A blog on issues affecting Australia's newsagents, media and small business generally. More ...

High-value nativity set sales in the newsagency

We put this beautiful nativity set out today, in the window, priced at $279.99.

Within two hours we sold two. A couple of hours later, we sold a third. We have ordered more given that it is early in the Christmas season. We have been able to keep a set in the window until the new stock arrives in the next couple of days. This is important as it draws people to the shop.

I hear often from newsagents that they cannot sell gift and seasonal items priced at more than $20 to $30. This shop where we had this success today is in middle class Australia. Plenty of nursing homes, self funded retirees and families, where money is tight. The right product in the right location can help us see what is possible.

What we discovered is that a nativity scene purchase is an emotional purchase.l Emotional purchases are less about price.

$839.97 in revenue from this one product in a couple of hours is terrific. We have banked the margin dollars before the supplier invoice is due. The margin dollars made equal more than 1,200 newspapers or more than  370 top selling weekly magazines.

The shopper for the nativity also appreciates the rosary beard, religious cards and other religious themed Christmas and everyday gift items. The attraction from a simple window display discovers a new shopper who could shop all year round, someone who would not have thought of a newsagency for this purchase.

I appreciate a nativity set at $279.99 is not for everyone. My suggestion today is challenge yourself. At the very least, think about it. Be open to a product you would never usually stock showing you what could be, showing you how the right product in the right location could bring in new traffic.

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Newsagency management

Highly recommended: Press, BBC TV mini-series

Press is a six episode BBC mini-series about two rival newspapers and abut the challenges faced by publishers and, in particular, their print product. I have seen then just-aired series and highly recommend it to anyone interested in newspapers. The battle between the Post and the Herald has some resonates when thinking about News and Fairfax titles.

Here is a brief trailer for the series:

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Media disruption

No surprise on Cosmopolitan closure

Bauer Media has announced that Cosmopolitan magazine will close. here is part of the story from Mediaweek today with more:

Bauer Media has announced the closure of Cosmopolitan Australia. The December issue will be its last.

The magazine has been published in Australia for over four decades and was a Hearst Magazines title published in Australia under licence to Bauer. Remaining Hearst titles in the Bauer stable are Harper’s Bazaar and Elle.

Cosmopolitan launched in Australia as part of what was then called Magazine Promotions, the Fairfax magazine arm. Later rebranded as Fairfax Magazines, the title moved along with most of the Fairfax’s other magazine brands to ACP Magazines.

Launch editor was Australian magazine legend Sylvia Rayner, who started the title in Australia in 1973, moving across from Woman’s Day where she was fashion editor.

Bauer Media CEO for ANZ Paul Dykzeul said this week: “It has not been an easy decision to make. However, the commercial viability of the magazine in Australia is no longer sustainable.

“Magazine closures are never easy, desirable or done without careful consideration for all of those involved. We have to ensure that we are continually reshaping and defining the business so that our readers of today, and those of tomorrow, remain engaged with the content we publish and the platforms upon which we deliver.

“We are incredibly proud of the brand and the people who have been involved and represented over the last 45 years. It has helped to launch the careers of media personalities, supported great brands and causes, and inspired millions of young women across the country.

“We would like to thank everyone who has contributed to the brand and its legacy over the years.”

Business is business. Newsagents checking their own sales data will know the titles facing similar challenges.

Cosmopolitan has been a good title. The challenge today is that this consumer is able to find satisfaction through other more visual, interactive and timely platforms. This sits at the core of challenges facing all publishers.

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magazines

Do you backup your computer system every day?

By backup, I mean do you take a copy of your business to an external drive, a USB stick or some other device for safe keeping? Or, do you have a cloud backup facility whereby a perpetual offsite backup us undertaken?

Attacks on computers are increasing. These can range from a attack that corrupts data through to an attack that denies you access to the computer until you pay a ransom.

Not backing up every day is stupid. The cost of cover from this could be thousands in terms of IT expert fees or even more if you are looking to sell your business in the next year and do not have current business performance data on which to set a price.

