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

Surging gift packaging sales in the newsagency

After purchasing the business late last year we replaced the gift packaging supplier, moved the category from the rear of the shop to next to the counter, to be the introduction category to cards, and, we replaced the fixtures with a more modern and easily shopped approach.

Here’s what it looks like.

Sales are up more than 250%. The inventory investment is up 10% and the space investment is the same.

While most of our customers are individuals, we do have some corporate customers. Wednesday last week, one corporate customer came in and bought 15 bags … because they noticed the range when shopping for something else.

The balance in the range is key we are finding. By balance, I mean the offering of bags, roll wrap, sheeted wrap, flat wrap and premium tissue. Enough people do invest in how the gift looks enough for us to offer what we offer.

Being literally next to the counter is good in that we can easily help shoppers see what they may be missing. Previously, this location had a segment of cards that was not doing so well.

The glass shelving enables us to keep the display looking tidy. It also makes the product stoppable.

There is nothing unique here, nothing that can’t be easily copied.

This is a Field of Dreams move. By that, I mean it’s something that will attract shoppers. You know, build it and they will come. The fresh range of gift packaging is attracting net new shoppers thanks to the ease with which it can be seen, word of mouth and our social media posts. It’s one the threads of our new customer strategy, which I wrote about here earlier.

What makes the focus on gift packaging more important is the margin. It’s more than 60%. The turn rate is such that this category is one of our top performers, which makes it cash flow beneficial. These factors all matter.

Too often suppliers neglect to pitch on stock turn. to me, stock turn is as important as margin. Get the two right, and in sync, and you have good times.

We are thrilled with the result of the bags and are grateful to be working with a supplier who has so willingly and engagingly partnered with us on this project.

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Newsagency management

We need better reporting of federal election debate over the minimum wage

You’d think it’s the end of the world as we know it if there is a $1.00 an hour increase to the minimum wage based on the ‘news’ coverage of this debate. Across a range of media outlets business lobbyists, conservative politicians, retailer representatives and some retailers themselves have been saying how awful such an increase would be.

Yesterday, on ABC radio Melbourne and 3AW there were retailers saying products had gone up 200% and 300% and other costs had gone up and a $1.00 an hour wage increase would eat into margin.

Gee, I wish there was fact checking of these claims.

And, I wish there was more comprehensive questioning.

And, if there is a case, it would be good for transparency around the details.

Pretty much every retailer I know has has signed a lease agreeing to an annual 5% increase in rent, sometimes more. That’s right, they contracted this 5% rent increase to be annual.

So, here’s my question? If people make a business, as so many retailers say, why would there be any hesitation on a 5% increase in pay for people … for without them, there may be no business.

Like, why agree to an annual locked-in 5% increase in rent costs but not labour?

A business on a knife edge that goes under for a $38.00 increase in the cost of an employee for 38 hours in a week is a business with a problem anyway.

People on the minimum wage are likely to spend what they earn. That helps the economy. That $1 an hour is beneficial for the economy.

We need smarter journalists who ask more thoughtful questions and who challenge selfishness. I want to hear the retailers asked about paying more rent every year and how they justify this while not wanting to pay their valued employees more every year.

It would be good to sit with a retailer who says they cannot afford the extra $1 an hour and unpack their business numbers from P&L back through inventory data, roster decisions … all decisions that gets the business to the point where $1 an hour is not affordable.

Sure, I want my business costs to fall. And, sure, I want to make more money. The reality is that we are all participants in this one economy. Constant squeezing that the bottom end is bad for those being squeezed, the economy and society. We should care about that.

As for the claims about products costing more. Some do cost more. But they cost more for everyone. There are smart ways to deal with product cost increases. It is lazy to complain. It is appalling to suggest that because of those cost increases you should not pay your employees more.

I appreciate my take will upset some. That’s not my intention. I want an intelligent discussion about wages and business costs, so that all participants understand the facts and, hopefully, through this better understand more sides of the debate on wages.

But, let’s think for a moment, how could small business retailers respond to a $1 an hour increase in labour cost?

