Australian Newsagency Blog

In a blow to printers, catalogue distributors and local delivery walkers, supermarket giant Coles has announced it is quitting print catalogues.

This decision by Coles will have a knock-on impact as their catalogue business has been important to that sector. Their continued engagement with the catalogue medium has, I suspect, encouraged others to continue with the medium.

The Coles departure will result in more departures, challenging long term viability of catalogues.

With so many more easily accessible pathways to consumer engagement available now, the death of the print catalogue was a matter of time.

It will be interesting to see what happens with catalogues inserted in newspapers. Given that the Coles experience is not theirs alone, it stand to reason fewer businesses insert in newspapers.

Through my POS software company I am hosting this free workshop via Zoom today:

Taking your retail business online from start to finish.
Wednesday August 12 @ 10:30am.

At Tower Systems make awesome specialty POS software for speciality retailers. We also make awesome Shopify and Magento 2 websites connected to our POS software.

Join us Wednesday August 12 @ 10:30am AEST for a free live and interactive workshop on taking your business online.

We will share insights, advice and experience from websites we run for our own shops and sites we have created for others.

We will talk design, smart text, SEO, SEM and other buzzwords, but we won’t use buzzwords. This will be a plain English workshop. We will be honest about the hungry beast that is a website.

The workshop is free. Just turn up. Click on this link:

https://zoom.us/j/92448828358?pwd=cllQSWFaRitJSkQwSUNYYy9ZTks1dz09
Meeting ID: 924 4882 8358 Passcode: 196319
Wednesday August 12 @ 10:30am AEST.

Are retail newsagencies closing due to COVID-19? I see no evidence of this. While I am aware of a couple of business owners saying they closed due to Covid, these businesses were on a trajectory to closure long before the outbreak.

In my experience and based on data I have seen, gift shops, jewellers and hospitality businesses are more likely to close due to Covid than newsagents. I am aware of plenty in these channels that have closed, businesses that were trading okay and not on a trajectory to closure.

By trajectory to closure, I mean data in year on year comparison – revenue and profitability were declining before Covid, showing the business to be on a trajectory to closure unless it took drastic action to play against the trajectory.

Most retail newsagents, particularly high street, regional and rural newsagents are doing well through Covid. It is rare to find one not doing well. And, by well, I mean with year on year revenue somewhere between -20% and +33% – yes, that is the actual range I am seeing reported.

Of the 150+ I have spoken with that are doing well, all had diversified in one or more ways, attracting non traditional newsagency shoppers, driving up overall GP% and broadening the appeal of the business. And, by doing well, I mean they did not qualify for JobKeeper.

The retail newsagencies more likely to not come out of Covid well are those in shopping centres, especially those without online revenue and those that have not pivoted enough. Covid has laid bare the risk of their the traditional newsagency situation of low margin agency lines and an ever growing operating cost base.

The good news for the channel is the successful pivots undertaken. There is the traditional pivot to gifts. then, there is the less traditional and often equally or more successful pivot to coffee, cafe, toys, games, homewares, baby, outdoors, electrical, locally made, services and more. Successful pivots usually involve 2 or more of these categories.

Covid has brought into focus the need to evolve. This need is not new nor are the suggested changes new. Indeed, they have been discussed and debated here for years as well as at conferences and workshops. indeed, the first time I laid out the need for fundamental change in new traffic categories was at the ACP Magazines Connections conference in 2005.

Newsagents who want help to pivot can speak with a marketing group. A good marketing group will offer options for consideration, new traffic opportunities, execution training and platforms through which you can discover new shoppers. This work is all basic to any engaged marketing group.

What Covid has brought into focus is new opportunities for the channel. These are in the form of new suppliers as well as new operating practices such as being online, offering click and collect and bundling. I see these as positive for those for whom they are new.

While the channel has evolved and continues to evolve, newsagencies are here and are strong. The biggest difference today is in the types of businesses that consider themselves to be under that shingle.

Now, if you plan to comment that it’s doom and gloom, I say, again, there is no evidence of this, no matter how much you may want there to be.

