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

People looking for Australian product

It is interesting seeing shoppers keen for Australian product. There has been an increase in interest since the coronavirus pandemic kicked off earlier this year. At first, interest was there, but infrequent. Today, it is common, with more customers asking where products are made.

Maybe an outcome of the coronavirus pandemic is that locals get a better understanding of what shopping local means. For that to work, tho9ugh, retailers themselves need to do more local shopping.

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Social responsibility

Zoom meeting: let’s talk business, corona and the future

I’m hosting a free Zoom meeting tomorrow, Wednesday, at 10am for any newsagents who want to join in. Let’s talk about business, coronavirus, opportunities, challenges and the future.

Here are the details to tap into this discussion:

Topic: Newsagencies, corona and the future
Time: Apr 15, 2020 10:00 AM Melbourne time.

Join Zoom Meeting
https://zoom.us/j/92683339453?pwd=dHFBRzVPOUp5eDZUNk5HZVVLWDhGdz09

Meeting ID: 926 8333 9453
Password: 978756

Raise any topics you like. Ideally, come along to chat. Wile listeners are welcome, these meetings work well when more contribute.

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newsagency of the future

Some retail landlords are ignoring the national cabinet’s code of conduct

It is disappointing seeing some landlords ignoring the code of conduct agreed by the national cabinet. I have seen information requests from individual landlords and big business landlords asking retail tenants for all manner of information outside what is covered in then national code.

  • One claimed that the tenant was not a small business, even though it clearly is.
  • One asked for accountant certified P&L.
  • Another asked for details of all state and federal support received by the business before they would even enhtertain a discussion.
  • One asked for personal financial details.
  • One asked for the details of every employee and the JobKeeper amount the business would receive by employee.

These are some examples of what landlords are asking for.

The code: NATIONAL CABINET MANDATORY CODE OF CONDUCT – SME COMMERCIAL LEASING PRINCIPLES DURING COVID-19 is very simple. The obligation on tenants and landlords straightforward.

It is frustrating seeing landlords abuse the process by seeking information that is not relevant, not any of their business.

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Ethics

Overseas magazines advertising for Australian subscribers

Social media feeds of Australians are being flooded with more subscription offers than I have ever seen from overseas publications like Wired, The Economist, The New Yorker and others. The deals for digital as well as home delivered subscriptions are sure to attract sign-ups. They are at prices retailers have no hope of matching.

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magazines

Mediaweek interview

I am grateful to James Manning of Mediaweek for the interview published earlier this week. It was terrific to catch up and talk about the magazine category in our businesses:

Retailer’s message to Bauer: ‘Australians still love magazines’

By James Manning

• What happened to the magazine sector and is there a future?

“Australians love magazines and they want Australian stories represented on their pages.” That is the message from Melbourne newsagent Mark Fletcher when Mediaweek asked him about the sector in Australia. And after Bauer Media closed its New Zealand operation, which Fletcher said stunned not only him, but people he knew in Bauer Media Australia, we asked about Bauer’s future in Australia.

“I don’t think that Bauer is looking to exit Australia, but I say that without any special knowledge.”

If anybody has a good understanding of magazine economics in Australia it should be Fletcher. He publishes a daily newsagency blog, owns three retail newsagencies (two in shopping centres, one on the high street), owns newsXpress, a franchised group with 225 stores, in addition to operating Tower Systems which supplies POS software to 1,700 newsagencies. “I have fingers in a few pies!” Fletcher estimates there are roughly 3,000 retail newsagents in Australia.

Magazines remain important for newsagencies, but not as much as they once were. “Magazine sales have been declining over the longer term,” said Fletcher. “They remain an important part of the business, but newsagents now have other traffic drivers in businesses now.”

When asked if keeping people at home in lockdown may be fast tracking where the sector was heading, Fletcher replied: “Within newsagency channels, a lot of the discussion has been about decisions like some publishers pulling back were possibly on the radar. The coronavirus situation is bringing those things forward. We are seeing similar things in newspapers with regional and suburban titles impacted.

