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

I can’t sell gifts in my newsagency, I have a gift shop nearby, it wouldn’t be fair to them

A newsagent said this to me a couple of days ago. It’s something I heard 20 years ago, not that much today.

The gift shop near then is a small shop with a narrow focus. They carry less than .5% of all available gifts in Australia.

It’s an out of date view for a newsagent to say they can’t stock gifts because they have a gift shop nearby.

Think about your newsagency for a moment. You have competitors for every category. Your exclusivity in circulation products and lotteries was ripped from you. It’s not your job to protect another shop nearby.

Then, think about online. That gift shop nearby is being competed with by thousands of online businesses, many of which are delivering to your town.

What newsagents owe is a commitment to their business for all those supported by the business.

My advice to the newsagent is to put irrational emotion aside and explore gifts in a way that is not in direct competiton with the nearby gift shop.

  • Offer different categories. There are many categories a nearby competitor will not have covered.
  • Source from difference suppliers.
  • Display differently.
  • Differentiate as to the how: your customer service, add-on offerings.
  • Be up front with them about your plans.

A newsagency without gifts is likely a newsagency sliding toward closure. Gifts are essential. Typically, today in 2024, gift revenue can easily be 5 and more times your card revenue. It takes time and commitment, you can get there.

Use your gift engagement to differentiate your business. Leverage your current shopper profile. Indeed, your card and magazine data provide the best starting point to understand the gift opportunity in the business. That’s where I start when working with a newsagency making this move.

If you’re put off by a big business competitor in the gift space, don’t be. They do their thing, you can be different in a way that locals appreciate and give you money for.

I get that you want to get on with local shops. You can expand into areas they cover by being different. You have to put the needs of your business first. Survival of the fittest and all that!

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Newsagency management

The Australian Cars The Collection launch has been a hit

Newsagents are selling out of the launch issue of Australian Cars The Collection. The distributor does have some stock and newsagents needing stock are urged to contact the call centre.

I said this would be a hit when first writing about it here. The new shopper traffic being generated is most welcome.

The success of the launch is a reminder to newsagents that shoppers will spend money on what they love.

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magazines

The difference in the performance of cards in newsagencies is considerable

Looking at card sales year to date, their average for 2024 verses 2023 is 2% growth. That average does not tell the real story though.

I’ve seen data for newsagencies achieving 20% year on year growth in 2024 over 2023. Those achieving this are working on their card department, usually with two card companies in place and on the back or a store level data-driven pocket / caption review.

I have also seen data for plenty of newsagents lies reporting a decline of 10% and more. One was as high as 30%. Typically, the stores experiencing decline have these attributes:

  • One card company dominating supply.
  • Orders are done by the card company without store level consultation.
  • The card company has provided cash or fixtures for the business to lock them in.
  • new cards are put out by a merchandiser and not staff in the store or the business owner.
  • There is no card shopper loyalty program.
  • Cards are only pitched in the card department.

Our channel has the best range of card captions in Australia. It’s a foundation category for each newsagency and needs to be managed as such.

If your card sales this year so far are not up more than 2% on last year, you need to take action. If they are in decline, you need to take urgent action.

I see terrific upside for card sales in our channel if we manage the category ourselves and engaged with it daily in our shops.

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Greeting Cards

Inspiring Christchurch gift fair

I am grateful for the opportunity to visit the Christchurch Gift Fair last weekend. It’s the smallest gift fair I have ever attended I think. Size, however, is not a measure of a good gift fair experience.

While the fair did have some of what we at gift fairs back here in Australia, there was plenty of new product to see. I have ordered from two already and excited for the opportunities those products bring.

If I had a shop in the Christchurch area, I think I would have spent at least $15,000 on products. The locally made products were particularly interesting. I liked the food and crafts as they would support the local narrative. Since my shop is not local I focussed on what I could use to reach new shoppers back home.

Since the Christchurch gift fair was small and not overloaded with visitors it was a completely different experience here in Australia. There was more time for the stands of interest and a better connection from the vendors, in part I think to them dealing with fewer people each day.

If you can get over to one of the New Zealand Gift Fairs, I think it would be well worth it.

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Newsagency management

If you are concerned about the 3.75% wage increase, what’s your view on 5% rent increase?

There are plenty of stories in the news these past few days quoting retailers and some other business owners complaining about the 3.75% increase in award wages as determined by the Fair Work Commission.

While I understand retailers with break even or loss making businesses being unhappy at a cost increase, it’s likely these same retailers have a lease for their premises that locks in an annual increase that is higher than what the Fair Work Commission has just decided.

My point here is why contract for one guaranteed annual increase and complain about another, lower and often less consistent increase?

People are often an important asset in any retail business, at least they should be. A 3.75% increase is modest in this economy, and modest for an important asset for the business.