I heard of a newsagent who paid $5,000 to recover business data from two weeks prior to when they were attacked. That could have been avoided had they followed basic backup advice.

Oh, and if you are backing up every day, have it checked to make sure you are actually backing up.

Not backing up and not checking your backups is like leaving the front door of the shop unlocked and the light on.

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Newsagency management

Will US department store troubles happen in Australia?

Turmoil in mass retail in the US continues with the filing for chapter 11 bankruptcy protection by Sears overnight. Reports say Sears will close an additional 142 stores, on top of the 33 stores already announced to close, which included 13 Kmart stores.

While there does not appear to be an obvious Australian connection, this can take time to evolve. Look at Toys R Us.

What I find interesting is that occupancy and labour costs in Australia are significantly higher. I also heard somewhere, but cannot recall where, that we have more retail space per capita than the US. Combine this information and add the growing migration of purchases to online, it makes sense that department type stores, big and small, stores that are not overly specialist, stores that struggle with a USP, these stores are vulnerable.

In some way, I think newsagency closures in Australia, around 15% this year, is for reasons similar to US department store closures.

As for Australian department stores, I look at Myer, Myer, David Jones, Big W and Target and owner which of those will be first to significantly downsize or close. I don’t include Aussie Kmart yet because they are on a streak of success right now.

I think it would be a mistake to look at the US story and say it is a US story just as it would be a mistake to look at Aussie mass retailers waiting for them to fail or trip. The reality of retail today is that every day we have to fight, be our best, specialise and make today, and every day, our payday.

Footnote: the 15% is a figure key national suppliers agreed was how we were tracking in terms of closure in 2018. I was at a workshop for newsagency channel national suppliers where this was discussed. We shared data and the 15% number was agreed, unfortunately. However, we all know what we know, and we all see what we see. The 15% in real terms is 495 shops. That is the chilling number. It concerns me that too many are sitting and watching it happen here in our own channel, and not acting themselves.

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Newsagency challenges

Magazine specialist store in New York

It was terrific to get another close look at Casa Magazines in York. Here’s shot from the outside.

Here are two shots from inside.

Here is a plea to shoppers.

Here are their social contact details, on the outside window.

Here are the locked boxes to where magazines are delivered:

This is a rare business, even in a huge city like New York. With weeklies and major monthlies readily available in convenience and drug stores and supermarkets and subscriptions such a large part of the supply chain, the need for specialty stores this size is not big.

While Casa Magazines looks cramped, inside you feel like you are in a specialty magazine store the truly has something for everyone. I’ll leave you with a cover shot of this title…

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magazines

Small business marketing videos

If you are looking for unbranded shop local and small business supportive social media content, here are some I released to small businesses using software from my POS software company.


 

 

 
Short videos are popular on social media.

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newsagency marketing

A fresh approach to displaying diaries

We have changed our approach to displaying diaries, using bookshelves…

The reactions have been terrific in terms of comments and purchases.

We like the bookshelf placement as it addresses the floorspace challenge that is often the case with diaries as they are heavy and hard to shift around.

I like the layered use of the bookshelves, too, for calendars and plush, all themed.

We have to change how we display products people expect in our businesses, otherwise shoppers will assume we are like every other retailer with these same products.

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Stationery

Lotterywest: rewards for growth

I like the Rewards For Growth initiative from Lotterywest. It focuses retailers on the key goal: sales growth. The pitch in their latest retailer email is simple and to the point:

Next week you’ll find out if you’re one of 129 retailers sharing in over $75,000 for achieving your sales target for the first quarter this financial year.

You’ll also find out what your NMS% target is for this quarter.

Stay tuned for exciting news on how you can earn rewards for increasing your Scratch’n’Win sales in the weeks leading up to Christmas.

Focussing on sales targets at the supplier, retailer and store level employee level is more important than busy work that tatts focusses on through their stress inducing compliance program.

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Lotteries

The customer service challenge with parcel collection in newsagencies

If you offer a parcel pickup service in your newsagency I urge you to ensure you have the space, resources and business processes in place to provide a good customer experience.

