Australian Newsagency Blog

The Tabcorp 2018/19 Annual Report will be sobering reading for any lottery retailer for in that year, revenue from online lottery ticket purchases rose 39.8% from the previous year. For reference, online revenue grew 22.6% in the FY17/18 year over the FY16/17 year.

While the company refers to this shift in revenue source as part of its omnichannel, I see it as a m migration from in-store purchase to online.

They have sought to appease retailers with a small bone of an increase in income, which has complex strings that keep retailers positioned more as servants than partners.

The size of the increase in Tabcorp’s own direct sales does not directly correlate with a decline in sales in-store. However, it is happening from what I can see at some stores.

For its future, Tabcorp needs to continue to push growth in online purchases as they are, I suspect, more valuable to the company than in-store purchases. With retailers playing such an important part in brand awareness and facilitating access to online, the company needs to keep them in check.

I don’t have lotteries in the newsagency businesses I have today. I did have years ago, but not today.

At some point, decisions will be made by retailers along the lines of decisions some of made many years ago about our home delivery runs. There will be a point when the requirements, price retail space cost and all the hoop jumping is not financially worth it.

What can help retailers today with a decision they may wish to make in the future is success at attracting new shoppers for purposes other than to buy a lottery ticket.

Tabcorp’s latest results are to me a strong call to retailers to relentlessly pursue non lottery new traffic opportunities cities through their businesses. Lottery retailers who do not do this will see their business results perform in line with the results achieved by Tabcorp. If the company continues to successfully grow online purchases and if that is achieved at a cost to in-store purchases then lottery focussed retailers will lose revenue and business value.

To be clear – I am not criticising Tabcorp. If I was a shareholder, which I am not, I would applaud their strategy. My criticism, if there is one, would be at retailers who are not acting already to make their businesses more relevant outside of lotteries. This is mission critical in my view.

Note: the image is from the Tabcorp published investor presentation.

I have heard this morning that magazines are not getting out of the TNT warehouse on Mondays, leaving NT newsagents without key weekly titles. I’ve reported this to Ovato.

UPDATE: 10:15am. There was a unique situation last week that disrupted deliveries. It has been addressed.

We have given the expanded range of mindfulness magazine titles better positioning and less noise nearby, to make the most of growing interest in this topic.

This move, which we made on the weekend, was a no-brainer given the increase in sales of mindfulness related products. The move also lends itself to social media support, to pitch to folks in the area who may want to check out these titles.

While, for sure, the low margin on magazines is frustrating, a move like this we have done for mindfulness required minimal time and no capital. It’s a small-step reminder that we are relevant magazine specialists, even if our range is less today than a year ago.

Social media gives everyone a voice. This is one reason why we retailers need to engage with it, to understand this, to leverage it ourselves and to be aware of hour it is used. Here is one example from the latest Alan Jones scandal. He made an appalling comment about the NZ Prime Minister and some on social media called for people to boycott advertisers on his show. Regardless of where you sit on the issue about which Jones spoke, this tweet is democracy in action.

Hey @HarveyNormanAU, I was going to buy a printer from your Balgowlah store today. However I decided to buy the printer from @Officeworks instead after I found out that you advertise with @2GB873 & @AlanJones. @slpng_giants_oz pic.twitter.com/9Um1nWvH2Q

— Sam (@sammy5997) August 17, 2019

When you combine dogs and the Star Wars licence franchise you have a winner and that is what we have with this Father’s Day card from Hallmark.

We are featuring it full face for impulse purchase as people need to see the whole card and not just the top 20% as is often the case  with regular card fixturing.

I expect this card to sell out.

We have a couple of pre-order opportunities we are running right now for items that will sell out quite fast. By offering pre-order, we are paid in full weeks before we take delivery and two months before we pay for the goods.

Retail today, in-store and online, is a race to the cash. A well managed pre-order process is key to success with this race.

Related to the Touch challenges being experienced by newsagents, Microsoft has confirmed it as a Visual Basic issue.

