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

Month: October 2005

News Corp fuel price decision unjust

News Corp ought to reconsider its decision to refuse small business newsagents’ request for fuel price relief. Talking to some colleagues over the weekend it is clear that the fuel price hike is hurting to the extent that some may shut their distribution businesses down. The denial by News of newsagents being able to pass on the high cost is proving to be the last straw.

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Newsagency challenges

Newsagents encouraged to boycott Independent Publishing Group (IPG).

In an email bulletin to newsagents (28/10), the Australian Newsagents’ Federation indirectly and subtly invites newsagents to consider boycotting IPG, distributor of a range of titles to newsagents. They have done this as a result of IPG entering into a newspaper supply arrangement with News Ltd for supply of newspapers to major city hotels. Here is the text of the bulletin:

Raw Deal for Newsagents from IPG

DID YOU KNOW?

There is a company in Australia called Independent Publishing Group (IPG). It is a privately owned independent publishing company that specialises in the supply of publishing services. IPG has been independently judged by BRW and Deloitte Touche Tohmatsu as one of the fastest growing companies in Australia.

WHY DO YOU NEED TO KNOW THIS?

This is the company that negotiated an exclusive deal, as far as we know, in February this year with News Ltd to supply all Hotels/Motels in NSW with the sales of the Daily, Sunday Telegraph and The Australian newspapers. The deal is fascinating in that it provides the Hotel/Motel with a 75% discount off cover price on standard 25 daily papers. These may be any mix of the Daily Telegraph or Australian (Monday to Saturday) and The Sunday Telegraph.

AND THERE’S MORE!

In addition they offered 34 complimentary TV guides and a monthly copy of Vogue!! (great demographic study there!!)

Delivery is to be carried out by Nationwide News and the billing is direct to the motel through IPG. So! IPG are picking up the order and the money – News is delivering the goods. Hmmmm – 75% off cover price and the other 25% to ????? For gathering the orders and sending the cheque!!! Money for jam and News must be delighted that they can now provide these newspapers at 75% off cover price. In fact that would be 100% free!!! But of course that would be invoiced and audited and of course IPG get paid a goodly sum for paper shuffling.

AND THERE IS EVEN MORE!!

IPG, for you newsagents who are incensed over delivery fees, is HEAVILY reliant on newsagents for the sale of its newspapers – what is supposed to be its core business.

AND WHAT WOULD THAT BE?

You – the Newsagent – are happily selling IPG’s products!!

IPG – who can’t get into supermarkets and convenience stores without a lot of money and difficulty – are selling through loyal newsagents.

And we are supporting them while they do the big lucrative deal with the likes of News Ltd.

The products that you currently stock and support on behalf of IPG are the following:

1 International Express
2 British Football Week
3 The Guardian Weekly
4 Weekly Telegraph
5 Corriere della Sera
6 Weekly Sport
7 Inside Football
8 New Zealander
9 Ex-Pats Investor

My concern is the double standards demonstrated here. Newsagents recently had the commission they earn on Vodafone recharge transactions cut by 37.5% and the ANF berated newsagents rather than suggest any action; newsagents have just had their application for fuel price relief rejected and the ANF has remained silent of any possible action; newsagents have lost the Apple iTunes recharge opportunity to Coles and the ANF has published excuses rather than suggested action.

As an industry association the ANF is clearly having difficulty representing newsagents on issues to do with some suppliers compared to others. Like any industry association, the ANF needs to be consistent. They will achieve greater respect from newsagents if they achieve this.

On IPG the ANF would better serve newsagents by developing a tactical response. Indeed, given that this is a situation the ANF has had knowledge of for more than a year, one cold reasonably expect that this was done last year. The ANF should: inform newsagents of the facts (without emotion); build business plan assistance for the newsagents affected; write to the customers contracting with IPG (informing them that they are putting Australian jobs at risk); create a public relations campaign (small business being done over by big business; buying Australian versus buying through a UK company; keeping jobs local); make representations to News Ltd (with these being put on the public record); seeking out other opportunities for the affected newsagents; providing standard form contracts to enable newsagents to lock in current arrangements.

