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

The significant hit of regional newspaper closures

I am grateful to have seen comprehensive sales data for October 2020 compared to 2019 for a range of regional newsagencies. In this data, the impact of the loss of regional newspapers is laid bare.

In one case, the business lost several thousand transactions in a month. With more than half their local newspaper sales being a local newspaper and nothing else, the paper closure removes a reason for a chunk of shopper visits.

Remove enough of these reasons and you impact the broader health of the newsagency.

More traditional newsagencies rely on layered traffic courses, with regional / local newsapapers being one of these.

While the loss of a local newspaper is not easily addressed by newsagents, the businesses that fare best are those that pull shoppers for a diverse mix of purposes.

Net new traffic attraction remains a key business activity for all retailers in our channel. Our suppliers focus on their category, as they should. It is up to us to focus on traffic for our businesses.

2 likes
Newsagency management

COSBOA on Australia Post and Are Media magazines

Cosboa has published an article that will interest newsagents at their website:

Has Australia Post lost its way?

It is not responsible for a fully owned government entity to be using its market power to damage small businesses.

Australia Post was once known simply as a post office and a postal delivery service, but these days the company has become something far removed from its core purpose and, if recent developments are anything to go by, it is continuing to grow into new markets.

In addition to selling books, gadgets, souvenirs, technology, drones, gift cards for big businesses, chocolates, toys and stationery, Australia Post has developed partnerships with overseas competitors of Australian small businesses and Australian communities, such as Amazon.

In essence, Australia Post is a Government Business Enterprise (GBE) using its special and protected status to take business from other SMEs.

It even offers personal finance products, such as car and travel insurance, as well as currency conversion.

The company also provides a number of digital services outside of its mail and logistics operations. These include employment screening, online payment services, and a digital identity platform.

It appears Australia Post seems to be branching out into everything it can and drifting further away from its core purpose. Shouldn’t Australia Post be focussing on getting its postal services working well instead of monopolising the products and services of small businesses?

While the use of postal agents, who are small businesses, does provide people in the private sector an opportunity to add value to their own private businesses, the major post offices continue to compete unfairly with the self-employed. This year it has gotten worse.

This year, Australian small businesses have been battling external circumstances outside of their control during the biggest economic shock in over a century. Then we find StarTrack, a dominant delivery service wholly owned by Australia Post, deciding that this is a good time to further punish small businesses by increasing its prices for businesses by 4.9%. Currently the CPI is less than one percent, but Australia Post just up and increased its price without any real reason. Small businesses who are forced to rely on slow postal services more than ever due to the pandemic are being hit again while they are already down.

And now, having formed a partnership with ‘Are Media,’ Australia Post will sell the top ten most popular magazines in Australia in Post Offices – and most likely on different or more favourable terms to small businesses such as newsagents. There are over 3000 newsagents in Australia that Australia Post seems comfortable to make collateral damage when they are vulnerable.Taking a core identifying product category like magazines from newsagents in the middle of a recession, and particularly in a pandemic when there are a range of other limitations in their businesses, is not only unprincipled, but personally distressing for the individuals involved.

Australia Post has a unique competitive advantage that other small business cannot compete with. It receives all kinds of benefits such as retail price maintenance on stamps and limited liability on damaged parcels while small businesses like newsagents operate in a more competitive environment.

Furthermore, Australia Post may not be complying with Section 16 (2) of the Australian Postal Corporation Act in relation to selling magazines and other products. It is convenient for Australia Post to play the free market card on one hand, when it wants to take from small business, but not when it comes to putting up its prices (as a monopoly) with basically no competition due to its market dominance – and this is while being supported by taxpayers.

The optics of a large government owned corporation seeking to take advantage over thousands of struggling small retailers in a pandemic-induced recession is extraordinary. This is unfair practice.

What will come next? Will Australia Post provide flowers in competition with florists? Coffee and snacks in competition with coffee shops? Clothing? Hardware? Airline tickets? All being sold from big post offices where there is the physical space to do so. Will the main streets around Australia eventually consist of one shop the Government owned Post Office – selling everything? That would kill community, choice, and jobs. In our opinion, Australia Post should stick to postal issues and leave the rest to the private sector

This issue needs to be addressed before it’s too late. In fact, in this post COVID era, the big end of town needs to be more careful and socially responsible. Small business has to be allowed to recover and while we all need to innovate, the country needs big business to show leadership. This starts with Australia Post.