The best response is to engage with it on the shop floor. Here are my suggestions:

  • Make sure everyone working in your business understands the numbers: where you make  money and where you do not make money. Yes, this means being open on the business numbers. A couple of decades ago there was a movement led by the awesome Jack Stack, Open Book Management, it helped turn plenty of businesses around. The more those working in the business understand the numbers the more likely they will work with you.
  • Show the connection between what the business makes and what they make or could make through more hours or, even, a bonus(!!).
  • Set goals for the business and people in the business who can make a difference to the business performance.
  • Make decisions based on evidence for its is these decisions that make local retail shops more money than gut decisions.
  • Drive your overall business GP. The higher that is the more you are insulated from increases in your two biggest cost areas: labour and occupancy.
  • Think about each decision through the prism of: does this position me better to deal with rising costs, including rising wages costs.
  • Turn around and look back into your business for it is likely there are things you can do right now to improve your position. Here is the most easy move: look at inventory you have on the shelves that has not sold in 6 months or more. It’s dead stock. Dead cash, unless you sell it for something. Mine your business data and find opportunities like this.

I could go on. If a $1 an hour increase in labour cost bothers you, confront it as a business opportunity rather than a pure negative. It’s a door opening opportunity I think.

It frustrates me that the wages debate is a debate, with sides. All of us in business benefit if more people in the economy, our economy, have more money to spend, especially if they are in the cohort likely to spend money. If we could all talk about this without taking firm sides we’d have a better opportunity of navigating a path forward we are all happy with.

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Ethics

The newspaper distribution mess in Melbourne leaves Melbourne airport without papers til 7:30am …

Update (12:26): we’ve had customers coming in saying there was coverage on this topic on 3AW today, which surprises me given they are owned by Nine Media, one of the companies responsible for the mess.

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Newspaper distribution

Can we sell a $3,750.00 item in a newsagency?

Yes, we can, and we do, and we did within 3 hours of having the item.

Coins attract loyal, valuable, shoppers.

We sell mint coins from $15.00 through to this magnificent piece. But this post is not about coins, not really. It’s a bout what is possible in any local newsagency business.

What we used to do should not define us.

What we like, or don’t like, should not limit us.

Who we see in our shops or on the street outside should not limit who could shop with us.

What we sell today should not limit what we could sell tomorrow.

What you sell in your shop is up to you. All it takes is one unexpected success to brighten a path forward.

Too often, I see newsagents limiting their view of what they could achieve in their business, because of advice from an accountant (who is not a retailer) or advice from a bank manager (who, also, is not a retailer) or from their own view of what their business is.

Today’s in 2022, there are no boundaries, no rules, no limitations.

Your newsagency can sell anything. What it sells is up to you.

The challenge for our channel is that since forever we have had suppliers telling us what we can and should do, suppliers defining our borders and being paternalistic about decisions we make and about how were run our businesses. For too long too many in our channel have been happy to be agents rather than retailers, happy to be told what to do rather than to lean into free will and consider what we could do.

While many in our channel have found their way out of the agent world, too many are still in there, still chasing a few bucks they could win from a supplier for a good display of low margin product, rather than chasing many more bucks from, you know, actually selling higher priced and better margin from that same supplier requested display space.

My point is, if you are still reading this (thank you for that!), this $3,750.00 coin sale is no longer unusual for us. The first one did open my eyes. Like so many things we have tried in the past, we learnt from it, leaned into it and found more gold on the pathway. Any newsagent can do this. With the right relationships, capital is not a barrier.

And, my experience is not alone. I know of plenty of newsagents with sales outside of what has been traditionally, sales that caught their attention and propelled them to more change in their businesses.

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newsagency of the future

Using TikTok to reach a target audience and have fun with a competitor

The youth team supporting Dr Monique Ryan in Kooyong released this TikTok that comments on the plastering of the Kooyong electorate with posters, billboards and walking billboards supporting Josh Frydenberg.

@youth4mon Can’t escape it 🙄😨 #youth4mon #election2022 #auspol #fyp #kooyong #foryoupage #mon4kooyong ♬ Josh – Peach PRC

What’s this got to do with newsagency? Okay, TikTok is an interesting platform through which you can reach a demographic that is likely not shopping your shop. The team behind this and other video is reaching out to an audience important to the electron campaign. It’s also an audience we need to better connect with.

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Newsagency for sale

Motor magazine to close

Wheels Media recently announced that after 68 years, Motor magazine is to be closed. The July issue will be the last.

Someone needs to update the website.

MOTOR is now in a stronger position than at any point in its recent history. We continue with the printed page not because we have to, but because we want to. It’s an integral part of who we are and it reaches a different customer with different motivations than online journalism. What’s more, the magazine is growing in size, with better quality paper and a bigger editorial budget to bring both retail and subscription buyers alike a truly premium experience.

Fun fact: old issues of Motor magazine sell well, and for a good price, online.

