Month: August 2005

The Age has another giveaway this weekend. A yoga DVD apparently.

I had a customer ask a couple of days ago when the next CD or DVD was coming out with a newspaper. I asked why. “Because that’s when I’ll buy it” was the answer. Okay it’s anecdotal and a one off. However, all these giveaways which are unrelated to news only serve to confuse consumers about what the masthead (brand) stands for and I have evidence from one customer to support that.

Sonja Haller of The Arizona Republic reports about the considerable growth in the free classified marketplace in Phoenix which was started by the now worldwide famous craigslist.org. This story reports could just as easily have been written in Sydney or Melbourne where free classifieds are in in 2005. Yeah there are some rules but consumers seem to be embracing them.

I’m not a fan of FREE. It devalues the brand and the service you provide. However, with the craigslist model newspapers have had to come up with something which demonstrates them responding.

I’d rather see a response which offers a more valuable advertising proposition, something which makes newspaper advertising more meaningful than the online competitor.

Online advertising company Seek has posted exceptional results which do not augur well for newspaper advertising. Today’s Australian Financial Review carries the story (pg 11) and quotes Seek Director Matt Rockman claiming 31% growth in online employment advertising versus a 6% decline for print media in the same category.

While publishers can and will replace this lost revenue by playing in the online space, their traditional supply chain faces more complex challenges. We either need to find new products and services to offer or create product which we control. Focusing on new products and or services carries the risk of being beholden to suppliers. It would be unlikely that newsagents (in their current structure) would be a key channel for any new product and or service of significant value. Therefore, my attention would be on creating products and or services which we own.

The advertising shift reflected in the Seek results will continue as will the greater influence of mobile devices in producing access to newsagent information. These changes go to the core traffic generators of newsagencies. The successful newsagents will be those who have already started building elsewhere to replace the traffic and build relevance.

Full report at FT.com. Heseltine is chairman of Haymarket, a supplier to newsagents. He is responding to the draft report from the Office of Fair Trading which, if adpoted, would radically change distribution arrangements.

Two government owned retail post offices I am aware of have changed their retail ‘story’ in the last week.

Punchier stationery displays. Greeting cards at the very front.

I know from consumer feedback at one location that this is generates confusion since there is no postal service message at the front of the shop except the Australia Post logo.

Newsagents were in the stationery and greeting card space well before Australia Post. Post should either sell each of its retail stores (to individuals) or get out of all ancillary product and focus only on postal product.

Having the government trade off their postal product monopoly in an effort to take revenue from my small retail business is offensive. What other country in the world would allow a government owned operation like Australia Post to enter a well established and well served marketplace and compete with small business owners?

A government concerned about small business would fix this right away.

I spent half an hour watching the behavior of people at a local Starbucks the other day. I to see if The Age newspaper was selling there or more often being browsed and returned to the rack.

I’ll declare my vested interest: I own a newsagency and am frustrated that The Age is being sold in Starbucks for half price – in competition with existing full price outlets.

In the half hour I watched, no one purchased The Age; several picked it up and put it back and two took it to their table, read and returned it to the stack.

Beyond the confusion the dual pricing in close proximity brings to a brand, there is the possible lost sale because of poor policing of the browsing and reading at the table. The price of the newspaper is the price of the newspaper. The content is no less valuable in store A compared to store B. While one cold argue that it’s an up sell financially supported by Starbucks you have to wonder why then it’s not promoted more aggressively.

I wish publishers would discuss these strategies with their distribution network prior to implementation. My experience is that all this move has done is shift sales from one location to another.

Vnunet.com reports that a survey by CLX shows that it’s not young people who are driving the growth in podcasting, but the older generation.

If accurate, this survey challenges some of what is being written about podcasting being a medium embraced by young people.

CLX surveyed 8,000 US consumers and that’s a decent dataset to work with.

I’d like to see more surveys. In the meantime podcasters will need to consider the implications for what is being produced. At the same time, mainstream media companies yet to enter podcasting might see this research as encouragement to enter the fray.

I still see podcasting as a medium which sets stories free. It provides another dimension which takes a story off the page and thus has the potential to attract more people to the brand.

Bad news for major city US newspapers according to Nikki Finke writing in the LA Weekly. (Source: Common Sense Journalism.)

When the Federal Government led newsagents to the trough of deregulation in 1999, Prime Minister John Howard crowed that he had delivered a good outcome for this small business channel. It’s a claim he repeated during the 2004 electron campaign.

