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

The key to new traffic is to not look like an old newsagency

In the first three hours of today 50% of the shoppers entering the business were new shoppers thanks to a major promotion and the front of store pitch into the shopping mall.  Here is what the ‘newsagency’ looks like today:

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As the headline says, the best way to get new people into your newsagency is for the business to not look like a newsagency as a business that looks like a newsagency connects with old memories that are most likely not relevant to most shoppers today.

Sales are excellent. GP is nicely above 50%. A good number of the new shoppers are connecting with our multi layered loyalty programs and will be back.

Attracting new traffic is a complex task that required planning and excellent in-store execution. Key to success is changing shopper perception about what the business is.

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Newsagency management

Selling News Corp. Hasbro Board Games on eBay

I was surprised to see many eBay sellers offering the recent News Corp. Hasbro Board Games including this one that has sold 57 units so far.

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Looking further at some of the sellers it is surprising the extent of their offers. I’d love to know the revenue they are generating and if this makes the promotions worthwhile in the long run.

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Newsagency challenges

Bananas with magazines

15036354_10153838081782003_5294406306785513749_nOne newsagent received a magazine bundle with part of a banana crushed on the outside of the bundle. In the middle of bundle was the rest of the banana. Sticky and messy.

This leads me to ask the question: what surprises have you found in magazine bundles?

A newsagent I spoke with yesterday told be about an unopened condom pack – seriously.

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magazines

The journal challenge for Universal Magazines

IMG_0823Universal Magazines has a range of journals under the brand of Signature. I was sent a pack recently. I like the product as do others in the office.

The model is a challenge. 33% GP is insufficient. GP should be 50%+. Calling what we make commission demonstrates a disconnect with our model today.

Sale or return does not help. nor does delayed billing in that it is easy to get terms like 60 days or close to without much difficulty.

At the Hong Kong Gift fair a few weeks ago I saw journals like these with a similar look and a matching quality. If I was bringing in a container I could land them for around 20% of the suggested retail price. There are wholesalers doing this and knocking on newsagent doors. Making tough competition a challenge for Universal too.

The final issue is the story. Many of us want stationery related items that fall into a broader category story. While I like the two stands Universal has for this product, it is the the size story I am looking for.

I applaud Universal for trying. next time they should listen more carefully before sourcing products.

6 likes
Suppliers

Signs that turn customers off #1

This sign in a Sydney c-store was noticed by a customer who had waited in line to purchase a top up. The retailer didn’t care they walked out. They also didn’t care if I took the photo. I don’t need her he said in the direction of the customer leaving without making a purchase.

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Newsagency management

Darrell Lea in Officeworks

IMG_0964I was surprised to see Darrell Lea liquorice at Officeworks in Pitt Street Sydney yesterday. The Officeworks price is $1.00 per pack higher than I can easily find it elsewhere. So much of the Officeworks low prices claim in their expensive ad campaigns.

The other surprise was the placement of the product in a dump bin, next to what look like cheap products. This is not the type of representation I expect to see for a quality brand.

Dump bins in Australian retail typically suggest a deal. This is not a deal.

If you sell Darrell Lea and have an Officeworks nearby, be aware.

9 likes
Competition

newsXpress launches national TV campaign today

newsXpress kicks off a national TV campaign today, launching its EXCLUSIVE National Beanie Boo Week, to coincide with the launch of six exclusive to newsXpress Beanie Boos. Here is the call to action TVC:

This campaign is not costing newsXpress members anything. In addition to the TVC, newsXpress has provided members free stock to give away, A1 posters for in-store, flyers for local distribution, a colouring competition and more. Do a Google search for Beanie Boos and see our online strategy. The store-connected newsXpress site is the second highest ranked Australian site – ahead of Toys R Us and KidStuff.

The Beanie Boo TV commercial and National Beanie Boo Week campaign by newsXpress are part of an integrated campaign of transformation. Regulars here would know I think transformation is mission critical for newsagents.