The newsagency channel is filled with plenty of good news, which we should celebrate.

Footnote: I expect Covid will result in a fundamental change in areas including occupancy cost, a shift, for some, out of malls and on to the high street, access to new suppliers and, maybe, changes to employee arrangements. These and other areas of change will lead to fundamental recasting of retail, business and our channel.

Note: My information comes from my software company, Tower Systems, which serves 1,700+ retail newsagents, my work with newsXpress members, 220+ retail newsagency businesses, newsagency suppliers and others.

It’s been another weekend of reasonable greeting card sales in Melbourne with all other categories challenged. In my own experience, checking basket data, people are buying 2, often more. Some are buying and many as 10 in a purchase. There is good caption depth in the basket too.

Whereas card sales crashed in the early days of COVID-19 in March, this time around sales are down but they have not crashed. This is based on data from a handful of stores.

There is no doubt that the situation is ‘helped’ by other card outlets being closed. That said, even our regular card shoppers are purchasing more. Father’s Day card sales continue to be strong.

More broadly, though, in Metro Melbourne newspaper sales have declined significantly, 50% in some cases, more so than magazines, which are down too.

Stationery is doing okay with home office supplies and similar necessities doing well.

A newsagent sent me photos this morning of their wet magazines delivered via the News Corp. truck. It appears to be a feature of the trucks that they are open, with product not plastic wrapped subject to getting wet, like the entire shipment of magazines for this business.

You’d think that the folks in charge of the change in logistics arrangements would have ensures that the quality of service provided did not drop as a result of the change. Apparently, not.

This is the third time magazines have arrived wet in the newsagency that shares the photos with me.

People will not want to buy product that presents like this:

Rectification of the problem is a challenge. Gone are the days a rep would get in the car and personally deliver replacement stock.

There has been a surge wholesalers who have previously not pitched to newsagents reaching out to the channel as a result of the second wave of Covid-19 infection in Victoria. By surge, I am referring to 4 of which I am aware, wholesalers who previously did not deal with the newsagency channel who are now happy to embrace.

This is good news I guess as it can offer product range expansion opportunities. It is a challenge, too, as we need to con sider every product opportunity carefully and in the context of how we see our businesses and the types of shoppers we seek to attract.

With traditional gift shops closed in Melbourne and the vulnerabilities of that niche retail channel laid bare since March this year, it is no wonder that wholesalers are looking for other outlets for their products.

Some wholesalers are looking to offload overstock while others are looking for retail partners of the long term. While media reports have been about shops closing, wholesalers closing is a whole other thing. It is prudent to do due diligence on a new wholesaler for your business before taking them on. Knowing their longer term prospects is important.

It seems that every week is presenting new opportunities and challenges. Overall, I think this is a good thing. It’s allowing plenty of us to evolve our businesses, in-store and online, faster than may have been the case in a more traditional 2020.

The Banjo Patterson coins and set released by the Royal Australian Mint a few days ago has sold out, creating a frenzy of shoppers chasing product, begging, offering to pay above SRP.

Some shoppers are regulars who buy coin magazines, while others are new shoppers chasing these coins and other mint coins we stock.

It’s fascinating watching this surge unfold in the middle of such an unusual retail situation as we have in Victoria right now. It’s a terrific good news story for an important and growing category in-store. Collectible sales are growing, not only in coins but in other segments too.

we have been in the mint coin space for a while and it is a valuable and growing part of the business, working well in-store as well as online. Indeed, re online, coins are an easily portable gift and that matters in 2020.

Here is what we have had behind the counter for the last couple of weeks at one of retail newsagencies. This is what shoppers see when they are at the counter. People are pointing to the one they want, happily adding to their purchases, on impulse.

It has been working a treat. Shoppers love that they can choose without touching and knowing that others, too, have not touched. They also love the Squishmallows product as it is a perfect huggable gift in this moment in time when hugs are not possible – here in Melbourne at least.

That wall beyond the counter is more important than ever here in Victoria as we can use it to drive impulse purchases with tactical placement, such as with these Squishmallows.