The Prime Minister is wrong. The job was only half done. Newsagents have been left with operational processes which disadvantage them and, indeed, provide their new competitors an unfair advantage.

Indeed, the government demanded that newsagents deregulate but did not provide funding for professional representation through the deregulation negotiation process. This say newsagents negotiating with lawyers from newspaper publishers, magazine distributors and the ACCC. A government concerned about small business would have made sure that they were professionally represented so that the discussions had some balance.

The supply and accounting processes newsagents have today are the same as in the regulated world when we had more customers and a certain exclusivity. Today, with many others taking the top selling product, we have less traffic yet onerous supply arrangements for the lesser selling product. This is choking some newsagencies.

Australia needs to decide if it wants this newsagent channel. While that sounds dramatic, the question is realistic for unless more equitable magazine supply arrangements are put in place for low volume titles, newsagents will go broke.

Magazines are important to newsagents. Hence the need for newsagents to consider the economic viability of current processes so that we can maintain our position as magazine specialists and so that all publishers have access to a viable magazine retail network.

Below are my proposed proposed magazine distributor Key Performance Indicators I’d like to see discussed between newsagents and magazine distributors. I am sure that through discussion a set of KPIs can be agreed which serve all stakeholders.

TECHNOLOGY

1. Implementation of appropriate systems in supplier offices to enable scale out decisions based on current data and not data 13 weeks old as happens today.
2. Provision of supplier invoices electronically without any cost to access the service.

SUPPLY

1. Scale out to reflect title performance in that outlet with supply to be no more than 25% above recent sell through rates except in exceptional circumstances where the additional product is expected to sell due to cover feature or special promotion. With higher scale out to be accepted for an additional fee.
2. Offering of a carrying fee for titles which do not meet minimum performance criteria so that the newsagent is paid to carry the title.
3. Newsagent to be able to easily and electronically alter order quantities (i.e. without having to call a call centre and wait on line for too long)
4. Changed supply figures not to be altered without reference to newsagent unless such change absolutely supported by sales data.
5. No cut of supply below current recorded net sales.
6. No reissue within six months of last issue of a title.

RETURNS

1. Online returns to be implemented ASAP.
2. Returns to be credited within 48 hours of provision of electronic returns data or 7 days of provision of physical returns form.
3. Returns to be called no later than the date of the next issue of the same title going on sale.
4. Agreement of record keeping requirements for returns form and immediate acceptance in the event of a distributor losing a form and the newsagent proving local store compliance with standard practice.

ACCOUNTS

1. The threat of cutting off of supply to cease in cases where there is a legitimate dispute over the amount owed.
2. Agreement in independent arbitration in the event of a credit dispute – similar to an ombudsman approach. This could be something the distributors all fund like the telecommunications Industry Ombudsman.

I estimate that newsagents care currently subsidising at least 50% of the magazines they carry. This is an inequitable situation which cannot continue if newsagents are to survive. The only solutions are for under performing titles to be cut or for newsagents to be paid a fee to carry under performing titles. Maintaining the status quo will kill many of these independent small businesses.

The Prime Minister has been told of the challenges as has Fran Bailey the Minister for Small Business and Helen Coonan the Minister for Communications. They have done nothing.

The Federal Government needs to decide if it supports small business and the newsagent channel in particular. Turning its back as it has done for the last six years puts more than 20,000 jobs at risk and thousands of families’ life savings at risk. It also puts at risk the cultural, social and economic value of the unique newsagent channel.

The challenges are not that great. All it takes is will on all sides to navigate them in pursuit of a more level playing field than the Federal Government has created.

In an excellent on ed piece in the Baltimore Sun, Can newspapers reverse their decline?, Michael Socolow (Director of the journalism program, Brandeis University in Massachusetts) asks why newspaper sales and readership are falling.

Soclow considers the impact of technology and the desire for gossip over news. More important though is his question of whether newspapers themselves have contributed to the decline in sales.

Socolow says: “Newspapers sell you their credibility. That is the single most important value of any newspaper brand in the marketplace.”

I agree. Readers here will know of my frustration that newspapers too often try and build sales through competitions and not through promoting the brand and something to trust. Focus on delivering news backed by insightful and challenging analysis and make it available only in print and people will buy the product and therefore eyeball the advertisements which will generate the profits the corporations want.