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magazines

The dire situation facing the McColls newsagency business in the UK is a reminder of the challenges of the convenience model

While I am not privy to the financial details of the troubled 1,265 store UK McColls group, I have been in plenty of their shops, and other similar shops on the UK high street.

They identify as newsagents, like the other similar businesses. Convenience stores for sure, but newsagents, too. There is nothing unique about their businesses, nothing special.

This is what many businesses in the UK newsagency channel did years ago, they evolved into convenience businesses. I have written about it here before, in the context of some in the Australian newsagency channel referencing the convenience model. I am on the record with the opinion that convenience does to offer a good future for any independent small business retailer.

The challenge with convenience is that it is a mass driven model, dominated by huge suppliers hungry for mass sales. Scale is everything, and this starts with scale in terms of retail fleet. It’s why in the UK the supermarket chains dominate the convenience retail offering, making it hard for any smaller group and almost impossible for independent retailers.

We see the convenience model evolving here in Australia with the major supermarkets playing with their models and, in some states, opening more outlets. 7-Eleven is strong, and they offer abroad range of products. Petrol outlets are evolving too, with plenty offering more magazines and cards than some local newsagents.

Here in Australia, as in the UK, I see no upside whatsoever for newsagents in the convenience space. It’s price driven – meaning you have to buy as well as the big businesses. Convenience shoppers tend to not be as loyal, not destination shoppers.

But, hey, these are my opinions. What local retailers do is up to them, of course.

The local convenience model is facing several new challenges. Quick commerce is trying to attract the convenience shopper. These are businesses like Milk Run, which offers home delivery of convenience and supermarket lines within 10 minutes. They are eliminating the shop altogether from the convenience experience as they supply through dark stores. In the US you have Uber eats, InstaCart and Deliveroo all spending up in this space.

There appears to be no shortage of investors happy to throw millions at this latest innovation impacting convenience retail, offering another warning sign to any local independent retailer, like a newsagent, considering the convenience model as viable business move.

The news today that McColls is reportedly close to collapse is not what anyone in retail wants to read. And, possibly, their situation has little to do with choice of model. But, we only have to walk down any UK high street to see the cannibalisation taking place, the money being invested to churn customers from one shingle to another. There does not appear to be much investment in growing the market, just a battle for cash in that market.

While the McColls news can feel distant to our local retail businesses in Australia, I think it is a reminder of the challenges of local retail and the need for each of us to know what we stand for in our businesses, to know what differentiates us, and to ensure that this is an appreciated value proposition.

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Convenience retail

4 things any retailer can do to improve cash flow

I released this video, 4 things any retailer can do to improve cash flow, on my POS software company’s YouTube channel less than 2 days ago and it’s had 243 views already. This is a surprise because the videos I make tend to attract time number of viewers over several months. They are not made to attract good numbers quickly.

I am sharing the video here because of the high number of views (for this type of video) and the feedback from retailers about the advice provided.

I made the video after publishing a longer list of advice for retailers on improving cash flow:

  1. Free dead stock. In our experiences this releases the most cash flow value, but it is the option most often rejected for often silly reasons. dead stock is stock that is not selling, not moving. It is often stock you have long since paid for. This means that any money you get for it is positive cash flow right now. The loss from paying for the stock has already been realised – many retailers forget that. So, idea tidy what’s not selling, and quit it creatively, with urgency. Cheer every dollar this brings.
  2. Trim where you can without impacting sales. The most beneficial move here is typically a cut in the roster, a cut in labour cost. Save a few dollars with no sales revenue impact and you are ahead cash flow wise.
  3. Get shoppers to spend more in a visit. Smart loyalty software will do this. Points loyalty systems are unlikely to do this. There are better loyalty options designed to help encourage shoppers to spend more in a visit. Our POS software helps nurture this.
  4. Charge more. Yes, we understand this can be scary. The thing is, if you do this carefully, thoughtfully, and offer a good loyalty incentive and bundle items together, a modest price rise is less likely to be noticed and more likely to have a positive impact on cash flow. Think about it. Plan for it. Take small steps. A 1% rise across your top 200 inventory items could be the small step that delivers the cash flow boost you need.
  5. Find more customers. The more new customers you have shopping with you the more you will sell, obviously. It can feel easier said than done to attract new customers. In our experience, most local retail businesses do not have a new customer attraction plan. Do you? It does not need to be complex. Even a simple social media pitch honouring a new product, reflecting your gratefulness to have it could be enough. One the post is up, pay for a boost in your area. An $8 spend over 4 days is all you may need to get in front of a few hundred prospective new customers … and that gets you on the path, that could be your new customer attraction plan.
  6. Trim overheads. Look through your business overheads and look for an opportunity to trim.
  7. Look at your sales counter. With most purchases being completed at the sales counter, look at it from the perspective of your shoppers and see what you could do to encourage them to add items at the last minute. The counter is a valuable place of influence. Use it. Make sure it is driving deeper purchase baskets, and adding to cash flow.
  8. Spend less on inventory. Look for suppliers with good inventory holdings that allow you to use them, rather than your shop floor or store room, to hold stock you may not sell right away.

