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

Why I am not interested in a convenience model in any newsagency business I own

Convenience retail is highly competitive the world over. The channel is dominated by big players, national and multi national businesses with deep pockets, lucrative supplier relationships and the competitive advantage of centralised, efficient decision making.

A single locally owned convenience business has an uphill battle. It is not impossible, but it is tough.

The prime proposition of any convenience is convenience, location.

The secondary proposition is value, price.

While there are other propositions, they fall a long way behind, in my view, location and price.

A convenience focussed newsagency with a national brand convenience store nearby and / or fuel based convenience offerings nearby will always struggle. The brand awareness of the national brands counts for plenty as shoppers know what to expect.

While an indie retailer may pitch on price to compete with a national c-store, they will not have the capacity to negotiate the same buying price points nor will they have the resources to subsidise price. On top of this, they will rarely have the ability to market in the same way a national c-store will, especially in-store with price messaging.

So, to me, operating a convenience business feels like a tough battle.

I see more value in pursuing other retail segments, where differentiation is easier, shopper passion is higher and return business more certain. In such a business the margin dollars per purchase are higher, competition is less and people are more likely to travel by choice to shop with you.

An Aussie newsagency in any location can specialise in higher margin product categories. It takes research to understand the opportunities and maybe time to negotiate product access. However, the result can be a business that is more easily run, relying on less foot traffic, needing less of a perfect location.

This approach to me feels more strategic, long term and valuable in terms of overall business value. It is a business that is more easily marketed externally and harder to compete with.

Further, niche specialty retail is less likely to attract a national or multi-national retailer as competition. The competition is more likely to be online and while, for sure, this is a tough thing, you can look and understand an online competitor more.

Kudos to newsagency operators doing we’ll out of a convenience model. More power to you.

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Convenience retail

Gotch rejecting returns

Newsagents are having returns submitted to Gotch rejected by the company. Tower support people have check rejected files as have XchangeIT people – both parties say the returns files are to standard. The problem appears to be at the Gotch end. It looks like something has changed at Gotch over the weekend.

UPDATE: 4:35pm. Gotch says the number of stores affected is 36, that they do not know the cause and that they are working on it at their end.

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magazine distribution

What to do if traffic in your newsagency is down

If traffic in your newsagency is down and revenue down as a result, you must act. A traffic decline that is more than a blip or related to obvious factors such as street construction or major weather events demands a response.

Doing nothing is not an option. Complaining achieves nothing.

You must act.

  1. Make your business more appealing to new traffic.
  2. Reach outside your business to attract the new traffic.
  3. The more different your response to what you have been doing the better the opportunity of finding new traffic.

Okay, I get that these three points are simple and not detailed. That is deliberate for this post. My goal here is to stat what I see as the obvious: if you do not make changes in your business you cannot expect to alter the traffic and performance trajectory of the business.

You make your business more appealing to new traffic by engaging with new products and product categories.

You reach outside your business through smart and fun Facebook posts that you boost.

These are things any newsagent can do.

If your traffic is down, these are things you must do. The alternative is that you complain next month, and the month after, and the month after that traffic is down. What kind of business plan is that? It’s not, that is my point.

No supplier owes you a solution, no landlord has to fix this for you. Falling traffic is your challenge to lean into and to resolve.

I have seen it resolved. In fact, a dead business I took over less that a year ago is an example of this, an example of recasting the business for a new traffic future.

Success in approaching the declining traffic challenge will demoed on how far you are prepared to go, how different you are prepared to pitch your business outside of what it has been known for. This is difficult if the only retail you know is newsagency as recasting the business involves significant steps away from that traditional business.

Ask for help. Seek to be challenged. There are plenty out there who willingly help retailers recast their businesses.

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Newsagency management

Lost data can impact the sale of your business

A newsagent experienced a computer outage recently, losing weeks of data. The data was lost because they backup they thought someone else in the business was doing was not being done.

This business is on the market. A prospective owner doing due diligence could have questions about the gap in business data. This could impact the purchase price.

There is no excuse for not having a current data backup. It is essential for the swift recovery of accurate current business data in the event of hardware or other malfunction.

There was a sale last year that was held up because of data related issues that challenged trust.

Data backup is essential today and for what might come in the future. 

