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

Month: October 2009

New newspaper distribution contracts from News Limited?

Distribution newsagents are talking about the imminent new contracts from News Limited.  There is plenty of speculation in the marketplace including rumours that News is not negotiating the contracts centrally through the ANF and that the contracts will be for one year only.

I don’t have any inside information about the new contracts.

What I do know is that while some newsagents make good money from home delivery, many do not.  The inability to charge a price based on the costs of delivering the service stops home delivery being a business.

The drop in real terms of the fee permitted by the newspaper publishers over the last fifteen years is what has caused hundreds of newsagents to walk away from their newspaper home delivery businesses.

While I am on the record saying that newsagents should not enter into new contracts, I appreciate that many will because they want security and because a contract is crucial to their business funding.

At minimum, a contract must provide the newsagent with fair levers which they can use to act as business people in the twenty-first century as opposed to indentured servants from yesteryear.

The future of the current newspaper home delivery model will be decided over the next year.  Newsagents who want to remain in the home delivery business must fight for their rights.

While I sold off the home delivery side of my newsagency three years ago, My software company, Tower Systems, serves in excess of 1,500 newsagents, many of whom have home delivery businesses.  I care about the health of the newsagency and am committed to helping where I can to achieve a more equitable outcome from newspaper home delivery.

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Newsagency opportunities

Happy Halloween!

fhn_halloween_entrance1.JPGThe big day is finally here.  October 31 – Halloween.  This has been a terrific Halloween season for us, the best ever.  Excellent sales of Halloween related items at fantastic margin – 50% and above. Sales across categories: party items, candy, magazines and cards.  We have demonstrated our competitiveness on range and price and this has won new customers for us thanks to great word of mouth.  Halloween has also given us a reason to create in-store theatre and this benefits the whole of the business.

Halloween is a natural fit for newsagents.  Done well, sales can beat some other traditional seasons. We are aleady discussing Halloween 2010.

Ann Davies, US correspondent for The Age, has written an excellent piece which provides context for the Halloween celebreation in the US from an Australian’s perspective.

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Gifts

Moving magazines through the week

fhn_week_unfolds.JPGLike most newsagents, we start the week with a full waterfall for all major weeklies.  As the week unfolds, we scale back and use the empty pockets to promote titles from other categories.  We carefully select and place titles.  Click on the image for a larger version of how our magazine space looked on Thursday this week.  See how we block titles and use logic in adjacencies – Real Living and Home Beautiful together for example.  We always double-pocket these co-located titles – to give them a chance of being noticed in this most shopped magazine real-estate.  We know our approach works because we track sales from these pockets.

Newsagents I talk with usually do not have a strategy for filling space as the week unfolds.  I have found that a consistent process for this works well, others in the business can follow the process.  Putting thought into the titles you co-locate is more likely to drive the sales outcome you want than letting anyone put any titles into the spare pockets.

Magazines are vitally important to us because the range in an average newsagency is our only product-based point of difference.  If we embrace this by working the category  we make our business a destination. While print has challenges, these are more long term.  Aggressively managing magazines today provides a valuable point of differeence for newsagents over other magazine retailers.

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magazines

Apple iTablet rumours reach Australia

The Sydney Morning Herald is reporting that Apple has sent specifications for its new device (iTablet?) to media outlets here.

Apple is the master of content-maker engagement.  Look at iTunes.  If they get supplier engagement and if the new device is as game-changing as the iPod then newsagents will have a new distribution channel competitor sooner than expected.

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Media disruption

Starting a Western Union trend

We stopped offering the Western Union money transfer service in August.  While I was concerned that we would have to recommend the government owned Post Office opposite, the benefits of ceasing the service were too great.

It seems that Australia Post has reached the same conclusion as us, they are no longer offering the Western Union service.  I am not sure if this applies in other Government owned Post Offices.

For us the decision was about customer service.  There was a conflict between the Western Union service and customer flow for the rest of the business.  as we had evolved, Western Union became incompatible.

I figured Australia Post would keep Western Union because their customers are used to long lines and slow transactions.

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Australia Post

How is your customer service?

6a00e0097e4e6888330120a67c8d80970c-800wi.jpgClick on the image to read the sign shoppers see as they enter a Golden Casket agency (maybe a newsagency) somewhere in Queensland.  The photo is from the ABC Brisbane website – yes, the world gets to see how one retailer deals with customer queries.

