Behind the counter of the newsagency
We appreciate the value of retail theatre…
We appreciate the value of retail theatre…
The crossword segment of magazines continues to perform well in retail newsagencies. I see plenty of businesses reporting growth and those reporting decline report a lower decline for crosswords.
Crosswords respond well to in-store engagement and promotion. For a small investment of time, you can expect a lift in sales of crossword titles. Here is my current list of top engagement opportunities for a retailer with crosswords:
I get that some reading this will say we only get 25%, why bother. I agree the margin is disrespectful. However, crossword shoppers purchase out of habit. That makes them valuable to us beyond the crossword purchase.
Big lottery jackpots can be a challenge in terms of shop floor management as well as that they can suck cash out of the local economy that might otherwise have been useful for spending of products in your shop. Big lottery jackpots are also an opportunity to leverage, bringing in people you have not seen before. The key is what you do with the new traffic.
Here are some tips for shop floor management:
Here are some ideas for leveraging big lottery jackpot traffic:
The value of any lottery jackpot to your business beyond lottery commission depends on what you do.
Footnote: this advice is part of the extensive newsXpress knowledgeable accessible by newsXpress members. It is a deep well of advice and encouragement for building more valuable businesses.
If you can grab 15 minutes today, please watch the business report from the ABC last Thursday night abut Myer. It is interesting and sobering and relevant to our retail businesses.
What the experts tell Myer they need:
All retailers need these things, and more. I found the report valuable and fascinating.
Note this: 10% of revenue for Myer now comes from online. 10%
The Australian Small Business and Family Enterprise Ombudsman has published some excellent tools that will be helpful to small business retailers in the area of funding.
This type if advice is critical in this era of business owners engaging with FinTech companies that offer high cost easy to access financing without the need for security. These too good to be true finance offers usually are, actually, too good to be true. I have seen retailers pay too much for stop gap funding when, in reality, they should have looked at entering formal administration. All the funding did was add to their costs.
The ASBFEO advice is timely and useful. I urge newsagents to read it so they are aware of the advice even if it is not relevant today.
Click here to access FitsME – Essential guide. Click here to access the Funding Guide. The advice is this document is excellent. My only complaint is that the documents are sponsored by a finance business.
I’ve always found it bizarre that you can find newsagents that advertise the Sunday paper and are closed on Sundays pic.twitter.com/plt8hF28GQ
— McG ᵃʳⁿⁱᶜᵃˡ (@McGarnical) September 6, 2019
This was on Twitter overnight:
Nobody eats from a toilet, why would anybody read The Sun? Save the country from the scourge of Rupert Murdoch’s propaganda. Talk to your newsagents, convince them to stop stocking The Sun. #DoNotBuyTheSun #TotalEclipseOfTheSun
News Corp earlier this week announced format changes for these titles: CQ News, Gympie Times, Fraser Coast Chronicle, Central & North Burnett Times and the South Burnett Times. This is on the back of changes in some other regions.
Dear Retailer,
Each issue of CQ News is read by an average of 7,000 Central Queensland residents,* connecting them with essential local news, sport and opinion that matters most to their busy lives.
To ensure we continue to deliver the deep connection we share with our readers and advertisers, while maintaining global best practice and ensure long-term sustainability, we are evolving.
What is Happening?
CQ News will adopt a smaller, friendlier and contemporary 350mm tabloid format. This newspaper will continue to be printed on the newsprint loved by our readers.
When do these changes happen?
CQ News will move to the new 350mm tabloid format from publishing date Friday 13 September, 2019. The last publishing date in the current format will be Friday 6 September 2019.
What does this mean for our retailers?
An in-store point of sale suite will be created to assist in notifying and informing your customers of the upcoming format changes prior to the official launch.
The new format change will provide a more compact user friendly experience for your loyal customers to enjoy on a daily basis.
What does this mean for our readers?
We will let our readers know about the new format in paper and online in the lead up to the changes. We will also launch a brand marketing campaign to inform and inspire Central Queensland locals as we launch the new-look paper.
Where can I find more information?
