Crabtree & Evelyn wrote to retailers a few days ago announcing the imminent closure of their Australian wholesale business. It came as a surprise to plenty of customers, including newsagents, gift shops and independent pharmacies. Crabtree & Evelyn is a solid brand, well recognised and appealing to a valuable demographic.
This move is one of many recently by suppliers, retreating or trimming operations in light of challenges in retail and allied areas.
I think 2019 will see more suppliers dealing from a head office, with less investment in field representation – especially in dealing with small business accounts.
As I noted here a few months ago, representation is expensive, especially compared to being able to deal with a national account that covers hundreds of locations. Here is what I wrote about the cost of reps min the road.
A rep on the road has a cost to the business of around $100,000 made up of salary, maintained vehicle, on-costs such as work cover, insurance and related as well as any incentive for performance.
A rep is on the road, on average, forty weeks of the year allowing for annual leave, other leave, training, meetings and times when retailers don’t want to see any reps. While the 40 is a generous number, let’s go with it.
Forty weeks is 200 working days, or 1,400 working hours after allowing for breaks.
A rep needs to earn at least $71.42 in gross profit per work hour to cover their costs to the business let alone other business costs.
However, reps and suppliers tell me that rep travel time accounts for around 30% of work hours. This takes the work hours in a year to 980. At 980 work hours a year, a rep needs to earn $102.05 in GP to cover just their cost to the business.
The reality is, given business overheads, the cost of a warehouse, marketing and other costs, a rep would need to earn between three and five times this in GP to cover the business costs.
While not ubiquitous in the newsagency channel, the Crabtree & Evelyn is well represented.
Apple the ACCC and the ATO are seeking to alert retailers and shoppers about a scam involving gift cards and iTunes cards. This, from the Apple statement:
A string of scams are taking place asking people to make payments over the phone for things such as taxes, hospital bills, bail money, debt collection, and utility bills. The scams are committed using many methods, including gift cards. As the fraudsters are sometimes requesting codes from App Store & iTunes Gift Cards or Apple Store Gift Cards, we want to make sure our customers are aware of these scams.
Regardless of the reason for payment, the scam follows a certain formula: The victim receives a call instilling panic and urgency to make a payment by purchasing App Store & iTunes Gift Cards or Apple Store Gift Cards from the nearest retailer (convenience store, electronics retailer, etc.). After the cards have been purchased, the victim is asked to pay by sharing the code(s) on the back of the card with the caller over the phone.
The ACCC is warning people to be on the lookout for scammers who are trying to con their victims into paying for scams with Apple iTunes gift cards.
During 2017 to date, reports to the ACCC’s Scamwatch show 1236 people lost nearly $540,000 to scammers using gift cards as payments.
This is a growing trend: in the 2015-16 financial year losses were about $480,000.
“Scammers are increasingly getting their victims to pay with iTunes gift cards as they can quickly on-sell them and pocket the money,” ACCC Deputy Chair Delia Rickard said.
The Australian Taxation Office (ATO) is reminding Australians to stop and think before giving their personal details or hard-earned money to scammers this tax time.
Assistant Commissioner Kath Anderson said 48,084 scams were reported to the ATO between July and October last year.
“We have already seen a five-fold increase in scams from January to May this year and typically expect further increases during the tax time period,” Ms Anderson said.
As retailers, our roles are to ensure we are aware and to use our shopper communication platforms tom amplify warnings about scams, especially when they could connect with what we sell, such as gift cards.
Posting about this on your business Facebook page could be appreciated this time of the year.
Gordon and Gotch announced to newsagents Friday that they plan to change their name to Ovato. While the announcement seems innocuous enough, the final statement in the letter has caused several retailers to express concerns.
During 2019 the Gordon and Gotch name will be transitioned to a division name of Ovato and we will be sending out further communication in due course as well as any resulting changes to our trading relationship.
My take is that PMP plans further, and most likely considerable, evolution of their business and that the name change is a public facing representation of that change.
The company’s share price, sitting at less than half it was a year ago, is the driver for change, as you would expect. This level of drop in market value is serious for investors and serious for the board that sets the direction of the business.
Check out this graph of the PMP share price from the ASX website:
Do I think what we know as the Gotch business is set for change? Yes, I think it is set for change. It’s margins are low and it is dealing in a product category that remains stuck in deep decline. Change is necessary and by change, I am talking about 90 or 180 degrees. Like the change we need too drive in our businesses.