“When advertising revenue dries up the directors [of publishers] have to make a decision at what point do they declare the business non-viable. Any assessment of the current situation indicates we are probably in for 6-12 months of significant economic pain. Are publishers prepared to wait that period of time to see if there is something on the other side?

“My take is that the Bauer family are very pragmatic which is why you haven’t seen the Pacific Magazines transaction completed at this stage.”

Fletcher said he wouldn’t be surprised to see Bauer eventually make moves about rationalising its range in Australia.

Newsagents have been disappointed in the past with the way some publishers engaged with the distribution channel.

“Early on Bauer was engaged and active with newsagents. That faded, but now we are in a situation where they are engaging much better with newsagents in the past 12 months.”

Fletcher thinks newsagents have been doing better with magazine titles in the past 12 months because petrol and convenience stores aren’t as strong as they once were. “We remain a destination for many people because of the depth of range we still have. A typical newsagent still might have 700-800 different titles. A shopper looking for diversity is catered for. At present crossword titles, craft and scrapbooking are all doing really well and growing. Your average newsagent is looking at magazine sales being up probably 10 or 11 per cent year-on-year. That has remained the case for much April and May – if our stores remain open.”

One challenge for the industry could be distribution. Ovato, the business formerly known as PMP and its distribution arm Gordon and Gotch, is facing big challenges with shares trading under two cents as it grapples with reduced printing demand which is its main business.

Fletcher wondered if it is an area that News Corp might move into. “They have the infrastructure to get product out there. Could that be an option for them? The Ovato situation is a hot topic for newsagents because at different points in the cycle Ovato owes newsagents money for returned product.”

Fletcher speculated if there was a withdrawal of the major distributor it could take weeks for a replacement to be ready. “Would that be something to push some magazines over the edge? Some newsagents have also said they would not open their doors if that happened because some rely so much on magazine revenue.”

Overall regional and rural newsagents are in good shape, said Fletcher. So good that he doesn’t expect many will meet the criteria of seeing revenue drop 30% or more to qualify for Job Keeper program.

“High street metro newsagencies aren’t doing too badly either. However it is in shopping centres where things are different. We are seeing declines of 60-80% year-on-year. One of the fallouts will probably be less newsagencies in shopping centres.”

As to reasons why the hunger for magazines has declined, there are several, said Fletcher. “As soon a publishers started putting their top performing titles in supermarkets at checkouts it cut down the browsing of magazine aisles. Browsing was key to people picking up multiple titles. The impulse purchase of magazines is really important.

“The long tail that newsagents provide – a broad range of titles in smaller numbers – is really valuable to our channel. The speciality customer is glued to the business and returns regularly to find their niche titles.”

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magazines

Terrific email from Lotterywest

Lotterywest retailers received an email from the company that included this:

Your first $10,000 payment
Yesterday you received the first $10,000 monthly payment as part of the COVID-19 Retailer Incentive Package. This amount was credited into your nominated bank account and will be reflected on your Recipient Created Tax Invoice (RCTI) week ending Monday 6 April.

What a terrific start to Easter. Well done Lotterywest.

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Lotteries

Linfox owned Armaguard misrepresents federal cabinet retail leasing code to pressure small business retailers for a rent deal

The massive Armaguard organisation, owned by Linfox, has written to small business retailers demanding they not pay rent for ATMs they have installed in shopfronts for April through September this year. Here is the first page of a letter they sent:

In my opinion, this letter misrepresents the position of state and federal governments.

The federal cabinet’s retail tenancy code of conduct is for SMEs, small to medium enterprises. Linfox does not qualify.

Further, they offer no justification for their claim, there is no evidence of a slow down of use or traffic. The federal cabinet’s code specifically lays out what is needed to support a claim. For example, a claimant needs to qualify for JobKeeper.

I wonder what Lindsey Fox thinks about this attack from his business on small business newsagents.

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Ethics

Pacific Magazines takes Bauer Media to court

Mumbrella reports…

Pacific Magazines is taking Bauer Media to court over the $40m acquisition of its business which was given the green light last month.

The takeover was scheduled to be completed on Thursday, with Seven West Media’s magazine arm now seeking support from the courts to ensure the deal goes ahead.