In May 2010, I posted Retail turnaround tips for newsagents experiencing flat sales. This was a post in response to reported flat retail sales.

We are at that place today. retail sales are flat. There is plenty of bad news being reported.

Here is an updated version of that 2010 post…

If your retail sales are flat and you are doing the same things today that you have been doing for the last year it is not good enough.

Business will not come to you. You have to go out and find it – often through a series of small steps as opposed to a big bold move. You have to obsess about presenting a compelling offer to everyone walking through your door.

Price is not a point of difference.  Shoppers expect us to be expensive. That has been shown in plenty of consumer surveys. Railing against this is a challenge. We can do this for some categories and at seasons but not across the board.

Being unique differentiates. The mix requirements of our shingle make that a challenge.

Here are some tips for retailer newsagents on responding to flat sales:

• Refresh your head. Work out what you want for your business and those who rely on it. Make a plan. Live the plan. Success is in your hands.
• Lock the office door. Only rarely do you make retail sales from the office. The shop floor is where the action is. Play there.
• Refresh what you sell.
• Refresh the counter. Many newsagency counters look the same, boring, what you see in other stores. Create something different and fresh. Take everything off and rebuild the counter with the purpose of selling product on impulse. Make strategic choices. Your counter should NOT look like a newsagency counter.
• Refresh the window. Tell a story. have fun. Cause people to stop and look.
• Refresh the shop. Change change and change. Move departments and categories. Make the shop feel fresh to regular customers and to your team. Make strategic choices about what products go where. Use dump bins for specials. Place impulse products next to high traffic products. Once you have undertaken the big moves, create a plan for continual change each week. Change shows that the business is a, living and breathing thing. It can make the shop appealing to new visitors. Newsagents who don’ change their business reinforce that the model is a retail dinosaur.
• Refresh the team. Let your team know than business is tough. Ask for their ideas. Take some time out of the business to relax over a meal or drink or some other social activity (mini golf, go kart racing, fishing, bushwalking) and share an adventure outside the business. Sometimes getting away like this can get creative juices flowing about changes which can be made back at the business.
• Ask suppliers for help. If your business is slow it is likely that your suppliers are finding it slow too. Ask them for some good value deals – not the stock they can’t sell but the stock they have plenty of and which sells well.
• Lure customers back. Look at the top selling items in your businesses. Create a strategy for getting these customers back. Create a small flyer offering a discount on something if they come back in, say, a couple of days. Do this leveraging your top traffic products.
• Create events. Give people more reasons to visit your shop other than to specifically buy something.
• Use social media properly. be your platform for marketing.
• Connect with the community. Go to community clubs and offer a discount to members and a rebate back to the club for business their marketing efforts on your behalf deliver. This is easy to setup and manage. The more people you have in the community saying to their friends that they should shop with you the better.
• Ode to you. Run a competiton to find the best poem which reflects why your business is important to the local community. Get the finalists in to read them live and get your customers to vote. Maybe the local newspaper will run the winner?
• Crazy ideas. Think outside the norm. Nude day has been done so has the underpants idea where customers get a discount for shopping only wearing underwear.

Stop talking about it. Yes, retail is tough. Talking about will not improve your situation. Doing something is better than talk.

Change is oxygen to any retail business regardless of its current sales health. Doing nothing in tough times will make the tough times tougher for you.

Personally, I am optimistic about the future for newsagents … that is from 2010. It is true today.

There is a problem affecting all AfterpayTouch customers, regardless of what POS system they use. It is apparently an issue between Visual Basic and Windows. The Touch software is written in Visual Basic.

Touch is un-commissioned when attempting to sell vouchers. It seems to have occurred after the latest round of Windows updates.

The Tower help desk has received more than 30 calls so far. We have been in contact with Touch and are awaiting an update from them.

For Tower Systems customers please keep an eye on our private Facebook group and your email for an update once we have heard from Touch. We anticipate they will release an update to address the issue.

