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

If you compete with the Reject Shop…

The Reject Shop appears to be in challenging times, according to a report in The Age.

The Reject Shop will part ways with its chief executive and has revealed it is heading for a full-year loss, as sales evaporate and it cuts prices amid fierce competition from supermarkets and department stores.

The discount retail chain on Thursday said it now expected to run at a loss of $1 million to $2 million this year – a downgrade from earlier guidance for a profit of $3 million to $4 million.

The ASX announcement from the business has more details:

In addition, Gross Margins have fallen as the expected benefits from Sales and Merchandise related initiatives have not landed with consumers during the half. This margin pressure has been exacerbated by the competitive pricing pressure placed on a number of key Sales Departments from both the major Supermarkets (FMCG) and the Department Stores (General Discretionary Merchandise), forcing price roll-backs across a number of key lines as the business looks to maintain its price gap in the market.

Non-product related costs including Store Wages, Occupancy Costs and Head Office Costs have been well controlled during the half, with material cash reductions on rent renewals still being delivered.

This will be good news to newsagents competing with the discount retailer. I have been tracking them this year because of their creeping into more areas in the gift, card and related categories. I thought they were doing well in the context of their type of retail.

For what it’s worth and thinking about today’s news, I think the Reject Shop is encountering challenges because of renewed focus from K-Mart, supermarkets and because the Reject Shop approach to retail is not what shoppers look for today.

The days of retail shelves being full as a sales approach are over for now. Shoppers want engagement, experiences. Give them this and sales will increase.

I visit a couple of Reject Shops regularly to watch their changes and offering experiences is not something I see.

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Competition

Diversity in retail

Here is an article I have recently completed about diversity in retail, as a management approach to help you attract more customers to your business. I have been thinking about diversity because of an inspirational presentation I heard by Aubrey Bergauer, Executive Director of the California Symphony, in which she outlined how a commitment to diversity has helped the Symphony become more successful.

Diversity in retail.

This is not about what you may think it is about.

For years, retailers, especially small business retailers have been told do one thing right, be known for something.

They have been told that a unique selling proposition(USP) is about that one thing and getting it so right that you are known for it.

This singular focus began in an era when people often discovering a business did so by being in front of the business.

While pursuing a USP has worked for many, the world today has changed. Technology has changed us, it has changed how people find retail businesses.

Whereas in the past, there was often one major path delivering traffic to a business, today, thanks to technology, there are usually many paths, often not as obvious to us as the path of years ago.

Technology has also changed what businesses can and do offer.

Most important, technology has changed the ease of reaching customers.

Being local is not as important as it used to be.

While local small business retailers wish being local is all that matters, it is not. Often, the local community is not sufficient to serve the growth needs of a business, often because locals themselves are shopping elsewhere because doing so is easier.

Retailers need to reach more people. This means reaching beyond what has been traditional. For local retailers it means reaching beyond local. It can mean reaching beyond what you are known for.

Thanks to cool personalisation technology and targeted marketing, businesses interstate or overseas can provide a special interest product in a way that locals can love. Big businesses, especially, can leverage technology to reach local shoppers in personal and local ways.

Being local is notas important as it used to be for plenty of specialty retail businesses.

A commitment to diversity could help local retailers in this changed world.

I am not talking here about diversity in the manner in which the term is often used.

To me, diversity in small business retail is about a business, your business, being diversein the customers it pursues and diversein the ways it seeks to connect with potential new customers.

Customer diversityis about being relevant, appealing and of value to different groups of customers to those you pursue today. No, not everyone, because that does not work.

Diversity in customers is about targeting very specific, new, groups that you are certain you can satisfy.

Why do people shop with you?

Think about what brings people through your front door right now. Typically, a majority of shoppers will come through for one reason, one product or service category.

Is there another product or service category not too distant from what you focus on today that you could introduce to broaden the appeal of the business, to help you reach people who are not interested in your prime product category or service today?

This is one example of diversity … making your business appealing to a group of people who do not find your current offer appealing.

It is not about becoming a general store. Rather, it is about making thoughtful moves, based on research, to broaden the pool of people who couldwant to shop with you.

This is about you reaching more customers.

Diversity in ways of connecting with potential new customersis about how you communicate, how you connect.

Multiple touchpoints matter in this connected world.

While we all get sick of emails, text messages, social media ads and the like, they are sent for a reason, by big businesses with strong tech infrastructure to take care of this follow up.