Plush sales were up 25% in July across Australia, not only in newsagencies but in other retail channels as well. I think this is because giving a plush item is like giving a hug.

Tactical placement at the counter is key to leveraging the opportunity. Try it.

News Corp has just released its fourth quarter and full results. For the Australian and newspaper part of the business for Q4:

There is also this re COVID-19:

The figures have just dropped. there is sure to be plenty of analysis, especially by competitor outlets.

In terms of COVID-19 it is interesting to see their commentary about their own business and to reflect on this in the context of their shrill and changing commentary which is often shouted at the public. If only their reporting and ‘news’ stories were as reflective and considered as what they write about themselves.

The early days of stage 4 restrictions in Victoria have offered up some learnings others may find useful.

• Shoppers are less tolerant. People have a shorter fuse, leading to more outbursts of anger in-store.
• People are stocking-up. Cards, crosswords, games, jigsaws … these and some other categories are benefiting. Take cards, for example, several times over the last 2 days we have seen people buy 10+ cards in a purchase, so they have what they need for the next two months.
• Jigsaws continue to be a hero category.
• People want easy. They like gift packs, ready to buy.
• Impulse at the counter works. Easy to understand products at the counter are working.
• Father’s Day is early. Yes, I have noted this previously. sales are good.
• People want more. Shoppers are asking for products not usually stocked, products they would get elsewhere but those stores are closed.
• Online is hot. Yes, I’ve said this before. Interestingly, sales volume later at night is up.

I suspect that outside of Victoria, businesses that are online are seeing growth in sales for delivery into Victoria.

With stage 4 lockdown now in force in Victoria, there is considerable more attention on click and collect given that it is noted in the lockdown provisions.

Click and collect is where a shopper purchases online and collects the purchase curbside or at a designated contactless collection point from the business.

Click and collect operates through websites, like Shopify, that are connected to the POS software of a business, thereby managing inventory through one dataset, eliminating duplicate work and ensuring accurate stock on hand data.

The even safer solution in stage 4 is home delivery whereby people purchase online and have the goods delivered, contactless, to their delivery point.

Smart newsagents have been offering online purchases, including click and collect, for years. I have been talking abut it for years here, at conferences and at workshops.

I first offered click and collect in my own newsagencies in 2015. It quickly became an important offer in each business, helping to attract folks who otherwise might not have shopped with the business, usually from another state but also locally when it comes to click and collect.

Click and collect allows someone to purchase at midnight, securing what they want, paying for it and having it ready for quick and safe collection the next day. It’s smart in that online shoppers have their wallets open when. online. It’s a race to the cash in many respects and offering click and collect, or delivery, is key to winning that business as convenience is paramount.

Today, I know of many newsagents operating click and collect through POS software connected Shopify sites. While some have WooCommerce (WordPress) sites and Magento sites, they are small in number, Shopify is the main game in town for many excellent reasons. Note: my view on Shopify is not personally commercial in that I use and have used all 3.

In this corona impacted 2020, having a click and collect offer is good disaster planning, it can provide the business a framework through which ti can continue to trade, which matters as the stage 4 regulations are showing.

The big challenge for newsagents is suppliers. Not all, but certainly plenty, make data feeds to online challenging. Suppliers need to be more organised with images, data feeds and more. There are others, like TheLott, that block online altogether.

Whether you like it or not, click and collect is here to stay. It is a core offering of any engaged retail business today. Start by talking to your software company. For anyone interested, I created an online questionnaire for retailers from my POS software company to help them work through their needs. Once you fill this in, it sends you your responses, for your own records and consideration.

Since some folks are commenting elsewhere, here is the full announcement by Tabcorp yesterday:

1. Permitted worker scheme. Any employees travelling to or from workplaces or for work in any part of the Melbourne stage 4 lockdown will need to have a permitted worker permit with them. Click here to access the Victorian Department of Justice page that details this.
2. The Victorian government has expanded its business support grants of $10,000 and $5,000 for stage 4 for Melbourne and stage 3 for regional areas Click here for details and to apply.
3. Workplaces need a Covid Safe plan. Divergent government websites say this but are inconsistent on the detail. In my own situation we created a one pager that we can point to and have this located in the office, which is open. It’s backed by more comprehensive information in the business at appropriate points.
4. Click here for the detailed document outlining what’s in and what’s out.
5. JobKeeper. The government website is open for July data, meaning payments will flow in the next few days.