Customers only visiting the newsagency to collect a parcel will expect quick, knowledgable service. If they do not get this they will most likely want to complain.

There is good anecdotal evidence that online shoppers embrace opportunities to complain. E-commerce sites and social media make complaining easy through feedback, ratings, reviews and in other ways.

A poor parcel pickup experience is something online shoppers will complain about. They are empowered because of the ease with which they can complain online – often not to those who could address their complaint.

I have been contacted by newsagents with parcel pickup services seeking advice on how to deal with complaints against them. I have been contacted through this blog by shoppers who want to tell their story of poor parcel pickup service fro newsagency businesses. I have been contacted by parcel service businesses asking how to get newsagents to provide better service.

The parcel collection customer they wants…

  1. Easy access to the pick-up business.
  2. Fast service once inside.
  3. Straightforward processes.
  4. Security for their parcels.

The most common complaint I have heard relates to speed of service in the business. While they are happy to wait, they want to be served in sequence. They do not want to be told to wait until other customers are served.

Here is an example of a complaint from a parcel collection customer, in their own words, about there experience:

The lady that works at the newsagent would not give me my parcel at the store she wanted to to serve the other two customers there and told me to wait even tho I was waiting first anyways after she kept serving the other customers I said are u gonna serve me now and then she went off her head yelling at me and even her husband told her to be quiet, I’m not happy at all with the service cos she wanted me to wait till she serves the whole store then I’ll get my stuff.

This is a common complaint.

Anytime someone approaches me about a parcel collection service issue I suggest they deal with the retailer as they are likely to have more leverage. I also suggest they contact the parcel service business connected with the newsagency business as they, too, are likely to have more leverage.

Parcel collection can be challenging for retailers. You should only take it on if you are prepared for the challenges and prepared to provide the level of service customers expect.

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Newsagency management

Newspaper publishers shed more staff

Mumbrella has reported more jobs lost at News Corp in Marketing. This is on the back of job cuts at Fairfax a few weeks ago.

A spokesperson for News Corp told Mumbrella today: “A number of changes to the state marketing teams were announced this week. It follows the restructure of the group marketing function a month ago. The changes at a state level are designed to align roles and responsibilities to those at a group level. Unfortunately this has resulted in a small number of roles being made redundant.”

This sounds like marketing will be more national than state based.

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Media disruption

When an employee steals from your retail business

I was going through some old photos at the weekend and found one from twenty years ago of an employee who stole more than $15,000 from my newsagency.

The photo, taken at a work Christmas party, reminded me of the theft, which I had long forgotten. It was my first experience at substantial employee theft.

The theft was discovered when were chasing an anomaly in end of shift balancing following an unexpected roster change. A pattern of behaviour was discovered. This caused a question to be asked. Within twenty four hours there was an admission of theft over the previous year of $15,000. This was settled with a bank cheque, funded by their parents, and agreement of immediate termination of employment for then agreement that their partner was not advised.

Knowing what I know now, the amount stolen was sure to be considerably more than the advised $15,000. However, the lesson from the situation was far more valuable in that I learnt exactly what they were doing. This resulted in a tightening of the processes as wells changes to the software to make discovering such theft easier in the future.

We’d bee too busy worrying about big theft to notice small theft, $50 or $50 a day.

Back then, in 1997, cancelling sales in POS software was not frowned upon. There were valid reasons you might cancel a sale. Discovery of the theft revealed that it was a common way to steal small amounts from a business that might not be detected in a P&L analysis.

The software was changed and the business management processes I required changed for my shops. It is now much easier to detect theft and businesses that want to block cancel sales can – although, I recommend against this as it continues to be an excellent indicator of employee theft. In fact, the software changes have been on-going in that this first theft experience established my interest in the area and commitment to help independent retailers reduce the cost of theft.

Being stolen from by someone you trust, someone you count as a friend, is gut-wrenching. It can also be a defining moment from which you learn and act, to ensure it does not happen again. That is how it played out for me in retail as well as in POS software development. For that experience I am certainly grateful.

I kept the photo as it is a useful reminder of what a thief can look like.