Through careful targeting, newsXpress guides members to find new shoppers in four valuable and specific demographics with little overlap. This is all about finding new traffic, which is vital for any newsagency business.

Through new products and some exclusive products, in-store engagement, online marketing and other activities, newsXpress is helping members not only find new traffic but to lift overall business GP.

The newsXpress online strategy is driving in-store traffic as well as online sales. In a few hours yesterday, for example, one of our six public websites generated more than $1,000 in sales for several newsXpress stores and led to calls and emails to newsXpress members seeking out products.

My opinion is the old-school traditional newsagency has no future. Further, the old-school traditional retail business website has no future. The brand focus is paying off with local newsXpress businesses being found easily when people are searching on their phones and online for popular brands.

I am a Director of newsXpress.

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marketing

This is what magazine oversupply looks like in a newsagency

I took this photo in a newsagency recently. This business tries hard to display magazines well yet every week they are sent far more than they can reasonable display.

Magazine publishers take a look – you cause this.

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This is one section of the magazine department. There are two others like this.

No wonder there are newsagency businesses without a magazine department.

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magazines

How does a wrapping machine in the shop window drive traffic?

I am shocked that in 2016 there are still newsagents who store their newspaper wrapping machine in the shop window – blocking a view inside the shop and not using the window to display products for sale.

This is crazy! Yet is is happening today.

No matter how small the town and how little passing traffic you get, a shop window ought to be treated with respect and offer a window on the retail business. It is the most valuable retail real estate after all.

Using a street frontage window as storage space is ridiculous, clearly not the kind of move you would expect from a retailer.

The answer to my question How does a wrapping machine in the shop window drive traffic? is: it doesn’t. To me, a wrapping machine in the window says this shop is not worth visiting, whatsoever. The shop must be old-school to of date and more focussed on one retail activity. Surely it cannot have any products of interest.

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Newsagency management

Newsagent exclusive colouring magazine

IMG_0877I was surprised to see this newsagent exclusive adult colouring magazine pack with free felt Paper Mate pens. I say surprised because I’d not heard about it. Usually, good national promotions get noticed. I only discovered the pack last week. I like the pack and that it is exclusive to newsagency businesses.

While adult colouring is not the segment it once was, there is enough remaining interest for quality titles to warrant some regular space allocation.

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magazines

Newsagency Sales Benchmark Report: July – September 2016 vs. 2015

This has been a challenging quarter for newsagents. The overall traffic decline is one of the largest in recent benchmark studies.

The decline is due to declines in traffic for core newsagency lines: newspapers, magazines, tobacco and stationery. The increase in transaction count for lotteries is not driving an increase in non lottery product purchases. Indeed, lotteries is one of the most inefficient product categories in newsagencies – by this I mean, people purchase lottery products and nothing else in a visit, like the majority of newspaper purchases.

The good news in the survey is the improved performance in newsagency businesses embracing change. New traffic drivers are working and expansion in gifts, toys and other better margin categories are improving the overall GP story in these businesses.

There is no doubt change is afoot in the newsagency channel. There is considerable evidence in this latest benchmark study of greater difference between businesses. The gap between those performing the best and those performing the worst is the biggest I have ever seen.

The data pool for this survey is the broadest I have had in the last two years in terms of different rooftops represented and number. I am grateful to the bigger pool of 170+ newsagents participating.

There is good news in these benchmark results, especially for newsagents who are working their business as retailers.

  • Customer traffic. 71% of newsagents report average decline of 3.8%.
  • Overall sales. 64% reported an average revenue decline of 4.6%.
  • Basket depth. 61% report a .7% decrease in basket size.
  • Basket dollar value. 66% report a decrease in basket value of 1.3%.
  • 31% of respondents use a structured loyalty offer such as points or some other discount.