…

In an update to the Australian Securities Exchange (ASX) today, Seven advised it has received an email from Bauer’s solicitors saying: “Bauer is aware of its obligations under the Sale of Business Agreement and, as you
know, has been actively engaged since October 2019 in preparing for completion”.

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magazines

Details of the national cabinet code on SME commercial leasing

There is now a published code of conduct, agreed by the national cabinet. While the states and territories need to legislate to the requirements, there is nothing stopping retailers taking steps now to negotiate with their landlord.

  1. Click here for a copy of the cabinet agreed mandatory code.
  2. Click here for an ABC news link to the story.
  3. Click here to see a letter from Michaelia Cash Minister for Employment, Skills, Small and Family Business

Key to making your case will be data, proving your situation. It will not be enough to say you are down and that you need help.

There are some retail newsagents today not experiencing any downturn. While some of these may be frustrated that they cannot make a case for a rent break right now, their growth today should be celebrated as many are not in that situation.

Given that the code is directly connected to the Job Keeper program, we need to see the detail of that once federal parliament meets today.

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Newsagency management

Position reached on retail tenancy

The national cabinet has reached agreement on retail tenancy. This, from the ABC:

Prime Minister Scott Morrison has announced new rental waivers and deferrals for commercial tenants hit by the impact of the coronavirus crisis.

Under the scheme, which was announced after a meeting of the National Cabinet on Tuesday, landlords will have to reduce leases in proportion to the reduction in the tenant’s business.

The waivers will have to account for at least 50 per cent of the reduction in business.

Deferrals — rental payments that will need to be made, but can be put off — must be spread over the remaining time on a lease and for no less than 12 months.

That means that if a tenant had three months remaining on a lease, they would still have at least a year to make any deferred rent payment.

The code will apply to any tenancies where the landlord or tenant applies for JobKeeper and where they have a turnover of $50 million or less, Mr Morrison said.

The arrangements will be overseen by binding mediation and a mandatory code will be rolled out in each state and territory.

Mr Morrison said landlords were legally required to speak with tenants about rental arrangements and if they refused they would “forfeit their way out of the lease”.

Click on the link for more on this story.

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retail leases

Tabcorp stands down 700 people

In an announcement to the ASX this morning, Tabcorp announced it was standing down 700 employees.

The temporary standing down of over 700 Tabcorp employees to 30 June 2020 in businesses of the Group where there is no work as a result of COVID-19 shutdowns. Our focus is on retaining jobs for the long term. During the temporary stand down period, affected employees can access their accrued leave benefits and are expected to resume work when business activity returns to normal levels.

Tabcorp is currently exploring its eligibility for the Federal Government’s Job Keeper Wage Subsidy.

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Lotteries

Ovato offers little help to small business newsagents in dealing with the AFL trading card problem

Ovato is being inflexible in helping newsagents deal with the supply of AFL trading cards. here is the company’s position:

Team Zone AFL Cards – 85864/210

O/S March 14th

Initial allocation based on 80% of 2019 sale & small agents full carton or below got full supply larger agents received on average just 35% of total supply

Current sales in newsagents are 15% of initial supply after 10 days on-sale and sales are tracking -10% YoY

Returns policy as previous years. Agents need to phone / e-mail the contact centre to confirm how much stock is wanted to be returned. Publisher will send Aus Post return label to agent. Once agent confirms returns have been sent credit is given.

 

Select AFL Cards – 15035/70

O/S March 2nd

Initial distribution was 60% of final sales in 2019.

Current sales in newsagents are 30% of initial supply after 3 weeks on-sale and sales are tracking -10% YoY

Returns policy: Stock can be returned for credit but is full copy return.

For those outside of newsagency businesses – this is stock newsagents did not order. They are forced to carry the financial burden off dealing with this. This is unfair given that there is no reasonable process in place for newsagents to mitigate their financial costs for this product.

The Ovato approach places an unfair burden on small business newsagents.

4 likes
Ethics

Is Ovato imposing an unfair financial burden on small business newsagents because of COVID-19 impact on magazine distribution?