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Newsagency management

Some green shoots in December quarter sales data for Australian newsagents.

I have just, finally, completed analysis of the benchmark data provided by newsagents as part of my regular channel business performance study.

The October – December quarter sales data indicate a better result for magazines in Australian newsagencies with the rate of sales decline falling.

Benchmark headline numbers.

  • Magazine unit sales declined 9.5%. What is interesting is the weeklies. The average decline there was 6.9%. This is good news in that the decline has slowed.
  • Greeting card revenue was flat. However, one reported year on year growth of 17% with plenty at close to 10%.
  • Lottery revenue declined 1.6%.
  • Newspaper unit sales declined 12.5%.
  • Gift revenue increased by 15%. This is good news for those strong in gifts.
  • Toy revenue increased by 8%. This is good news for those strong in toys.
  • Plush revenue increased by 11%. This is good news for those strong in plush.
  • Stationery revenue declined 10%.

The above percentages reflect the overall performance of the 168 newsagency businesses in this benchmark study – large small, city country, in groups and solo.

The results for magazines represent the best quarter in the 2017 calendar year.

OVERALL PERFORMANCE DATA.

  • Customer traffic. 72% of newsagents report average decline of 4%.
  • Overall sales. 43% reported an average revenue growth of 3+%.
  • Basket depth. 46% report a 1.8% increase in basket size.
  • Basket dollar value. 49% report a increase in basket value of 4%.

THE MOST IMPORTANT DATA FOR NEWSAGENTS

This benchmark dataset provides newsagents something to compare with. The more important analysis is for newsagents to do your own comparison for their own business for these comparative periods. We are our most important competitor.

If your numbers are not as good as you want, things must change for if they do not change the trajectory will continue.

What is your intention for your business?

I urge you to ask yourself daily, what have I done today to reach a new shopper, someone who does not know we exist? This is what successful businesses in the benchmark study are doing and doing well.

BENCHMARK GOALS

I am often asked for benchmark goals newsagents ought to aim for. Here are some benchmarks I have developed in my work with newsXpress and through Tower Systems:

  1. Gross profit: this is the goal gross profit for all product sales not taking into account any revenue or costs related to any agency business. The traditional newsagency average sits at 28% to 32%. For a newsagency focused on the future, the goal has to be at least 45%.
  1. Ratio of Gift revenue to Card revenue: 50% minimum. The goal ought to be 100% or more. If you do $100K a year in cards, target to do $100K in gifts, or more.
  2. Revenue per employee – $250 an hour minimum not including agency revenue. This is a contentious KPI. If you think it is not for you, work the numbers back and see what your number needs to be based on each labour hour in the business.
  3. Revenue PSQM $4,500 – $8,500 depending on country vs. city / high street to shopping centre and depending of product mix. Higher GP lower revenue required.
  4. Overall revenue mix percentage targets: Cards: 25%; Gifts/toys/plush: 25%; Stat: 10%; magazines/newspapers: 20%; other: 15%.
  5. FLOORSPACE ALLOCATION: Cards: 25%; Gifts/toys/plush: 25%; Stat: 8%; magazines/newspapers: 15%; other products: 15%; office/back room / counter: 12%. It’s rare you make money from an office or store room.
  6. Mark-up goals: Stationery: 125%; Gifts 110%; plush: 110%.
  7. Occupancy cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Location and situation are a big factor in this benchmark. For example, a large shopping centre business will have a higher cost than a high street situation.
  8. Labour cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Labour cost should include fair market costs for all who work in the business. (See above).
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Newsagency benchmark

Anonymous mail

I have received four pieces of mail over the last two weeks from people asking me to publish material related to entities serving the newsagency channel. Each piece relates to national organisations in the channel.

One piece is highly critical and, I suspect, if published, would be open to legal challenge. The pieces are not related to businesses my businesses compete with.

Those who sent the material, and it may be several people, want this blog to be used to serve their agenda. They should find their own platform.

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Newsagency management

Pitching to older shoppers

I like this sign I saw in a US clothing store. Through this sign and elsewhere in the business they pitch to the older shopper and those who buy for them, in a fun and disarming way. Their in-store signage approach is more direct and obvious that what we tend to see in Australia.