Benchmark results by key departments:

  1. Magazines. 85% of report an average decline in unit sales of 11.3%. The average decline in weeklies is 10.1%.  The decline is not as bad outside the top selling titles.
  2. Newspapers. 85% report average decline in over the counter unit sales of 8.7%.
  3. Greeting cards. 64% of report average revenue increase of 2.9%.
  4. Lotteries. 64% of those with lotteries report average increase of 4% in transactions.
  5. Stationery. 80% of newsagents report a decline, with an average of 3.8%.
  6. Ink. 18% of stores report ink separately. Of these, 55% reported increase of 2%.
  7. Gifts. Of the 65% with gifts, 74% report average growth of 6.2%. Note: for the purposes of this analysis I roll gift related departments such as plush, collectibles, homewares and gifts into one.
  8. Tobacco. Of the 42% with tobacco, 80% report an average decline of 12%.
  9. Confectionery. Of the 55% with confectionery, 65% report an average decline of 3%.
  10. Toys. Of the 20% with toys, 75% report growth of 4.9%. Note: toys can include plush, games, puzzles and other toys.

Here are some insights from analysis of the data:

  • The traditional newsagencies: papers / magazines / lotteries / cards / stationery and little or no gifts fared the worst.
  • Newsagencies with strong gift, toy and plush departments performed better.
  • Those with more expensive gift lines did better than those with cheap gifts.
  • Newsagencies in a group usually, but not always, perform better than those not.
  • In the successful group, the ratio of gift to card revenue continues to grow. I have data from newsagencies achieving 2:1 gifts over cards … in other words, $2 revenue in gifts for each $1 in revenue for cards.

DOES THE NEWSAGENCY CHANNEL HAVE A FUTURE?

Given the number of poor performing businesses in the channel it is looking more likely that the channel as a channel does not have a future. In this situation it could be replaced by multiple channels trading under different names. It all depends how each of the marketing groups position themselves over the next year or two.

Urgent change is vital to the future of newsagency businesses. Change on the shop floor to inventory range, shop layout and how those who work in the shop sell.

BLAME.

I blame every supplier who agitated, facilitated and supported in any way the move of papers and magazines into other retail businesses. That move alone in the 1990s put the channel on the path it is on today. As the migration of traffic and revenue to these other businesses made the impact for newsagents of digital disruption a far greater burden to bear.

Today, some of these same suppliers treat newsagents as if still in a regulated environment, effectively making newsagents less competitive than the other outlets they supply. Shame on them.

What these suppliers have today in the newsagency channel is a careful what you wish for moment. Yet most are in denial.

THE ERA OF THE AGENT IS OVER.

Relying on a small percentage of a sale acting as an agent was never a long term business model as it relies on the generosity of the supplier. As we have seen in recent years with falling commission from transport tickets, phone recharge, phone cards and, in real terms, lottery products, agency business has become less valuable.

While there are some who love being an agent for Ladbrokes and other services, you have to ask where the long-term benefit is as these customers are unlikely to be the loyal customers a retail business needs for the long term. I don’t see a long term benefit.

Newsagents who transitioned to being retailers have fared better. There are many success stories including those from businesses that have sustained a considerable decline in revenue but increased profit thanks to a managed GP shift.

It is hard work being an engaged retailer compared to an agent. However, the rewards are greater as you are building a business that attracts loyal shoppers. This is why we should not fear the breakdown of the channel as a channel.

OPTIMISTIC.

I am optimistic for my own newsagency businesses and for the businesses of many newsagents. Well considered changes implemented without high capital cost can attract new shoppers. The right products can bring people back to the business regularly. New customer bases can be found, valuable customer bases where we rely less on competing with supermarkets and others.

Good retailers can make a bright future.

HOW TO USE THESE RESULTS

Look at your own situation. Compare your year on year results with those detailed here. If you are doing worse, act. If you are doing better, celebrate briefly and then get back to it.

There is no time to lose. We are in a period of extraordinary change and challenge on many fronts and the best way to confront change and challenge is to lean in and bring it on.

The business owners of any newsagency are the single most important influence on their results.

