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

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

Be a card giver and learn more about the category

A newsagent colleague once said to me that they never give cards and don’t understand people who do.

It was funny at the time. Then, their card sales were falling and they had one less reference point for understanding why.

To me, a test of the card range I have in-store is how many cards I would happily purchase from my business. While there are, for sure, occasions when I will want a niche card that I am unlikely to stock, for everyday type purposes I should be able to buy from myself.

Of course, it starts with being a card giver. Be this person and shop in your own shop and it will influence decisions you make about your card range. My advice now to any newsagent who says to me that they are not a card giver is that they are missing out on valuable consumer research.

I guarantee that if you start buying cards from yourself and actually sending them you will seek to drive changes in your card range. This is good for your business as it engages you in card range decisions. Often, newsagents do not have themselves situated in this role.

It’s your retail space. You pay for the inventory. You bank the results of sales. It makes sense that you are in the driver’s seat for the best margin product category you have in the shop.

This past weekend I wanted a thank you card. I needed something that set a specific tone. I found the perfect card. The search revealed some changes that could broaden the reach of what we have. While I may have noticed the need had I been looking to buy a card, I suspect it is that I was looking as a customer that helped me see more.

if you are not a card giver, be a card giver and be open for what you learn from the experience.

5 likes
Greeting Cards

GiftWrap tape tips for newsagents

Take a moment to check that you have your Scotch GiftWrap tape placed for success. But first, why Scotch? It is the most recognisable tape brand, by far, the most trusted. It is an easy sell, a mush-have for this time of year. You can maximise your Scotch GiftWrap tape success with multiple location placements in-store:

  1. At the sales counter.
  2. With roll wrap – several placements.
  3. With newspapers.
  4. On your tape wall.

Most purchases this time of the year will be by impulse, if you have positioned product to achieve this.

A couple of minutes on the shop floor can drive good returns.

2 likes
Newsagency management

Supermarket removes free newspapers and magazines from its shelves

In another move against print media in supermarkets, the UK Kroger group has removed free newspapers and magazines from its stores. Check out this report from earlier this year.

Kroger will be removing free newspapers from all of its stores, effective Oct. 15. Locally, those publications include The Memphis Flyer, Focus, Memphis Parent, Memphis Health & Fitness, and Best Times.

“We are removing the publication racks from our stores because more publications continue to shift to digital formats, resulting in less customers using the products,” said Teresa Dickerson, corporate affairs manager of Kroger’s Delta division.

Even so, the move may hurt local news organizations.

“It’s a huge blow to Health and Fitness because we move 20,000 magazines a month out of there,” said Amy Goode, the publisher of Health and Fitness.

Free publications rely on a paid advertising business model: Advertisers buy ads with certain assurances that their marketing messages will reach a certain number of customers. This is why having a reliable, wide-ranging distribution point such as Kroger is so important.

I say it is another blow because of moves announced earlier about a branch of Aldi getting out of newspapers.

3 likes
magazines

7 principles to help local retail businesses through the Covid recession.

I get it, Australia is in a recession, a Covid recession brought on by the pandemic and responses to it here and overseas. Okay, some say we are out of recession already. Who really knows? To ma ny, the recession is real and present.

Relentlessly, media outlets overload us with recession stories, fuelling worry and anxiety and challenging consumer confidence.

It’s tempting to get drawn to the doom and gloom stories, to amplify the woe is me narrative.

Plenty of people in business, especially small business, prefer to look ahead, to focus on the other side of the recession as it is that view of what could be that motivates.

I think a back to basics approach is what is needed to get us through the recession. I think it’s right for our business, the retail shops I own and for the many local businesses I serve.

The back to basics guiding principles I share here are focussed on this, focussed on providing sure footing today and encouraging optimism for tomorrow.

This is not a list from which you choose what you like. My advice is that you do everything on this list, because together they provide the best chance of navigating the recession well.