My concern is that too many retailers will not do the work, they will not take the important steps to address cash flow, until it is too late.

Through the work I do at Tower Systems and at newsXpress, I try and encourage retailers to confront the truth in their business data sooner and with tighter focus that might otherwise be the case.

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Management tip

Wow, Easter!

Looking at data for several newsagency businesses and comparing 2022 to 2019 (pre Covid), easter card sales are up between 40% and 100% – it varies by location. 40% up was the lowest result from this small dataset.

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Greeting Cards

Speculation about interest rate rises impacts consumer confidence

So many Aussie media outlets trade off speculation, especially speculation about economy-related numbers, like interest rates.

For several weeks now it’s a lead story for many news outlets, speculation about an interest rate rise, with many expecting the Reserve bank board to make a decision at their monthly meeting tomorrow.

The volume of the speculation makes the possibility off interest rate rises a topic of discussion in retail. The speculation worries people, it negatively impacts consumer confidence.

I wish news outlets would stick to reporting news, and stop covering speculation as if it is news.

Here in our local small business newsagencies, we can’t control interest rate movements, but we can buttress our own businesses to enable them to be less impacted by interest rate increases. There are plenty of moves we can make so our businesses rely less one month that has an interest cost. We can also not engage with the speculation in-store or on socials.

Consumer confidence is vital to local retail, especially in these mid-year wasteland months.

I have been thinking about how small business retailers can deal with interest rate rises when preparing advice for my POS software company customers recently. Freeing up dead cash remains the most vital, and immediate, move any local retailer cam make:

We help retailers free up cash in their businesses. And, this can help reduce their reliance on loan funds, which means a lower impact of rising interest rates. now, how do we help retailers free up cash. We do this in a range of ways, through smart tools in our POS software. We helped one business release more than $20,000 of hitherto dead money. The released funds helped them reduce their overdraft and that reduced the amount of interest the business was paying. It all comes back to using business data.

If you are concerns about the speculation, it’s better to act rather than amplify what might be.

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Newsagency management

Why the Local Australian Newsagency Retail Business Is Vital for Local Communities

Serving local communities for more than 130 years, the local Australian newsagency business plays a vital role in community connection and engagement, bringing to local shoppers products and services on which they rely.

The local Aussie newsagency is quintessentially Australian. It’s a place where people can gather to catch up on the latest news, purchase their favourite magazines and chat with friendly staff. As newsagents, we get to know our regular customers by name and develop a rapport that can last for years.

For many of us, the newsagency is more than just a retail business – it’s an important part of the community. We’re proud to serve our local communities and will continue to do so for many years to come.

If you value your local newsagency, make sure you support it! Shop locally where possible and tell your friends and family about the great service you receive. Together, we can keep our newsagents thriving. Thanks for supporting your local!

And, in case you hand’t noticed, the local Aussie newsagency has changed, it has evolved with the times, often offering gifts and other products that you would not have seen in a local newsagency 15 or 20 years ago.

So, please don’t think of us as just a place to buy your newspapers and magazines, we are so much more than that! We are your local community connection.

And that is why the local Australian newsagency retail business is vital for local communities. We connect people, we help them express their feelings, we help them and their interests feel seen. We help keep local communities strong.

Now, let’s get to what this post is really about. While the above pitch is supportive of newsagencies, this post is not about that. I included the above content to demonstrate to you how much the world is shifting.

An artificial intelligence app wrote the above article. I spent a minute on the topic and a couple of keywords. the AI app did the rest, in seconds. I have pasted above exactly what the AI app wrote. I have not edited it whatsoever.

This is how much written content for websites, blogs, magazines and even some books is being generated now. Not everyone uses AI apps, not even most. But you’d never know.

How does this relate to newsagents? To me, it speaks to change. I could not have generated this article with so little input a year ago. Okay, I could have but it would not be as good as this one. I’m not saying the article is perfect. But, if you want something that indexes well with Google to keywords like local newsagent or local newsagency, this article will do the trick.