It is un-Australian for Australia Post to use its competitive advantage as a protected Government Business Enterprise, with a model that lacks competitive neutrality, to target vulnerable small businesses. And as the owner and sole shareholder, the Government should make a clear statement to Australia Post that it must not pursue strategies that damage small businesses.

For years, we have seen Australia Post chip away at various product categories like greeting cards, games, toys, gifts, sewing machines and more. The government owned enterprise does this, in my opinion, leveraging the benefits of government ownership and relying on that protection and its provision of extraordinary resources to enable the corporation with a competitive advantage.

Now, newsagents can either sit back and let this Are media move play out, or they can act. I say the channel needs to act. Having 800+ corporate run government owned outlets taking money from our shops is appalling. This is the government competing with us, taking revenue and taking products we are challenged to get in our own businesses.

ALNA is part of COSBOA. They are working for newsagents on this issue through the lobbying route. Newsagents themselves need to think about what they might do about this, especially in the light of the possibility of Are media, through their owners, having a considerable stake in the Ovato business.

In case you missed it, here is a video I shot the morning after the Are Media / Australia Post announcement.

6 likes
Australia Post

An early look at Christmas 2020 in local small business retail in Australia

I am grateful to the many retailers who have shared recent year on year comparative sales data. This has enabled me to a deep dive into shopper traffic, basket depth and product category performance. I have done this to get an early look into what Christmas 2020 in local small business retail might look like.

The headline is that Christmas 2020 looks good in local small business retail.

Local high street retailers are doing considerably better than shopping mall retail. Suburban, regional and rural high street retail businesses, for which we have comprehensive sales data, are doing very well. They are experiencing solid double-digit year-on-year growth. For the dataset of 60+ businesses in our latest analysis, the average year on year revenue growth is 22%.

What is interesting is that the spike in revenue growth is not matched in a spike in shopper traffic. Rather, the revenue spike has come from shoppers buying more in each visit, driving better shopper efficiency. We are seeing average sale value increase by between 10% and 25%.

The dataset includes business across all states and territories except for the Northern Territory. The results are universal. There appears to be no difference between Victoria, which was in lockdown for some of the weeks under analysis and other states that were not in lockdown.

In terms of Christmas specifically, data indicate excellent year on year growth in Christmas card sales. The same is true for Christmas decorations, Christmas-themed home decor and gift wrap. Year on year growth is, again, 20% and more.

Locally made products are doing particularly well. Shoppers continue to engage with supply chain questions. A common question relates to sourcing from China.

Also of note is excellent growth in sales of calendars and diaries. The diaries growth encourages an optimistic outlook on 2021. Smart retailers are pitching it as that and having some fun with putting 2020 in the past.

Back in March, in the early days of Covid in Australia, jigsaws were hot. They sold out fast. Some expected the surge to fade over time. The latest sales data for October and even into the first two weeks of November suggest otherwise. Yes, jigsaw sales remain strong. half of the stores in the latest dataset sell jigsaws and every one of them is reporting year on year growth. The average of that growth is 150%. Key is breadth of range of supply.

In addition to the jigsaw growth, crafts, art, maker kits and similar are all showing strong results.

Comfort gifts are especially strong. Core in this category is plush. Plush is often dismissed as being tired or ho hum. We have seen sales in the plush space up as much as 50% off a strong base. In one local high street retail business in one recent week, for example, they did $1,850.00 in everyday plush, more than double their usual sales. Range, again, is key this this success.

Not reflected in the POS software collected data is anecdotal evidence that people are spending more this Christmas. Many retailers spoke to this. They spoke of shoppers saying they were spending more on loved ones as well as buying gifts for some they would not usually buy for.

There is the wonder as to the role of government stimulus funding on the sales results. While retailers think is is a factor, they do not see it as the key factor. If time does reveal it as a key factor, local small business retailers will respond accordingly. They are an agile bunch.

Considering the sales data and the and the anecdotal comments, Christmas 2020 looks strong. Plenty of retailers are already talking up the first quarter of 2021.