Socolow goes on: “Most newspapers are offering little more than a comfortable rehash of events that their consumers are already aware of. Instead, newspapers should be challenging their readers by providing difficult-to-obtain firsthand reports from around the world that are unavailable anywhere else. They should combine that reporting with bracing, counterintuitive commentary that would provoke thought and discussion in the civic arena.”

Here here.

Competitions will not deliver loyal readers. Gossip will but at a cost to the brand. Loyal (valuable) readers come from providing quality content consistently. That’s what I hear across the counter in my newsagency.

At Akami you’ll find the Akamai Net Usage Index which they claim is the world’s first and only daily Web traffic benchmark that tracks where news is being consumed on a global basis. Akamai, is the content delivery platform for more than 100 global news portal companies.

This is not a scientific study so beware. Having made that disclaimer I report that I’ve been looking at sales data from a bunch of newsagencies. The last six to eight weeks have been hot in terms of magazine sales.

There are several partworks titles which are doing great business: Gods of Ancient Egypt, Essential Parts of Beauty; and Horrible Science. Horrible Science is a sell out in just one week! Newsagents own partworks as no other retailer touches them. They are high overhead with many retail challenges.

There’s Notebook. The new home and lifestyle magazine from FPC. Great sales.

There’s Real Living. The new lifestyle magazine from APC. Great sales and it’s only been out four days.

There’s the Marie Claire 10th birthday edition. Another sell out in a week.

There’s above average sales for Australian Women’s Weekly, Better Homes and Gardens, New Idea and Woman’s Day.

There’s the new Sudoku segment in the crossword category. Now with ten new titles on sale, none of which existed just three months ago.

There’s the university guide segment bringing six new one-shot titles this year, one of which will dominate. No other retailer carries these titles.

All of this is boosting the vitality in newsagencies – more so than our competitors because it’s in newsagencies where space is given to well promote the launches and changes. In supermarkets and convenience stores it is rare that new launches and promotions receive prominence.

We are tracking year on year sales growth for magazines of well above 20% in our own shop and above 50% of the HOT women’s weeklies segment of the category. While we have some in store drivers working this, I am seeing strong sales growth in other newsagencies which tells me that this winter is good for some newsagents in terms of magazine sales.

I’d say we’re in the middle of the hottest time in magazine sales for several years.

Now if only I could get enough stock to satisfy the customers who come in after we’ve sold out!

Mainstream media outlets have been carrying stories about RSS this past week.

Forbes carries an excellent introductory article backgrounding the technology and providing a perspective of how companies like News Corp. can leverage the opportunity through MySpace.

RSS is hot with consumers because it allows us to easily aggregate stories from a range of sources into your own daily read. It’s also hot with business because advertisers can easily track subscriptions.

Back at the sales counter of my newsagency I’m wondering how I can get in on this RSS thing. Hmmm…not in this business so I’ll just smile, share an anecdote or two and hope that the world one day turns and people want to start interacting with each other in person rather than electronically.

Part of the problem with the retailing of newspapers in Australia is the predictability of the display. A stack of papers and a poster. Occasionally a special poster. The most vibrant displays centre around competitions (and readers here know what I think about them).

With newspaper sales flat (at best) surely it is time to reinvent how we merchandise. Further to my post yesterday I’d suggest that there are sales to be achieved if we take a new approach.

Changing magazine locations around in a newsagency where there has not been significant change for a couple of years or more always boosts sales by between 5% and 10%. The same is true with greeting cards.

While many newsagencies make such changes, many display newspapers today as they did ten and twenty years ago. We’re too predictable!

While publishers are responding to changing consumer habits by pursuing non newsagent retail outlets, they have let their eye slip off the ball in retailing newspapers in newsagencies. This is the channel which was built for newspapers, surely newsagents and publishers have a vested interest to be cooperatively smart in retailing newspapers.

Off the top of my head, here’s what I’d propose as a starting point:

Publishers should provide more posters each day and different posters. This one headline poster per store approach is nuts. Create different size posters as well – maybe even A4 teasers which can work at the counter and landscape mode strip posters.

Retail is theatre. Publishers need to provide newsagents with other tools which fit with this.

Marketing people from publishers ought to spend a couple of weeks working in a newsagency. This practical experience should unlock some further opportunities.

Pay a bonus for above average sales growth. Like any sales incentive, a bonus will lead to a sales kick.