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Ethics

Calendars help newsagents find new customers

Calendars have been strong in our channel for a long time. However, not enough newsagents leverage calendars as a new traffic opportunity.

By calendars, I mean the ones we choose for ourselves and from which we make 50% and more, not the magazine distributor calendars over which we have no control.

The opportunity starts with buying early in the year, usually no later than March. Selecting titles through which you can promote your business outside what people expect from you or promoting segments and categories around which you build a broader offer in the business.

Once the stock is in, I like to go through the range, selecting the titles I will promote and scheduling these into social media and elsewhere.

Sometime I’ll promote only the calendar, or several that are related, which other times I’ll promote a calendar with a range of related items that work well together.

In every instance I am looking for calendars titles that play outside what we are known for, titles that are more likely to bring a fringe-sweller in or, better still, someone who have never shopped with us before.

There is where choosing the calendar title is key as you want to tap into passion. People are happy to drive for passion, if they feel they will be satisfied.

We go out with calendars in September, with Father’s Day.  Through the season they have three or four locations in-store to tap into existing traffic. however, it is the out of store pitch that interests me to most as it is the opportunity for new traffic that I see as vital for our businesses, key for our engagement right now given the continuing decline in footfall for core categories in newsagencies.

Stocking a good range of calendars is not enough, not any more. You will only reach the potential if you actively promote outside the business, to people not in your community, to people who do not shop with you. This is absolutely critical.

Now, if you are thinking that calendars are redundant. I don’t think they are, especially not the ones that appeal to interests people hold dear to their heart. Sales tell us interest is strong.

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Calendars

Why suppliers sell to other shops in town: understanding the cost of wholesaler reps

Small business retailers, including newsagents, get understandably upset when they see products they ordered from a rep who visited in another shop near to theirs. Their preference is that suppliers do not do this.

It makes sense in a small town for there to be product differentiation between local retailers.

Today, however, I want to unpack the supplier rep cost base so you can think about why it might happen.

A rep on the road has a cost to the business of around $100,000 made up of salary, maintained vehicle, on-costs such as work cover, insurance and related as well as any incentive for performance.

A rep is on the road, on average, forty weeks of the year allowing for annual leave, other leave, training, meetings and times when retailers don’t want to see any reps. While the 40 is a generous number, let’s go with it.

Forty weeks is 200 working days, or 1,400 working hours after allowing for breaks.

A rep needs to earn at least $71.42 in gross profit per work hour to cover their costs to the business let alone other business costs.

However, reps and suppliers tell me that rep travel time accounts for around 30% of work hours. This takes the work hours in a year to 980. At 980 work hours a year, a rep needs to earn $102.05 in GP to cover just their cost to the business.

The reality is, given business overheads, the cost of a warehouse, marketing and other costs, a rep would need to earn between three and five times this in GP to cover the business costs.

What I have written above is based on discussions with wholesalers in a range of retail channels including one wholesale business owner who took their ten full-time reps off the road and went to a purely online model of service after doing a deep dive into the costs their business model.

Given the slim margins in wholesale, usually considerably less than in retail, I can see a rep needing to write between $2,500 and $5,000 a day in wholesale business to cover their costs and the business costs.

The objective of this post today is to have you consider these numbers next time you see a rep in your shop. Consider what they have to make and how they might go about making that.

While it does not justify them selling to a nearby competitor, it may explain why it happens.

With more wholesalers moving to an online only model, there is an opportunity to purchase from this type of business, one less livelily to walk a few steps up or down the street to sell to a competitor what they just sold to you. It is not the answer, but it could be one answer.

Next time you get angry about a supplier selling to a competitor, think about their business and what you think they could do differently to benefit your business and their business without causing the anger it has caused. Talk to them. That conversation could benefit both businesses.

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Newsagency management

Postal franchisee campaign ramps up

This tweet from yesterday reflects the core message of a campaign for fair compensation for postal franchisees:

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Australia Post

newsXpress businesses pitched in TV campaign

newsXpress this morning launches another national TV campaign promoting new Beanie Boos, a new ow price for beanie Boos and two exclusive Boo related products.