WHY I DO THIS STUDY

My interest in the study is as a newsagent and as a supplier to the channel through Tower Systems and through newsXpress. I want the channel to grow for selfish reasons and because it has been my life since 1981. I am invested.

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.
  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).

Mark Fletcher.
Email | mark@towersystems.com.au
M | 0418 321 338

24 likes
Newsagency benchmark

Sunday newsagency management tip: understand theft is a cost of business

Theft is a cost of doing business in retail. Don’t let theft divert your attention from the bigger picture. Don’t let it get you putting up signs that turn customers off. Don’t let it get you hiding stock from customers.

I see too many retailers obsessing about theft to a point where their obsession costs the business more than the theft they are trying to avoid.

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Management tip

Making better use of the old newspaper stand space in the newsagency

IMG_0864This photo shows what used to be the newspaper stand in this newsagency I visited in in Queensland. The old newspaper stand went from floor to ceiling and reached out toward the front of the store by at least 1.2 metres. The location is just inside the entrance to the small 70 square metre shop in a shopping centre – prime and expensive space. This old newspaper stand location is easily seen from outside the front of the shop, it is perfect for attracting shoppers.

The newspaper stand was completely removed from the business and papers put in a more space efficient stand, still at the front of the shop. The new stand takes up a quarter of the space and is situated in less-expensive real estate at the front.

In the place of the old newspaper stand is the stand of gift items you can see in the photo. This stand has been setup to facilitate easy change.

Take a look at how this change is working:

Newspaper sales in the business have not been harmed by the move.

Yesterday morning, an office worker who works nearby noticed the gifts, and spent $175.00 in a single purchase from the new stand. They came back and spent another $65.00 in a second transaction. This is a new customer for the business purchasing new items for the business. Te total gross profit from the two transactions was $108.00.

This newsagent would need to sell 453 copies of their local daily newspaper to achieve $108.00 in gross profit.

The value of the move goes beyond the two transactions yesterday.

Newspapers are available in more than thirty outlets within a five minute walk of this newsagency. They are also regularly given away metres away from the business by the publisher. The gifts in the stand are not so easily available. Indeed, you wold need to drive to find the closest competitor.

This new customer discovered yesterday as a result of the strategic move to move the newspaper stand is set to be far more valuable to the business over the long term than a newspaper customer won by the stand being in this same location.

The story here presents an argument to use to the newspaper publisher rep who may pressure you to not remove their stand or the magazine publisher who may challenge you considering moving the front of store prime retail space currently allocated to magazines.

This post is about strategy, strategy for finding new traffic, strategy for growing the overall GP of your business, strategy for attracting shoppers who will return to make more valuable purchases.

Every newsagent can do what this newsagent I visited yesterday has done. Every newsagent can transition their business. The steps do not need to be big or bold. They can be often and small.

Yes, this is a newsXpress business, yes, the strategies they are engaging with are newsXpress strategies. yes, I am a director of newsXpress. There is enough information in this post to inspire anyone on moves like I have outlined – regardless of the group you are in.

While some in the channel say rip out your newspaper stand and leave it at that, the better advice is to present viable long-term alternatives to re-locating newspapers to elsewhere and replacing them with a stand that enables moves like I have outlined here.

Any change requires you to think beyond a single move. You need to plan. This is where newsagency marketing groups should shine.

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Newsagency management

Tough quarter for magazine sales in Australia

While I will publish the July – September newsagency sales benchmark results Monday, I note the following results for magazines:

  • 85% of report an average decline in unit sales of 11.3%. The average decline in weeklies was 10.1%.  The decline is not as bad outside the top selling titles.

These results are in line with the audit results as published at Mumbrella today.

I will have more to say on this on Monday once the report is completed.

8 likes
magazines

Another ad from Lottoland targeting, mocking, small business newsagents

If you ever needed evidence that Lottoland is targeting newsagents more so than Tatts, check out their latest TV commercial that has just started airing:

My question for newsagents with lotteries is: what are you doing about this?