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marketing

New faith based cards driving new shopper traffic

We have had several ranges of DaySpring faith based cards in store since prior to Christmas, long enough to get good data to access performance.

In addition to being added to baskets of existing shoppers, the DaySpring cards are helping us attract new shoppers to the business. We are doing this through a thoughtfully crafted social media campaign that seeks to reach people we think could purchase these cards.

Customer feedback has been wonderful.

DaySpring is a Hallmark subsidiary. These cards have never been available in newsagencies or regular card shops in Australia before. It is new ground we are grateful to have the opportunity to tread.

What we are finding is that the DaySpring cards have brand appeal, broader than one may think when you loom at the cards and realise that each contains a bible verse related to the sentiment expressed.

I know one newsagent who has the range who sold $165.00 of the cards to one customer in one transaction … yes, the customer was that thrilled to find the range.

The DaySpring shopper is more likely to purchase multiple cards in a single purchase, making them more valuable than the average card shopper.

We have the range in a spinner, which we move to interrupt destination traffic in-store and thereby have more retailers see the range.

Footnote: the DaySpring range is part of the newsXpress product exclusivity project that delivers newsXpress members access to products they are unable to source elsewhere, providing a range advantage. I am a Director of newsXpress.

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Greeting Cards

Media companies pile-on in the appeal against the Rebel Wilson verdict

ABC, Fairfax Media, News Corp, Seven, Nine, and Macquarie Media and all seeking leave of the court to have a say in the appeal by Bauer Media of the decision granting Rebel Wilson $4.5m in damages following her claim of defamation last year.

My personal view is that defamation payouts should not be held back, that Australian courts should be able to detriment payouts in the millions if they judge the harm to warrant it. The risk of such penalties should / could result in more accurate news reporting by media outlets.

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Media regulation

Discounted magazines appear here to stay

Look, I don’t get it, I don’t get why retailers continue to stock discounted magazines next to the full price version. Sure, in transit locations maybe, but newsagencies? No, I don’t get it, not for the business I prefer at least.

These bagged offers educate the magazine shoppers we really like – those who buy two or more weeklies a week. They won’t pay full price if they know they can get a deal.

I see my shop as a full service quality outlet. Discounting is only used to quit stock. Sure, there are loyalty offers but they require work, and loyalty, to unlock. The bagged magazine offer is a version of loyalty but really only benefiting the publisher.

Magazine publisher reps have explained the rationale to me in the past. But I still don’t get it.

I’d love to know what others think about these deals.

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magazines

More on the Powerball changes

I have seen the recent communication from Lotterywest to newsagents in preparation for the Powerball changes. The is much for retailers to communicate to customers, plenty of changes that will cause friction at the counter.

I know from feedback already that customers will have many questions, as will staff and newsagency business owners.

The changes are a challenge, but needed to lift sales if the research touted by Tatts and Lotterywest is accurate. People want bigger jackpots. The only way to get them is with changes like these. The changes come at a labour and customer relationship cost. This is why training and management are key, to mitigate situations that will arise.

While Lottoland has been busy with their marketing, I am yet to see anything that confronts the Powerball changes.

Newsagency suppliers hold ensure their team members are aware that the time around the launch of the new Powerball game will be challenging for newsagents.

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Lotteries

Good start to Sydney Gift Fair

Feedback from the floor of the Sydney Gift Fair is that optimism was strong among retailers and buying good.

Attendance was up 14% on level 1 and 18% on level 4 on 2017 numbers.

There is no better indicator of business outlook than buying at a major trade show like this.

Suppliers I have had contact with are happy with the first day of trade and sale looking forward to the next four.

My tips for retailers are:

  1. Ensure you know who else near could you get what you are interested in.
  2. Be clear about what is acceptable to you re backorders.
  3. Be clear about delivery timing you require. Some suppliers harvest orders and then order from overseas.
  4. have a budget.
  5. Never spend the full budget.
  6. Remember: you are not your customer.
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Gifts

Strong digital subs growth for Fairfax

Fairfax this week reported strong growth in digital subscriptions.

In the six months to December 31, The Australian Financial Review, The Sydney Morning Herald and The Age grew their total paid digital subscriber base by close to 50,000, the strongest half in four years, taking total subscribers across Fairfax’s three major titles to more than 283,000. Digital subscription revenue rose 11 per cent in the first half in the metro business.