The TVC is integrated with in-store displays featuring professional collateral that visually  connects with images in the TVC, in-store events, social media marketing and more.

Planning for a TVC began months ago, with the agreement on exclusive Beanie Boos products and the creation of a 1340 page 2018 Boo Collectors yearbook. This book was published last week after a three month in-house design process.

The TVC has been timed for now to be ahead of the Christmas ad curve and to leverage school holidays.

This is the TVC, which will run in high rotation for two weeks.

Out of store marketing is critical for us to replace foot traffic leaving our channel and moving to other retailers and online. While TV as a medium has challenges, there is evidence that it continues to play an important role in brand  building and that is certainly one of the objectives of this campaign.

Now, for those working on a comment to put this campaign down as can happen here with any newsXpress related post I write … Boos sit in the top of the top 10 toys currently sold in Australia, newsXpress is the third most successful retailer of Boos – behind Coles and Woolworths, Boos are a net new traffic driver for newsXpress businesses, Boos shoppers are valuable in that they purchase other products, Boos are fun.

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newsagency marketing

Promoting BHG Christmas

We are promoting the Better Homes and Gardens All I Want For Christmas special in a few locations in the business to maximise the opportunity. We’ve done this for years and found it works a treat. It’s easily purchased on impulse.

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magazines

We are not our customers

Hallmark Keepsake ornament sales are very strong this year. The sales are a reminder that I am not my customer. This Christmas ornament of a character from The Walking Dead is one example:

It’s popular. As is this one from Finding Nemo.

The shoppers buying these, and other licenced Hallmark Keepsake ornaments, are thrilled they can get them. They want other product from these licences and other licences. Rarely do we sell a single ornament in a transaction. Three is common. The biggest transaction is fifteen.

If deciding to stock the full range, a decision made late 2017, there was a risk. However, I wanted to take buying away from being item based, I wanted the range and marketplace to show what could happen.

The experience has been a reminder to me of an important mantra: you are not your customer. Thank goodness for that!

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Newsagency management

Fuck … language matters less in retail today

Years ago, having a product with a swear word on it in the newsagency would have resulted in plenty of complaints at the sales counter every day. That is no longer the case, even for the more serious swears.

Swear words are okay if complaints, or lack thereof in my experience, are anything to go by. In one of my stores, in suburban Melbourne, we have developed a large selection and we get a complaint every few weeks at the most.

The key is that the products are smart, funny. Swears for the sake of swearing are not appreciated. Smart, funny, caustic use of swears usually works the best. This is the era of sarcasm after all.

We place these swears related products together, away from parts of the business likely to attract people who are more likely to be offended.

What is interesting about products with swears is that through them we can attract shoppers who might otherwise have not shopped with us. We can demonstrate products with a broader demo appeal. This is good news because anything through which we can appeal to people who do not shop with us has to be good.

There are several suppliers who specialise in swears related products. While newsagency businesses are usually not their go-to fit they do supply and in short time you can see if you have an opportunity on which you can valuably expand.

The photo is of a tea towel. It’s a hit with people of all ages, including grandparents who laugh at the prospect of giving this to a wayward grandchild.

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Management tip

Why you should not use your card company, or any supplier, as a source of capital

For decades, some card companies in Australia have loaned capital to newsagents in the form of cash, or fixtures or equipment items as an incentive to sign long-term agreements. Some other suppliers have done this too.

Most loans are repaid through rebates, discounts off purchases, through the term of the agreement. Some are paid off through regular, non transaction related, payments.

Card companies have used the financial assistance offer as a carrot to win new business. It has worked well for them and for newsagents who may not have been able to easily source capital elsewhere.

For years, whenever I have been asked by newsagents or someone entering the channel about tapping a card company for funding, I have said don’t do it. That remains my position today.

Supplier provided capital funding comes at a cost. Some agreements I have seen, are unfair. In one case last year, the agreement I saw had a real cost to the business way above reasonable interest rate level. It was structured to roll on as a significant handcuff to the business with the fixtures involved having a book value eight years on when they should have had zero value by then.