This is a serious question: Is magazine distributor Ovato hitting small business newsagents with an unexpected cost as a result of an impact on its operations due to COOVID-19?

Many newsagents have reported an unexpectedly high magazine charge. For some, the charge is higher than their cashflow supports, they will be unable to pay the bill.

So, I dug deeper. I have found examples of Ovato increasing supply of titles beyond what is reasonable over the last two months, even longer this year. In one instance, for Reader’s Digest, based on a 25% return rate, Ovato increased supply 37.5%. Then, another 10% and a month later another 16.5%. There is no justification whatsoever in the sales data from the store for any increase.

It’s not just Reader’s Digest. There are other titles too.

Ovato has, as I understand it, a requirement in some magazine publisher contracts that they distribute all of what they receive. If my understanding is right and this clause has not been set aside in the current situation, the closure of most transit location retailers will have increased the volume of inventory that Ovato must place elsewhere, thereby increasing the cashflow obligation on newsagents.

Ovato management need to explain how they are dealing with the shutdown of around 25% of their usual mix of retail outlets. They need to ensure that their allocation systems do not unreasonably increasing supply to newsagents. The evidence suggests otherwise though. If this has been the case, they need to fix it right away. If I am wrong, they need to explain why supply increases where the return rate is 25% or more.

I really thought we were behind the problems of serious magazine oversupply. Research over the last week indicates otherwise. I’d be glad to be proven wrong.

If you are a magazine publisher, look at your contract with Ovato, see whether you require them to distribute everything. If it does, propose that this requirement is set aside for the next six months.

Given the data flow from newsagents, there is no need for oversupply. Indeed, any oversupply ought be considered neglect, a cash grab,. And given the parlous state of Ovato, that is the last thing newsagents need to be exposed to right now.

Here is how we are responding to oversupply to my own newsagencies: we have reverted to weekly tight culls of magazine supply, cutting back to what we know we will sell plus a small buffer to allow of the current unique situation where some magazine categories are in growth.

The oversupply has caused us to invest more time on magazine supply and to be ruthless to protect our business.

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magazine distribution

Zoom meetings keep small business newsagents connected during COVID-19 challenges

For a month now newsXpress has been helping its member community connect with regular Zoom, video conference, meetings. For the last three weeks, these have been daily @ 2pm Monday to Friday with a morning meeting as well on some days and a weekend meeting some Sundar afternoons. A tradition has developed on Fridays with suppliers joining in the meeting.

Conversation is free flowing, with plenty of topics covered. No topics are off the table. People share their stories, how business is going, what is working, what is not working. The meetings often consider issues of collective interest.

newsXpress was on to the landlord challenge close to two months ago so there has been plenty to talk in the Zoom meetings about in terms of how different landlords have responded to the various newsXpress strategies proposed. newsXpress was also onto the jigsaw opportunity early, back in February, and this, too, has been part of the Zoom discussion.

The most significant value of the Zoom meetings has been the opportunity to experience that as a business owner you are not alone in confronting COVID-19, that your fears are fears others share, that there can be comfort from an openly shared experience.

Each Zoom meeting has between 35 and 40 people engaged live with more than 100 watching the recording overnight.

newsXpress also sends a daily email, usually by 7am, with updates on any issues covered in the Zoom meeting the day before as well as news that relates to our channel, links to relevant government resources and details of relevant supplier opportunities.

There have been plenty of stories in the media this week about Zoom meeting fails. These newsXpress meetings have been wonderful and very much appropriate to the times.

Our next one is tomorrow, Sunday, at 3pm. I’ve cast as a more relaxed meeting, with wine (or beer or a cocktail) in hand. Then, on Monday at 2pm, we’re back to weekday business.

Now more than ever we in small business retail need to be connected to each other as we can learn from each other and support each other. That is central to the newsXpress use of Zoom for daily member meetings. Oh, and if you think you don’t have time, people have the meeting on their computer while they get other work done, each lunch or take calls. Multitasking is applauded.

Footnote: I am a director of newsXpress.