I suspect the cost of the 3.75% will be under $100 for most retail newsagencies. Here are some ways you can cover the cost:

  • Mark-up what you sell to reflect the convenience of local shopping. Stationery, for example, should be marked-up 105% at least. The majority of newsagents mark it up 100%. Moving to 120% will not hurt sales, and you’ll make more money.
  • Pitch good margin easy to purchase impulse items at the counter. These should be items not found in convenience stores or supermarkets. Include 2 of your funniest cards – but change them every week.
  • Configure the front 3 metres of your shop with good margin winners. Have as little as possible of low margin (less than 50% GP) product here.
  • Make your front window awesome and different every week.
  • Fine a new product category you can carry, something you’d never expect to see in your shop that could attract new shoppers.
  • Lead to achieve a productivity gain from mall who work in the business, including yourself.
  • Work in your card department. Depending on your card supplier, there could be some easy wins here using your own business data to better manage your card supplier actions. I have seen newsagencies boost card revenue 20% by taking the action I suggest here.

This is not rocket science. In every retail business there are easy moves you can make to make that extra $100 or so. All it takes is a bit of time and focus.

Complaining and saying poor me is easy. I think it’s a waste of energy and not a reflection of being a good retailer.

Prices go up. It’s not a surprise. I think local small business retailers can be smarter in terms of how we engage with this.

If you’d like to discuss this or any suggestions I’ve made, you can reach me at mark@towersystems.com.au.

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Newsagency management

The challenge of employing school students part time

This email I received represents the challenges for retailers in giving work to school students:

My name is Joe, I am 14 years old, currently in my first semester of year nine at high school. I don’t have any past work experience, but I am very optimistic on getting a job with you! As I am a student, I can offer you minimal shifts unfortunately, but I can do afterschool shifts starting around 5, following bus routines, however I can be there around, 4 on Thursdays as school ends early. Wednesdays and Saturdays won’t work for me as I have already adopted the responsibility of playing netball, which, although takes up work time, has taught me how to work with people while under pressure, and I can make quick rational decisions. Please shoot me a response if you’d like to see my resume. Kind Regards, Joe

I have changed details to fully anonymise the email.

I love their confidence and clear communication. The challenge is the restrictions on hours. With the cost of training and limited hours availability, I think ‘Joe’ will struggle to find work.

There has been an uptick in school students seeking work this year in my experience. Looking back on email approached, it’s up more than 100%.

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Newsagency management

Bluey coin madness in the newsagency

newsXpress stores had access to the Bluey coins the released yesterday morning at 8:30am. It was crazy in-store and online thanks to terrific news coverage leading up to the release.

The coins sold out in a minute and retailers spent the rest of the day fielding questions. Some had to take their phone off the hook.

While there for sure is frustration about selling out so fast and not having enough stock to satisfy demand, there is the upside of new shopper traffic in-store and online. Plenty of this traffic flowed into other purchases, even by those who missed out on the Bluey coins.

Some of the additional purchases were for new coins releases exclusive to newsXpress. These products help drive stickiness of coin shoppers. By that I mean they’re repeat purchases back at the same shop. Coin shoppers are like that and basket data indicate they purchase other items.

newsXpress stores are now authorised retailers for the Royal Australian Mint, Perth Mint, New Zealand Mint, New Zealand Post Office and a couple of others.

In a moment in time when net new shopper traffic is vital in retail and in our channel in particular, coin shoppers are most welcome, and appreciated.

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newsagency marketing

Over the counter newspaper sales down 8% year on year

Looking at data for a selection of newsagency businesses in the city and regionally, unit sales of newspapers over the counter declines 8% in January – May 2024 compared to the same period in 2023.

While the data pool is small, the businesses have been a good indicator for years as to what is happening nationally.

It’s challenging to compare with publisher data because they don’t report audited sales the way they used to.

I mention it today to encourage newsagents to look at the data for their businesses, to calculate the gross profit value of newspapers and consider this in the context of the value of the space they occupy and the labour involved. If your newspapers are in a higher valued position in-store and the grow profit contribution is declining, move them to a less valuable location and use the freed space for higher margin products you are likely to gain a sales boost from given a better position.

Where you place product in your shop should be based on a the financial value to you. That’s why I say look at your data.

In one shop I was working with recently, they moved newspapers from prime position front of store to a lower cost location part way down the shop. There was no negative imact to newspaper sales from the move. They are making more money fro the space newspapers used to occupy.

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Newspapers

Australian Cars The Collection set to drive traffic to Aussie newsagents

Newsagents are tagged in the TV commercial for Australian Cars The Collection, a new partwork series launching June 10. Newsagents are the exclusive retailers of this title.

I am grateful to have seen part 1 of Australian Cars The Collection. It’s a terrific product. It feels good. We already know how much car lovers like buying magazines. This new series is sure to appeal to to current car lovers, those who appreciate nostalgia, those who love collecting and people collecting for young kids.

Each issue in Australian Cars The Collection comes with an authentic 1:43 scale die-cast metal car model. The series will feature of some of the most iconic Australian cars from the 60’ to the ‘90’s.

My advice to newsagents is to display each issue of Australian Cars The Collection in prime position at the front of the shop, to leverage the considerable spend on the TV commercial, which tags newsagents. If there is room, put it at the counter. I am confident this will be a traffic driver for our channel.