Think about the new shopper journey in your shop today. Think about how they found you. In small business retail, word of mouth remains important as does store location. But what about other new shoppers, how can they be found?

Diversity in how, where and when you promote your business matters as does diversity in your voice.

How you reach out to an older shopper should be different to how you reach out to a young mum.

How you reach out to someone new to your core product category should be different to how you reach out to someone deeply engaged with your core category.

A more diverse pool of shoppers requires a more diverse approach to find them.

Here’s what I mean: use diverse avenues of marketing and through these use diverse marketing pitches, targeted for a more diverse pool of customers.

Marketing avenues can include social media paid and free, Google Ads, with each being thoughtfully created to pursue a specific type of shopper, one that fits a diversity goal.

Just as you expand what you offer to appeal to new consumers, you expand how you appeal to reach new customers.

Local businesses often promote local. It made sense for years. Today, specialty retailers can easily sell outside the local area, making a commitment to diversity also being about reaching beyond local as that in itself is about pursuing diversity.

It’s about more than what you are known for today.

Here is what it comes down to. What you are known for today is not enoughsince that will limit your appeal to customers interested in that. Smart and tech engaged businesses are chipping away at your core, what you are known for.

Thoughtfully, carefully, broaden the appeal of your business through what you sell and how you pitch. Pursuing a more diverse pool of customers will buttress your business, help it weather change.

This is why diversity matters. It is why you have to make your business appealing to more people and why you have to be more diverse in how you try and find them.

Now, an action plan.

Write down your target customer today. Describe them in a concise way.

Now, think about another customer you could target, a different customer you would like to reach but do not reach today. Think about what you need to do in terms of inventory, shop layout, online engagement and other changes to reach this new customer.

Write down how you promote your business today. Now, think about other ways you could promote your business and other voices, styles, tones you could use to appeal to people you do not appeal to today.

New products, new services, pitched through new voices in new mediums, this is how to attract a more diverse customer pool to your business.

Diversity in retail is simple really. It is about expanding your reach through thoughtful planned actions to reach a more diverse group of customers.

The alternative is to keep doing what you have been doing. That will maintain your current business trajectory.

I am the owner of Tower Systems, newsXpress and several niche retail businesses.

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Newsagency management

Business outlook for Ovato (Gotch)

Click here to access an investor presentation fro Ovato, released yesterday. Ovato shares were halted from trading pending the announcement of a share entitlement offer.

As you can see from the half year report and their share price over the last year, it has been a tough time:

Here is a page from the investor presentation that may interest newsagents – not the magazine forecast:

With magazine sales declining, cover prices at five (and more) year ago prices and with GP fixed at 25%, this category is problematic for newsagents.

No wonder….

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magazine distribution

The City of San Francisco bans cashless stores

San Francisco last week moved to ban cashless stores. This is a big news story receiving plenty of coverage, like this from CBS:

San Francisco is about to require brick-and-mortar stores to take cash as payment, joining Philadelphia and New Jersey in banning an increasingly popular store policy of snubbing cash. Critics say refusing cash payments harms low-income people and the homeless, who are less likely to have access to credit cards.

And this TV news report:

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retail

If you have Grumpy Cat product…

Grumpy Cat has died. This cat that spawned a worldwide business has lead a celebratory life. Grumpy Cat achieved terrific success in Australia.

If you have Grumpy Cat products, pitch them where they will be seen. Do it respectfully. Interest will be strong I suspect.

If you don’t have Grumpy Cat products but ant to acknowledge the cat’s passing, the image I have included with this post is the official announcement that was shared on social media. Consider sharing this.

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Gifts

Vale Bob Hawke

Today is a good day to place newspapers with Bob Hawke on the cover at the counter. You will sell more for sure. Today’s paper will be bought by plenty who would otherwise not buy a paper – if you make it easy for them.

Regardless of your politics, it is hard to not wish for a leader like Hawke, he preferred consensus, has a commitment to social justice, did not tolerate racism and steered in great reforms, like universal health care and a significant increase in education engagement.



 

All the pics are from Twitter.

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Newspapers

Do we need to see old magazine titles retired?

In the online world of e-commerce sites, information sited, podcasts and community forums, it is common to see major rebrands and replacements of old with new.

Fresh is in online. Thanks to excellent and deep engagement data, decisions are made based on evidence. hence the replacement of brands with new.

Looking at the magazine shelves, I think we could do with a bit of this. There are some tired titles that are not viable for newsagents at a GP of 25% of cover price that is not keeping up with CPI.