  1. Nurture what makes the business moneyand fix or stop what does not make the business money. Leverage strengths. Fix or eliminate weaknesses.
  2. Embrace ways tobroaden the reach of the business.
  3. Makesafe decisions, decisions you know will work. For example, buy well. That is, buy what will sell easily, quickly.
  4. Embrace ways you canadd value to what you sell without spending more.
  5. Be frugal. Before every spending decision ask 2 questions: do we need this? Will this add value? Review every business expense. Cut those that do not add value.
  6. Your next step is in front of you. Look ahead, not behind. Talk up, not down.
  7. If you feel overwhelmed, take it one step at a time. Every day, do something that makes you happy.

When should you start? Now. But not alone. This is a whole of business project. Involve the whole team and embrace the 10 points at every opportunity.

How do I know these principles work? I’ve traded through two recessions, one country wide and the other sector wide. I’ve also traded through Covid with excellent results – because businesses I am connected with embraced these principles back in early March 2020.

Let’s take a moment to unpack principle #3, make safe decisions. Safe decisions are those you can bet on because they work every time. They may not be exciting, but they are safe. They may not be the best margin, but they are safe. Safe decisions are all about certainty, providing a small step that is stable. Put a few of those in a row and you feel better. Feeling better is key to helping you navigate the Covid recession.

While I understand the value of news, there may be value in consuming less news, staying away from the negative stories. Your success is the most important news right now.

7 likes
Newsagency management

How will UK newsagents fare in the second lockdown?

UK newsagents are classed as essential in the second lockdown announced by the UK Prime Minister.

Newsagents here in Victoria (Australia) where we have just come out of a second, 100+ day, lockdown, fared well. While traditional products like newspapers, magazines and lotteries did okay, it was in the gifts, toys, homewares and personal nourishment categories where the best growth was achieved – all higher margin categories than traditional newsagency product lines.

The newsagencies that had already transitioned and relied less on traditional did the best. They met the criteria for being essential but were able to serve customers in-store and, importantly, online, maximising the profitability of this time.

The average growth I have seen in sales data to the end of lockdown is year on year growth of 20% and more. What’s interesting is that in most cases there was no noticeable increase in shopper traffic. Visit efficiency spiked.

With the second UK lockdown impacting an important time for retailers, UK newsagents that trade outside of the traditional convenience approach will, in my view, do better. The success they experience will be enhanced in they are established online.

Again, in Victoria, I have seen some newsagencies grow online revenue from a 2% contribution of total revenue to 20%. Most online sales have been of higher margin items like jigsaws, games, toys, personal nourishment and gift hampers. I am grateful that many of us were well established in these categories prior to lockdown, enabling is to serve customers who could not get to other closed shops with these items.

If I was advising UK newsagents I would be saying that Covid is the opportunity to pivot, to re-cast the focus of the business. UK high streets are full of businesses competing in the convenience space. The majors will win that battle. There are better opportunities elsewhere. Right now is the best time to consider that.

5 likes
Newsagency challenges

The new Covid normal for retail

The Sunday Age yesterday had a story from Dominic Powell and Simon Johanson about retail and the new normal. It speaks about how retail has changed through Covid and that many changes will stick.

From smaller shops to major chains such as JB Hi-Fi and Coles, the exodus from Australia’s inner cities is just one of the many effects of the coronavirus pandemic shopkeepers fear could persist well beyond the six to 12 months until the world has its vaccine.

As the article notes, there is no doubt that the surge in online will continue.

Broader changes, like the rapid acceleration of online shopping, will be widespread and unstoppable. Retailers are already re-assessing their moribund bricks-and-mortar stores and spending millions on online platforms. “Omnichannel” (along with “resilience”) has been the jargon du jour for merchants through the recent corporate reporting season.

There is also no doubt, in my view, that the migration away from malls to the high street and regional, will continue, too.

Now, more than ever, being online with a beautiful, easily found, website is key. Further, selling what sells faster in-store is also key.

These are not things to put off. Newsagents have no choice but to review what they sell and to re-cast stock range based on this new normal and getting online to find shoppers far away from the business.