For more information, please see our FAQs attached.
While the shape of CQ News is changing, our commitment to the Central Queensland community is not. Our role in providing essential local news, sport and opinion to our readers remains as vital as it has always been.
We thank you for your support of our ongoing evolution to ensure our newspapers remain the trusted, proud voice for the Central Queensland community in the years ahead.
We look forward to taking this latest step to keep delivering for our readers and advertisers with you.
Regards,
News Corp Australia
Click here to see one off the FAQ documents issued.
This is a move that has been in planning for a while. I don’t see anything concerning in it. If anything it will freshen interest in the print product and, possibly, offer retailers more options for placement.
A free workshop for small business retailers: How to find new customers by selling online direct from POS software for your specific type of business using Shopify and Magento.
This is a free workshop I am running for my POS software company that may interest newsagents. In the workshops I will provide context in terms of how retail, physical and online, is changing. I’ll share trend insights from overseas that have small business implications. I’ll look at being prepared for what’s next.
You’d be most welcome at this free workshop where we will explore Shopify and Magento direct connected POS software for specialty retailers: jewellers, garden centres, produce, toy, firearms, fishing, outdoors, newsagents, pet, gift, book, bike and adult.
At the interactive and engaging workshops we will focus on new online insights for 2020 and beyond that are relevant to indie small business retailers.
Each workshop will be live and interactive and relevant to your type of business. It could save you thousands in web developer fees. This will not be a sales pitch. We will share what we know having done this work ourselves for the retail businesses we own in the homewares, pop culture, collectible, plush, gift and games segments of retail.
We live everyday the challenges of pricing, marketing, shipping and more and we will share out learnings.
We will cover hot topics including: SEO, shipping options, free shipping, the role of social in online sales, returns, bundles, branding and a plan b for your web strategy.
Click on your preferred city below to book. Each workshop (except for online) will be in an easy to get to capital city location.
We are local. Tower Systems serves 3,500+ specialty businesses – with POS software and websites. We make what we sell. We use it ourselves too, in our own retail and online businesses.
With these workshops and all we do, goal is to help you enjoy a more successful and valuable business.
Following lobbying facilitated by collective shout, 7-Eleven Australia has declared that the target ‘porn’ magazines no longer be stocked in their stores. There is no information about the specific titles being removed.
Every week I hear from a different landlord (or two, or three)pitching a tenancy, or tenancies, if their centre that would be ideal for a traditional newsagency. When I ask what they think a traditional newsagency sells they almost always say: papers, magazines, lotteries, cigarettes and lollies. Pushed, they will add cards and phone recharge.
Some say they would not permit a newsagency to sell gifts while others say yes to gifts but no to homewares or toys.
Landlords of shopping centres are a problem for our channel. They are living in the dark ages.
These shopping centre landlords do not want newsagencies of 2019 and beyond. No, they want convenience stores offering categories that we either have left behind or managed to a small footprint as we chase new traffic and higher overall GP%. Which is okay. There is a place for those businesses, the businesses that offer papers, magazines, lotteries, cigarettes and lollies as their core.
So, in addition to Australia having more retail space per capital than most other countries and our retail space priced higher than most others, we also have to content with landlords who guide retailers to setup businesses that are focussed on the past more than on the future.
They get people agreeing to this. I heard from someone last week who had just signed a lease for a new 30-shop centre being built in regional Australia, in an economically affluent area. They had agreed to a 150 sq m newsagency that would sell papers, magazines, lotteries, cigarettes and lollies. Oh, and cards and small gifts (under $20). This would be their first retail business and they wanted help to create it. They thought they were on a winner, based on projections from the landlord.
I suggested they get the projections in writing and ask the landlord for people to speak to, to guide the creation of the business. The landlord refused, saying the projections were guidance only and not to be relied on. In talking abut how they planned full the shop they figured it as 33% magazines, 20% cards, 25% lotteries and the rest in convenience products and management.
I asked they has created a cashflow projection model for the business. They had not. They referred back to the landlord projection on how good a newsagency would be.