FOOTNOTE: I wrote this for my POS software company yesterday as it relates to not only data from newsagencies. I share it here as it speaks to optimism so many newsagents feel right now.

7 likes
retail

Australian shoppers preference high street retail over shopping malls

Looking at retail newsagency sales data for October and the first 2 weeks of November of 2020 compared to the same period in 2019, there is evidence that Australian shoppers are preferencing high street retail over shopping mall retail.

Newsagencies in high street situations, city and country, are doing much better, often reporting strong double-digit growth, compared to shopping mall businesses.

In the dataset I can see plenty of good news flowing from the easing of Covid related restrictions across retail in the newsagency channel. The news for high street situated retail newsagencies is considerably better than for those in shopping mall situations.

Looking at the core category of magazines. While the overall channel average is a year on year decline, even in locations where Covid restrictions have been relaxed for months, it is in high street situations that I am more likely see growth in the sales data.

Digging deeper into the women’s weeklies segment of magazines, decline in shopping mall businesses yet growth in some high street city and regional businesses.

So, what sort of growth am I talking about? There are high street newsagencies reporting 45% year on year growth, off a good base. The majority of this growth is coming from high margin lines such as gifts, homewares, games and toys. This is driving up overall business GP%.

One factor at play here is the diversity in high street businesses. They tend to offer more product categories, thereby appealing to a broader range of shoppers. I do wonder if this is a consequence of narrow permitted use clauses required by shopping mall landlords.

While it is early days in the recovery, there are indications of a stickiness to high street retail. That is, shoppers who found high street newsagencies are tending to stay, liking what they saw when those were the only general retail businesses open during lockdown.

While I don’t want to read too much into the year on year sales results I have seen so far, I like what I am seeing and am encouraged that the growth plenty saw during the Covid lockdown is continuing.

Based on the sales data, newsagency type businesses are, in my opinion, worth more today than they were this time last year and that has to be good news for the newsagency channel and those who supply the newsagency channel.

4 likes
Newsagency management

What is a newsagent?

At around am hour and twenty minutes in, this UK podcast includes a discussion about what you call a newsagent in the UK. Only a passing topic. I share it here as it may interest some wondering about how they identify their business.

1 likes
newsagency of the future

Advice for leveraging Christmas now

Here is a small selection of some of the Christmas marketing and management advice that is part of the newsXpress store management / advice kit:

  1. Always:
    1. Pitch 3 Christmas cards at the counter, on the newsXpress stand – carefully selected, changed weekly.
    2. Have gift wrap tape with wrapping paper.
    3. Have a selection wrapping paper and bags with cards, at the counter and with newspapers.
    4. Run your loyalty programs through Christmas – to bring them back.
    5. Make the shop smell like Christmas.
    6. Keep all everyday and lifestyle cards up – they sell through.
  2. Let your customers help each other. Setup a whiteboard or sheets of butcher’s paper, yes keep it simple. Get customers to write gift suggestions under different age/gender groups. For example: Girls 18 – 25, Boys 55+. Encourage your customers to help each other through their suggestions.
  3. Facilitate sharing stories. Find space in your shop for customers to share their Christmas stories. It could be a story wall inside or in front of the shop. This initiative encourages storytelling by locals and better connects the business with the community.
  4. Share Christmas recipes. Each week for, say, four weeks, give customers a family Christmas recipe. This personalises Christmas in your business, creates a talking point and makes shopping with you different to your bigger competitors.
  5. Help people rest and recharge. Create a Christmas shopping rest and recovery zone. Offer free tea, coffee, water and something to eat. Encourage people to take a break in your shop – without any obligation for them to spend money with you.

I am sharing this today to encourage others to think about and engage with Christmas 2020. It’s an odd year and results will benefit from fresh, not your usual, engagement.

6 likes
marketing

Friday 13th sale a hit

We ran an online only sale for 24 hours through Friday November 13th. The offer was simple, 13% off for a product category with a GP% of 55%. We did $3,675.00 over the 24 hours. Marketing spend was $0.00. We used fun and targeted free social media posts.

Online is key in our businesses for finding shoppers we would otherwise not reach and driving efficiency from existing infrastructure.