It’s a race, a race that is more even right now between large and small than in traditional retail. Small business retailers, like newsagents, acting now will still be relatively early at this. But … it takes creativity, commitment and smarts to be successful.

The article in The Age is a terrific read.

4 likes
newsagency of the future

There are problems with magazine delivery in some of Western Australia

The last few months have been particularly stressful for some newsagents in Western Australia due to problems with magazine delivery.

The issue is not magazines at all on the on-sale day. Sometimes, they come the next day and sometimes two days late.

This is a relatively new problem, something that has happened in the last few months.

Newsagents impacted are frustrated as their calls for help, they say, fell on deaf ears for many weeks. They think the issue has come about because of more cost-cutting.

I am writing about this today to draw attention to the problem, to ensure publishers know of the break in the magazine distribution system that is affecting some in Western Australia.

The good news is that Ovato advised a couple of days ago that they think the issue is resolved. We will see what Monday and the days that follow bring.

I hope it is resolved as the newsagents involved would appreciate less stress.

4 likes
magazine distribution

Strong Christmas card sales online

We have been selling boxed Christmas cards online since June as pre-orders. Once we had stock, we shifted to same-day postage.

Sales in June were good. Over the last month they have spiked.

What’s interesting is that sales have been terrific without a single cent spent on advertising. Getting icing on the cake revenue for products we carry in-store regardless is terrific and yet another reminder of the value of an online strategy.

We stared with boxed Christmas cards thinking that they would be an add on to another online purchase. While this does happen, we get more sales from people purchasing only cards, often 4 and more boxes at a time.

It is fascinating to see, and to learn from. We will be more engaged with this opportunity next year, and earlier, too.

7 likes
Greeting Cards

Crossword titles remain the hero magazine category

Looking deeper into the newsagency sales benchmark data, in almost every store I have data for, crossword titles are in growth. In plenty of newsagencies, crosswords is the only magazine category In growth.

What’s interesting is that this continues excellent interest in crosswords fits with continued strong sales for jigsaws, diamond dots art, adult colouring, 3D puzzles and other maker kits. Put all these together and you have a wonderful story.

Indeed, I’ve seen regional businesses achieving between $1,500 and $5,00 a month, yes, I did type $5,000, in sales from crosswords / jigsaws / maker kits with the combined sales of these beating other product categories / segments.

This is an excellent example of a good news story for our channel this year. Good growth and, for most products in the segment, good margin. Maker kits, for example, can earn 65% GP.

Crosswords are the indicator category. See strong sales for them and you have a pathway forward for leveraging that traffic and attracting people crossword folks talk to about similar interest product. This is a great way to grow the business with no marketing spend.

7 likes
crosswords

newsXpress launches Creative Writing Competition

Newsagency marketing group newsXpress has launched a national creative writing competition seeking entries of short stories, poems and songs that relate, somehow, in some way, to the Aussie newsagency.

Two cash prizes of $1,000 each will be awarded, one for anyone aged up to and including 17 and the second for anyone aged more than 17.

Writers are invited to submit a short story, first person narrative, song or poem. Each entry is required to in some way reference a newsagency, either a specific business or the type of business generally.

The local newsagency is the quintessential Australian small business, and through Covid the newsagency channel proved it’s value as an essential service to local communities. We wanted to explore a way of celebrating that.

The idea of this competition is to encourage creative writing by Australians, to shine a light on local stories and through these reference in some way the local Aussie newsagency.

newsXpress is a collective of over 200 local family owned and run newsagency businesses across Australia, mainly rural and regional. Most shops in the group have transitioned from the traditional to be modern. newsXpress businesses showcase Australian made products that help Australians express themselves.

To me, this is a perfect newsagency marketing group activity. It is fresh, creative and not tied to shoppers spending money in the business. It fits with my view that sometimes the best way to get from A to B is to head for C. I like it too because there is no supplier connection, no outstretched arm asking for help.

newsXpress is funding this itself, including providing retailers with A1 colour posters.

Here is more information about the competition:

This competition is run by newsXpress Pty Ltd.