Speaking personally. Owning a business that remains open in the Melbourne metro stage 4 lockdown can be a good feeling, for a moment, a brief moment, and then you realise all the businesses around you that will close.

Every local retail business is part of a community, an ecosystem, of businesses and people who rely on those businesses. So many colleagues will be home and out of work, with shops close. Some will have prepared and have an online operation through which they can trade. however, I suspect the majority will not.

Right now, I wonder if 6 (or more) weeks on we will see the announcement yesterday as a phyrric victory.

It is odd considering this through the prism of owning businesses that get to remain open. I didn’t expect this to be the case. It is good, but challenging.

Back in the first weeks of March we planned for this. We were frugal with spending, backing only winners, prepping for what might come. That work, back then, has made the path ahead more certain for us and provided the capacity for us to pivot, again, through the new stage 4 situation.

Looking at this more broadly. The rest of Australia is starting to see the role businesses in Victoria play. This is reflected in the detail of the government announcement yesterday.

In our channel, with all major card companies and many major gift, toy, games and plush suppliers supplying through Victorian based warehouses, the impact could have been far worse.

The reduction in warehouse teams will slow supply, but not stop it. I think key will be timing of ordering. retailers are well advised to add a buffer to the order cycle. For example, if you usually order Wednesday for an early the next week delivery, pull that forward by at least two days and include a buffer so you are not left without stock.

In the Melbourne metro area, there are opportunities for retail newsagencies to offer products other local retailers cannot. Toys, games, gifts, homewares all fit within this opportunity space. However, engaging with these opportunities will need respect and care so as to not damage other local relationships. Nimble suppliers will embrace this opportunity for relationships with newsagency businesses, some, maybe, for the first time.

The rest of Australia. Outside of Victoria, I expect that stage 4 in Victoria will impact the psyche of Australians as it offers a more local case study on dealing with the ramifications of people with corona being close to others.

As someone living and working in metro Melbourne, it is an unexpected and weird experience. However, like plenty of 2020, it is something to understand and deal with.

Click here for the detail list of restrictions. Here is the first part of the announcement:

Last week, we saw good Father’s Day card and gift sales. The season has started already this year, way ahead of what is usual for Father’s Day.

It is common that around 75% of Father’s Day card purchases are in the last 4 days of the season. based on sales already, I think we are likely to see sales over a longer period as well as an overall boost in sales.

If you have Father’s Day cards and gifts and are yet to put these out, my suggestion is you put them out now and start pitching them on social media. Placement in-store should be front of store or the window if you have a window.

On social media, I think it is useful to pitch to unique captions.

Due to corona, people are unsure as to how and when they might shop. Plenty are buying now for later because of these uncertainties.

Also, with most supermarkets yet to put the season up, you can benefit from a first mover advantage.

In my own shops we have gone out early with Father’s Day cards and gifts front of store as well as online. We have been particularly surprised, and pleased, with the early Father’s Day card sales.

On social media we have engaged with a series of pitches, including this announcement video that the season has arrived in-store.

It is certainly odd selling products that celebrate the Tokyo 2020 Olympics that should be being held right now but are not on and may possibly not be held at all based on the latest analysis. However, that is exactly what we are doing with this and other mint coins from the commemorative 2020 Tokyo Olympics mint coin set sourced from the Royal Australian Mint.

Collectors are collecting even though the 2020 Olympics are yet to be held. Some think this anomaly makes the coins more interesting and, for some, more valuable.

In-store, the collection is an interesting talking point and another marker of an odd 2020.

I had thought that the Mint might recall the product and start again but once I realised the cost of that and the interest in the coins regardless of the event itself not happening I understood why the products are out there, and selling.