3 likes
marketing

Attracting shoppers to the newsagency using video

Here’s a video I made this week for my Westfield Southland business. I shot it on my phone, tweaked the visit using iMovie and then added text and music using the Promo platform. The goal of the video is to use ‘retail theatre’ to reflect range, encouraging that any Christmas card need could be satisfied in our shop.

10 likes
marketing

Ovato rights issue backed by Mercury Capital

A major announcement impacting Ovato released this afternoon with the company announcing a rights issue to be backed by mercury Capital, owners of Are media (formerly Bauer).

Click here for the creditors’ scheme of arrangement document as lodged with the ASX.

This line from the release release is telling: The plan would provide a viable future for Ovato and prevent possible insolvency. 

Ovato announces plans for $40 million rights issue and restructure

Ovato Limited, one of Australia’s largest print and distribution businesses, today announced a plan for a $40 million rights issue and restructure aimed at saving 900 jobs in the Australian manufacturing industry.

The plan would provide a viable future for Ovato and prevent possible insolvency. The plan includes 300 redundancies primarily through the closure of the Clayton printing plant in Melbourne.

The majority Ovato shareholder, the Hannan family, and a Mercury Capital entity Are Media Pty Limited have agreed to underwrite $35 million of the rights issue.

The Scheme is subject to completion of the rights issue and approval by creditors and the Supreme Court of NSW.

The Managing Director of Ovato, Mr Kevin Slaven, said:

“Print-based industries have been significantly affected in recent years and the COVID-19 pandemic has increased the pain this year for many parts of our group.

“Our industry has gone about as far as it can with mergers and consolidations in the last five years. Ovato has suffered losses for several years because of the costs of measures to meet the reduced demand for printed communications. This restructure allows for the company to get back to profitability and a sustainable future.

“Unfortunately, it means that over 300 employees will lose their jobs. However, the restructure will save 900 other jobs because the company would be facing an uncertain future without the restructure we are proposing.

“The proposed new equity, underwritten by two significant players in the printing and media sectors, together with the indicative support of our major suppliers and financiers to restructure our balance sheet, provides the foundation for a viable, sustainable and exciting future for our Group.

“Critical to the implementation of the Scheme, there will be no impact on our customers or all other suppliers outside of the Scheme, other than the positive impact of providing the Company with a stronger balance sheet and a viable, sustainable future. Our view, and the view of the independent expert, is that without this Scheme, the outlook for the whole group is unpalatable. We have searched for alternative solutions to the massive disruption in our industry, but they were unworkable.

“The Scheme will reduce our cost base, make us more sustainable and provide customers, suppliers and the 900 remaining staff certainty around a viable and profitable future.”

Ovato, which operates in Australia and New Zealand with print, distribution and marketing services. Ovato made a net loss after tax of $108.8 million last financial year, on revenue of $539.3 million. Creditors will meet on 30 November. All Ovato businesses outside of the Australian print operations are unaffected by the restructure.

UPDATE: November 13, 2020:

My view is that we need to consider what is happening with Ovato in the context of my recent post: What if the most important stream of revenue for your business was cut off overnight?. Okay, this may not be overnight, and it relies on a truckload of assumption … but what if Mercury get into a position of significant influence over Ovato? What if they saw a brighter future for top selling magazines through Australia Post, Supermarkets and Convenience, with newsagents way down the line?

I know the folks at Ovato will say that is hot a consideration. I accept that in their offices it would not be a consideration. But, what if Mercury gained a position of influence. It is what Mercury wants that would matter more.

Ovato is two main businesses print and distribution. I suspect that given the pivot of supermarkets and mass retail away from catalogues and flyers the print business is challenges. I suspect the magazine distribution part of distribution is doing well. However, that business is currently tied to the print business.

While I am no accountant or business strategy expert, what if the magazine distribution part of the business was spun out of a Mercury influenced Ovato, what would that look like for Mercury, their Are media business and for magazine distribution.

This is all speculation.

I have read a chunk of the Project Walker document. While it is considerable, 624 pages, it does not address how this may ultimately play out. It certainly speaks to the immediate need. Does it speak to what actually matters to us.