If you run any other software written in Visual Basic this may be affected. Note: the Tower newsagency software is not written in Visual Basic.

A report from Chris Woods at Crikey Tuesday about whether a boycott of News Corp. titles could work is interesting reading, especially for newsagents and other retailers of newspapers. Click here to access the report. Here are the opening pars of the article…

Over the weekend, two major things happened in the News Corp universe.

First, The Australian launched a new page technically titled “gender issues” that, coincidentally, is 99% directed at trans people. Of those, the majority either focus on the Prime Minister’s squeamishness about trans people playing cricket, fear-mongering over Victoria’s new birth certificate laws, or flat-out lies about people “castrating children”. The folks at Junkee go into this further, but the short story is that no, neither early childhood support or latter-stage puberty blockers are anywhere near the same thing as castration.

Secondly, journalist Rick Morton published his first major story since leaving The Australian, which, not for nothing, covers a world-first study examining how News Corp papers embolden far-right groups that use stories around safe schools and immigration as recruitment tools. Morton joins a growing stable of journalists and editors who have left the media giant.

Both these events didn’t come from nowhere — and they have both helped spur existing campaigns against News Corp, each targeting different facets of the organisation. But can they work? Crikey looks into the realities of such a disparate push.

What interests me is that social media has evolved into an easy to access protect platform through which people can organise. This is a risk for News Corp and its use of its newspapers and other media outlets to yell at people. push agendas and tell people how to vote.

Regulars here will know I have been interested in the newsagent boycott of The Sun in the UK. I wonder if that could happen here now that there are more respected former News journalists outside of News Corp.

Sometimes, it is the small cellabarations customers love. This social media post yesterday worked a treat.

Picking up from my video of a couple of days ago in which I posed three questions. Here is a new video with a more finely tuned consideration…

Coles supermarkets have a consistent front of store Father’s Day card pitch this week.

The location is strategic, something newsagents should consider if they =are not pitching Father’s Day cards similarly already.

The other smart move is a stand of birthday cards next to Father’s Day cards.

It pains me that Coles is doing cards so well across their fleet of stores.  I’d prefer newsagents were as consistent nationally in this commercially vital category.

I encourage newsagents to take a moment to ensure Father’s Day cards are being pitched front of store and that a birthday or other mix is pitched next to them. It is vital that every shopper entering and exiting the business sees the range as Father’s Day card purchases are more likely to be on impulse.

We have had the season up for a week and a half at the entrance and it is working well.

This, from Twitter Friday …

How can you continue to spruik your support for family, small businesses @ScottMorrisonMP , when Postal Franchisees continue to be sent broke by your Government’s @auspost ? They’re having a go, but not getting a go @PaulFletcherMP ? #auspolpic.twitter.com/aZidpVGkF0

— Madero (@fuwap15) August 9, 2019

More regional and small business retailers are being challenged with banking cash as banks retreat from branch and even deposit ATM service in more locations.

Talking to a newsagent yesterday, they mentioned that for them now banking cash involved and two hour round trip with no other bank or ATM nearby to manage cash deposits.

With lottery revenue being swept twice a week and other demands on cash, they are currently making four trips to the bank each week with the hope of cutting this back to three a week. They are actively considering going cashless as a result because of  the six hour saving and the release of additional cash they are holding to cover when they cannot get to the bank.

If you cost up the six hours of travel time, other banking time costs of around two hours a week and fuel, you can reach between $250 and $300 a week. That is at least $500 to $600 in revenue cost.

If I was affected by this I’d be writing to my local federal and state politicians, the banking industry ombudsman, the small business commissioner as well as media outlets.

There was a time when newsagents would aim for a dollar in gift revenue for every dollar in card revenue. Back then, cards pulled shoppers and gifts were the add on.

Today, there are engaged newsagents who achieve a gift to card revenue ration of 2:1 and 3:1. That is, they are easily achieving $2 in gift revenue for every $1 in card revenue. I think this is the starting point benchmark for gift to card revenue. Anything above that is bonus.