At Australian Printer, there is a useful report on the name change:
PMP will soon be rebranded as Ovato, as part of a shake up that will see it also install an 80pp manroland Lithoman press in the new year.
The company had taken heavy hits to its share price when its expected EBITDA was revised twice throughout the financial year, coinciding with the early exit of long-time CEO Peter George.
During the company’s AGM, its chairman pointed to the three-month delayed ACCC approval leading to a shorter time-frame to integrate with IPMG, meaning planned efficiencies were not achieved.
Kevin Slaven, CEO, PMP, says, “As a business we have drawn a line in the sand.
“Our rebranding [to Ovato] is not a simple change of name for the sake of changing a name. It is based on the rationale that the value of bringing our businesses together is significant, that we need to signal a significant evolution of the business, and to better present the impact we already have, and are building, in data and technology.
“We have had some significant customer wins during the year and the renewal of many existing major customer contracts. We have won or re-signed some large customers with a bundled offering of print and distribution. We have a unique selling proposition as the only company in Australia and New Zealand with a national footprint providing co-located print and distribution delivering freight efficiencies, and speed to market for customers.”
Significant evolution. Gotch has changed since taking over the Network Services distribution business. However, I suspect the financial benefits have not hit what the board expected. If I am right. what we know at the Gotch business will need further change.
The assessments they will be doing, on the numbers, are what we should be doing. Products we sell have to pay their way. This is why I say to every magazine publisher with whom I speak, the 25% gross profit on magazines is unacceptable. maintain this and you will see fewer newsagents stocking magazines. We are no longer agents.
FYI here is the full Gotch announcement:
Dear Newsagent,
As you know Gordon and Gotch is a subsidiary company of PMP Limited. At the recent AGM it was voted positively by shareholders that PMP and all of its subsidiary companies would be rebranding as Ovato from February 7th 2019.
In terms of the work we already do for you, very little will be different from February. There will be a new brand name and logo on your invoices and our communications, access to websites will not change.
The company name, business number (ABN/ACN) and bank accounts will also remain the same as current.
During 2019 the Gordon and Gotch name will be transitioned to a division name of Ovato and we will be sending out further communication in due course as well as any resulting changes to our trading relationship.
newsXpress launched this awesome homewares / outdoors / adult gift product months ago and it has been a hit for Christmas. It is an Aussie product for the Aussie marketplace. Here’s a video I made for newsxpress members to use to promote it. Be sure to watch it with the sound on:
A common question I am asked privately from people who find me through this blog is what should I ask for when looking at buying a newsagency?
The question itself, when asked, indicates how green a prospective purchaser is when it comes to purchasing a business.
Here is an updated list of data I suggest newsagency business purchasers access from the vendor or their representative. I first published this two years ago. I’ve just updated it:
P&L from the accountant for the last two years. i.e. not a spreadsheet created for the purpose.
Tax returns for the same two years. While note always appropriate given business structures, they can provide a cross check with the accountant P&L.
A good explanation of any add-backs reflected in the P&L.
Sales data reports, for the last two years, from the POS software in use – to verify the income claim.
Sales data reports from the lottery terminal to verify the income claim.
BAS forms to confirm data in the P&L.
A list of all inventory to include purchase price and date last sold for each item.
Copies of invoices from which you can randomly select to verify the above point.
A copy of the shop lease.
A copy of any leases the vendor expects you to take on board.
A detailed list of all forward orders placed on behalf of the business.
A list of all employees: name, hourly rate, nature of employment, start date, accrued leave and accrued long service leave.
A testament from the vendor as to the claimed accuracy of sales data.
This is good basic information that will enable any purchaser to undertake reasonable assessment of a business.
A good business will shine through the numbers just as a business with upside achievable by new owners will shine through.
My advice to newsagents looking to sell who are concerned about this list is: think about it now and focus on your business so the data I have listed looks good.
Every day you make decisions in your business that impact many of the data points listed.
This is why I say every day is your pay day. Run a smart, lean and profit focused business and you will have a good pay day today and a good one when you come to sell.
The most appealing businesses are those that are easier to run and are making money.
The time to focus on that is now.
Sure a purchaser can turn a business around. They should get the rewards if they are expected to do that for your business.