Ovato has a cash challenge brought on by decay within its core businesses and accelerated by Covid. In the print part of the business especially it appears the company did not have a solid plan b in the event of the lost of an important revenue stream.

What was lodged with the ASX yesterday represents an early step. The next few weeks will be interesting for all involved with the business.

From a newsagent perspective, I am keen to hear what Mercury Capital has to say, in particular about the future of the magazine distribution side of the Ovato business. Had Are media not pursured the Australia Post trial I would be less concerned.

6 likes
magazines

Late newspapers today in NSW

Today’s Daily Telegraph was printed hours late, reportedly because of the State of Origin.

As a consequence, you have newspapers being delivered now and, likely until mid morning. From a workplace health and safety perspective this is not ideal. You have more traffic on the road now at 8am compared to 5am, plus more pedestrians as kids are off to school.

Already, newsagencies are being hit with calls from irate customers. I suspect the publishers will be, too.

Newsagents have contacted me, frustrated with poor communication from News Corp.

What a mess.

If you are a newspaper customer and reading this, please don’t be anger at your local newsagent. The lateness is 100% the fault of the newspaper publisher.

8 likes
Newspaper distribution

Challenging financials from GNS

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.

1 likes
Stationery

$500 a day in revenue before opening the shop each day last week

We have booked more than $500 in revenue every day for the last seven days between when we closed the night before and opening the next morning. These are online sales. On three days, it was more than $1,000 in revenue.

Gross profit percentage for the products is, 50%.

There is no retain penance space cost as online uses existing retail space that is required anyway.

The labour cost is minimal with it being accounted through everyday roster management at the store.

While some purchases are click and collect, the majority ship to people who live hours, sometimes days, away.

I know that my shop is not alone in our channel achieving these numbers and more.

We are not yet where we know we can be. We think that, with little investment, we can easily double the results of this online business.

It is essential that every newsagency business has an online outlet and that this is not represented as an online newsagency. Those having the most success online play outside the confines, assumptions and history related to the channel.

Online revenue is there for the harvesting. Sure, it is hard work, but it can be done on a minimal budget. The most important investments are creativity and strategy.

There is what I’d describe as a dopamine hit when I open emails in the morning and see the online sales from overnight.

9 likes
Newsagency management

There are signs major landlords are scrambling to appeal to newsagents

Newsagents in two different large capital city shopping centres received revised offers from their respective landlords last week to entice them to stay in the centre.

In each case their lease was ending and the newsagents had advised they would not continue because of the high occupancy cost.

\For months the respective landlords said there was no room to move and then, at the last minute, they blocked and offered a substantially discounted offer.

What makes these cases different is that the discounted offer is a discount on base rent, not some manipulated pitch that enables the landlord to claim higher value for the space than what is actually paid.

If what I’m told Wass pitched last week is a trend, it would be good news for newsagents in shopping centres.

5 likes
retail leases

It is great to see a magazine publisher support newsagents

The publisher of the AFL Record has consistently promoted newsagents on social media through Covid. They have directly promoted our channel as the place to purchase their popular title.

I wish more magazine publishers would promote our channel direct directly and consistently.

Kudos SEN for your support of our small business channel with posts like this on twitter:

And posts like this on Facebook:

3 likes
magazines

Has an appeal lodged by an existing lottery retailer to Tabcorp or Tatts before them against a new lottery outlet ever succeeded

I heard from a newsagent last week of another appeal lost, with Tabcorp approving a new outlet nearby, another of the fuel outlets that run 24/7.

The newsagent is gutted. They lodged an excellent appeal. Their case was well made and backed by evidence. Their sales numbers are excellent.

Based on my knowledge of the situation, I expect that the new outlet will drive the existing outlet to investor time to maintain (or grow) lottery sales, meaning the new outlet increases operating costs for the existing outlet.

I see no sense in this particular decision. I have no confidence whatsoever that the folks at Tabcorp actually considered the appeal from the existing retailer.

5 likes
Ethics

Why Woo Commerce (WordPress) may not be a good website platform for newsagents

The website development side of my newsagency software company has developed websites for many retail businesses. It is a tech. partner for Shopify, Magento and WooCommerce.

While each platform serves a different need, Shopify is the widest used in the small business retail space by far. Magento is good for complex requirements, but maintenance of a Memento website will require a developer. Shopify can be maintained, modified and enhanced without web developer skills.