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Newsagency marketing group

Unified industry lobbying of shopping centre landlords

This week, ALNA has lead discussions with the newsagency marketing groups Newspaper, nextra, newsXpress and The Lucky Charm to agree a unified approach to shopping centre landlords on challenges resulting from the impact of COVID-19. ALNA sent the following to the Shopping Centre Council of Australia.

2nd of April 2020

 

Angus Nardi
Executive Director
Shopping Centre Council of Australia

Cc: Kate Carnell, COSBOA

 

RE: Australian Lottery & Newsagents Association letter to SCCA requesting landlords to immediately play a bigger role in addressing the COVID-19 Pandemic with their Tenants

 

Dear Angus,

The Australian Lottery and Newsagents’ Association (ALNA) is the national industry body representing Lottery Retailers and Newsagents’ who represents small businesses in almost every rural town, regional centre, urban and metropolitan shopping centre in Australia.

There are over 4000+ Lottery Retailers and Newsagents’ in Australia. They are an important and trusted part of Australian communities and approximately 35% of the Australian population visit these small businesses at least once a week (source – Retail Doctor Group Insights study).

The current COVID-19 Pandemic is impacting our small retailer’s businesses in a significant way. Newsagents and Lottery Agents are not businesses with huge financial capacity or large margins, they are generally mum’s and dad’s, family enterprises, who are having a go, being their own boss and working hard to make a success of their business.

Their biggest immediate concern now to surviving this crisis, is their financial capacity to continue to pay rent to their landlords during the crisis. Many are reporting that they will have limited capacity to continue to pay rent over the several months it may now take before any recovery in customer visitation occurs after social restrictions are lifted.

When they have reached out to landlords and their representatives as almost all have, and as the Prime Minister has suggested they do,  to have a conversation about sensible rent relief and abatement to meet the requirements of their business surviving this crisis that is no fault of their own, they are consistently and overwhelmingly met with delay and obfuscation.

Examples include:

  • Landlords and their representatives who simply point to government or bank support as the only solution.
  • Landlords and their representatives who ask tenants to sign a confidentiality agreement before any discussions can occur.
  • Landlords who have asked retailers to dip into reserves (assuming they have them) and pay up, saying every business should have sufficient funds to operate with a downturn in business for at least a few months. We expect our April invoice to be paid.
  • Landlords and their representatives who use delaying tactics like requiring evidence that tenants have accessed every single state and federal support scheme announced and who require detailed P&L’s and projections in a fluid global crisis that no one can realistically predict.

We are relying on each other to get to the other side of this crisis, and many businesses have stepped up in this crisis, banks have for example stepped up to assist individuals, businesses and landlords alike, providing short-term solutions to get each other through and governments across the board have as well.

But when it comes to landlords being asked to step up, they roll out the good work of others as solutions to the predicament of their small retailers, and ask for unrealistic bureaucracy to delay outcomes or conversations actually occurring, rather than contributing consistently to shoulder the load they abrogate all responsibility.

This behaviour puts the mental wellbeing of many small business owners and their staff at risk in a crisis, and this is un-Australian and disrespectful to your members business partners and our community more broadly, who are all in this crisis together with you.

Consequently, we are writing to ask your industry to step up, to show some leadership and to genuinely partner with your commercial tenants, to help see them through the crisis through immediate dialogue and delivering rapid outcomes.

—-

In conjunction with the four major Franchise and Marketing groups in our sector, which include; The nextra Group, Newspower, newsXpress and the Lucky Charm Group, who collectively represent approximately 1000 retailers, along with the rest of our members who are not part of these groups, we are asking you and your members to do this without delay.

Many many of these businesses are tenants in your members businesses, we ask that your organisation and your members do significantly more to address this consistently objectionable behaviour.

We believe arrangements between landlords and our retailers’ that properly acknowledge the significant reductions in turnover occurring, are immediately put in place without delay, as the Federal Government have done. Then as a result, reduce commercial rent payments immediately and in the case of those tenants who have already paid for April rents, refund them.

For these effected businesses, rent payments will need to be reduced to close to zero in most cases for six-months as this will be critical to their survival, as it will be for the long-term survival of your members businesses. For shopping centre and CBD newsagency businesses, we seek an immediate measure to suspend all rent related obligations for three months with no change to rental period and no requirement to catch up rent that would have been paid in the suspended period and a commitment to review an extension of this six weeks into the three months.