And landlords wonder why some traditional newsagency businesses go broke.
Mediaweek yesterday had the story about the results of Pacific Star Network, the sports radio and media business with Craig Hutchison as CEO.
Pacific Star Network reports Crocmedia financials for 2018-19
FY19 revenue of $67.0 million was up 140% and underlying EBITDA of $9.0 million (guidance: $8.75-9.25 million) was up 208% on the prior corresponding period (pcp), respectively.
In the story is a report abut the purchase of the AFL Record business from the AFL.
In July 2018, PNW’s wholly owned subsidiary Crocmedia signed an agreement with the AFL to acquire the AFL Publishing business. The business is responsible for numerous football related publications, including the iconic AFL Record publication, which has been the official match program for more than 100 years.
The AFL Publications business had a purchase price of $8.1 million comprising $5.850 million cash less working capital adjustments of $0.244 million and $2.250 million prepaid advertising to be retained by the AFL. The AFL Record performance was in line with expectations, with revenue of $6.846 million and net profit after tax at $2.269 million.
That is a net profit 33.14%, an extraordinary result.
Now, while most of these publications are not sold in newsagencies, the report does indicate the value that can be achieve from a niche publication with an efficient distribution network.
Two weeks ago I wrote briefly about a pre-order pitch we are making. What I did not say is that we were primarily pitching online. Well, today, two weeks on, we have banked more than $9,000 in revenue – for stock the will not arrive for another four weeks.
What makes the experience even more valuable is knowing in advance of stock arriving what the hot sellers will be, what we can feature knowing it will sell two, three and four times faster than other products in the model line. This is invaluable.
The success I am talking about here is from one store, with a niche product category that is also pitched in majors. What we have done is leverage the opportunity in a more flexible way that you won’t see in the majors as operationally it is too challenging for them.
Our spend on advertising so far – $0.00. We have leveraged an email database that we have built up of people interested in this product category as well as a specialty Facebook page created for the category – again, without spending anything on advertising.
My core point is that success is out there for the taking, not too far away from our shingle, as long as we are opportunistic, back ourselves and are creative at reaching possible shoppers.
What we are doing is not that unique, it is certainly not the first time preorders have been offered in this niche. What is different is that wee started planning a year out, building the email database, growing the social media community and creating a backend engagement approach that enables us to make the most of the pre-sell opportunity.
The reality is that we build an infrastructure like a big business would build, but on a small small business budget of $0 spend.
Retail has fundamentally changed as has businesses under the newsagency shingle as well as suppliers who supply the channel. Further, change is far from done. This is why we have to keep innovating, to play a good game on a moving pitch in rough weather.
It is at the fringes where we have opportunities to make good money.
The days of staying in your lane for specialty retailers is long over. Look at almost any specialty retailer and they earn from products outside the specialisation reflected in their single.
I was reminded of this recently when at a large bookshop. They had this massive wall of socks.
I don’t see a connection between books and socks except that people who read books also wear socks. It turns out the wall became free as a result of remodelling and they wanted a single category solution for the wall. Socks happened to fit. I am told the results have been terrific.
The sock wall i9n this awesome book shop was a reminder to not be constrained by the obligations of the shingle.
It is terrific seeing magazine publishers trying different approaches to boost sales. I am aware of five different title-specific trials being run right now in selected newsagencies. Each is designed to achieve incremental purchases of the target title in the participating store. Each trial is being run in between 5 and 10 newsagencies.
I like the trials as they will provide experience and data soon which decisions can be made. I also like that the trans are different to what we have seen in the past for magazine promotions.
Click here if you’d like to download and use an unbranded Father’s Day video I created using a platform I have access to.
The ABC has reported the ATO is clamping down on small businesses using sales suppression software to minimise tax.
Ms Jenkins said the ATO was also cracking down on the use of sales suppression software that disguised the transactions within a company’s records.
“There is some really sophisticated software out there that is helping people avoid paying the right amount of tax.
“But whether it is cashless payments or whether it is the use of platforms or apps, it means there is really a trace of your transactions.