Newsagents think about these things when looking at space allocation for the category.

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magazines

Discount Mother’s Day cards

Maybe I missed it before but it feels like the extent of low-price Mother’s Day cards in supermarkets is bigger than before. This photo from a Woolworths supermarket shows only part of their low-priced Mother’s Day cards. It was better located than the more expensive cards.

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Greeting Cards

Valuable inventory management mantra for retail newsagents

Never let an item of inventory have a birthday in your business.

This is excellent advice. It is easy to track and easy to manage.

I did some work for a newsagent last year and in stationery alone they had $37,000 worth of inventory items that had not sold in six months and $13,000 of items that had not sold in over a year. That is, not any of the stock of any of the items had sold in the period.

Acting on this starts with tracking it. It is dead set easy. Track it. Identify the dead stock. Quit it. Don’t replace it.

Dead stock is an opportunity cost to the business. It weighs you down and causes you to offer a sub-par shopping experience.

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Newsagency management

Free flu shots for staff

We offered free flu shots at my office last year through a service we paid for to visit and deliver the shots. This year, we have taken a different approach, to enable people outside of the head office to engage.

This year, we are refunding the $20.00 cost of people getting a flu shot from their GP or local pharmacy. There is a GP near the office offering the $20.00 service.

We announced it last week and the response has been terrific.

Our experience last year was a reduction in downtime as a result of flu in the workplace.

I mention it today as offering the refund is a relatively low cost opportunity for employers to provide an unexpected level of care for team members. It can be a small but useful differentiator in making the workplace more appealing.

This matters in small businesses where hiring people can be a challenge. I know of plenty of businesses where they are looking for ways to compete for staff with other local businesses.

The Health Direct website, from the federal department of health, has excellent advice on flu shots.

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Social responsibility

Is Woolworths getting out of magazines?

A couple of people mentioned to me they heard a rumour Woolworths was getting out of magazines. I checked several Woolworths stores, including George St Sydney, and while their magazine offer is patchy (at best)  there is no evidence of them exiting yet.

What does appear to be the case in Coles and Woolworths is a reduction in magazine pockets at or near registers. This location was high value of impulse purchases of magazines. The retreat from the large number of pockets that used to be at registers must have impacted magazine sales in supermarkets.

I suspect supermarkets will be a space to watch in terms of magazines over the rest of 2019.

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magazines

Newspaper front page cover-up

2019 has seen a significant increase in replacement of the entire front page of some newspapers in Australia with ads. What used to be a rare replacement of front page news with a full wrap-around is more common now in my experience. While we will never know, I’d love to know the impact on sales.

On Saturdays years ago, customers would empty the papers of their catalogues and flyers. I have seen customers recently remove the ad wraparound and leave it at the counter or, worse, throw it on the ground in the street.

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Newspapers

Mother’s Day day is here

As is often the case with Mother’s Day and Father’s Day, the real success of the day for many retailers is the Saturday before. Today is that day.

Good luck everyone. I hope the day is a terrific success for the business.

Today, as through the season, we have gifts and cards in several locations, to connect with the different destination shoppers we serve.

We have very little in the way of Mother’s Day specific gifts. In fact, that’s been our approach for years. We think mums are tired of cupboards of Best Mum Ever mugs.

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newsagency marketing

News Corp and tax

The AFR today has a story some may find interesting.

Is News Corp still paying zero tax?

News Corp did a little tax engineering just days before the election campaign started.

It’s always inspiring to see someone backing themselves, and Rupert Murdoch is putting his money where his mouth is when it comes to News Corp Australia.

On March 29 News Corp US ponied up $178 million to invest as new shares in News Australia Holdings. Apparently the $4.3 billion of existing capital was completely inadequate.

….

So how much tax does News Corp Australia pay?

Looking at cashflow, in 2018 NAH made $162 million in cash payments for tax. But that includes REA Group, its 61.6 per cent subsidiary, which paid three-quarters, or $124 million, of that.

It also includes News Corp’s 65 per cent owned NXE Australia, which owns Foxtel and Fox Sports Australia and paid $10.4 million cash tax.

News media outlets have a social responsibility to be good citizens, which includes paying their fair contribution of tax – an not managing affairs to shift untaxed income offshore, in my opinion.