While we are challenged daily with questions for which we consider the answers are obvious, cheerful customer service should be central to every contact with a newsagency.

The gap between the customer experience delivered in newsagencies is greater than the gap between us on most other matters.

Signs like this empower any marketing or franchise group in the newsagency channel which enforces customer service standards for businesses trading under their brand.  It is why some of these groups will stop representing themselves as newsagencies.

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Customer Service

Augmented reality and the future of magazines

There is considerable buzz around the December issue of Esquire magazine and their use of “augmented reality”.  If you hold some pages of the magazine on front of a webcam, additional editorial content will come to life.  The is the seocnd time Esquire has experimented with interaction.  Portfolio tells us:

The future of magazines begins November 16. That is, if the future of magazines is “augmented reality” in the form of fancy ads and gratuitous computer animation.

While a nice way to drive interaction with the magazine, this, of itself, is not the future of magazines.  The future of print magazines is about content.  The future of magazine brands is about a range of initiatives including what they are doing with Esquire.

If When we see these initiatives here in Australia, newsagents will need to consider giving our customers the ability to browse these augmented reality features.

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magazines

In the Night Garden magazine finds its niche

fhn_night.JPGIn the Night Garden is a welcome new launch from ACP Magazines this year.  While not high in volume, it appears to be gaining traction.  we are having more customers ask for the title.  This tells me that the TV show and other coverage for the brand is paying off.  Given the customer requests, we now place this title prominently in our children’s section.  We are going to request a doubling of our supply on the back of customer interest and recent sales.

Children’s magazines are somewhat forgotten in the magazine department.  Rightfully so given the approach of some titles.  The magazines are junk as are the gifts with every issue.  Quality titles do well but there are not enough of these around which to create a strong presence.  I hope that In the Night Garden continues to focus on quality and attract new readers.

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magazines

Selling a $16.95 magazine in a newsagency

fhn_menshealth_dvd.JPGI was skeptical when I saw the Men’s Health DVD / Magazine special on Monday morning this week.  I thought the $16.95 price was too high for a newsagency and the packaging challenging for it to work in our fixturing.  While I know that Men’s Health works for us, this product is different to the regular magazine. That said, we have it on display next to Men’s Health – where it should be.

We received four copies and sold our first on Wednesday, three days in.  My skepticism is fading.

Given the special interest customers we attract, we should realise that price is not so much an issue.  Content is valuable to the right shopper.

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magazines

Kindle and e-reader skeptics change gear

A month or so ago there were plenty of people saying that e-readers were a flash in the pan and that Australians would not have much interest in the Amazon Kindle.  It is interesting to see some reverse their opinion in the face of the considerable traffic being generated around the Kindle launch here.  As I have blogged for a couple of years, the Kindle and similar devices should not be underestimated.  There is a card for this.

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Media disruption

Coverage on publisher engagement

Mediabiznet is covering the engagement between the publisher of Australian Traveller and newsagents at this blog.

Every day I hear of or see further examples of the reach of this blog and the conversations here.  It is gratifying to see its usefulness.

On Australian Traveller, smart newsagents are promoting this title to leverage the bonus commission from the current issue and to strengthen sales given the on-going additional commission being paid to newsagents – 30% as opposed to the usual 25%.  The more newsagents support this the more publishers will engage with us.

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magazines

Selling more copies of Donna Hay magazine

donna_hay_magazine.JPGOur sales for the current issue of Donna Hay magazine are more than double what we have historically achieved by this point in the on-sale period.

We will sell out with time to spare.  Overall sales will be up on recent issues.

I put our success of this issue of Donna Hay down to an excellent free gift, the tea towel is high quality, and our own aggressive merchandising approach.

We have Donna Hay magazine with our food titles and with the column of food magazines in the middle of our women’s weeklies titles – surrounded by weeklies on either side.

While we had it at the counter for the first three days of the on-sale, this did not work for us.  Our success has come from the placement with the weeklies.  I watched a customer yesterday early in the morning.  The picked up Take 5 and That’s Life and browsed but did not purchase Donna Hay.  While we did not get the Donna Hay sale this time, they browsed it when the would most likely have missed it had it not been in this second location.

Our success with Donna Hay and food titles in general is due to this column we made space for in with our weeklies.  It costs nothing to try.