There are 2 prizes: one of $1,000 for entrant up to and including 17 years of age and one of $1,000 for an entrant more than 17 years of age. Each winner will receive a certificate.

TERMS.

  1. All entries are to be submitted by email to writing@newsxpress.com.au.
  2. Each entry is to include a first page with entrant name, age in years and months, email address, name of local newsXpress business if known (not mandatory) and the name of the piece.
  3. Each page of the entry is to have only the name of the piece.
  4. Entries to be an original, previously unpublished short story, a song, a poem or first person narrative. Maximum word length: 1,000.
  5. Page format is to be A4, font is to be arial, 12pt. No images. For short stories and first person narrative, double spaced please.
  6. Entries to be in PDF or Microsoft Word format or a format easily read by either.
  7. There is no limit on entries per person.
  8. There is no entry cost.
  9. Entries close at midnight December 11, 2020.
  10. Each entry must, in some way, reference a newsagency. We are not being prescriptive as to how central a newsagency is to the story, song or poem. We leave that up to the writer. But, we do want there to be a reference at some point to a newsagency, any newsagency.
  11. The decision of the judges will be final.
  12. The winner will be announced on the newsXpress Facebook page and elsewhere no later than January 30, 2021.
  13. newsXpress will publish the winning stories on its blog, crediting the writer.
  14. Once the competition is over, all entries will be destroyed.
  15. newsXpress will not share entrant details or use them in marketing.

A newsXpress local store may choose to offer a local prize or prizes for entries from their area. This will be entirely managed at that local store level by the local store.

Footnote: I am the Managing Director of newsXpress.

14 likes
marketing

Growing anti-Murdoch movement in Victoria?

It feels like there is more evidence of a growing anti-Murdoch sentiment in Victoria, especially on Twitter. Many tweets reference what happened in the UK when locals rose up against the reporting of a local matter by The Sun over there. Given the firm negative stance taken by The Australian and the Herald Sun on matters related to Victoria in recent months, I guess this type of social media commentary is not unexpected. Read the re reply from someone in a cafe.:

9 likes
Newspapers

Is Westfield referencing retailers that take the Klarna buy now pay later payment?

Westfield has written to retailers outlining Christmas plans with a key investment appearing to  support the Klarna buy now pay later payment platform. The material talks about in-centre events and floor decals to drive shopper engagement with the Klarna app. The obsession with Klarna doesn’t feel supportive of retailers who have well-established buy now pay later arrangements.

While the Klarna rate to retailers is lower than the cost of Afterpay, it is higher than others.

As a Westfield tenant, I think they should promote shopping in their centre and not involve themselves in how people pay their retailers.

2 likes
Ugh!

Do you really want business to get back to the way it was?

This is a serious question.

Do you really want business to get back to the way it was?

Business back the way it was represents no change, no learning from the last 8 months, no reflection on what Covid normal may look like, no consideration of societal change.

Whether we like it or not, things have changed.

  • More businesses will allow more people to work from home, long after Covid, because of what they learned through Covid.
  • More businesses will continue with less the in-person engagement with their customers learned through Covid long after Covid is dealt with.
  • More businesses will sell to new people they discovered during Covid long after Covid.
  • Plenty of businesses and individuals who cut costs during Covid will continue with a tighter focus on cash.
  • Plenty of people who have worked from home will want to keep working from home.

Businesses that have benefited from these and similar Covid related changes will want that experience to continue rather than getting back to the way business was.

To me, the calls for business to get back to how it was are regressive. The future is always in front of us, never behind.

This is why I think that the businesses that have a good Covid are the ones best positioned for a brighter 2021 and beyond. They are most likely the businesses run by people who have not complained and moaned their way through Covid.

I get the calls to open up, get the economy moving and the like. However, for plenty, their economy has been moving. This is especially true in regional and rural Australia as well as in the high street.

It’s critical that all retailers are focussed on the (cliché alert) new normal of more people working from home, less CBD / business centre foot traffic, more online sales and the associated changes in what sells and when. That is where good business will be found, in those areas of change, not back the way things were.