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Social responsibility

Accountants don’t always provide good advice when it comes to POS software for small business retailers

A newsagent told me this week that their accountant told them they should be using a particular software product to run their newsagency business. The software the accountant recommended has not beed made for newsagency businesses. It does not connect with any suppliers. It is not made in Australia nor is it supported in Australia.

The advice from the accountant was dangerous as had the newsagent followed it they would have disconnected their business from functions that are key to them.

I hear this too often, accountants providing software selection advice. Most accountants are not retailers, most have no understanding of workflow, data connection and other requirements specific to specialty retail channels. This is why I suggest to specialty retailers, like newsagents, that they do not rely on their accountant for software selection advice.

The accounting providing the advice to which I refer in this post uses accounting practice specific software to serve the specialty needs of their business. So, it is good enough for them to choose software tailored for their needs but not good enough for their clients to select software tailored for their needs.

Yes, I own a POS software company. However, I am not saying here choose Tower Systems. rather, I am saying to any specialty retailer, to jewellers, toy shop owners, butchers, bike shop owners, newsagents, pet store owners, garden centre owners, produce store owners, fishing store owners, homewares business owners and more – choose software that is fit for purpose, software designed for your type of business. Do your own homework. Make an informed decision.

Rarely will an external accountant have the practical experience with your specific type of business to provide good advice specific to your business needs, beyond accounting system interface needs.

By all means, rely on your accountant for accounting software advice like Xero versus MYOB, as that is in their wheelhouse. Given that smart POS software seamlessly links with Xero, MYOB and Quicken, the newsagency software you run or the specialty retail management software other specialty retailers run is best left to the experts in your business.

The easiest software Tower Systems can sell against is the generic POS software sold to a specialty channel retailer because once the retailer sees facilities that serve their needs the decision is easier. For newsagents, that is connections that serve in managing magazines, newspapers, meeting cards, stationery and more.

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Newsagency management

Terrific Mother’s Day campaign

The Hilton Hotel is Sydney has this wall for messages people can leave about / for their mums. It is part of  an awareness and fundraising campaign for the Mother’s Day Classic, an event in support of Breast cancer research. This display is setup in the foyer of the hotel.

What I like about is that it is complete. There is the large wall onto which people fix their messages. There is the poster explaining it. And, there are the materials for participation. They make it ease to engage.

This complete approach is worth remembering when running similar shopper engagement opportunities in our businesses – making it easy for shoppers to engage and thereby leveraging the benefit opportunity for the business.

Creating a wall of remembrance and thanks for mums has been on my list of Mother’s Day marketing tips for newsagents for years. How they have executed it at the Hilton is inspiring.

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marketing

Federal election comment: politicians should be required to spend a week working in a local small business

I first wrote here in 2013 that State and federal politicians should be required to undertake a week of genuine paid work experience in a small business every year. I believe it today more than ever.

Right now in Australia, during this 2019 election campaign where small business barely rates a mention,  this idea ought to be put to every politician from all parties. While they are happy to visit small businesses, have their photo taken, shake some hands and move on to the next photo op. Each visit is stage managed to show them engaged with small business. Yet, they are not engaged.

Politicians who really want to engage with small business will seriously consider this proposal. Sadly, that means none will, from any side will.

Here is my proposal from 2013:

Despite small businesses employing more Australians than any other business block we receive less attention from our politicians. This is in part our own fault driven by disconnected representation and a lack of unity on issues.

One way to redress the disconnect between small business and politicians would be to require every politician, federal and state, to spend a week a year working in a  small business in their electorate – paid real work.

The business should be chosen by random ballot – to remove the opportunity for mates looking after mates.

Besides the practical work experience, the politicians would gain a better understanding of the life and challenges of everyday Australians.

I am confident that after a couple of years we would see this small business work experience program drive a more practical narrative from politicians of all sides- and not just a small business focused narrative but one also more connected with real life.

We can’t compete with the lobbyists who are paid a fortune to guide our politicians to outcomes they want. Hence my call for a legislated week of small business work every year for every politician.

Imagine what discussions about paid parental leave, GST changes, assistance for the car industry or workplace relations changes would be like in the cabinet room if everyone at the table had done a week of real work in a small business beforehand. They would have reference points relevant not only to our small businesses but also to our employee colleagues, their constituents.

Thinking about this further today, I am confident enforcing a week a year working in a small business in their electorate chosen at random would result in better government not only for small business owners but for all these small businesses serve for it would add to the experiences of the politicians and change their conversations.

For the record: This post has been written and authorised by Mark Fletcher, Richmond, Victoria.

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Newsagency management