And, yes, I hear the argument about the paltry margin. We have to suck it up while we do everything we can to leverage the traffic boost. If you are tempted to early return the title, my advice is don’t. Get behind it and sell out. The launch of Australian Cars The Collection is an opportunity for us to show what our channel can do. I suspect people will be watching us to see how we handle the opportunity. It’s up to all newsagents receiving the title to not let the channel down.

Use your newsagency software to offer a putaway service, to lock those early shoppers for this title into buying future issues from you. Good newsagency software makes putaways easy with the result being a personalised label for each cutaway customer. It’s the best approach to managing any partwork series as it provide you with control and the customer with a good experience.

This launch has been almost 2 years in the planning with a company in the UK and a company based in Asia that produces diecast cars for the world market. I know that the folks at Are Direct have used their own sales data to develop the allocation model for the title. This has taken considerable planning.

It’s been a long time since we have seen a partwork launch like this. Many newsagents in the channel today would not have experienced it before. That’s one reason I am writing this post – to share that this is a good opportunity. The TV commercial alone tagging newsagents is an opportunity for us to leverage. It should land people in your shop who are not regulars. This is the opportunity.

We should use our socials to talk about the launch, leverage the front of the store as I have already noted and ensured that everyone in the business is aware of the launch and the broader opportunity for the business.

If you are one of the 1,800+ newsagents using the Tower Systems newsagency software, please click here to access to knowledge base articles on managing cutaways.

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magazines

Retail transformation: newsXpress Mount Waverley

newsXpress Mount Waverley is a corporate store, it’s one of our own shops where we experiment with tech and retail. It’s a shop we run on a tight budget.

In this video, Anthony from our newsXpress head office and Mark Fletcher our CEO discuss the transformation of the Mount Waverley business from 2018 to today. We also cover how this business spawned a second business, and online business, that outgrew the shop, and how it’s just launched its second online business – www.hugsandlove.com.au.

While the business identifies as a newsagency, it’s far removed from what Aussies consider to be a newsagency. It’s a gift shop, a haven for collectors and a place to shop for young kids.

This video shows how to go about changing a local high street shop on a small budget and the importance of being flexible to pivot when the world presents opportunities.

I am grateful for the opportunity to take you behind the scenes of one of our corporate stores, to show the value we harvest from being a POS software company that owns and runs retail businesses.

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newsagency of the future

Newsagency transformation (part 3): completely change the first 3 metres

The first 3 metres of your shop from the front windows and door in represent your headline.

If you want to transform your newsagency and have people see your business as changed, change this space, dramatically, completely. Leave nothing as it was.

It’s this first 3 metres people will see and decide the type of shop you have. This is where you get to play against expectations, it is where you have to disrupt. Don’t give them what they expect.

Products, fixtures – they are all up for grabs in terms of the changes you bring.

If your counter is located in this space, it needs the same dramatic attention.

I think the best way to do this is one day when the shops is closed, take everything away from the first 3 metres, remove it so you have a blank slate. Set a rule for yourself that you cannot put back into the space anything that was there. It will be difficult. You’ll have the urge to put oe thing back into the space, then another. Resist this urge.

What you really want from the experience is for customers to tell you there are surprised to see you stock something you always have stocked but that they only notice now because of what you have done in the first 3 metres of the shop.

Here are four principles for making the first 3 metres of your shop work:

  • Declutter and Create a Visual Feast: As you place new products, keep the entrance free from clutter. Make it visually appealing. Try and not use traditional retail fixtures. Use clean lines, captivating displays, and well-maintained fixtures.

  • Sensory Experience: Consider incorporating subtle elements that engage other senses. Play upbeat music at the front of the shop – music people will know, showcase beautifully scented products, let people smell your type of business and enjoy it.

  • Storytelling Through Displays: Don’t just display products, tell a story. Create thematic displays that showcase how your products can be used or benefit the customer. Don’t have too many of an item in a display. Show less quantity but more range of products – to tell that story you want.

  • Interactive Elements: Make it easy for people to engage with what you sell, to touch and smell. Having products on display in a box of so old school. Take products out. Encourage touching and engaging.

The first 3 metres of the shop is the most valuable retail real estate in the shop if you make good use of it. Be in charge. Set the tone. Make a statement. Keep changing it. Show that yours is a transforming business.

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Newsagency management

Newsagency transformation (part 2): if your data sucks and want an easier way to start

If you know you need / want to transform your newsagency and your business data is not in good shape, there are steps you can take on the shop floor to drive change in the business.

In my experience, businesses often in this situation often have a traditional shop floor layout.

The advice I provide below is all about disrupting what you have as I have found this can help retailers see what they could see. It’s radical and rough, designed to seriously change things up in the business.

It is important to know that whatever you do is forever. Make these moves, watch, learn and adjust. Shops needs to be continuously evolving.

First: the old newspaper and magazine unit

If you have a traditional magazine fixture running down the business of the business with newspapers on the front facing shoppers and they enter the business: take all the stock off and rip it out. Don’t overthink it, rip it out.

This is prime retail space you should be using for products with 50% gross profit and more. Giving this space to products from which you make 25% GP and less is a bad business move.