Create a loyalty campaign which offers genuine rewards for a certain number of repeat purchases in a week. Why just reward home delivery customers (which a higher landed cost) – reward loyal retail customers.

Publishers should use the various promotional tools in newsagencies – in store radio, in store television, on receipt promo spots etc. to display content specific promotions to show the value, today, of purchasing the newspaper.

Develop a co-location strategy in store so that newspapers are in a couple of good locations.

Analyse newsagent traffic generators and work with the two other major categories (magazines and lotteries) of a cohesive strategy driving bigger basket sales. Feed off each other.

Run a competition among newsagents for the best regular day display – i.e. a display for the newspaper – no competition, no special inserts, just the newspaper.

List the top ten newsagents in each state in terms of year on year growth where growth has been achieved by newsagent effort and report to newsagents about what was done to achieve the growth. Let’s learn!

I am sure there are plenty of other ideas.

What I want is a publisher relationship which helps be change the way I manage, promote and display newspapers. I want to reinvent what has not changed for decades. I want to find a way to make newspapers fresh for me and for my customers.

Let’s not be ashamed of newspapers. They are newsagents’ raison d’etre.

Report from MediaPost about the latest ABC results for magazine sales in the US. While the US and Australian magazine markets are extremely different it’s interesting to note the growth for celebrity/gossip related titles and the decline for news magazines such as Time and Newsweek.

To sum up experts shopping at my newsagency comparing even newspapers and the weekly women’s magazines – why read that when you can have a laugh in here (pointing to Woman’s Day and New Idea). Makes sense.

Borrell Associates have released the reaults of their latest research into online real estate advertising in the US. Here’s what they have to say:

“While overall real estate advertising flattens, the online portion will grow 55 percent this year. Online is poised to overtake the longtime leader in this category — newspapers — by 2009. By year’s end, online spending will hit $1.8 billion, garnering a 15.7 percent share of the $11.4 billion real estate advertising market. Lead generation and paid search have emerged as the leading forms of advertising, with agents and brokers paying an average of more than $1 per click and $10 per lead.”

(For more detail you have to buy the report.)

That’s phenomenal growth. I can’t find current research for Australia but I’d suggest we’re not far behind. You only have to consider the News Corp. interest in buying www.realestate.com.au to understand their interest in online.

While it is early days, Real Living ia tracking well from ACP Magazines. Even accounting for us being out of stock for just over half a day (Monday), our own sales are at 25% of allocation. It’s certainly attracting younger customers than we usually see buying lifestyle product.

Answering a question from an industry colleague yesterday I discovered that in my newsagency we received over 400 new titles in the last year. Once we accounted for new titles for the same product (romance story magazines, cowboy fiction etc) we are still looking at over 300 new titles.

I then went and looked at the performance of these. Fewer than ten of the 300 titles actually generated a cash flow positive return for my business.

Depressed, I had a look at data from seven other newsagencies. Their new title list ranged from 200 to 400 depending on location and business size. They too did not achieve a reasonable economic return from the new titles.

The titles which work are those with some strategy behind them, titles which fit an existing segment yet add value to the segment or are introduced in such a way as to create a new segment.

There are too many me too titles which don’t add value to the range already in store and no one is policing this. Newsagents think that distributors make ranging decisions. I see no evidence of magazine distributors making any ranging decision. With the bulk of their revenue coming from a fee for service it places their criteria for carrying a title in a different place to newsagents who are paid for success – yet newsagents don’t get to choose if they carry a title.

Magazine distribution in Australia is in a mess and newsagents are close to breaking point.

The system needs urgent work to stop its collapse.

Newspaper publishers want newsagents to display their product in a common way. They like the clone approach. While I understand this and would probably seek the same one size fits all approach if I were a publisher, experience this year in my shop is proof that this approach may well be flawed.

Comparing 2005 with 2004 from January 1 up to August 16, I am happy to report that overall over the counter newspaper sales are up 5.9%. For our highest selling newspaper sales are up 8.4%. Both increases are ahead of industry averages.

We’ve achieved this by breaking the rules. We do not have an approved newspaper display unit. We locate newspaper product in two locations. We display front pages and not posters. We offer value add deals to newspaper customers to enhance the over the counter offering. We retail. We make decisions locally in order to sell more product.