Experimenting like this is important for newsagents.  it separates us from the cookie-cutter approach of supermarkets, convenience stores and petrol outlets.  It is only by experimentation in our newsagencies that we find what works for us to drive significant sales growth.  This is usually achieved by placement outside of what publishers request for their title.

Smart publishers will tap into this opportunity and work more close with newsagents.

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magazines

Explaining the end of the Trading Post

picture-047.jpgA smart newsagent in Queensland is explaining the death of the Trading Post to customers with a sign and a copy of a notice from Telstra.

This is a good way to head off some of the questions which are bound to arise when Trading Post customers come in for the next issue and can’t find it.

Meanwhile, the Melbourne Trader launched yesterday, as part of the Melbourne Observer newspaper.  They have picked up some people from the Trading Post in Melbourne to help run the new venture.

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Newsagency opportunities

Selling Halloween to chocolate lovers

halloween_chocs.JPGWe are having success with these small chocolate packs at the counter for Halloween.  When we first started in Halloween years ago it was all about the kids.  Now it is a season which crosses generations and tastes – including people who will jump at any excuse to purchase chocolate.  I know newsagents who will sell more Halloween related gifts and toys than they do plush and chocolate at Easter or Valentine’s Day.  The numbers I am seeing suggest that Halloween 2009 is a bumper season.

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confectionary

Record lottery jackpot

The Monday / Wednesday lottery game jackpotted last night to $8 million this coming Monday – a record for this game.  While not the most popular lottery through the week, the large jackpot will drive a good boost to sales, especially right after the $20 million superdraw on Saturday.  We find the day after a superdraw an excellent opportunity to selling people who have won small prizes into new games.

The traffic boost from the superdraw and a (small) record lottery jackpot is most welcome and we will make the most of it.

Our marketing focus will be around this being a record.

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Lotteries

Kidnappers and newspaper sales.

A ton of ink has been spent over the last couple of weeks in Australia and overseas talking up newspapers.   It makes business sense that publishers publish good stories about their medium.  The AWL has a sobering perspective for the US marketplace – be sure to check out their graph.

While I am concerned for newsagents about the future on newspaper generated traffic, I do see this as more of a medium term than a short term problem for us.  So, there is enough time for a laugh in the meantime.  This is where kidnappers come into consideration – check out The Onion for their hilarious take on the current commentary about newspaper sales performance.

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Newspapers

Bookstore set to dominate e-reader sales

US bookstore chain Barnes & Noble is positioning itself to dominate e-reader sales with the announcement overnight of a deal to sell the new Que proReader device from Plastic Logic.  this will sit on the shelf next to their own device, the nook, announced last this week.

Newsagents ought to be watching these moves carefully.  The book distribution channel is changing.  Some say this is a new channel in addition to print.  Others say print is dead.  The future is probably somewhere in the middle.

These moves will impact, in one way or another, on newspapers and magazines.

We are in the middle of the most disruptive era for print ever.

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Media disruption

The all natural Sarah Murdoch AWW cover

fhn_sww_oct2809.JPGWe are promoting the latest issue of Australian Women’s Weekly with Sarah Murdoch on the cover sans make-up.  The display is at the entrance to our busiest magazine aisle.

The cover looks is brilliant – the best for Australian Women’s Weekly this year in my view.  The visual impact on the shelf is stunning and the reader connection very strong thanks to the natural look.

I am surprised that AWW a feature magazine for the ACP Connections marketing program this week – meaning we did not receive any additional collateral with which to promote the title.

The first on-sale week is vitally important to the sales of AWW.  Good collateral is essential to successful in-store promotion in enwsagencies.  lack of collateral means no special attention in most newsagencies.

It makes no sense to me that AWW is not the feature title in every newsagency in Australia this week.

Lack of collateral notwithstanding, we are promoting the Sarah Murdoch issue of AWW  as shown in the photo and at two other locations in-store.  I want us to get early sales as opposed to the supermarkets and other major retailers in my centre with this title.

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magazines

Promoting Girlfriend Twilight issue

fhn_girlfriend_oct2809.JPGWe are promoting the new issue of Girlfriend magazine, out today, at the front of our newsagency.  The Twilight features in the magazine make this issue appealing to a broader than usual demographic – hence promotion out the front of the shop rather than our usual location.

There appears to be no slowing of the appeal of Twilight based on interest in the calendar and Twilight covers on other magazines.