Rip the whole unit out.

Now, using low cost basic everyday shelving, put your magazines on the back wall of the shop. What ever was in that spot needs to go somewhere else.

Basic strip shelving with brackets that hold the shelves will suffice.

Put your newspapers below, on a bottom flat shelf.

If you’ve ben putting out newspaper or magazine posters, stop. They do not increase sales.

Second: fill the freed up space.

Grab a couple of old tables, or some old wooden boxes. Create display places on the shop floor and on each tell a product category story. Bring products to this part of the shop that people might otherwise not have seen.

If you don’t have tables, look at a local op. shop, in your garage or somewhere like Amart. Spend as little as possible.

Resist using spinners here in this recovered space.

Choose products you are proud to offer.

Be sure to include products you are certain would not work for your customers – it’s important you do this to figure out what you don’t know about your customers.

Be prepared to change the displays within a week if they are not working for you.

Three: watch what happens.

The moves may be a bust. It’s okay if they are, make more changes and keep doing so until you see a good result.

You may see some early success. If you do, lean into that, do more.

If your business is that traditional that it has an old magazine and newspaper unit running down the middle of the shop, I suspect you will experience good news for that’s what I have seen in every business I have seen try it.

Have fun.

One newsagent I know who made these moves hosted a Saturday afternoon sausage sizzle so people would watch as they used a chain saw to exorcise the old magazine unit from the shop.

The key point of this first move is to disrupt your view of the business. Sure, the shop floor will be disrupted. You need to be disrupted more and that’s why you need to do something radical that you are likely to want to resist. The suggested changes could do more for you personally than the business itself.

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Newsagency management

Newsagency transformation (part 1): where do you start?

If you want to change your retail newsagency business, no matter whether it is a traditional newsagency or one that has already seen some transformation, it starts with being sure of where you are at, it starts with your data.

Knowing where the business is at is the foundation of steps forward. This involves looking at the business from a range of angles.

  • Up to date profit and loss statement.
  • A current debtors report and a current creditors report.
  • A list of all monies owed by the business, both formal and informal.
  • Stock listing showing total value of stock.
  • Dead stock listing showing all items for which zero sales have been recorded in six months or more – showing the total value of this stock.
  • A floor map showing gross profit percentage contribution by product department / category floorspace allocation.
  • Total rostered hours in a week, including owners regardless of whether they are paid, and a calculation on revenue per hour.
  • a revenue comparison down to the category level comparing the most recent 6 months with the same 6 months a year earlier.

It’s not enough to say you want to transform your business, you need to understand where you are at and the capacity for change. The above information will provide insights as to immediate opportunities as well as the capacity of the business to fund the cost of change. This list is the starting point of what I ask for from any business I work with on transformation.

In looking through the pool of data from this list, my recommendation is to seek our easy wins that can set up for productive focus next. For example, if there is $10,000 or more in dead stock and all of that stock has long since been paid for, quit it. The freed cash and space will give you a boost. Now, to quit the stock, place it in one location, a clearance location. It could be a table, or two or more. Put it together with the same discount for all. My suggestion is 50%.

While you are quitting dead stock, work through the rest of the data to understand the business performance as it stands today and look at the comparison report for any easy green shoot opportunities you can see allied to current business categories. This could provide you with an easy first step.

As you work through your data, make a list of ideas, action items. It could be that on that list there are some easy wins you’d not seen before or had been ignoring.

Some retailers I have spoken with over the years about business transformation or improvement have been tempted to use their accountant to guide them. I think this is a mistake unless the accountant has current hands-on retail experience in your type of shop. Others have been keen to use a business consultant. Unless they have current retail experience in your area, I’d not engage with them.

My point here is that it’s your business. You are at a point of wanting change, transformation. The next steps are up to you and best done by you so that you own the changes.

This first step starts with gathering the data, cleaning house and getting fit.

All of this work is about getting you match fit for more considerable change, that comes next.

Footnote: I’ve owned newsagencies since 1996. I’ve been a Director of newsXpress since 2005. I started Tower Systems in 1981. While I am no guru, I have had a range of experiences that have helped me see the value of changing our businesses, transforming them beyond the traditional and doing so on a minimal budget. If you are embarking on the transformation and what to talk to someone, I’m here: mark@towersystems.com.au or 0418 321 338.

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Newsagency management

The future of the Australian newsagency

The future of the Australian newsagency channel is in the hands of those who own and run the 2,800 or so retail businesses that make up the channel. The decisions they each make in each of their businesses determine the success, or otherwise, of those businesses, and of the channel.

The decisions that will matter most are those relating to the products carried in the business, the narrative of the business and how you sell.

Before I get to that, I can say the future of the Australian newsagency will not be found in newspapers, magazines, lotteries, convenience retail, tobacco, cheap gifts, cheap toys or a canyon of spinners of products with names on them. The future of the Australian newsagency will not be found in any type of business competing with discount variety.

Suppliers, too, will not play in the future of the Australian newsagency. Despite them creating our channel, print media businesses especially have no interest in our future.