WooCommerce will require a developer for site maintenance. It also does not have as rich a support network as Shopify.

In our experience, small business retailers can achieve better, more cost effective, commercial outcomes with a Shopify website than a WooCommerce website.

I mention this today because in my experience local web developers are more likely to recommend the WooCommerce platform. I think they do this because it is better for them commercially in that web development is often their prime source of income. A Shopify website will not drive repeat business for them from a customer whereas a WooCommerce website is more likely to.

A newsagent I spoke to recently told me they were paying $9,000 for a WooCommerce website. That same site from my company would have cost $5,000, or even $2,500 if they contracted for it as a newsXpress member because of a half price deal at the time.

My point is shop around, ask a ton of questions. Be sure to understand on-going maintenance costs. If they say you can maintain the site yourself, ask them to show you how to change the look and feel, how to add a new web page, how to change categories. Being shown how to do this will, for most newsagents show them that a WooCommerce website platform is not the right fit for them.

I don’t have a vested stake in this in that the web team in my company is skilled in Magento, Woo and Shopify as well as the even more complex and technical native web development. That team has a full room of booked business already.

There are many Shopify website developers out there you should consider before a WooCommerce developer.

A challenge in this website space is that often it is a friend, or friend of a friend, or family member involved.  They may have the best of intentions in recommending WooCommerce. For the reasons outlined already, WooCommerce is not a platform I recommend for retail newsagency website development.

Be careful. Do your research. Get all commitments in writing. If you are not sure, delay your decision.

If you have some software development skills, then Woo could be perfect for you to create your website yourself.

8 likes
Ethics

How does it feel to be open again?

On one day last week we counted How does it feel to be open again? asked of us more than. 50 times. Some who asked had been in plenty of time through lockdown, reminding us that retail sales counter conversation is often by rote and not expecting actual engagement.

The masks helped hide our responses.

2 likes
Fun

Fighting for a local newspaper

Australian Story on ABC TV next Monday looks like a good story about a local newspaper in Broken Hill fighting for survival.

Fight for the Truth
Five hundred kilometres from the nearest capital city, the outback mining town of Broken Hill is fighting to save its only newspaper.

For over a hundred years, the Barrier Truth has told the town’s stories, documented wars, droughts and the Depression, and recorded the lives and deaths of its citizens.

But when the pandemic struck, advertising revenue collapsed, forcing the newspaper to shut down.

Former Broken Hill resident and mining executive Robert Williamson heard about the community’s distress and raised enough money to restart the printing presses temporarily.

Now the newspaper’s union owners face a tough decision: should they sell their beloved paper to private interests?

Airs Monday November 9, 8pm (AEDT), on ABCTV and iview.

5 likes
Newspapers

News Corp. Q1 FY 2021 results

The latest results posted by News Corp. speak to challenges for the company in the print space with newspaper revenue down 20% and the benefits leveraged by the company in the digital subscription space.

The results are worth a read by newsagents as they provides context for understanding the focus of the company – digital.

0 likes
Media disruption

Magazine theft at Westfield Southland, VIC

Someone broke into the storage cage near our Southland newsagency in Victoria, when no one was around and before we open, cut open bundles of magazines delivered to us and stole almost all of our delivery that was due on sale  yesterday morning.

We have the thief on camera doing this and removing a considerable value of stock.

We have reported the matter to the police and provided the security footage.

It’s clear from the evidence what they were doing and what they were looking for.

Given that the volume stock taken would only be of value to a retailer, we are considering putting the evidence in the public domain. It’s something we are discussing with the police.

I hope the police identify and catch the person involved. We will do everything possible to support them.

4 likes
magazines

News Corp. and IGA giving away newspapers, again!

I have seen several IGA supermarkets promoting free News Corp. newspapers for shoppers who spend $20 or more in-store at the IGA.

One newsagent told me that in their situation, two doors away from an IGA running the promotion, they have seen News Corp. sales decline – they think because of the promotion.

I get that News Corp. does what it needs to do to achieve circulation / readership goals for ad revenue targets. I think the regularity of these deals speak to challenges for the company getting people to pay for its product.