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Newsagency challenges

Tattersalls promoting online lottery sales at Herald Sun website

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Sales of the Herald Sun are somewhat reliant of newsagent traffic and promotion. Sales of Tattersalls product are reliant on newsagent traffic and promotion. Both suppliers require newsagents to provide significant space to promote their brand. It is disappointing, therefore, to see the promotion of Tattersalls’ online business at the Herald Sun website. While Tattersalls has every right to advertise their business and the Herald Sun has every right to take advertising revenue, this is a small wedge which will hurt newsagencies and one day someone will say where did it go wrong for newsagents. I’d prefer a model where newsagents participate in such developments of Tattersalls products online. We have been crucial to brand development and continue to be strong brand advocates today. Tattersalls could not gain online traction without this. And as a major supplier the Herald Sun could work co-operatively with newsagents on this.

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Lotteries

News Corp. refuses fuel relief request from newsagents

Newsagents have received advice that their application for a fuel levy has been rejected by News Corp’s Australian subsidiaries in Queensland, Victoria and South Australia. Small business newsagents had sought relief from high fuel prices compared to the delivery fees which have not had a fuel adjustment for (I estimate) more than 10 years.

Newsagents do not control the delivery fee they are allowed to charge nor the cover price for the product they deliver. So any operational cost increase hits hard. With wages continuing to rise and fuel at an all time high they were hopeful that News Corp. would see its way clear to allowing them to recover some of the higher cost just as News Corp. itself does through its advertising pricing policy.

The rejection of the fuel levy application has hit newsagents hard and some are considering handing their delivery runs back because of the high price and the lack of business control they have over the operation.

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Newsagency challenges

Newsagents need content more than compliance

Suppliers and others involved with Australian newsagents are calling for greater compliance in terms of shop presentation, services, operational standards etc. They see the lack of compliance as a key problem for the channel and talk as if fixing this will deliver a bright future for Australia’s 4,600 newsagents.

I am not sure if I agree with this. First up newsagents need to want to be compliant. This will only happen if they see a benefit. This will only happen if they (all) are businesslike in running their business. Also, newsagents need to have something to be compliant about.

From a supplier perspective compliance is more about carrying a certain range and displaying their product in a consistent way. Shackling all newsagents in this way will hold some back. It does not make sense, for example, for newsagents to spend $4,000 on a newspaper display stand for one part of their shop when their current (non compliant) retail strategy is delivering double digit growth.

Before we consider compliance I think our efforts would be better spent on understanding what consumers think about newsagencies today and researching what products we will have to offer in our stores in five and ten years time.

Right now our core traffic generator products in order of traffic volume are newspapers, lotteries, magazines, greeting cards and stationery. (For some cigarettes will be in there too.) What changes will occur with newspapers, lotteries and magazines in the next five and ten years which we need to consider in developing our retail story from today on? This is the question we should be drawing attention to.

Creating a model newsagency now, while interesting, will only be of value if it reflects current consumer research and considered predictions about what our retail network needs to look like in five and ten years. And then such a model newsagency needs to be underscored by a supply paradigm and operational model which is economically sustainable and which is attractive to newsagents.

Our businesses are shackled with too many pre deregulation rules and it is only once these are released that more newsagents will become businesslike.

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Newsagency challenges

Day four of Mary week

Based on sales data from several newsagencies (small sample I know) I am seeing exceptional results for New Idea, Woman’s Day and Australian Women’s Weekly. New Idea and AWW are the strongest performers with the former maintaining 25% sales growth in the stores I have seen. If these results are seen across the country it will cement Mary as the magazine cover darling of this decade and lead to more Mary coverage. I’ll be interested to see if Lleyton and Bec Hewitt can beat Mary led sales when their baby is born.

To capitalise on the Mary covers on all three magazines at once we created a Mary pack with the three magazines and a baby card in our store – more to enhance focus than anything else.

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magazines

Study claims free daily newspapers are not competitors of paid newspapers (yet)

Good research paper from Scarborough Research on the impact of free newspapers on paid newspapers in several US cities. Packed with valuable information anyone involved in the newspaper business will find useful, this paper provides perspective we will be able to draw on as more free newspapers develop in Australia. Publishers of free newspapers will point to the research saying that they are not cannibalising paid sales. True. The paper also talks about the decline in paid sales circulation.