We can already see from retailers, newsagents, in the space that across Australia there is value to harvest from playing in premium and unique spaces, worrying less about price point and being smart when it comes to deciding your margin. Equally, there is value in the adage find a need and fill it in evolving our local businesses.

By products, I am particularly interested in products not common to the newsagency channel. Products such as clothing, gifts at $300.00 and more in price, books but not remainder books, cookware, collectibles people will drive for. Most likely products suppliers would not have in our channel today.

Sure, everyday products such as stationery, greeting cards and other categories our channel is known for will play a role in the future. Their success will depend on how smart we are in what we carry and how we price the burden of carrying. For example, selling stationery to those who need it is easy, selling to those who love is a whole different opportunity – one that is worth more I think.

There are no borders, rules or boundaries. What you can sell is up to you and your imagination as to how it is pitch.

By narrative I mean the story of the business the why for someone considering the business. If you’re a shopkeeper, you put products on the shelves. If you are a retailer with a commitment to a narrative, customers will understand the business, love being in the business and want what you offer because the narrative will nurture trust.

You nurture your narrative through what products you carry, how you place them in store, how you pitch them on social media, on your website and how personal you yourself are in and with them.

The challenge with narrative is that it must evolve, with you, time and the community.

By how, I mean when you sell and where you sell … having an ability to sell online is the key here. If you’re not online, you will have no idea what you don’t know.

Now if this all feels a bit new age like, I don’t mean it to. Today, in May 2024, we are in the midst of a period of immersive retail, retail people feel and experience. This is where your narrative plays a difference. A writing pad in a basic newsagency is a writing pad. The same writing pad in a store with a strong narrative could sell more easily and for more.

The more your shop and your website help people to feel things, the greater the success you will have.

What I am getting at here is that the future of the Australian newsagency lies in us being smart, engaged and creative, each of us making our own shop the best it can be. It won’t look like a cohesive channel, and that does not matters. What matters is that you create a business that is mighty successful locally, and with online shoppers who find you.

To those who don’t act, who don’t embrace change, I say farewell. The days of the old school newsagency are over. Time will catch you. This will result in fewer rooftops in our channel. I’m not sure how many, but on the current trend it will be 150 – 200 in the next 12 months.

To those keen to act, there are plenty of us in the channel who will help where we can. Reach out. Together we can ensure the relevance and success of our vital local retail businesses no matter how diverse our product and service mix and no matter what we call ourselves.

Footnote: There will be some who say the shingle should change, that news is not relevant. While it’s not relevant, what you call the shop does not matter all that much. It’s kind of like a picture versus a thousand words. What a shop shows itself as being matters more than what a shop calls itself. That said, Aussie newsagencies, being quintessentially local businesses are, in my opinions best off being called a name that is locally relevant – rather than some national name that is not locally relevant.

Second footnote: Reading back what I have written I know I have not made a clear and solid prediction. That’s because I can’t. There is no channel, no way to determine what all businesses in the channel will do.

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Newsagency challenges

The history of the Australian newsagency part 3: early 2020 – 2023, the Covid years

Aussie newsagency businesses were designated essential early in the Covid pandemic lockdowns implemented in the states and territories of Australia. This meant newsagencies could open while many retailers around then had to remain closed. This reacquainted many Aussies with their local newsagency.

Plenty of newsagents leant into the lockdown opportunity, expanding what they sold beyond what until then had been traditional for newsagencies. While gifts and similar products were common among those who expanded the range of products in their newsagencies, other new categories appearing in some businesses own the channel included flowers, coffee, electrical goods, clothing and camping goods.

While retail had the physical challenges of social distancing in this time, there were also considerable supply chain challenges as well as new operational models to learn such as selling online, click and collect and making as much of the in -store experience as contactless as possible.

Plenty of suppliers who had previously not engaged with the newsagency channel as they did not consider it appropriate to them engaged during the lockdown years. The expanded the range of products forward-leaning newsagents could easily access for their businesses.

As a result of the lockdowns, newsagents and suppliers found other ways of connecting and doing business. Trade shows that had been a key part of the product sourcing cycle for newsagents proved to not be as important post-lockdown. Retailer attendance at trade shows did not bounce back to pre Covid numbers.

Another situation that emerged post-lockdown is that newsagents relied less on traditional product categories. The commercial interests of newsagents and expanded, there were more opportunities than traditional suppliers offered.

Many newsagency businesses experienced double-digit growth in calendar 2020 over 2019 and 2021 over 2020. While the growth slowed, it did continue in 2022 and into 2023. The newsagency businesses in which growth was not as strong tended to be those that did not embrace the opportunity of being designated essential during the Covid lockdowns.

The good Covid years made newsagency businesses more appealing than they had been. This resulted in more business sales post Covid lockdowns than we were seeing previously.

As 2023 developed even though Australia had fewer newsagency businesses, the businesses themselves were stronger and had better relevance. The Australian newsagency channel was refreshed, well, most of it at least.

There was a surge in newsagency business closures in late 2022 and into 2023. These businesses tended to be those that had not change, that had not embraced changed. With newspaper and magazine sales continuing to decline, foot traffic was lower, unless steps were taken with new product categories to make the business more appealing. While media outlets considered the closure of newsagency businesses newsworthy, newsagents did not as most of those remaining continued to trade well.