I have seen data this week from several different newsagency businesses, city and country, achieving gift revenue of more than $175,000 a year with card revenue sitting at $80,000 and with both growing.

Growth is the other piece of this. Growing gift sales sets you up for terrific growth in card sales. North in both good margin categories can provide a GP$ base that helps the business deal with rising lease and  labour costs.

We make our own success.

I agree wholeheartedly with this report by Greg Jericho in The Guardian. Below is a selection or pars from the report.

Tax cuts won’t pry open household wallets.

Last week the latest retail trades figures revealed that in the past 12 months the volume of retail spending, in seasonally adjusted terms, grew by less than at any time since the 1990 recession. The trend measure was less terrible – it suggested that the level of growth was only the worst it has been since the depths of the GFC.

In the past nine months the volume of retail trade has not grown at all. That’s recession-level spending.

That we are spending that weekly when the unemployment rate is 5.2% tells you a lot about how poor that measure has become for explaining the state of our economy.

And it is not the case that the bad news for households is contained to only some parts of the country. All states except Queensland have seen the volume of retail spending growth fall.

At this point the government is betting on the tax cuts fuelling an increase in spending. It should in the short-term, but without wages growth no household is going to think about increasing their spending long-term.

And the most troubling thing is the drop in inflation expectations and those for the cash rate have occurred not just since the government was re-elected but since the tax cuts have passed into law.

Few seem to think they will do enough, and instead we continue to look to the Reserve Bank to come to the rescue.

In my opinion, only wages growth can increase spending. People on a minimum wage, Newstart and other social programs, young families living pay to pay … these are the core fuel for retail, these are the people who will spend every extra cent they receive.

For years newsagents gave away newspaper related gifts for little or no commission to customers who bought papers at supermarkets. We were told to suck it up and to look at the bigger picture by newspaper publishers.

Turn to this past weekend and this full page ad in the Herald Sun.

Here is the fine print for those interested…

I noticed WHAT DOCTORS DON’T TELL YOU on the shelves of a shop this week. Having never seen the title before, I took a look. I found it hard to believe the veracity of claims I saw in a quick scan of articles. It feels like this title is targeted at people drawn to pseudo-medicine / quackery.

What is pitched as a launch issue is an Aussie version of a UK title that has been around for years. Checking online, I can find references as far back as 2012.

There is controversy about this magazine. Dr Margaret McCartney published comments  in October 2012 including:

Although medical journals carry advertisements for drugs, the ones in this magazine are an extraordinary shrine to non-evidenced based medicine. …

It is right to criticise medicine, but the same standards must be applied to all interventions, “alternative” or not. We now realise how important it is to ensure that fair evidence, free of bias, is used in making medical decisions. There is no point in substituting bad medicine for bad science, and it is not clear from this magazine where the hierarchies of evidence stand, and the limitations and uncertainties that arise in research are not consistently explained. The magazine’s liability statement—“the publishers cannot accept any responsibility for any damage or harm caused by any treatment, advice or information contained in this publication”—should perhaps be better printed on the cover, in an unmissable font.”

This article by Christine Oka, Research & Instruction, Northeastern University Libraries, Boston, MA, at the ProQuest blog from 2017, is fascinating:

Looking into the background of WDDTY I saw it was originally launched as an alternative medicine magazine in the UK, in 2012 with a number of cautionary reviews from medical and health publications, such as the British Medical Journal, Health News Review, and the Science and Skepticism section of The Guardian. WDDTY is published monthly and contains advertisements from the holistic and alternative medicine market. The WDDTY Editorial Panel is comprised of “some of the world’s leading pioneers in nutritional, environmental and alternative medicine.” But another source writes about The Editorial Panel, “Of those who can be found on the GMC List of Registered Medical Practitioners, one has been issued with a warning, one has relinquished his registration, and all of them advocate dubious interventions, some of which have been shown to do more harm than good.”