What is a newspaper worth? Shop here and you pay $2.00. Shop at IGA for it’s free if you spend more than $20.00.

What diminishes the value of the newspaper product further in my opinion is the mechanic of the free paper at the IGA. The offer is not consistent. Sometimes it is offered while other times it is not. The wording is especially inconsistent.

That checkout counter offer of the free paper opens conversations about the papers and there is where brand damage can be delivered. Simply by offering a free News Corp. paper invites a response. Given the extent of growing negative feelings toward News Corp. in some locations this year, I would have thought that opening the door for sharing opinions was not ideal.

A quick check of Twitter shows plenty of people talking about the latest News Corp. giveaway, like this one:

And this one:

Yes, these types of deals have been around for years. That does not mean we should ignore them and consider the challenge they present to retail newsagents.

Oh, and some in News Corp. may say the free paper today could convert someone who goes on to purchase from the newsagent in the future. To this I would say, show me the evidence of this. Like the claims for trickle-down economics, I suspect it is wishful thinking not backed by evidence.

4 likes
Newspapers

What if the most important stream of revenue for your business was cut off overnight?

Hundreds of Australian businesses yesterday discovered that China was blocking their exporting of products to that country. According to news reports, Australian wine, copper, barley, coal, sugar, timber and lobster are set to be banned from Friday.

This is dreadful news for the businesses, those who work for them and the communities that rely on them for income and purchases. The ramifications across Australia could be extraordinary.

Hearing the news of the move by China, I wondered – what would happen to your business if a key income stream was cut off overnight?

Would your business survive? Do you have a plan B? Can you move quickly enough to recover? Were you too exposed to and too reliant on the key revenue stream?

These are questions you can discuss with clarity with hindsight. Better still, they are questions you can discuss in advance.

I raise the questions today because considering them before you face the challenges being faced right now by Australian exporters of wine, copper, barley, coal, sugar, timber and lobster gives you the opportunity today to be less reliant on a single revenue stream.

I get that this can read as a ho-hum topic, something not worth worrying about today. However, I bet there are wine makers, sugar farmers and fishermen who several days ago would have thought the topic ho-hum too.

What if the most important revenue stream to your business was cut off overnight, without notice?

Actions I think anyone reading this could consider include:

  1. Assess income to understand the income category streams on which the business most relies and take immediate steps to broaden these.
  2. Assess income sources. In retail especially most income comes from a shop or physical presence. Broaden this, rely on more than the physical presence.
  3. Assess the importance of suppliers by looking at percentage of revenue attached to each and taking steps to broaden these.
  4. Look at your business finances and consider the impact if any supporting finance arrangement was removed overnight.
  5. Workshop with key people as to what it would mean if any supplier was cut off from you or if any product category or brand was overnight stripped from your business. Those participating in this need to challenge each other.

In terms of the situation that has emerged in China this week, we need to look at our reliance on product from China, especially is we rely on people connected with wine, copper, barley, coal, sugar, timber and lobster. For example, if we have customers who work in wine businesses that export to China. How will they feel purchasing product from us that are sourced from China when China has struck so hard at the core of their income source?

What has happened in China is a reason for us to take stock, look more carefully at our businesses, and ensure that we are better structured to trade through unexpected decisions by others.

A personal story: Decades ago, my software company developed software for radiology practices, managing patient accounts and reports on x-rays. I wrote a word processor to make it easier and faster for radiologists to write report. It was a hit, gaining terrific early sales. A year and a half in, an international x-ray film supplier offered radiology practices free software from the US if they contracted to buy their film for 5 years. Our sales stopped overnight. I decided then that my company would never rely on a single customer or a single channel for the majority of business. It’s why we are now in 12 specialty retail channels, why we only sell to sell business retailers and why we will not borrow to fund the business.

Footnote: I wrote this for newsXpress members, as part of on-going strategic planning advice for members of that retail community. I share it here because of the many communities in Australia today confronted by the challenge presented by China.

17 likes
Newsagency challenges
Trending Articles

Fairfax changes approach to TV Guide, disrespects newsagents

Published on April 20, 2011

What do you think of the Powerball changes?

Published on February 16, 2018

IPS releases new magazine contracts

Published on June 21, 2011