Covid change the local Aussie newsagency and local communities benefited.

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Newsagency management

The history of the Australian newsagency part 2: 2015 to early 2020

2015 to 2020, up to the start of the Covid pandemic, were tumultuous for Australian newsagents as suppliers newsagents had served for years in the agency side of the business looked elsewhere for revenue.

What we now know as The Lottery Corporation ramped up selling lottery products online and on mobile devices, achieving excellent growth, taking plenty of in0-store purchases from retailers who continued to invest, under duress, in shook-fit and other requirements.

Newspaper publishers withdrew from newspaper distribution arrangements with newsagents, often delivering a poor substitute and leaving customers of long standing receiving poor service, failing on their promise of a better service for their subscribers.

Newspaper publishers also reduced in real terms the margin retail newsagents make from selling newspapers. What newsagents made did not keep pace with price increases. Also in these years, plenty of local newspapers closed with local news apparently valued less by major publishers.

Plenty of magazines stumbled with Bauer Media doing a poor job running the ACP media business they had purchased in 2012 and with pacific magazines not receiving much love from its owners at Seven West.

Banks no longer valued a newsagency business as an asset against which a purchaser could borrow.

Also during this period of 2015 to early 2020 there was disruption from the migration of accessing news and other traditionally print content to online.

Newsagents themselves remained disorganised with four different associations claiming to represent them.

In the midst of the changes plenty of newsagents realised that they had to make their own success, that suppliers who had led the channel for decades had all but abandoned it.

There was no whole of channel move this way or that. Rather, some moved into book retail, others into outdoors, others into coffee with most significantly expanding their gift and homewares offering.

Initially, the evolution was through a range of everyday gift suppliers who saw the opportunities in the newsagency channel. The focus was on gifts priced at under one hundred dollars and that served the traditional seasons of Valentine’s Day, Easter, Mothers’s Day, Father’s Day and Christmas. Newsagents continued to dominate in card sales for these seasons so tapping into gift related opportunities seemed easy.

The extent and speed of change in newsagency businesses varied business to business. There were many who did not change in these years, and this was a key factor in business closures, which were tracked at around 10% of newsagency rooftops each year in this period.

These years of 2015 through to early 2020 we say the biggest move from the agency model on which the channel was built to pure retail. Success was dependent on newsagents becoming retailers.

By the time 2020 reached us, the Australian newsagency channel was a channel in name only. In reality it was just over 3,000 retail businesses all operating locally, independently, and differently – some thriving, some treading water and some slowly going under. While there were several marketing group trading banners in the marketplace, the consistency between the businesses in these groups was not evident.

If it were not for the arrival of the pandemic early in 2020, the next years for the newsagency channel would have been quite different.

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Newsagency management

The history of the Australian newsagency part 1: 1980 to 2014

 In 2014 I was asked to contribute a chapter for A Companion to the Australian Media, the first comprehensive, authoritative study of Australia’s press, broadcasting and new media sectors. Edited by Bridget Griffen-Foley, this book is loaded with terrific content on the history of the media in Australia.

My contribution was on the history of newsagents. I share it below as part 1 of what I plan to be three posts on The history of the Australian newsagency.

The first organised newsagency in Australia was created in the 1800s to distribute publications to the Victorian goldfields.

The delivery news agents soon found themselves delivering multiple publications along particular routes, creating the beginnings of the first newsagency businesses. Over time, delivery routes were organised, providing the newsagent covering a defined route with exclusivity by arrangement with publishers.

In the latter part of the 1800s, some newsagents opened retail shops from which to run their distribution businesses. In addition to selling newspapers and magazines, these early retail newsagency businesses also offered stationery.

A traditional newsagency business model evolved, consisting of a retail outlet, distribution of newspapers and magazines to homes and businesses in a defined territory, and the supply of newspapers and magazines on a wholesale basis to other retail outlets. This model was not national: in South Australia and to a certain extent in Western Australia, the distribution and retail businesses evolved separately, making it rare for one business to operate both a retail shop and a distribution business.

The supply of newspapers and magazines to other retailers, called sub-agents, on a wholesale basis was contentious almost from the outset. Early in the 20th century, newspaper publishers took the lead in controlling who could purchase a newsagency and where one could be opened, opening hours, service levels and even what products could be sold. The lever of control was the Newsagency Council, established in each state and made up of publisher representatives.

Central to the newsagency model was that newsagents were – and are today for some suppliers – agents. This meant that they could exert little control over key aspects of their businesses, such as products supplied, quantity of supply and selling price.

Newspaper publishers micro-managed all aspects of their products in a newsagency business, from the time by which they had to be delivered to homes to their placement in the shops. Newsagents accepted this as a cost of having a monopoly.

It was not uncommon, even as late as the 1980s and early 1990s, for publishers to restrict access to ownership of a newsagency based on race. Magazine distributors exerted similar control on the granting of a trading account.