This is another unique experience of 2020 from which we are learning … and I like that.

The on-going challenge of COVID-19 infection in Victoria is hitting even high street retailers with shopper traffic down for this segment of retail that had been resilient over recent months.

This past week has seen a measurable downturn in traffic.

Retailers with an online presence have seen an increase through that channel. One high street retailer in Victoria retailer I spoke with yesterday, not a newsagent, said that over the counter was down 30% while online was up 200% with the business overall trading at close to the same revenue level.

In my own situation, online is helping with sales fulfilled through the post as well as sales fulfilled through click and collect. indeed, click and collect has become quickly understood and appreciated by shoppers, especially older shoppers.

These days, being flexible with how and when we transact business is important. Online is no longer niche or a game, it is a core need in business … challenging for plenty but core.

Ovato hit Twitter yesterday with an announcement re no physical returns. This is great news as there is no better incentive to reduce waste in magazine printing than eliminating physical returns.

OVATO RETAIL DISTRIBUTION – NO PHYSICAL RETURNS PROGRAM: IMPORTANT UPDATE – https://t.co/pfyCNa4qp7

— Ovato Retail Distribution Aus (@Gordongotch_au) July 30, 2020

UPDATE @ 10:00am: I have been contacted by Ovato,. Apparently the Tweet announcement was inaccurate. Here is what I received:

I have been alerted that our marketing team has posted on twitter that we have stopped all physical returns. You have picked up on this on your blog today.

This was actually the EDM Mailchimp notification sent out to newsagents on our NPR (No Physical Returns) program that has been running for over 3 years that was linked to twitter in error. We do a quarterly review of all EDI sales data from XchangeIT and then confirm to agents who are on if they continue to pass the criteria and confirm to agents who have just passed they are now on the program. From the latest review with now have 1,129 newsagents on the NPR program with 25 joining from August. We know this is an extremely beneficial program to newsagents saving time and real cost and is a key focus for XchangeIT and ourselves to work with agents to improve their data and get more newsagents on the program.

In regards to continuing to simplying the magazine category for returns to save time and money we confirmed in June to all newsagents not on the NPR program that we had permanently stopped full copy returns except for partworks and selective trading cards from July. We confirmed this after doing a 3 month trial from the start of COVID in April which we received very positive feedback. The newsagents on this program still have to send back tops so we can perform audits.

I would be grateful if you could update your blog post on this do avoid and further confusion and we will send an update and apologise on twitter to clarify the mistake.

Okay, so returns of unsold magazines is still a thing, which is disappointing since newsagents can’t control wheat they get yet they have to spend money returning what does not sell.

Here is a new tweet from this morning:

Our post yesterday on No Physical Returns was supposed to be sent only to agents who supply us with daily sales data that pass the criteria, but in error was also sent on our twitter feed. We apologise for this mistake.

— Ovato Retail Distribution Aus (@Gordongotch_au) July 31, 2020

Here is the original detail Ovato shared on Twitter:

To ensure continuation of this process, the following terms and conditions apply:

You will:

• Continue to send regular Sales Inventory Data (SL2 files)
• Submit returns files via XchangeIT not via web and Ovato Connect
• Maintain minimum Gold Status through XchangeIT
• Pass Ovato Retail Distribution’s data review process where variances in your EDI scan data and returns claims are evaluated across the entire Ovato Retail portfolio.
• Continue to return full copies of Partworks and some trading cards as these are excluded from the program. We will communicate to you in advance of recall which trading cards need to be returned.  All returns boxes containing Partworks and trading cards must have the fluro “Partwork” label supplied by Ovato next week in a prominent position.
• Hold physical returns for 2 business days commencing the day after submitting your returns through XchangeIT; this includes supplementary returns
• Remove all returns claimed from sale and destroy all unsold product to ensure it is unsaleable

Ovato Retail Distribution will:

• Generate random audit requests whereby you will be required to submit physical proof of claims. These audits will be advised through XchangeIT or ORD and compliance is compulsory. This is a key requirement of the program.  If you are unable to provide proof of claims to support your returns submission, we may consider your returns submission void and reverse the claims raised.
• To meet the requirements of the audit, physical returns must be held as specified above.
• Continue to review the performance of newsagents across all measures to ensure full compliance.
• Require resumption of our normal physical return policy if at any time you do not meet the above criteria.
• Provide you with “Partwork” fluro stickers to be placed prominently on all return boxes for partworks/nominated trading cards. To order additional stickers contact us on 1300 650 666 or via email contactus.retaildistribution@ovato.com.au

We hope these revised trading conditions deliver efficiencies related to the management of the magazine category in your business.

I was cold-called by an NLNA sales person late yesterday, Sam.

Sam had the pitch down claiming that NLNA helps its customers, yes, that is the term he used, to make more money in their businesses and cut their costs.

I questioned him about the details and he mentioned other business names, partners apparently, but no details as to the how.

He was on a mission for me to sign up. That appeared to be his only goal.

I am guessing that Sam is one of the NLNA sales people they hired a few weeks ago, pitching $2,000 a week income commission only.

While Sam has a job to do, a quota to make, if he wants to achieve any income, association representation comes from the hard slog of representation. There is only one national association representing newsagents and that is ALNA, as recognised already by suppliers and myriad government bodies.

What a joke.

Here we are, four and a half months into Covid and we have major Australian landlords misbehaving in their dealings with small business retailers.

• One national landlord has advised tenants in some locations that they will now charge additional fees if they decide to open their shops on a Sunday. This follows years of Sunday trading without a cost being applied.
• One national landlord is yet to agree any rent relief to small business retailers in at least 2 of their centres.
• Several national landlords have applied the maximum increase in rent even though traffic in their centres is way down due to Covid.
• Several national landlords are continuing to bring in major discount outpost operators, which take business from permanent small business tenants, despite foot traffic =in the centres being down by more than 50%.

Years ago, shopping centre tenancies were sought-after. Today, many of those tenancies are in serious trouble because of Covid. Centre traffic is down and landlord dealings are challenging.

Australians have demonstrated a clear preference for the high street over the last four months. This makes high street retail more valuable. I think it is a reason we are seeing more high street newsagency businesses sold with shopping centre businesses less so.

Unless shopping centre landlords considerably reduce the occupancy cost and address some of their harmful practices, we will see fewer indie small business retail outlets.

Not all face masks are the same. Be sure to do your research before deciding what face masks you will stock.

Given the use of face marks, the last thing you want is to discover that you sold something not fit for purpose, not safe.

I know of one business that recently purchased KN95 masks where the straps that held them in place were 2cm shorter than usual, making them unsafe for adults to wear.

I know of another business that bought surgical masks that were imported and found to be missing a protective layer.

Beware that there are some pitching face masks, taking money up front, and not delivering. This product niche is ripe for scammers.

This is a whole new product for retailers. if you do decide to play in this space, research is key.

The positive and negative impacts of COVID-19 on  newsagency retail sales revenue across Australia.

The results of the June 2020 quarter newsagency retail sales benchmark show the extent to which COVID-19 is impacting businesses.

There are winners and losers.

• The winners are regional and high street retailers.
• The losers are shipping centre based retailers.

Looking at comprehensive retail sales data from 137 newsagencies for April – June 2020 compared to April – June 2019, the results underscore the value of the retail newsagency channel to local communities. This is a same-store comparison, making the results meaningful. FYI, I removed stores that were closed for any time in the reporting periods.

Data include a mix of rooftops from several brands. The benchmark includes data from businesses using the Tower newsagency software and several who are not.

Given the extraordinary gap in performance, I share the results separately, because reporting them as one dataset does not make sense.

Shopping centre based retail newsagencies.

• Transaction count change: down 42%.
• Revenue change: down 36%.
• Basket size change: up 11%.
• Newspaper unit sales: down 15%.
• Magazine unit sales: down 21%.
• Cards revenue: down 27%.
• Stationery revenue:  down 11%.
• Gift revenue: down 45%.
• Toy revenue: down 42%.
• Puzzle revenue: up 5%. A quarter of reporting businesses sell puzzles.
• Instant lottery revenue: up 9%. Half reporting businesses have lotteries.
• Lottery revenue:  down 5%.

