and UHU related searches online. Our channel is nowhere to be seen in the top 100 results.

I’m currently collecting data for a July – September 2020 newsagency sales benchmark study. While the process is in its early days, with data from 30 businesses in so far, already I am seeing concerning data for stationery with sales down, against an overall trend for the businesses.

I have data for one business where overall revenue is up 13% while stationery revenue is down 9%. In another case I can see revenue up 9% but stationery revenue down 12%.

While stationery has been challenged in the channel for a few years, these results are worse than the trend. It’s concerning.

Click here to access awesome social media resources you can use to pitch 3M products. The resources have been created by 3M for retailers of their products.

With giftwrap tape, double sided tape and Scotch Magic Tape selling well this time of year, pitching on social media is timely.

The folks at 3M participated in a Zoom meeting with newsXpress members recently, sharing tech insights into the product, which will help drive sales. A couple of key takeaways from that session are: place the products with wrap and at the counter and, maintain stock levels as many retailers sell out early in the season and can’t get replenishment stock.

It may not seem like great use of time or resources to focus on tape. However, it’s a good margin impulse purchase that can add tangible value to the basket. The business is there for you to grab through simple and low-cost options.

There is some relaxing and therapeutic about this video showing the making of yellow pencils.

Making the colour bit of pencils. Transfixed 😳pic.twitter.com/JULOfiExee

— Bernie'sTweets (@berniespofforth) July 13, 2020

Officeworks is spending a ton of money right now advertising that they offer the best back to school deals. They have clever wording to buy them coverage one direct price comparison. Like Bunnings, they are the master of making it look like they are cheaper. That’s to get you in and spending, knowing you’ll pay above the odds on other items.

Local retailers like newsagents and local stationery shops, family businesses, businesses integrated with the local community, will provide more genuine value if you support them.

While I don’t offer back to school supplies in the newsagencies I own, I surge all Australians with kids heading to school this year to shop local, shop with the shop you are likely to call on to support your community group or charity. They can’t help if you don’t support them.

Support the local business with no TV ad spend telling you how cheap they are because someone pays for the TV ads and that someone is the shopper. TV ads are expensive. The Officeworks ads are excellent at nurturing the impression that you will save if you shop with them.

Newsagencies are among the first businesses approached by local community groups, schools and others for support for raffles and other fundraisers. If every member of the local groups and clubs asking newsagents for help shopped with newsagents ahead of big business competitors, more help could be forthcoming.

For back to school needs for then 2020 school year I urge families to shop local and I urge newsagents to get this message out, to encourage people to think before they shop.

newsXpress has provided its retailers with a raft of Back to School promotional collateral including…

and …

GNS has released two planograms that will help newsagents engage with this new and innovative house brand. Stat is putting stationery in play, in a positive way, for newsagents in my view.

GNS is hosting more roadshows, offering newsagents opportunities to see products and talk face to face with representatives from the newsagent owned business.

This approach of taking products closer to retailers rather than larger capital city focussed trade trade shows respects the geographic challenges of Australia.

Typo has a range of journals that look like National Geographic magazines, as part of their front of store stationery pitch. I have see it in three of their stores in the last two weeks.

They have gone for iconic covers that resonate. It’s a smart move by this forward leaning retailer. It would work well in our channel.

While we continue to pitch functional stationery, stores like Typo are growing sales through fashion related moves that encourage purchase beyond need.

This is the future of stationery growth. As paper is used less, we need to expand the reasons for people to purchase stationery products, if we want to remain in the category. No, a cute looking journal will not cut it.

If you are bashed in Victoria and have not seen the new Officeworks near Southbound, check it out. It is impressive. The range, hours and price pitch are impossible for indie retailers to match.

ANCOL has pitched a stationery / gift pack to newsagents outside South Australia, with free shipping:

These two photos, which I took in an Officeworks in Sydney a couple of days prior to Christmas, tell the story of an engaged, fierce competition for back to school business. This first sign is what you see as you enter the business:

This is places deeper in the business, with a terrific range of school supplies:

They make it look easy, like they have everything and that their prices are competitive.