Newsagents were selected as the preferred retail outlet for lottery products and held this position almost exclusively until the 1980s.

A typical newsagency shop for much of the 20th century would have around 30 per cent of floorspace given over to magazines, 30 per cent to greeting cards, 30 per cent to stationery and 10 per cent to newspapers.

As shopping centres evolved in Australia, more newsagents opened retail newsagency businesses inside them. In 1999, through a process overseen by the Australian Competition and Consumer Commission, newsagents lost their monopoly over the distribution of newspapers and magazines. This resulted in other businesses being able to access direct supply of newspapers and magazines. While some publishers maintained newsagents as the last-mile distributor of products, they no longer controlled the relationship. No compensation was offered or paid to newsagents for the loss of the monopoly.

While the distribution of newspapers and magazines was deregulated, pre-deregulation rules and processes have remained for newsagents in relation to the supply of magazines. This has disadvantaged newsagents. In the years since deregulation, the relationship between newsagents and magazine distributors has prevented newsagents from breaking free of the monopoly-protected business model.

Since 1999, distribution and retail newsagency businesses have evolved. The number of newsagencies with a combined retail, home delivery and sub-agent business has significantly fallen as a result. Whereas up to 1990 newsagencies carried a reasonably consistent range of products across a limited number of core categories, in the 1990s some newsagents branched into new areas.

The pace of change in the newsagency channel increased in the mid-2000s, with many newsagents either selling or giving up their newspaper home delivery and sub-agent

distribution businesses. This came about because newspaper publishers refused to allow newsagents to charge a commercial rate for distribution services. Coupled with a static cover price for newspapers, from which newsagents made a margin, this meant the majority of newspaper distribution businesses were loss-making. A limited number of newsagents purchased these businesses, combining them into bigger specialist distribution businesses by leveraging leverage critical mass to make newspaper and magazine distribution profitable.

Since 2011, the pace of change in retail newsagency businesses has increased considerably, driven by declining sales of print media products, increased retail real estate and labour costs, a higher cost of capital and a greater penetration of franchise groups providing newsagents with management and marketing advice.

By 2012, there was a growing separation between distribution newsagencies and retail newsagencies, as well as a growing gulf among retail newsagencies. This was encouraged by News Limited with a trial project called T2020, intended to force newspaper distribution consolidation among newsagents. While T2020 failed to go beyond trial, newspaper publishers continued to encourage newsagents to consolidate to drive operational efficiency.

In 2013, around 7 per cent of retail newsagencies closed, due to a lack of newspaper home delivery revenue and falling newspaper and magazine retail income. Today, while a typical high street newsagency has a floor space similar to that of 30 years ago, the average shopping centre newsagency has a more diverse product offering.

Whereas in 1999 newsagents did not sell printer cartridges, by 2014 they accounted for around 40 per cent of stationery sales. Some product categories, such as toys, have come full circle. Decades ago, newsagents used to dominate in the toys category. This faded from the 1980s; however, since 2013, newsagents have clawed back toy sales and are now a sought-after channel among toy manufacturers.

Market forces are driving newsagents to pursue greater change and develop businesses that are more competitive and with a broader appeal to shoppers. While some suppliers continue to resist this, newsagents expect to finally unshackle their businesses from pre-deregulation anti-competitive practices.

Nowhere is the change confronted by newsagents more evident than in industry representation. In 2003, close to 3,000 newsagents were members of the national Australian Newsagents’ Federation industry association or one of its affiliated state associations. By 2014, that number was estimated to be under 2000, with newsagents relying less on national representation.

REFs: Australian Newsagents’ Federation, Newsagents Year Book (2014).

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Newsagency management

We installed a self checkout kiosk in our newsagency recently

We installed a self checkout kiosk from my POS software company in our newsagency on Glenferrie Road Malvern recently. My understanding this is a first in the local indie Aussie newsagency channel – while WH Smith have their self checkout terminals they are far removed here from a local Aussie newsagency. It’s going well. Customers are using it.

While we developed this POS software self checkout solution for other retail channels, I wanted us to test first in one of our shops, to allow us to see interaction first-hand and to tune the software and hardware as a result.

Here’s a short video about it:

Australia’s big two supermarkets have damaged the reputation of self-checkouts with cameras watching shoppers and less shop floor staff because of more self-checkout positions, they have given self-checkouts a bad name.

There are situations where self-checkouts can be useful for customers and for the business, and where then can be setup without the nasties the big two supermarket chains have used.

I know of retailers who like the idea of a self checkout located far from the counter, closer to where customers load their car or van. A small format self checkout kiosk can be the answer.

I also know of retailers who have shopper traffic peaks for brief periods and where a self checkout terminal could be a cost effective way of smoothing shopper flow.

Tower developed a self checkout solution for our POS software, found awesome small-footprint hardware and installed it at malvern as a trial.

What we have discovered so far is that people are familiar with self-checkout, there is no hesitancy. An unexpected use is by people preferring a discrete purchase.

There have been some questions, like whether there is a camera attached. People like that there is no camera.

One older (80s I am guessing) customer said to me they were surprised to see self checkout in a newsagency and then went on to say they love the innovation, shows you’re keeping with the times he said as he headed out the door.