The price you can sell your business for will be based on what it is making now.
Getting the data ready for the sale of the business could, of itself, help you improve how you run your business.
I heard of a newsagent being ripped off recently, paying more than $12,000 for a mediocre security system for their business that is not ideal for the business.
Here is my advice on buying security cameras:
Much has changed in security camera technology over recent years. Whereas in the past best-practice advice was to install a retail specific security system connected to your POS software, that is no longer recommended.
Many domestic camera solutions are better and more cost effective for small business retailers than those pitched specifically at retail businesses.
DVR (the device that records the video) technology is changing rapidly, making it challenging for integrated systems to keep up.
The connection to your POS software is not important, especially when you consider the cost of systems that offer such a connection.
Myadvice is that you start by considering what you want. Usually, the most important need is a record of what went on in-store – so you can see who did what and when and from anywhere including outside the business.
While security will be a key need, cameras will also enable you to track shopper traffic and this this you can make product placement decisions that drive better business outcomes.
Here is what I suggest you cover with cameras:
Shop entrance. See the faces of those entering.
Shop exit. See the faces of those leaving.
The counter. See who presents at the counter and what the purchase. Plus see staff behaviour at the counter.
Shop floor. Do not go overboard. Better quality cameras will cover more areas and allow zooming.
Rear entrance, if you have one.
Back room, if you have one.
As for cameras, don’t go cheap. Resolution o is key. Buy units that you can control remotely. Wireless is best – if you have good stable in-store Wi-Fi. Wi-Fi means you can save on wiring and easily move the cameras as the needs of the business change – but you still need power. Consider how you want night video to be handled.
When it comes to the DVR, it may be more cost effective to get two. It all depends on the prices available at the time. Two smaller units for 6 to 8 cameras may be cheaper than a bigger unit serving 8 cameras.
Install a monitor in-store to show you are recording.
If you are not sure what you want to do, start with two to four cameras in prime locations. This could cost under $1,000.
We received this at the office a couple of days ago. It’s a letter from a customer of newsXpress Southland. I am grateful they sent it and grateful for the team member involved.
Alex Turnbull tweeted Monday about circulation numbers for News Corp. titles
Compassion is important and today I’d like to meditate on what it must be like to be @newscorp which is seeing most of its circulation implode faster than an emerging market this year. Circulation numbers below form 10k filings #auspolpic.twitter.com/s9IGBvC0e5
Here are two tables included in the thread. Turnbull says they are from the News Corp. 10K filing. They show challenging circulation numbers for the publisher. The first table shows the year on year movement in circulation for cap city dailies. the declines we are seeing here are like what we have seen over the last two years for most Fairfax titles.
This second table shows circulation for cap city dailies.
In Some respects, there is nothing new here. Through the quarterly benchmark results we have seen declines in over the counter purchase. However, for the Herald Sun and the Daily Telegraph, my numbers re not as bad as the numbers here.
Newsagents cannot rely in print newspapers whatsoever in their business planning and modelling. We can transition through this and have viable, growing businesses. Achieving that requires action and a focus outside what has been traditional for Australian newsagency businesses.
We place this poster pitching the 65 cent Christmas card postage price tactically in the shop to remind shoppers that cards cost less to post than usual letters.
Small reminders like this help this time of year when we have the infrequent card shopper in-store.
Better still, selling the stamps and providing a place for people to write on the cards and offering to post them helps drive an even better outcome.
Christmas card sales are strong this year. It is too early to do the year on year comparison but I am feeling good. Boxed cards have been especially strong.
This same pitch also works on social media.
We all need to do our bit to nurture card buying. Merely allocating the space in-store for card companies to stock and manage is not enough any more.
What a messy weekend for for newsagents because of the News Corp. promoted Coles Little Shop Mini campaign. The company aggressively promoted the free offer one the front of the paper, the paper sold in newsagencies.
FREE TODAY. WITH THE PAPER. The pitch on the front page of the Sunday Herald Sun is clear. However, it was not free with the paper, not in newsagencies. No, we had to tell shoppers they needed to go to Coles to buy then paper to get the free Little Shop Mini. How ridiculous. News Corp. sold newsagents out.
This is another example of the giant News Corp. siding with its mate the giant Coles Corporation, to the detriment of small business newsagents.
Customers at newsagency counters were angry yesterday and Saturday. Plenty wanted to argue about it from what I am told. This disrupted the shop and impacted negatively on the business.