The year presents us excellent opportunities for embracing change, leveraging what we have learnt since March this year and rapidly leaning into what we see emerge as I expect the pace of change to increase. This will be a consequence of Covid, what people have themselves learned through Covid and also a consequence of the Covid recession.

No, I am not looking for business to go back the way it was, I’m too busy looking to the future, which does look exciting.

10 likes
Newsagency management

Are Media to trial magazines in Australia Post outlets

On November 2, 2020, Are Media (formerly Bauer)  commences a trial placing 10 of their top magazine titles with 28 Australia Post retail outlets. Woman’s Day, New Idea, Take 5, That’s Life, Better Homes and Gardens, Australian Women’s Weekly, Home Beautiful, AWW lifestyle title, Puzzler – Woman’s Day, Puzzler – AWW are the titles in the trial from Are Media along with a Bluey title.

The only need for this trial is to test whether Australia Post retail outlets offer a viable alternative to the newsagency channel.

Here is a short video from me this morning with some of my views on the trial.

29 likes
Ethics

Tower Systems releases Covid related contact tracking tool for newsagency software customers

My POS software business earlier today released to customers a free contact tracing initiative through its website that enables them to easily collect the details of people entering their business in a format useful to health authorities should that be necessary.

Here’s part of what I announced to Tower customers early this morning:

We have done this because state and territory governments have not agreed on a consistent approach and because we think manual record keeping is not ideal in times when health authorities will want a fast response.

Using our approach, we collect and securely store customer details and allow our retailers, and only our retailers, to download these based on selection criteria you enter.

We generate a QR code unique to each business. Customers scan this and are taken to a page we create for each business where they enter their name and mobile number. They can optionally enter their email address. We tag this data with the date and time. That’s it. Their visit is tracked. If asked, retailers can show authorities that they have a process in place for collecting this data. For those without a phone, collect the data manually, on a clip-board.

As we gain use experience with this facility we expect to enhance it further.

We have also shared a sample document in editable Word format to use at the front of a store, with the QR code shown replaced with the store’s QR code:

We have developed this free QR code based contract tracing tool to help our small business retailer community to be well equipped for helping health authorities should there be a Covid diagnosis that connects with the retail business in some way.

This is another way we can give something back to the small business retail community, a community that is so important to our business.

We have seen with Covid that the ability to quickly track those who may have had contact with someone who tests positive it critical to the public health response.

This contact tracing initiative from our POS software company could be a useful tool. From the outset, we knew we have to deliver this without cost to small business retailers.

We are grateful to those on our team who have brought this to life and our own retail stores where we tested this to ensure its practical usefulness.

With Covid here for a while longer, having tools like this for rapid response is critical for the economy, critical for our small business retail community.

6 likes
Social responsibility

Newsagency sales benchmark study results: July – October 2020 vs. 2019

Based on comprehensive sales data for July through September 2020 with data from 2019 from 128 newsagency businesses across Australia in city and country locations, high street and mall, the latest newsagency sales benchmark study is revealing as to the impact of Covid on our channel and the value of location.

  • Covid restrictions have benefited many newsagency businesses.
  • High street locations have fared better than shopping mall locations.
  • Regional Australia has performed better that capital city Australia.
  • Diversification of product mix is key to traffic generation.
  • Magazines are back on their pre-Covid trajectory.
  • There are winners and losers.

I have data from a mix of branded and un-branded newsagencies as well as a mix of states and territories in the data set.

Given the extraordinary gap in performance, I share the results for different cohorts, because reporting them as one dataset does not make sense this quarter.

Victorian newsagencies.

Victorian newsagencies have had a good second Covid lockdown. Their newspaper, magazine and lottery products performance is better than other states, because of the lockdown I think.

All but one Victorian high street business I have data for is up on on 2019. The biggest increase relates to average sale value, this has spiked considerably, as you may expect. The categories that have performed best in Victoria this quarter in terms of year on year growth are: cards, gifts, plush, jigsaws, home decor and games.