It’s time for newspaper publishers to relax the rules and reward the kind of growth we have achieved. The approach of the big stick is not working. Publishers need to allow newsagents to truly retail their product. (Especially in the light of petrol and convenience, supermarkets and coffee shops dictating to publishers how newspaper product is presented.) If sales are above an agreed goal they ought to pay premium commission. It’s less than the cost of a Monopoly competition or a telemarketing campaign to attract customers who are loyal for a fixed term.

This would be easy to test. I am sure that a sales boost would follow if there was an appropriate incentive. This would need to be a lift from the traditional 25% commission to, say, 50% for over achievement. In my case I estimate that this would be worth at least $2,000.00. The publisher wins. I win. Advertisers win. Well done all round I’d say.

I know that there people from News and Fairfax reading this blog so how about it folks? Are you up for an incentive program for newsagents which could/should boost sales?

I hope so.

Newsagents are like cab drivers. People talk to them about anything and everything. Standing behind the counter in a newsagency is a great way to connnect with the pulse of the street without conducting an expensive poll.

Yestreday a semi regular and quiet customer commented on how good The Australian newspaper was looking. I was surprised because it was unusual for this customer to speak and because The Australian is not a big seller in my shop.

He’s right though. The Australian is looking very good. While they do promotions from time to time they seem (in the main) on content based promotions (such as the current World War series) than winning cash and other prizes.

Further to my earlier post, I have now determined now many titles of the 1,650 titles I carry which generate above the required $5.00 per month gross profit return. It’s 35% based on July 2005 sales.

That is, in July, 65% of the titles we carried generated an uneconomic return for my business.

This strengthens my claim that newsagents ought to be paid a service fee equal to the cost of real-estate and labour for the title on their business or they ought to have the opportunity to permanently stop supply.

This independent owned small business channel is drowning in stock at one and, for some titles, starving from lack of oxygen (supply) at the other end.

The Federal Government in 1999 led us to the trough of deregulation and did a half baked job. The years since have been very tough on newsagents yet they continue, struggle many, without the benefit of the subsidies of other industries.

While I have talked about digital magazine technology here before, the University of Texas is soon to publish the first edition of a video magazine about the season of their football team. No physical magazine, pure online. Using video technology to truly lift the stories off the page.

By cutting production costs and eliminating a more traditional supply chain, the economics of special interest publishing dramatically change.

I think about this in the context of the current economic model of niche magazines in Australia – magazines carried by newsagents and which sell one copy per issue. There is doubtful commercial value for newsagents in carrying these titles.

Read more on the Texas U plans here.

Wired News carries a story about television and podcasting and outlines several plans for mainstream TV networks to embrace podcasting. It also lists podcasts of programs such as Meet The Press and Nightline which are doing well on iTunes rankings.

Maybe it’s a population thing but once again Australian media outlets are slow at embracing the mobile world. Podcasting unlocks a new audience yet our mainstream media outlets are not playing.

The 100% Federal Government owned Australia Post launched their BIG Savings for business sale on August 8. It runs until August 21. The sale is promoted through a four page colour catalogue.

My newsagency – newsXpress Forest Hill – competes with a government owned Post Office directly opposite our front door. We sell stationery, they do too. We sell greeting cards, they do too. We have Western Union, they have it too. We offer a bill payment service, they do too. We sell phone recharge, they do too.

Their big glossy sale catalogue offers big savings on house brand copy paper for $5.75 (our price is $5.50); HP C8727A black ink cartridge for $29.95 (our price is $28.95); HP C8728A tri colour ink cartridge for $34.95 (our price is $33.95). I could go on but you get my message.

That the government of Australia owns and operates retail businesses in areas well serviced by independent retailers like me and others is appalling. That they leech off the postal service traffic (which must go to their outlets) is an appalling advantage I cannot compete with.

But that they claim big savings in this campaign is a crock. Maybe big savings off their prices but not off prices in my independent newsagency and other newsagencies like mine.

And interesting sideline in the four page catalogue is the amount of house brand product they now sell. Eight items. I wonder if this is done as leverage to get all Post outlets carrying the product as someone cleverly suggested to me. Why our Australia Post is engaging in this is beyond me. They are a postal service, not a retail chain.

But then if you’re building the chain for privatisation then it’s important. Are they privatising? I don’t know. Should they privatise? Yes. BUT: not as a national chain. each government owned Post Office should be sold to an individual or a locally owned independent business.

Having the government compete with independent retailers who were there first is offensive and demonstrates a lack of regard for small business.