“We use merchant data and other sources of information to identify where things just don’t look right. Then we go and have a chat to them and say, ‘Hey, can you explain?’
In the mid 1990s there was sales suppression scam operating in the newsagency channel. I became aware of it because my newsagency software company lost businesses because we refused to offer such a facility.
There was a software program into which the retailer could enter a code and then an amount of cash they wanted to take out of the business unreported. A second set of records was maintained for the ATO and another records for the business owner.
I know because the software was demonstrated to me several times, by someone who had worked for the software company that created the software. They had approached me. I did some more checking with newsagents and discovered the facility in the software was being used.
The matter was reported to the ATO. At their then Box Hill office in Victoria they assembled a task force including representatives from the ATO, Federal Police, Federal Attorney General office. Victorian State Revenue and Victorian Attorney General office. Several of us with knowledge were brought in for a demonstration of the software. There were several follow up meetings with the ATO in Sydney.
Eventually, my software company stopped losing sales because we did not have the tax avoidance facility in our software.
Any retailer deliberately and systematically underreporting their income to avoid tax deserves what they get from the ATO and from any suppliers they impact through their actions.
Nine (Fairfax) has announced a 20 cent (6%) cover price increase for The Sydney Morning Herald yet only a 1 cent, or 1.6% increase in margin for the retailer. In my opinion, this further downgrade of margin for newsagents is disrespectful and offers retail newsagents encouragement to ditch the product category.
Here is the detail of what Nine has announced.
This move offers newsagents an appalling return on the space, labour and capital required to support the sale of newspapers in a newsagency.
I wonder if it is more evidence of a theory that the publishers want to move more retail of their product from newsagents to convenience stores, like 7-Eleven, supermarkets and petrol outlets.
Look at a general retailer. They will get 31.5 cents from a $3.40 item sold. That is 9.26%, down from 9.68% on the current price.
The massive Nine corporation is showing what it thinks of small business newsagents in this move.
What Nine is doing here, in my opinion, is like the federal government move to cut penalty rates. It is shameful, disrespectful and preys on the weak and vulnerable.
The question newsagents have to ask is: Is it worth stocking Fairfax titles or newspapers more broadly? The trajectory of margin is clear. The latest decline in real terms continues the trend.
How much longer will newsagents put up with being screwed over like this? I mean, seriously, how much longer?
Print newspapers, especially dailies, are dying. There is no upside. Newspaper publishers are managing their exit and they are doing this in a way that best suits them. Hence, these moves that disrespect newsagents.
I think the days for accepting their motherhood statements that newsagents are important them are over. If newspaper publishers thought newsagents were important to them they would actually respect them. They are doing the opposite – making more money for themselves while at the same time less for newsagents.
So, the product is dying. It is what it is. I think newsagents need to, for themselves, decide when they will exit the category. They can decide this on their terms, with their timing.
For me, this Nine announcement encourages the decision to quit the category.
Nine will say the papers are losing money and they cannot give newsagents more. Who cares? Not me. I am a newsagent providing a service. Show me some respect or get out.
Oh, and what makes it worse is that newsagents have to pay for shrinkage. One paper stolen will take the sale of nine papers to cover that cost. I suspect supermarkets don’t pay for stolen papers. I suspect they pay only for scanned sales. I say this because I understand some are on this model for magazines.
Footnote: click on the image for a larger version.
A person in the US has died from what the Centers for Disease Control and Prevention speculate is a vaping-related condition. This and data from around 200 cases has seen vaping getting a lot of media coverage this week.
The CDC is investigating whether more than 120 cases of lung disease are linked to vaping pic.twitter.com/VkFLdQgC7U
— NowThis (@nowthisnews) August 25, 2019
The views of bank managers are given too much attention in my view. However, sadly, they are the gatekeepers to business funding. So, they are listened too.
A bank manager recently said to someone why would you buy a newsagency, they are going nowhere. It was a generalisation, not based on any business financials, not considering the transition already achieved in a business. It was ignorant and unhelpful.