Even though the data is up to September 30, 2020, it is interesting to see Christmas doing so well in Victorian businesses that had it out. This augurs well for the season.

All Victorian shopping centre businesses are down. Shopping centres are in for a rough few years I think.

Now, outside of Victoria…

Regional high street businesses.

  • Transaction count change: up 3%.
  • Revenue change: up 7%.
  • Basket size change: up 13%.
  • Newspaper unit sales: down 11%.
  • Magazine unit sales: down 9%.
  • Card revenue: up 7%.
  • Stationery revenue:  down 8%.
  • Gift revenue: up 19%. 80% of businesses report selling gifts.
  • Toy revenue: up 11%. 10% of businesses report selling toys.
  • Puzzle revenue: up 43%. 25% of businesses report selling puzzles.
  • Instant lottery revenue: up 26%.
  • Lottery revenue:  up 7%.

City high street newsagencies.

  • Transaction count change: up 1%.
  • Revenue change: up 5%.
  • Basket size change: up 9%.
  • Newspaper unit sales: down 8%.
  • Magazine unit sales: down 9%.
  • Card revenue: up 6%.
  • Stationery revenue:  down 8%.
  • Gift revenue: up 9%.
  • Toy revenue: up 11%.
  • Puzzle revenue: up 60%.
  • Instant lottery revenue: up 28%.
  • Lottery revenue:  up 4%.

Regional shopping centre businesses.

I do not have enough businesses in this group to safely report.

City shopping centre based newsagencies.

  • Transaction count change: down 22%.
  • Revenue change: down 31%.
  • Basket size change: up 2%.
  • Newspaper unit sales: down 13%.
  • Magazine unit sales: down 11%.
  • Card revenue: up 4%.
  • Stationery revenue:  down 17%.
  • Gift revenue: up 11%.
  • Toy revenue: up 9%.
  • Puzzle revenue: up 22%.
  • Instant lottery revenue: up 28%.
  • Lottery revenue:  up 5%.

Note. 

These are averages. The gap between those doing well and those not doing well is considerable. It is important that newsagents look at their own data as the most important competitor they have is themselves. The trading period from the past against which you compare results is your competitor. Look at those numbers more carefully than you look at these benchmark results.

What have we learned from the last 8 months?

  • High street retail fares better than mall based retail.
  • Diversification in newsagency product offering drives better shopper visit efficiency.
  • Having an online presence is vital.
  • People want to connect – this is one reason cards are doing so well.
  • Postable gifts are selling well.
  • Safe buying is key.

I am grateful to all newsagents who shared their data for inclusion in this study.

Mark Fletcher.
Email: mark@towersystems.com.au  Website: www.towersystems.com.au  Blog: www.newsagencyblog.com.au
M | 0418 321 338

13 likes
Newsagency benchmark

Understanding the cost of sales reps in small business retail

Small business retailers are quick to complain about a lack of visits by a sales rep from a supplier, often citing this as a reason to not order.

The only reason to not order products is if it is not working. Blaming a method of ordering is nuts in my opinion. It’s petty and ignorant of facts.

But back to sales reps. They are expensive and that expense is covered by product prices.

Considering reasonable wages, possible commission and operating costs, a sales rep costs a supplier at least $110,o00 a year – rarely less and often considerably more, especially in harder to get to locations.

A rep costing $110,000 a year would need to make the supplier at least $1 million in revenue, depending on the product category as margins vary.

Given that in an average year a rep can be on the road visiting stores for 200 days a year and often only around 175 allowing for in-office meetings, training, trade shows and more, the rep will need to write at least $5,000 a day in business.

Allowing for the geography of Australia, in regional Australia a sales rep might see 2, maybe 3, retailers a day. Often, though, it would be 1. In the city, the number could be 4 or 5.

Talking with some suppliers and allowing for data they shared, the $5,000 number for an average calculation like I am presenting here needs to be closer to $7,000 as that allows for closer to the 175 days a year in-store.