The world is changing rapidly. AI is having more of an impact on our day to day than most of us imaging.

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newsagency of the future

AFL team Coach product update

I know plenty of newsagents are keen for more of the AFL team Coach product following sell-out sales. I reached out to a members of the leadership team at Are Direct yesterday and can share this update from them with you.

I have spoken to the Account Manager for the Team Zone AFL cards. I can confirm no state is being given priority on stock and the % of stock distributed to date is equal. The publisher prints the cards locally here, waits until the final team photos in mid-March then commences production.

There has been a delay in the production and the amount of stock we would normally have by the end of April but more stock is going out tomorrow and also next week. We understand the frustration but we allocate stock as evenly as possible and as quick as it is coming in the door. We do have more overall stock this year than last year so when initial allocations are completed by mid-May there will be larger amounts of stock available for stores that are selling well / sold out.

This is good news. It gives us specific information to share with customers.

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Newsagency management

Plush a super category of growth for Aussie retailers

The latest sales data from across a diverse range of toy retailers indicate plush as a super category. To be clear, this is across different types of shops, different banners, using different POS software. This broad cross section makes it reliable and useful. The performance of plush is a stand out.

I am happy about this news as there are still some in the newsagency channel who mock plush, say it doesn’t make money, say it’s had its day. This evidence indicates otherwise. It indicates that those talking down plush have not looked at the evidence, for the evidence shows success.

Now, of course, plush can mean a range of different things, from sub $10.00 items through to $200.00 items, and more.

I have a good range of plush in each of my shops, from a range of different suppliers. It is performing well, delivering growth, driving net new traffic.

I introduced it to the newsagency I bought in malvern just before Christmas. They had not stocked it before. It’s now at $3,000 a month in revenue, and bringing in new shoppers. It’s a good news story from my personal experience – just as I expected it.

What is especially interesting about plush in newsagencies is what is bought with it. That mix is diverse. rarely do you have a single plush item in the purchase. Usually it is 2 or more, and 1 or 2 other items. Plush is a basket means it is a deeper than is often the case basket.

The bonus with plush is the margin. 55% and more GP% is a good number. Plus, the plush shopper is more likely to be back as plush purchases tend to be habit based purchases, making the ‘lifetime’ value of the shopper something to crave and appreciate.

In my experience, the keys to success with plush are having an evolving range, front of store placement, constant change to displays, full displays and the right touch to shopper engagement. Those buying for themselves are collectors and they appreciate being treated as such. Plush is not a toy, buying plush can be like buying a pet.

I am yet to see a newsagency business properly introduce plush and fail.

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Newsagency management

News Corp. and Nine Media fail newsagents again with newspaper delivery

Several Victorian newsagents shared with me their frustration about newspaper delivery failures yesterday. here is one:

I am dumbfounded after my attempts to find out where our paper deliveries have got to today.

I was advised by NDS customer service that they cannot contact the driver to ascertain when we might receive the delivery, nor can they ensure that the driver delivers the papers and where applicable, magazines directly to the shop front. We are left in limbo not knowing what to expect.

On Thursday just gone, not only were the papers late but our magazine delivery was also late. We have a staff member start work early on a Thursday to ensure that magazines are on sale as early as possible and there are obvious costs wasted when magazines are delivered late

It is becoming an issue as to whether it is viable for us to stock newspapers as the combination of space taken, effort required to manage them an time spent attending issues such late and non delivery of papers outweighs the pittance they earn for us.

Here is another:

Good morning folks, once again we face a disastrous morning for a newsagency.

We happen to be away on holidays and our poor staff have no papers at 9.15 on a Saturday morning.

No communication at all, no notifications from anyone.

I could share more, but they are the same message – no papers, no communication, time wasted in the business, angry customers that erodes trust in the local newsagency business.

The failure of News Corp and Nine Media to get newspapers to newsagents, and to home delivery customers, consistently and on time must be a factor in the future of the print product.

What a mess.

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Newspaper distribution

More publisher support for newsagents on Twitter yesterday

Koorie Mail:

AFL Record:

And this from last week:

If only more publishers would support the channel on social media.

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newsagency marketing

Are magazines less of a focus for WH Smith in Australia

I have been in several WH Smith transit locations recently and found magazines in a slow traffic location in -store, and poorly stocked.

This photo is from one of the Melbourne stores just over a week ago.

In one store, okay, it could be one-off. But more? I mentioned this to someone in the magazine publisher space and they had noticed it too and felt it was a deliberate decision.

Time will tell.

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magazines