This is an excellent result for the company, even considering the cost of obtaining and maintaining digital subs. It is a base and it reflects migration from print to digital.

Whereas print newspapers are primarily an advertising delivery medium, digital news platforms have the opportunity to be primarily news and analysis delivery platforms, driven by demonstrated reader interest.

The Fairfax boss said the company has been able to use data to better understand exactly what readers want and give it to them in ways media businesses have traditionally not been able to.

“This feeds into subscriptions. If more of your revenues are dependent upon subscriptions and less on advertising, clearly, you’re going to be saying ‘well, what do our subscribers want?’ So the focus becomes on your core audience rather than a mass audience. This all evolves, we’re always part of an endless learning process.”

Newsagents with business models that rely on print need to read the details of the Fairfax results and contemplate the results in the context of their own businesses. There is much to consider here if your business is reliant on print related revenue.

The live question is with such growth in digital subscriptions and continued declines in print, when?

Note: in case the article is now behind a paywall, click here.

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Media disruption

The challenge of the permitted use clause in shopping centre leases

Major shopping centres can be fierce in their interpretation and regulation of permitted use clauses in leases.

The permitted use clause details what you can sell or offer in your business.

Some newsagents are coming up against permitted use clause challenges when they evolve their businesses in response to market changes. I have and it can be a frustrating and expensive experience.

The ABC recently published a story about a hairdresser who refused a girl a haircut based on gender, because of the permitted use clause in their lease.

Vivien Houston was a regular at Jimmy Rod’s Barber Shop in The Gap Village Shopping Centre.

But when she turned up for a trim recently she was turned away because she was female.

Jimmy Rod’s managing director James O’Brien said women were not able to have haircuts at the shop because of a new lease agreement he had signed with the local shopping centre management.

It is important that anyone signing a lease does so knowing the full implications of the lease and, in particular, the permitted use clause. If I was a hairdresser I would not want my business to be in a position of turning anyone away because of gender.

It is disappointing the landlord sought this type of restriction for the barber shop. However, it is not uncommon for landlords to set permitted use stipulations that look ridiculous and non-commercial  on small businesses. It is a cost of business for those of us who trade in shopping centres so I guess we often suck it up.

We are in a retail world of rapid and considerable change. Legislating borders is out of date with the retail situation of today.

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Newsagency management

Gotch lets newsagents down with My Little Pony Adventures part series from Eaglemoss

The My Little Pony Colouring Adventures part series launches next week. I expect issue 1 will sell out quickly for some stores while others will have returns.

I say Gotch has let newsagents down because of their typically poor and one size fits all approach.

I have had My Little Pony products from multiple suppliers in store for ages, products that appeal to kids and adult collectors of the licence, yes adults. I also have a permanent unicorn department in-store, which appeals yo MLP shoppers too.

Stores with this level of engagement could do far better with the launch that will permit with its one size fits all approach.

I’d prefer Gotch to:

  1. Invite store engagement months out.
  2. Allow us to set supply quantities, without argument.
  3. Give us a better price for firm sale.
  4. Guarantee replenishment through to issue #12.
  5. Guarantee minimum supply for the run of the series where we have confirmed putaways.
  6. Help newsagents with allied product supplier suggestions. While engaged marketing groups will be onto this, Gotch could too.
  7. Make it very easy for shoppers to find stores.
  8. Provide pre-launch collateral to facilitate preorders.
  9. Provide demographic and other insights to help newsagents understand the broader opportunity. My Little Pony has a broader appeal than as a kids toy or kids character.

Sure Gotch is a magazine distributor. See their website and see their claims of being specialist. A specialist business would do more than they have done in the lead up to the launch of this title. It is not enough in my opinion.

We are going all out as My Little Pony Colouring Adventures will drive traffic in-store. I say this because support for the MLP brand is strong, I do understand the demographic and I am already setup to leverage that into deeper basket opportunities.

To anyone at Gotch rolling their eyes, frustrated, angry or annoyed at this post – all I want is for newsagents to make the maximum amount of money possible. Your poor execution will not see this happen.

Check out a TVC from the UK launch to see why I think this part series will be a bit.

Check out collateral Gotch has shared with the public via their Twitter feed:

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magazine distribution
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