Covid has change all of this from a supplier perspective. Many have realised that they can maintain sales revenue without the pre-Covid in-store visits. They have looked at this as a bottom line benefit if they reduce their rep investment and replace it with a back office investment, but not to the sale value as the reps.

Many small business retailers love reps because they do work for them, by doing the orders. This is false economy. As I noted above, order what’s selling and do this yourself – be in control. Letting someone else spend your money may not be ideal.

Smart suppliers that reduce their investment in sales reps will pass on some of the savings to retailers. That’s what I am looking for. I don’t expect all the benefit as they do need to invest in back office people as well as appropriate IT infrastructure to make doing business with them easier.

I think the rep model as it relates to small business retailers is up for grabs, that significant change can be brought and that small business retailers and their customers can benefit significantly from this.

6 likes
Newsagency management

Shareable social media content driving newsagency shopper traffic

We are having terrific success with videos of artists behind products we sell. Whether shot on a phone or put through a production process like the video I share in this post, this content is referred to by marketers as shareable content. This is ideal for social media as it is a glimpse beyond the product.

Engaged suppliers are good about providing this content to retailers, to help them reach new shoppers.

This video below is for a high-end $80 metal ornament of Ariel and Flounder, from The Little Mermaid. We have this in-store and online.

I’d love to see more suppliers provide shareable content like this or in an ever more raw form that retailers can brand with their store brand.

4 likes
marketing

Promoting Christmas in the newsagency

Further to my post yesterday about Christmas in the newsagency yesterday, here is one of the social media posts that I have created for one of the shops I wrote about. This is for my Southland business.

For those who think this is an expensive production, here is what I did. I shot the video at my Southland store a week ago on my iPhone. I loaded that to iMovie on my Mac and stripped out the background sound. I added a filter to soften the image. I then loaded that video into a platform called Promo where I added the text and music and, voilà, you have this video ready for the socials…

In case people are wondering – I have posted this to show what can be done for no cost and a small time investment, to pitch the business differently to what peso,e expect from a newsagency.

 

5 likes
marketing

Christmas cards in the newsagency

Here are the Christmas cards that have been in place now for a couple of weeks in one of my newsagencies.

And here is part of the range in another of my stores, where space is quite limited:

I am showing them to speak to range, front of store placement and being out early.

We started with boxed cards over a month ago and comparing year on year we are more than 50% ahead. Singles have been out less time but they, too, are well ahead. It’s clear from early sales that caption 4range will be more important this year than in the past.

9 likes
Newsagency management

Shopping centre landlords will struggle to attract newsagency tenants

Covid is demonstrating that high street newsagencies have significant benefits over shopping centre newsagencies in a pandemic. It is also helping high street newsagents be flexible in their approach to business, something that is more channeling in a shopping centre setting.

I suspect there are newsagents in shopping centres today looking for nearby high street location opportunities.

I suspect, too, there will be some who were considering a shopping centre tenancy who now consider it unlikely.

With shopping centre occupancy costs yet to reflect new market conditions, they are not appealing, especially when you consider the restrictions coded in leases as to floorspace allocation for categories outside what a landlord considers to be cor newsagency categories.

If shopping centre landlords do reset occupancy cost to reflect the new conditions, which would mean an occupancy cost decline of at least 33%, their space could be appealing for a newsagency or a newsagency related business.

It would be a bold landlord who makes that move. They are not known for wanting to be first for such changes.

The thing is, a newsagency is good for a centre, especially an evolved newsagency that is focussed on the future with a nod to the past. Such a business can be fresh, enticing and net traffic generating, not relying o=n the traffic a centre itself has.

With fashion retail looking at a tough year ahead and some other niches also challenged. the mix in shopping centres will change. That could be an ideal time for landlords to better support a traffic anchor like a newsagency. It will be interesting to see if they have what it takes to make their space commercially interesting to newsagents … because right now it is not commercially interesting.

One thing Covid has provided newsagents is options, meaning we are not as reliant on shopping centres as we used to be.

6 likes
retail leases
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