Toward the end is this which sums it up for me:

So, the emergence of free dailies does not yet address the very critical issue of why readers are defecting from
traditional print newspapers. Moreover, neither is the free daily going to solve the circulation declines.

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Newspapers

Newsagents lose out to Coles Myer on the iTunes deal

Bill Express, a major trading partner of newsagents, has announced to the ASX today that they are providing electronic vouchers that can be used on the internet to acquire and download products from Apple’s iTunes Music Store.

While it is likely that Bill Express were brought to the table by Coles Myer after they did their deal with Apple, it is appalling that newsagents have been cut out of business which should be ours. We have the technology network and we have the connect with the iTunes demographic. What 15 year old wants to go to a supermarket to get an online voucher. They’d be happier in a newsagency where they can get music magazines and other products.

I hope that Bill Express robustly represented newsagents as a better recharge outlet than supermarkets.

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Newsagency challenges

Australia Post privatisation (by stealth)

Rather than just blog about the franchising of the Australia Post PostShop network and how the government owned business is taking sales from independent small businesses like mine I have written to Helen Coonan, Minister for Communication, Fran Bailey, Minister for Small Business, Phil Barresi, MHR for Deakin and the Chairman of Australia Post. I will be interested to read their responses.

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Newsagency challenges

Google Base taking on newspaper classifieds, Craigslist, eBay et al?

While Craigslist and eBay have been a frustration for newspaper publishers, Google Base will be the biggest disruption of newspaper advertising yet. It will cause an urgent response from publishers. There are several reports online about Google Base including: This report at Business Week. And a more detailed report at searchenginewatch – this includes details of an official Google announcement.

Based on the database entry screens, Google Base is gathering all the data it needs to compete with newspaper classifieds and the major online portals like tradingpost.com.au, reasestate.com.au, carsales.com.au, seek.com.au etc. So, not only will newspaper publishers need to respond but so will online classified portals.

Consumers like free. The obvious pitch of the paid sites and newspapers is the strength of their brand. They’ll say people will use Google Base as an ad-on. Maybe so. At the lower end of the market if Google gets its offering right and can connect with the community it will be game over in terms of online and newspaper models.

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Media disruption

Tale of two government businesses: Telstra vs. Australia

Why is the government demanding that Telstra compete in an open marketplace while it protects the best stores in the Australia Post retail network from open competition?

Why has the government allowed Australia Post to aggressively pursue product lines sold by small business newsagents?

Why has the government demanded that newsagents deregulate (in 1999) yet refused to open the sale of postage stamps to the same retail competition?

Is the government prepared to compete with all small business sectors or will it restrict its enterprises to competing with newsagents?

How does the government feel when its employees visit small business newsagencies, note retail prices for items and return to their PostShop and adjust sales prices?

Does the government have a small business policy which is pro small business?

Why will the government not set a policy of selling off the PostShop retail businesses to local small business people?

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Newsagency challenges

Big W does not sell for less

Roger Corbett of Woolworths has been gracing TVs again reminding us that the Woolworths Big W network sells for less. I price checked ten stationery items yesterday and found that we beat their price on nine of the items. Based on this small sample I’d say that they don’t sell for less, certainly not on all lines as their advertising implies.

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Newsagency challenges

Coles Myer beats small business to iTunes

It is disappointing that Apple has chosen to partner with the giant Coles Myer retail chain for the sale of prepaid cards for its iTunes store than partner with small business newsagents. Apple has shunned a wonderful opportunity to demonstrate its support for independently owned small business stores but has instead decided to support Australia’s largest retailer.

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Newsagency challenges

Newspaper M-F sales figures hide some potholes

I’ve been looking at day of week sales data for newspapers in several states and am seeing some interesting trends of specific days of the week which are contrary to the dat reflected in the Audit figures released a couple of weeks ago. While for many a Monday through Friday view of sales is okay, I find this day of week data more valuable. For example, a fall, year on year, in sales for a capital city daily of 12% would be news I would have thought.