While I don’t see self checkout becoming a big thing in newsagencies, nor in many smaller independent shops for that matter, there are situations where it is an ideal solution. This is why we invested money in the new software. The development project had to overcome some tech hurdles which resulted in knowledge that will help in other areas of the software.

Software innovation is important in all retail channels given the rapid changes we are seeing in how, when and where people shop as software innovations facilitates retail innovation. What could be sold from here could be quite different to what people pass across the counter to purchase.

This is, in part, what the trial install is about – learning what could be.

While I mention this is a first. If I’m wrong, please comment on this post so the record can be corrected.

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newsagency of the future

Newsagents: are you tech-ready for the new Weekday Windfall game from The Lottery Corporation

As I wrote here on May 3, the tech implementation by The Lott for the new game has been selfish and poor.

Despite strong protests from me to senior management at The Lott, they, in their infinite wisdom (bless them), plan to reuse a product code for the new game. This  code is currently linked to a payout department.

In our opinion, this is a seriously stupid and dangerous move by The Lott. They should have used a completely new product code.

Failure to adhere to the steps outlined in our knowledge base advice will result in all sales for the new Weekday Windfall game being treated as payouts or lotto wins. This risks you disbursing funds to customers by mistake.

Have you taken steps with your newsagency software to be ready? If you haven’t, and a mistake at the sales counter is made, it could be expensive.

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Lotteries

The Australian Financial Review all but out of Western Australia

This note has been sent to newsagents by Nine Media:

Supply of The Australian Financial Review

Nine has been notified of a substantial increase to printing costs of copies of The Australian Financial Review (the AFR) supplied to newsagents, distributors and sub-agents in Western Australia.

As a result of these increased costs, the supply and distribution of print copies of the AFR in Western Australia is no longer commercially viable.

Our existing print distribution arrangements for the AFR to newsagents, distributors and sub-agents in Western Australia will cease effective close of business on Wednesday, 22 May 2024. Your business has been identified as currently receiving print copies of the AFR and as a result, you will no longer receive these print copies effective close of business on Wednesday, 22 May 2024.

We will be contacting all AFR subscribers to advise them that home and office delivery of print copies of the AFR will no longer be possible after that date.

We kindly request that you make a copy of this notice available to any sub-agents or other retail outlets supplied and billed by you (i.e. those retailers who do not have a direct account with Nine).

Separately, Nine will distribute retail copies of The Australian Financial Review Magazine and the quarterly Fin! magazine in metropolitan Perth from the end of the month. If you are interested in receiving supply of any other publications that Nine may determine is commercially viable to distribute within Western Australia from time to time, please notify us of your interest via email at circsales@nine.com.au

We thank you for your past support of The Australian Financial Review. If you have any questions in relation to this matter, please contact us via email at newsagencycontracts@nine.com.au.

It’s an odd move by Seven West. Maybe they think this may help with sales of their local paper or boost interest in their new online after nine product. It will be interesting to watch how it plays out.

Aussie daily newspapers have hung on to print editions for longer than in plenty of other parts of the world. While I am no expert, I suspect that somewhere around half the daily newspapers in Australia are not profitable on the majority of days they publish. They are thin and loaded with ads from a small group of businesses.

I suspect that if were see a capital city daily close it’s print edition, several others would follow quite quickly.

There is no upside for print newspapers. Publishers have repurposed the print product to rely far less on news and to give advertisers more control of their once respected mastheads. Smart newsagents long ago adjusted their businesses to not rely on them.

Newspapers themselves are inefficient products with more than 75% of newspaper purchases in a newsagency being a newspaper and nothing else. This basket inefficiency has been a challenge for our channel for decades. Back in the 1990s the inefficiency percentage was 85% or more. It has dropped a little, not enough though and this is despite extraordinary effort to engage with newspaper shoppers to try and sell other better margin products.

In their treatment of newsagents over recent years, newspaper publishers have shown little respect. Our margin is down, which makes newspapers less valuable. It’s at a point that there are newsagents in our channel who no longer sell newspapers.

What’s happening in Western Australia with The Australian Financial Review is interesting yet far from the bigger story about newspapers that is playing out nationally.

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Newspaper distribution

Inspiring newsagency transformation: Mount Lawley News, WA

Matt bought a traditional newsagency shop in late 2021. It was his first retail business. He knew he wanted to reinvent the business, to be relevant and appealing.

In less than 3 years Matt with his family and team have transformed the business into a thriving and loved local shop in Mount Lawley 10 minutes out of Perth.

While it’s called Mount Lawley News, this shop is not a newsagency, not what you think of as a newsagency. It’s a gift shop, a fun place to shop, somewhere you’re likely to find a gift for just about any occasion.

As Matt shares in this video, he embraces the opportunities of change, and he shows that even though the shop has been transformed, he’s not done. What he has created online through the website as well as on social media is fresh, engaging, and successful.

I are grateful to Matt for the opportunity to find out more. Be sure to check out their website: http://www.oliviaandgrace.com.au.

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Newsagency management