I checked out What doctors don’t tell you because it looked dodgy. Checking online, plenty think that.

While we are not censors, it is useful to know about titles available for our shelves, so our stocking decisions can be informed.

The New Daily has a terrific story about the relevance of Myer and David Jones. It is a read retailers, especially newsagents, will find interesting. Why? because newsagents are the small business version of a department store.

Someone is calling retailers claiming to be from Epay or one of the POS software companies asking for access to a computer in the business.

This is a scam.

Do not provide access.

Instead, ask them for their name and their phone number and say you will call them back. Usually, they will hang up at this point.

The Melbourne gift fair kicks off today. Here are my updated tips for retailers shopping the fair.

1. Have a budget. Stay within it.
2. Have a buying plan, to ensure you are buying to the goals of the business.
3. Buy knowing that you are not your customer.
4. Know that your buying is the first step to attracting new traffic to your business.
5. Write on each order your delivery timing requirements.
6. Write on each order any promises made, so the order fully documents your expectation. These could include exclusive territory, returns etc.
7. Write on the order whether you accept backorders.
8. Write on the order by which time the order is cancelled if they are unable to supply.
9. Photograph every order placed.

If you are going to the fair, have a great time!

Several newsagents contacted me about this News Corp. communication yesterday. Click here to see the letter.  Click here to see the FAQ.

This move by News Corp to take over newspaper home delivery from newsagents for what I am told is minimal compensation is along the lines of the company’s T2020 plan from 2013.

It appears that small business newsagents who paid goodwill for their distribution businesses have had, through this latest move, that goodwill  ripped from them by this large supplier.

Here is the letter, which has newsagents calculating losses in the thousands a week for some.

This is extraordinary action by News Corp against small business newsagents.

If I was a distribution newsagent and had received this letter, I’d be contacting the ACCC to discuss the abuse of market power.  I’d also reach out to state based opportunities like the CTTT, VCAT and QCAT. I’d also be talking to my local politician as  this is a small business store with impact locally.

While News can argue that this has been their long foreshadowed plan, that does not make it fair.

Newspaper home delivery has been a local community service. For many newsagents, this is their primary asset. Compensation needs to be fair, it needs to be lawful, it needs to meet community standards.

While I got out of newspaper home delivery thirteen years ago, selling my decent size run, because I saw little upside, through my work with newsagents I know of many who will be affected by these moves by News.

Selling a retail business is like selling a house, you need to prepare it so that it looks appealing to prospective purchasers. Selling a newsagency is more challenging because of assumptions out there and changes in what a newsagency is can could be.

Here is my updated advice on preparing a newsagency for sale.

1. Make it look and feel appealing. While there are people who will look for a challenge (opportunity). Most buyers will want two see a business they understand and feel they can run.
2. Eliminate dead stock. It looks bad on the shelves and looks bad on the books. Purchasers should not pay full wholesale for inventory more than six months old as your poor buying or management is not their obligation.
3. Streamline operations. Make the business look easy to run by ensuring it is easy to run for you. The easier it looks to run the more interesting to people who don’t understand the business.
4. Maximise profit. What anyone will pay will depend on actual profitability of the business.
5. Be happy. Owners who talk their business down will find it harder to sell the business.
6. Keep your social media presence up to date. Today, many people check out a business online prior to looking at it in-store. Maintain up to date Facebook, Instagram and elsewhere.
7. Get your paperwork in order. Early on, get business documents together:
   1. Premises lease.
   2. Equipment lease.
   3. Employee records.
   4. Product forward orders.
   5. Franchise documents.
   6. Supplier agreements.
   7. Details of any forward orders.
   8. Any other documents relating to the operation of the business including manuals for any equipment items.
8. Choose a broker for your circumstances.

Success at selling your newsagency business depends on the work you do to prepare it for sale. Focus months, even a years, out can make for an easier and better sale.