A note about shopping centre data. The dataset in small, just under 10% of respondents. However, the gap between respondents is small.

High street newsagencies.

• Transaction count change: down 5%.
• Revenue change: up 27%.
• Basket size change: up 20%.
• Newspaper unit sales: down 5%. early din, there was a jump, which has disappeared.
• Magazine unit sales: up 5%.
• Cards revenue: up 7%. There are pockets of success – female birthday and thank you cards, in particular.
• Stationery revenue:  up 13%. Homeschooling and home office, of course.
• Gift revenue: up 25%. Some categories are down while others, like nesting products, are in triple-digit growth.
• Toy revenue: up 13%.
• Puzzle revenue: up 150%. Less than half reporting businesses sell puzzles.
• Instant lottery revenue: up 16%. Just over half reporting businesses have lotteries.
• Lottery revenue:  up 4%.

A note about this high street data: it includes regional and rural as well as suburban high street. The performance of regional and rural is considerably better than suburban high street for the most part. How much, you ask? Around 33% better is my response.

Embarrassed.

Plenty of regional and high street newsagents are embarrassed to be reporting such good numbers. Their growth while other businesses nearby are struggling makes them not want to be too open about their success. Even within the newsagency channel there are those in growth who do not want to talk about it with newsagents who are way down.

A moving feast.

Looking at early July data, I’d note that it would be wrong to lock the April – June  results into a view for the long term. We are certainly in a period of significant change. The next quarter results could be different again.

What have we learned from the last 3 and 6 months?

• Shopping local has been embraced.
• The high street feels safer than a shopping mall.
• Newsagencies are trusted and appreciated businesses.
• Our channel is essential.
• A newsagency is a good business to own overall.

While we have learned more, this list is my key points.

Finally, I am grateful to all newsagents who shared their data for inclusion in this study.

Mark Fletcher.
Email: mark@towersystems.com.au  Website: www.towersystems.com.au  Blog: www.newsagencyblog.com.au
M | 0418 321 338

I failed high school and dropped out of university, twice. I’m not an economist and have no accounting training. My only experience is the software company I started and still run and my retail related businesses. I’ve experienced wins and losses, confronting adversity and getting out the other side.

That disclaimer noted, below are my suggestions for boosting the Australian economy and, through that, creating Australian jobs. However, before I get to that, in an overall sense, my suggestions represent a pivot in government support. I think the time is right for such a pivot, to lean into the opportunities presented by corona. Here you go:

1. Maintain job keeper for net new roles created in Australian owned businesses. Do this for a year, maybe longer. It would bring forward decisions by employers about roles they might create. I’d pay it in arrears ti mitigate against businesses hiring if they cannot afford it. However, if this idea was implemented, it would need to be managed with minimal paperwork.
2. Permanently increase unemployment benefits, the age pension, carer’s allowance and more. Giving people with little money more money will see that money spent more so and faster than giving people with plenty of money more money.
3. Support regional communities. Corona has shown that living regionally has considerable benefits. These are expected to linger long after corona. Invest now to support people in making that move. Consider more useful financial incentives for people and businesses to relocate to the regions. While I get the usual focus on tourism, I think more everyday businesses locating to a region could bring economic balance to that region.
4. Promote buy Australian by Australians. All governments should fund a national, clever and engaging ad campaign to promote buy Australian so that Australians understand what this means, what it can achieve for the economy and for people individually. This campaign needs to be so strong that an Amazon box, or similar, is a bad look.
5. Incentivise buy Australian. Consider a reward for buy Australian. Make it more beneficial to Australians to make this choice in situations where there is a choice to be made.
6. Buy Australian at government level. It is frustrating to see governments spend money with overseas companies where there are Australian businesses that can supply. Governments spend too much money with overseas businesses across plenty of business sectors.
7. Review government support that ships offshore. Let’s look at programs like franking credits and situations where money is paid to people living outside Australia and tax breaks given to offshore businesses and individuals. Any government assistance or payments could be of greater use if retained in Australia.
8. Introduce a multi-faceted investment allowance program. To get businesses spacing in areas they have not spent in the past.
   1. For Australian businesses to advertise to Australians.
   2. For Australian businesses to pivot and shift from overseas manufacture to local.
9. Rank Australian. Create an indicator to allow quick and easy understanding that a business is Australian. Something better than the current logos. This could allow for Australian ownership, percentage of Australian materials and labour – so that consumers can make informed decisions.
10. Eliminate payroll tax. This tax is a disincentive to employment.
11. Increase the tax take part 1. No, don’t increase tax rates. Rather, take forceful action against the big businesses that structure their arrangements to minimise tax by offshoring revenue. Independent journalist Michael West writes about this and runs a list of corporate tax dodgers – I urge people to read it.
12. Increase the tax take part 2. Introduce a fractional transaction tax, capturing all money movements and thereby getting for the government revenue before it is manipulated to be tax free.
13. Review employee import programs. My understanding is that we usually have hundreds of thousands of people from overseas working in Australia. The programs that allow this should be reviewed with rules tightened. I’ve heard of situations that sound sketchy.

This list is incomplete, of course.  It’s unstructured and basic. And, yes, I get that it parochial. Corona is driving the need for us to be parochial. I think that is what is needed to create jobs.

In business I have often found the simplest approach to a challenge is the best.

I’m told that Woolworths has sold fuel outlets and that in NSW there between 15 and 20 of these that are applying for the right to represent The Lott.

From a Tabcorp notice I have been provided, I can confirm that the company behind the multiple sites for which lottery applications have been lodged is Euro Garages, an international company with more than 5,900 outlets worldwide. This, from their website:

Founded in 2001 by the Issa family, United Kingdom based EG Group is a leading independent global “C-Store” operator serving seventeen million customers worldwide each week.

We operate approximately 5,900 sites spread across three continents, which we believe will make us the third largest independent C-Store operator in the world, the largest independent C-Store operator in Europe and the fifth largest independent C-Store operator in the United States, in each case based on numbers of sites.

Our global operations span six of the ten largest fuel markets in Europe by fuel volumes sold, namely Belgium, France, Germany, Italy, the Netherlands and the United Kingdom, all six states in Australia and thirty-one states across the United States.

We seek to deliver a modern and convenient customer retail experience by providing a “one stop” shop retail destination that offers a broad range of products and services to address evolving customer needs. For the twelve months ended June 30, 2019, we generated pro forma revenue of €22.6 billion, Pro Forma Adjusted EBITDA of €1.1 billion and Pro Forma Run-Rate Adjusted EBITDA of €1.4 billion.

I am sure the folks at Tabcorp have done their research as to the applicant.

Some of the outlets are as close a 2 minutes from an existing newsagent lottery outlet.

It shocks me that Tabcorp would consider approving a new outlet in the middle of the coronavirus pandemic.

The only party to be adversely affected by approving such new outlets would be the independent small retail businesses that already serve TheLott locally.

My view is that Tabcorp proceeding would be socially irresponsible, harmful to small business, harmful to local communities.

Unfortunately, there is little evidence that any objection process plays in favour of the incumbent local retailer.

Some the objection grounds I would focus on include:

1. The community is already well served.
2. Approving the application would harm my business.
3. Approving the application would reduce the return I achieve on my already substantial investment in The Lott products.
4. The applicant is a multi national business, not a small business, not local.
5. The applicant would, in all likelihood be given a franchise arrangement with different terms and conditions to existing franchisees.

My suggestions are:

1. Object to TheLott.
2. Object to Fair Trading.
3. Write to your state local lower house and upper house member.
4. Write to your local councillor.
5. Write to the ACCC as your TheLott relationship is a franchise.

The alternative is to complain to any who listen but actually do nothing and that will only make you feel worse.