Why would you ever listen to a bank manager. They are idiots. Yes, another generalisation, which is equally unhelpful.
The challenge for our channel is that banks have models that are out of date, models based on an assumption that all newsagency businesses are the same – when they are not.
The value of a business flows from its P&L, the business plan and the track record of those seeking the loan. The historic performance of the channel is not relevant today.
I know of newsagents achieving excellent growth. Most would not identify as newsagents but they have enough elements of a newsagency for them to fall under that retail channel category. While the growth is coming from non traditional categories, it is sustaining legacy aspects of the business, keeping services and products represented in regional and rural locations.
This is why the out of date modelling by the banks as represented by their managers is unhelpful for the transformation many of us in our channel are passing through.
Bankers should understand this as they are transforming their model too. That is why the quote at the start of this post is frustrating. It is ignorant and harmful to all in our channel.
If a bank manager says there is no future in a newsagency consider saying: I agree, there is no future in the traditional newsagency you might be thinking of. But, hey, that type of business has not been our model for years. Yeah, we left it behind and embraced something with new categories, new traffic drivers, better margins and lower operating costs. That’s why your banker model of a newsagency does not apply to our business.
Newsagents who are looking to sell their business should lean into this line of thinking. They should be on the front foot, addressing this issue before it is brought to them.
Bankers are frustrating. I remember a time when their opinions were based on what they saw and who they met outside their office. Today, their opinions are fed from out of date business modelling that is certainly not relevant to what may newsagencies are.
Footnote: in the headline I say some because there are some bank managers who think for themselves. They are a rare breed that we should cherish should we be lucky to find them.
I am often asked if a newsagency is a good type of business to buy.
Any newsagency is a good business to buy to the right purchaser, the person most suited for that business.
The answer really does come back to the purchaser because they may have skills ideal for a specific business. Equally, they may lack skills essential to a particular business – making them not the right purchaser.
Its also depends on the specific situation of the businesses and the opportunities for it.
The question demands a thoughtful answer and the answer will depend on who is asking, their skills, their resources, their experience, their fitness, their desire and their hopes and plans for the future.
While the business they are asking about is important, I see the answer as relying more on the person themselves. This is why I say any newsagency can be a good business to buy and often is.
I have a lot of confidence in the channel even though what the channel stood for in the past is changing rapidly, faster than ever before, to the extent that the channel is not the channel. But all of that is good in my view for I love change and the opportunities in change.
So what if we are not called newsagents. Our roots are our roots. What we are called tomorrow is of little matter.
There are plenty of good newsagency businesses for sale today with good financials and good upside prospects.
The Reject Shop has had a tough year. Their annual results indicate a sales decline of .8% and a decline in profit from $16M last year to -$16.9M this year. While some of the loss is due to write downs, trading appears to be challenging for the group.
I think any business that pitches low prices on known brands as the key reason to shop with them will always be vulnerable to attack from others playing the same game.
Genuine differentiation is key in retail. The best differentiation is one where you have control, where it is your asset and therefore is not easily copied.
The Reject Shop plays in a range of categories important to newsagents. It is worth taking the time to read their annual report and to look carefully at their businesses. It includes this from the Acting CEO:
The sales decline was compounded by a reduction in our gross margin which reduced through the second half. The reduction in margin was the result of the following factors:
- a response to competitive price pressures which resulted in price roll backs;
- increased markdowns to clear product in support of simplifying the shopping experience; and
- as a result of responding to the shift in elements of the merchandise strategy which resulted in clearance activity.
Additionally, we experienced a significant increase in our shrink results on the prior year. We are progressing through a plan to reduce the impact of shrink.
I noticed this tweet today promoting an R rated title that is available in the UK. Most Australian newsagents I know got out of adult titles years ago.
Out Now!!! Club DVD 12.7 featuring Beth & @Jasmineewebb & Rahyndee & Tiffany James from https://t.co/90sV2b1sB9 ! Available from most newsagents or garages Today !! pic.twitter.com/68tpRN34cL
— Paul Raymond Publications (PRP) (@paulraymondmag) August 22, 2019