Lottoland is attacking the small business newsagency channel as they see it as the weakest link in them gaining a stronger foothold in Australia. I hope you can see that – that they are targeting you ahead of the products you sell. And … Tatts does not appear to be in your corner.

As a newsXpress Director I can advise I have written to authorities about the misrepresentation of newsagents in the Lottoland TVCs, engaged with TV Standards, approached Lottoland Australia and approached Lottoland Europe. I have also written to the Chief Minister of the Northern territory where Lottoland has its licence. while I have little to show for the effort, the effort itself is important.

Also, in this place, representing all newsagents, I have written about Lottoland with some of those posts being picked up by news outlets.

I could be wrong but I suspect my effort is the only effort on behalf of newsagents on this. If others have engaged, please share what you have done.

This is not something to grumble about. No, it is something on which to act.

If you are in a marketing group, ask what they have done. If you are paying money to the ANF (ALNA), ask what they have done on your behalf.

8 likes
Competition

Paper Mate Woolworths stand would work in newsagencies

IMG_0709I love this Paper Mate stand in Woolworths supermarkets. The only problem is they have it and our channel does not. It is a no-brainer that newsagents should have this state, in every newsagency, in the same location in-store at the same time and with the products on the stand offered at the same price, nationally. That we don’t have the stand is a failure that needs to be corrected before Woolworths takes more stationery revenue from our channel.

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Stationery

How long would you take to approve this new retail newsagent account?

These are questions for distribution newsagents:

How long would it take you to establish an account and supply newspapers to a retail newsagent account where the business is run by a newsagent with six years experience in owning and running a newsagency, a good payment record for newspapers?

My experience is that such accounts are approved and opened in a day or two.

Do you ask for a deposit where the business persons known and has a good payment record?

I have heard of a deposit being required in rare situations.

In a situation this week, a newsagent with a good payment record has had to purchase newspapers at full retail price from the distribution newsagent sitting on the account application. Further, they have been told even if the account is approved a deposit of $2,000 will be required for an account that will amount to $1,000 a week.

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Newspaper distribution

4 million Lottoland players challenge newsagents

The Lottoland Australian website claims four million players. That number is extraordinary. It is audited by KPMG so I trust it.

What we don’t know is how many of the four million are regular players. That percentage would be interesting to know. Regardless, having 4 million players at any time over the course of their first year her is extraordinary.

As I have noted here previously when writing about Lottoland, they market well. here is part of an email I received from them yesterday – I am a registered customer having tested their product a while back.

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This is a compelling offer compared to how Tatts promotes products products. Look at it. Buy six games and they give you another three free.

Because it’s all done online, they can push the offer out quickly, gauge engagement quickly and get people playing again who may have taken a break. Their whole approach is different as there is no store and I think that is what newsagents don;t get about this challenger, there is no store.

This is why the Lottoland TVCs target newsagents, because this is where they are weak. To play lottery games in a newsagency you have to go to the newsagency you have to be in the store with the parking lines, credit card fees and more points of friction. To play Lottoland you don’t have these points of friction.

It is a very different game, promoted in a different way.

The TVC is about attracting new shoppers while the email marketing is about driving engagement among their database of customers, four million customers.

Marketers say emails get a minimum response rate of 2%. That is 80,000. Imagine if 80,000 played the six Powerball games. The revenue soon adds up.

Now think about what it would take for the newsagent lottery outlet network to sell the 80,000 tickets. 80,000 transactions at around 30 seconds each plus stating in line and parking and more, the time cost of the purchase would be in the order of four thousand person hours – allowing three minutes per transaction walking and / or parking time plus shopping time. Compare that to something like 400 person hours for the seconds it would take each of the 80,000 to make the purchase online.

My point here is Lottoland is an extraordinary game changer. I don;t want it to be because I want newsagents to flourish. However, it is what it is, a game changer in my view.

Be informed. Play it, let your business planning be informed by that experience.

7 likes
Competition
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