The pie chart below breaks down the newsagency sites installed by my software company, Tower Systems, over twelve weeks to yesterday. 50% have come from one competitor, 25% are greenfield locations and the rest spread between 3 competitors. To lose close to 20 clients in twelve weeks must be hurting one competitor. The newsagents have all switched for common reasons. While we knew we were doing well, we have not been watching enough to know how well.

There is a party going on at the moment and newsagents have forgotten to turn up. Nothing unusual about that. It’s an annual party yet we neglect it year after year. The party is Christmas and while we celebrate in store we do very little to drive customers to our shops. Okay, that’s not quite true. Many of us send our catalogues with offers and there is a smattering of TV advertising around the country. But that’s it. Compared to our major competitors in the greeting card and Christmas product area we are not on the consumer radar. Australia Post, Safeway / Woolworths, Coles, Big W, Target – I could go on – they are all on TV touting Christmas offers. Much of their TV content could relate to newsagents – greeting cards, wrapping paper, calendars, small gifts. The longer newsagents continue to ignore the party the more their share of business will fall.

A challenge is how to brand such advertising. For example, while we’re all newsagents, newsXpress stores would want their branding up as would Nextra and Newspower. The answer is to support all the brands. Christmas is one time the channel ought to consider an unified approach to celebrate the season and raise newsagencies and the key banner groups back into the minds of consumers.

As a shareholder in newsXpress I’ll be suggesting that the banner groups get together to discuss this in preparation for next Christmas. Either that or one of the groups breaks out with a cut through ad which pulls them ahead of the others on TV and in other media. Something has to happen because the current inaction is losing sales.

Steve Outing in his Stop The Presses column at Editor and Publisher yesterday grades newspaper websites. Ahead of the article itself is this introduction:

Just about everyone — finally — is on board and working to address the big problem: How to transition a significant part of the newspaper business to online and new media while keeping enough money flowing in during the transition period to fund quality journalism, and prevent newspapers from entering a downward spiral. So how’s this going?

Newsagents need to read this and understand what is being said. Newspapers are transitioning revenue. This means newsagents must transition revenue as well.

Outing’s article rates newspaper sites and, overall, says newspaper publishers are not doing enough to drive the transition. He opens his conclusion with:

With all the hand-wringing in the industry about how to cope — and the acceptance at the corporate level that big changes are required right now to address the challenges faced by newspapers — I’m surprised in looking at today’s state of the newspaper website that the changes aren’t more dramatic.

At least newspaper publishers have started. Newsagents have not. Our shopfits continue to be the same, the supply model of newspapers and magazines is the same, our product mix is the same, the earnings multiple for purchase is the same. Newsagents are not embracing change. They are waiting for someone else to deliver the changes to them.

The biggest transition newsagents face is that of moving from being a servant to being an entrepreneur. Some have done this with excellent success. Most have not.

Over the last three years newsagents have dramatically increased services offered at the counter, adding bill payment, money transfer, phone recharge and calling card sale to the more traditional newspaper account payment. Each involves technology. Some require customers to make decisions which often take longer than the commission is worth – calling cards are a good example of this. While providing these services is an important traffic generator for newsagents, we risk tarnishing our image of excellent customer service. Slow and out of date IT interfaces by some suppliers are delaying simple transactions such as sales of magazines, newspapers and greeting cards.

Newsagents need to demand that systems used and systems with which newsagents interface are state of the art. Not all current systems are – they cause traffic problems at the counter and disadvantage newsagents and their customers.

If the services part of our business is to grow, and it needs to, we need our suppliers to provide better IT links which reduce the technology at the counter rather than make it worse. To see our suppliers deliver better technology to our competitors ahead of the newsagent network is disappointing.

As a retail only newsagent now I don’t like the post-it note ad on the front of The Age today luring customers to get the newspaper home delivered. There’s nothing in that for me. If the folks at The Age want me to engage in in-store promotions to drive over the counter sales, they need to NOT undercut me in this way. What they are doing is disrespectful to all newsagents – delivery newsagents make less from a subscription delivery than they make from an over the counter sale. The retail channel is important to publishers – taking sales out of retail weakens the channel, leaving what? Not much.

The stuck on ad covered a promotion for a feature. Surely there are arguments going on within Fairfax about these stuck on ads?

I note that not all Ages in Melbourne had the ad. In two newsagencies I saw product without the ad whereas in mine and a convenience store the ads were in place.

The two day Congress in Sydney earlier this week was worthwhile beyond what I have already covered. Here are some of the other highlights as I saw them:

Magazines and the Internet: Patsy Keegan of Vanishing Point Media reinforced how important an online strategy is for magazines. She made sense talking about how successful titles use the Internet to engage with readers. Good local example: Girlfriend – brilliant reader engagement.

Old media adapting to Internet opportunities: Rohan Lund, Director, Digital Media and Strategic Investments, Seven Network took us behind the scenes on how Seven has embraced Yahoo! and embedded Yahoo! people with TV shows and magazines to create a more valuable relationship. The Yahoo! Side of things is providing a level of engagement that a pure broadcaster cannot achieve.

Today’s media Company: Tony Faure, CEO, ninemsn was opening keynote for the conference and set the tone. The world has changed. Media companies are not what they used to be. Those in the media need to adapt. This is an era of engagement and personalisation. Of course, the newspaper folks who followed Tony – see earlier blog entry – weren’t listening.

See the theme – engagement. We have engagement in newsagencies with every customer contact. However, few of us really engage – certainly not in a way which is comparable to the liberating engagement of a good website.

The biggest highlight of the Congress, from a small business perspective, is the opportunity to listen to representatives from suppliers and major media companies talk in broad terms about the new world and do some naval gazing about that. Back in my newsagency this morning dealing grass roots issues, it’s easy to forget the lofty ideas swirling around my head during the Congress. Day to day newsagents have little time for naval gazing and business planning. Their twelve to sixteen hour days are overcommitted with heavy labour, customer service, accounting, dealing with reps who are always ‘dropping in’, putting up displays, taking down displays, putting out new stock, processing returns … and so on. Back in they day they had more employees to do this work. As wages, rent and competition increased, newsagents kept busy and have not modified their businesses to address these very issues. Now, newsagents face, in my view, a tsunami. Newsagents and those who lead them need some serious naval gazing time to plan for the future – but they better hurry because the future will be here sooner than they think.