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magazines

US magazine subscriptions worse than Australia

Newsagents often complain about subcription offers in magazines, saying they undermine retail sales. I see subscriptions as a necessary part of the magazine supply model – as long the offer is not agressively pitched against newsagents.

Over the weekend I compared subscription offers for several Australian titles with US titles.  While our average subscriber discount is between 25% and 28%, in the US publications I looked at it ranges between 35% and 45%.

The one local exception of which I am aware is The Week – their subs discount is 60% off cover price.  I’d be concerned if larger Australian publishers discounted at this level.

While I am on subscriptions – I’d like publishers to offer a hybrid subscription which newsagents could sell – based on an upfront commitmenet for an in-store collection.  Using our putaway services we get to benefit from locked-in traffic and sell an overall higher priced item.

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magazines

Photography and camera magazines back in favour

fhn_photography_mags.JPGPhotography and camera magazines are performing better for us this year than I expected they would.  Our small range ticks over quite well.  It is also a very popular browser destination.

While there is some junk in the mix – not in the photo because I culled before I took this – overall performance is strong.  Our experience is that photography is one subject area where shoppers are more likely to purchase two titles at a time.

As the photo shows, we use mastheads to draw attention to the segment.  We also usually place digital photography titles next to digital camera titles.  This is a key factor in driving a better basket.

Memo to distributors reading this: don’t take this blog post as an invitation to supply more photography and camera titles.

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magazines

What’s with Michael Jackson calendar discounting?

michael-jackson-2010-calendar.jpgI am shocked at the number of retailers, newsagents included, who are discounting premium calendars already.  We are not discounting in my newsagencies and are on track to excellent sales growth this season.

Take the Michael Jackson calendar – I have this in all six of my stores at full price and it is selling well.  This is in addition to the excellent pre release sales we achieved. Why a newsagent would want to discount this by 25% is beyond me.  There is no sense in giving away margin unnecessarily.

The Michael Jackson is a premium item, the market has not been flooded.  I can’t see any reason for the 25% off other than poor management.

There are plenty of newsagents making good money from calendars selling at full price.  These operators usually have an excellent value proposition around service and range. They rely on business-based points of difference as opposed to price.

Discounting calendars now is lazy.  While shoppers may like the saving, it does little for the long term health of the business.

Don’t get me wrong, discounting has a place in retail, especially for calendars. For me, this is after the New Year.  It takes guts to hold this line. As I have seen in my stores over recent years, the reward is worth it.

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Calendars

When you can’t hand back your newspaper delivery run

I am concerned about reports of newsagent requests to hand back newspaper home delivery runs being blocked by a publisher.  How can a publisher force a newsagent to continue offering a loss making service?

Publishers control most business levers in the newspaper home delivery service: cover price, the delivery fee charged by newsagents, additional revenue opportunities with the newspaper home delivery and cash flow. Publishers, on the other hand, make most of their money from advertising revenue.

I am aware of newsagents with runs which lose in excess of $200 a week.  This is not a new problem.  Indeed, publishers have been talking about this with newsagent associations for most of this decade.  To date, there has been little real progress from a newsagent perspective.

I am guessing that publishers block the handing back of some runs because they do not want to carry the loss.  Yes, let’s rely on the contract we have with these families and force them carry the loss.  They did sign the contract after all.

For the health of newspaper home delivery, something must give – especially in regional areas where merging home delivery runs is not practical. One solutions which I put to publishers years ago is to ensure fair compensation for the service offered. Newspaper subscribers have shown that they are prepared to pay a higher price for the newspaper on their doorstep yet publishers refuse to permit newsagents to do this.

Blocking newsagents from charging a fair price for an excellent service is a factor in some good newsagents exiting our channel.

Unless the issue of fair compensation for newspaper home delivery is resolved in the next few months, the world’s best newspaper home delivery model will break up.

Politicians played a role in creating the current situation, maybe they could play a role in helping thousands of families across the country achieve an equitable outcome.

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Newsagency challenges

Grazia and the Spring Racing Carnival

fhn_grazia_oct2609.JPGWe are promoting Grazia magazine with other products connected with the Spring Racing Carnival such as newspapers.  The copy in the photo is placed above The Age on our main newspaper stand.  We don’t have any addditional collateral so our work is all abourr product placement.  This week would have been an ideal opportunity for Grazia to promote pre Melbourne Cup Fashion.

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magazines