Re-starting rental payments after the crisis will deliver small retailers the capacity to continue in business and landlords will still have tenants able to pay reasonable rents as a result. The alternative is broken lives, empty shops and having to offer six-month or more rent holidays to attract new tenants

We implore you to work with us on this to find a sensible solution now. This remains the big piece of the puzzle that is still unresolved and urgently required to make it possible for small businesses to go int a semi-hibernation state during the crisis and to not lose the capacity to come out the other side.

We thank you for your time, consideration and support.

 

Yours sincerely

Ben Kearney
Chief Executive Officer
Australian Lottery & Newsagents Association

11 likes
Retail tenancy

Sunraysia Daily to print on Saturdays

Great news out of Mildura yesterday:

Sunraysia Daily to print on Saturday
THE Sunraysia Daily will revive its printed publication with a Saturday edition.

After temporarily ceasing all its printed publications last weekend due to the economic impact of the coronavirus, the Elliott Newspaper Group decided on Thursday morning to print a Saturday only edition while the crisis continues.

Elliott Newspaper Group managing director Ross Lanyon said the move wouldn’t have been possible without the support of staff.

“We have seen an enormous community push for us to revive a printed product this week and we are listening to our readers,” Mr Lanyon said.

“While we have a strong online presence with our revamped website, people still love their paper and are desperate for it back.

his is terrific news as newsagency sales of the Saturday paper were terrific.

7 likes
Newspapers

Bauer closes NZ magazine business permanently

NZ Herald reports that Bauer has closed its NZ magazine business permanently.

New Zealand’s biggest newstand magazines have been folded, as Bauer Media NZ abruptly closes its doors permanently as a result of the Covid 19 crisis.

The New Zealand wing of the German-owned company publishes a range of New Zealand magazines including Woman’s Day, New Zealand Woman’s Weekly, The Australian Women’s Weekly, the Listener, North & South, Next, Metro, Kia Ora, Home NZ and Your Home & Garden.

The closure brings to an end many decades of publishing in New Zealand, with around 300 staff out of jobs.

A staffer spoken to by the Herald said they were “devastated” and “didn’t see it coming”.

This move is a shock.

4 likes
magazines

Sing Tao newspaper closure costs newsagents

Newsagents have lost out from the unexpected collapse a few weeks ago of Sing Tao Newspapers Pty Ltd. Despite this, the liquidator is pursuing newsagents for what could be dubious amounts. Further, they are being heavy handed in their approach.

Newsagents were supplied newspapers by the company. Newsagents paid for newspapers. Then, later in the cycle, they claimed for unsold product. Who knows what the actual debt is given the surprise collapse of the company. Timing is key in determining an accurate position.

The liquidator is threatening legal action to recover what they claim is a few hundred dollars owed in one instance shown to me. I doubt a liquidator would take legal action to recover this.  However, I am no expert and offer no advice.

If I received such a notice, I’d show the liquidator an invoice for my costs from the collapse covering any uncredited returns.

1 likes
Ethics

News Corp. to suspend print editions of 60 community papers

Nine has this story:

Rupert Murdoch’s News Corp will suspend publication of 60 community newspapers including The Manly Daily, The Wentworth Courier and The Diamond Valley Leader due to the COVID-19 pandemic.

The company announced on Wednesday morning it would turn its 60 community newspaper mastheads to digital-only products and suspend print publication from April 9 due to rapid declines in advertising revenues.

It’s understandable. Ad revenue has all but disappeared. The question is, will they come back?

1 likes
Media disruption

Nine suspend some sections of print newspapers

Mumbrella has this story:

In light of the coronavirus (COVID-19) outbreak, Nine has pivoted its publishing arm. The changes include the suspension of some print sections and the optimisation of newspapers’ webpages to provide consumers with COVID-19 updates.

Non-weekly magazines have been suspended and some lift outs have ceased. The staff impacted by the changes will be redeployed as appropriate, said a Nine spokesperson.

0 likes
Media disruption
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