Yet, newsagents we’re innocent. Telling people to the fine print inside the newspaper did not help.
Here is the detail of the offer inside the Sunday Herald Sun yesterday. The fine print is really fine and that made people angrier. Just give me my F&*$ing little shop thing you moron one customer said to the newsagency sales assistant. No one should have to put up with this anger. And, we would not have to put up with it if News Corp. did a better job executing the campaign. They did not. They failed us. They failed small business. All to benefit a big business mate in Coles.
Take a look at the fine print from yesterday’s Sunday Herald Sun…
Burying this as they did, News Corp. setup trouble for newsagents and other non Coles retailers.
What a mess.
Those responsible at News Corp. owe newsagents an apology for the harm done, the hurt caused and the disrespect shown.
Now, a note to newsagency suppliers who also supply Coles – what has happened here plays into how newsagents feel about your engagement with the supermarket giant and other giants. For here we have a long-term newsagency supplier, one we launched distribution for in this country acting in ways that hurt our businesses and our brand in our local communities. How we feel about this plays into how we feel about your involvement with Coles and similar.
One newsagent told me yesterday that this campaign will bring forward their decision to cut newspapers from their shop as they are sick of the lack of control over the impact this mediocre margin product has on their business.
The newspaper customer says they want the Little Shop Christmas Mini. When told they have to go to Coles they become frustrated. When told they have to actually buy the paper from there to be able to get it them ask: so why is advertised on the front of the paper here?
I agree.
Why is News Copy promoting a Coles exclusive offer on the front page of newspapers sold in newsagencies.
This front page cam pain by News Corp. is disruptive, disrespectful and demonstrating support for the supermarket giant over independent small business retailers.
Four new ranges of products have been launched by US company Ty in Australia over the last month. The launches have driven in-store and online shopper interest to new levels. While the launch range was exclusive to newsXpress, the other three were not.
I decided we would produce in-house shot videos as a differentiator. This morning, we published the seventh video that we have made. There are more in the can ready for release.
The videos are made solely for social media. They educate about the product and pitch the newsXpress offer in a fresh and different light to what you see from other retailers. They pitch in a may that is not traditional for newsagency businesses.
Differentiation is key in the collectible space of what are essentially mass produced items.
Here is one of the videos we released earlier this week, which has had thousands of views.
This story about a restaurant in Boston that uses robotic tech. to prepare and cook shows how some roles w considered to be human-only forever are being replaced by technology. This is interesting in retail as labour cost is something any retailer wants to reduce.
We got an online sale Saturday night for $153.89 to someone who lives a ten minutes from the shop. They knew they were purchasing local but did not take much notice of where we were since they don’t often come to the big shopping centre.
Now that they know what we have and are so close, they have said they will come in because previously they had only bought this specific category online.
We found them through the website and the service provided helped connect them with the physical store.
Every day or so this story repeats and online sales grow and as a web presence plays a more important role in being found by shoppers looking for products we sell. Doing this through interest categories and / or brands is valuable as it puts us in front of people who would not look in a newsagency for what we sell.
We knew websites are used to guide in-store purchases from research by Telstra and others. Experiencing this first have for a product category that ends itself to repeat business is most encouraging.
Having a good website is key. It being easily found is also key. These things deliver online revenue but, better still, can drive in-store purchase.
Oh, and the product in this transaction is not a usual newsagency line … and, it has a >50% gross profit.
Reach, the UK’s largest regional newspaper publisher says the home delivery distribution model for its free newspapers is “no longer sustainable”. It is closing the Solihull News this month, a title with a circulation of 44,786, according to December 2017 audit figures.
Reach (formerly Trinity Mirror) attributed the struggle to a “continued decline in local print advertising, particularly in the key property platform”.
In Australia we have been insulted from newspaper closures with plenty of our titles delivering lower circulation numbers that US and UK titles that have closed. I suspect this is in part due to the propping up of titles by newsagents through the provision of low cost distribution.
This is an interesting thread on Twitter about the new paywall for The Brisbane Times. Newsagents get a mention. Be sure to read the full thread and comments.
So, Brisbane Times has taken the leap to the world of a paywalled site, just as Nine’s Kylie Blucher will likely become the most powerful name in Queensland’s media, when the Fairfax name disappears on December 10.