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Newspapers

Federal Government policy hurts small business

The Australian Government owns Australia Post. Of its 4,474 outlets, 863 are government owned and operated. These PostShops don’t look like a post office. They look like a stationery / greeting card / services shop. In fact, many look like a newsagency. Except that newsagencies are privately owned and have been in the greeting card and stationery space decades more than Australia Post.

The current Federal Government has presided over Australia Post dramatically increasing its competition against small business newsagents. Not good credentials for a Government which claims to care about small business. Last week it was revealed that in the 2004/05 financial year Australia Post increased revenue in this area including stationery and greeting cards by 8.0%. Some of that increase will have been at a cost of small business newsagents.

Yesterday in (I estimate) tens of thousands of mail boxes Australia Post increased the pressure. It came in the form of a glossy eight page catalogue. This catalogue is promoting “big savings” on printer ink, computer printers, copy paper, printer toner, shredders, calculators, blank CDs, blank DVDs and phones. Not one postal item. Now their “big savings” are not that big for the items I checked. For example, we beat them on price for the toner, paper and blank CDs. Good I hear you say, that’s competition. True except that I do not have guaranteed traffic. I do not have any exclusive products or services in my shop. Australia Post has stamps and a range of postal related services. This guarantees foot traffic and while people are there in line down the middle of the store they are faced with all these products and posters saying “big savings” and, well, people being people they will think it’s a good deal.

This is my government promoting these “big savings” when newsagents near these post offices probably offer better prices like mine. But our voice is tiny compared to the might of the government owned Australia Post.

These Federal Government owned PostShops are trading off their exclusive and protected postal services traffic and reputation and turning into stationery and greeting card businesses. The only difference between their business and mine is that I have newspapers, magazines and lottery products. But hey, they have been chasing magazines so don’t think the current situation will last forever.

The move revealed over the weekend of Australia Post franchising some of its PostShops does not address the situation. The Federal Government is still profiting from competing against small businesses. They are still allowing the postal service well deserved and good name to be used to support the development of their general merchandise retail network.

This is a policy issue for the Government. The Government has no businesses owning these retail businesses.

Here’s what I want to happen: Australia Post to immediately stop its franchising moves; PostShop businesses to be put to tender for nearby similar small businesses to purchase and integrate with their businesses; the Government to exit the retail channel; Australia Post to focus on postal services and leave stationery, greeting card and other retail products and services to private enterprise.

I don’t hold much hope as the Government does not seem to care about small businesses.

Maybe the closure of some small businesses as a result of Australia Post competition will get them to take notice.

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Newsagency challenges

Princess Mary sets sales records

Day one of a very important seven days for magazine retailers and magazine publishers is over. In my own newsagency and several I have spoken with first day of issue sales of Woman’s Day and New Idea set new records for the year. I’m hearing of first day sales increases of between 8% and 30%. By all accounts New Idea is achieving greater growth. In my own case Woman’s Day is up 8% and New Idea 30%.

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Our Woman’s Day display at the entrance.

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Our New Idea counter display.

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magazines

Australian media naval gazing at an all time high

Since my post earlier today about the Andrew Jaspan, (Editor-in-Chief of The Age) speech covered online at theage.com today, I’ve had a chance to catch up with more internet / newspaper related coverage in The Australian, the Australian Financial Review, The Age and the Herald Sun. There is more I am sure. This transparent naval gazing is welcome. Online will impact newspaper sales. In developing their online models publishers will benefit from working with the existing supply chain. To do otherwise will encourage the existing supply chain to turn their back and pursue their own interests.

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Newspapers

Podcasting … more and more a mainstream channel

All around the Net there is evidence of growth in podcasting.

In the US, movietickets.com has launched a podcast service to provide synopses and alerts.

At Kankakee County in Illinois the Daily Journal is podcasting.

The Electrical Trades Union is using podcasting to get its message out regarding the Australian Federal Government’s workplace reform changes.

Odiogo has introduced an application that lets users listen to the latest news content from hundreds of news sources and blogs via MP3 players, PDAs, phones, or laptop computers. More at podcastingnews.com.

And then this story about the University of Washington testing podcasting for delivering lectures.

Sure there are plenty more and podcasting is growing daily. My point is that it’s use is diverse and companies, especially media companies, need to embrace it to ensure relevance.

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Uncategorized