I appreciate there can be challenges in raising capital in small business. In my experience you are better off without supplier funding than the challenges that can come with having it.

However, if you do go down this path…

  1. Do your homework.
  2. Do not rush.
  3. Understand all of the documentation.
  4. If in doubt, get legal advice.
  5. If the agreement asks you to acknowledge that you have had legal advice, make sure you get it.
  6. Do not sign if you have any doubt whatsoever.
  7. Make notes of all supplier representations leading up to the signing of the agreement.
  8. Keep a copy of the signed agreement and your notes from the time together in one place.
  9. Fulfil your obligations under the agreement.

The time issues arise from supplier funding agreements small business owners are usually at their weakest. Protect yourself from this by doing the necessary legwork up front and ensuring you fully understand what you are walking into prior to signing anything.

Card companies and suppliers have not set out to get people. Circumstances have seen it look like it though. With personnel changes as they are, it is only there words on the page with your signature that matter if there is a dispute. This is why records you keep can be vital.

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Ethics

How can Tatts rescue its relationship with newsagents?

Tatts needs to do something pretty amazing to rebuild its relationship with newsagents. The damage done over the last ten or so years, until the takeover by Tabcorp, was significant.

Urgent action by the management people a Tatts is needed to get newsagents and other small business lottery retailers back on side.

Here are a few simple steps that Tatts could take that would, in my view, immediately improve the situation and, most likely, improve revenue:

  1. Move focus to sales with same store year on year sales being the only metric for measurement of performance.
  2. Stop assessment visits. Stop penalising retailers for infractions such as other products on the counter and other ‘infractions’ that are yet to be shown to be detrimental to sales.
  3. Introduce a modest financial reward for year on year growth.
  4. Encourage leveraging the Tatts space in-store for other products.
  5. Make it easier for shoppers to find their local retailer on all Tatts digital touch points.

This is not a big list. It would not cost anything to implement. Tatts could even trial it nationally to June 30, 2019 and see how it performs.

By making it a trial, Tatts encourages buy-in from  the whole retail channel so the moves are a win at the local business level and a win for Tatts.

I doubt any of the five items on the list would have a detrimental impact on sales. In fact, I think they could have a positive impact. All it would taker is a management decision by Tatts to trial this list or something similar. It would a good next step to resetting the relationship, respecting the retail channel and showing that the relationship has moved on to new times.

Revenue is what matters to Tatts and to retailers. The current approach is handled at the store level in such a way that it can be a disincentive. It also lacks respect. The approach I suggest respects the local business owners and acknowledged a shared objective.

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Ethics

An exciting time in men’s gifts for newsagents evolving their gift offer

It is terrific to see the mens gift offering expand beyond stubby holders, socks and similar. Thanks to new wholesalers and better buying by existing wholesalers we are able to tap into cool gifts with a broader appeal than we have had in the past.

I am especially liking gifts that play well outside of seasons, as well as gifts that skew for guys but can work just as well for girls. It is a bonus is they work well for people 35 and younger.

Whereas in the past mens gifts used to be the same year in and year out, now we can play as if we are in  the fashion business, seasonally, knowing that what is in this season will have faded next season. Sure this is harder work for the retailer, but the benefits are worth it is we can become known as being a shop with cool gifts.

The changes over the last couple of years and in 2018 in particular in the mens gifts space are considerable. This is why I say it is exciting … because through this category of gift we can expand the appeal of our business both to existing shoppers as well as to new traffic shoppers.

Plus, many of the newer, funkier, mens gifts lend themselves to social media pitches. This is vital if we are to seek out and attract new shoppers to our businesses.

Finding the gifts is a challenge as you need to either have existing suppliers innovating through their buying for you or your need to seek our new suppliers who so not usually serve the channel. Both are options. I am seeing both work well in may businesses.

Given the number of cards we sell for males, it makes sense that we are strong in the male gift space. That said, gift sales in our channel skew strongly female, more strongly than the percentage of female cards we sell. I think this is because of buying choices by newsagents and others in our businesses who do the buying. It is something we need to fix, in our buying. The new products we have access to can help with that.

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Gifts
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