At the same time as passing on a modest fee increase for distribution and retail newsagents, Fairfax has signalled a change to its remuneration process. This, in a letter sent to newsagents. I bolded the part of the letter that deals with the change.
Fairfax Media Newsagent Fee Review – NSW & ACT (excluding Far North Coast NSW)
Fairfax Media has now completed a detailed review of the retail sales fees and delivery service fees currently paid to newsagents for The Sydney Morning Herald, The Sun-Herald and The Age newspapers.
Fairfax considers that the current annual fee review process needs to change to reflect the changing newspaper sales and distribution landscape. It is our intention to move to a fee model and review process that is performance based. This model will provide for fee increases based on specific performance metrics, and will align with our newsagency contracts which contain provisions for fee penalties for non-compliance, or failure to meet existing performance criteria. Work on this is already underway.
In the interim, Fairfax has decided to pass on an increase to its sales and service fees effective from Monday 3 December 2018.
The following fees will increase and will be reflected on your weekly newsagent statements issued after that date –
Details of each of the fee increases are shown in the Tables on the following pages of this notice. Further information can be found in the Fairfax Fee Schedule which will be available on Connect shortly.
I think this letter signals plans for a shake out of newspaper distribution and retail businesses, given the focus on compliance and the goal of aligning with provisions in the Fairfax contract.
What Fairfax management does not get is that what they pay is a pittance for a retail presence. Year on year, rent increases by 5%, wages by between 3% and 5% and overheads by 5%. Fairfax has not been keeping up and their forecast new approach will make matters worse I suspect. The result will be fewer retail newsagents selling their products.
There are reports that The Daily Telegraph next Saturday will weight just under 1kg. The thin papers of recent years have seen distribution newsagents and their delivery people adjust processes, equipment and the throw.
The forecast considerable weight reminds me of the work done more than ten years ago by the then ANF into ergonomic matters relating to newspaper delivery. The Nery Report, as it was called, was the focus of distribution newsagents for many months.
According to the Nery Report, current work practices are unsafe. The report documents unsafe work practices which stem, in part, from having to handle heavy newspapers. Any newspaper above .6 kilogram in weight is considered to be heavy. Consider this quote from the Executive Summary the report:
The Results section of this report (page 10) has outlined significant ergonomic risk factors associated with the newspaper delivery tasks. These risk factors are particularly related to dimensions of the weekend papers (Advertiser and Sunday Mail) when combined with the repetition, volume and manual handling aspects of the delivery process. In particular, there are significant risks associated with the delivery/throwing of the larger dimensioned and heavier Saturday Advertiser and Sunday Mail newspapers.
David Nery, the respected author of the Nery report was clear:
The current situation, in my view, is unsafe and modifications to the weight, dimensions and volume of papers distributed per person need to be reduced to provide a safe system of work.
While I have written plenty of times here about heavy newspapers and the Nery Report, it feels odd to be writing about it in 2018 when some days papers are mere pamphlets.
If the unusually large paper does proceed this weekend, newsagents should take appropriate precautions and engage with staff to ensure reasonable occupational health and safety.
We changed the small square Facebook icon photo last week and a few minutes later we had a sale of the item featured in the photo. The photo of the Harry Potter school bag was a hit. We used the photo because we liked it, not actually expecting to make an immediate sale. The experience was a timely rem under two regularly change this photo and to do it regularly.
We have a few Donald Trump themes cards in-store and they are popular. The greater the fun they make of him the more popular they are. The squishy we had of Trump was popular too. Just as Trump mocks others, plenty of people enjoy mocking him … and we are happy to oblige with product.
Sales of celebrity / gossip titles continue to fall dramatically. They are not the traffic drivers we relied on in our newsagency businesses ten and more years ago. Back then, Monday’s were wonderful with the steady stream of shoppers coming in for their fix. Today, while day of issue sales are higher than other days, they are not even remotely close to what they were.
The consumer of these titles is well satisfied with immediate access through TMZ, social media, purpose specific apps and channels such as YouTube and Twitter, like this one, PeopleTV…
Crabtree & Evelyn wrote to retailers a few days ago announcing the imminent closure of their Australian wholesale business. It came as a surprise to plenty of customers, including newsagents, gift shops and independent pharmacies. Crabtree & Evelyn is a solid brand, well recognised and appealing to a valuable demographic.
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