Month: October 2006

David and Michele Heinrich of newsXpress Clare have posted the following email to colleague newsagents:

Are there any other Newsagents in rural areas staring to feel the affects of the drought, covering all Australia, we are currently 1100 customers down since July 1st 2006, thanks to working smarter with a progressive marketing group we are only approximately $6000 in turnover down. I fear that this could have been worse had we not adopted different practices over the last few months,

I would like to ask this question, who will ask magazine distributors to help ease our overload that WILL put us under pressure during this time, we are awash with oversupply and those affected areas will need some assistance, again the top 200 sellers are ok it’s the rest that will cause pain.

I notice with interest how the farmers are given assistance ( great lobbyists), I don’t need government handouts , just some understanding of the situation by our government (magazine distributors) of the pressure they will put rural newsagents under.

Please other rural newsagents let your situation been known so we can start to gather information to present to our ANF friends to lobby on our behalf.

I have suggested to the magazine distributors (Gotch, Network and NDD) that they participate in a conference call or some other urgent event to agree on a strategy to assist drought affected newsagents. Such assistance could be increasing time to settle accounts; faster processing of returns credits; more accurate supply quantities; local marketing to support the newsagent as opposed to other outlets.

David and Michele are right to bring attention to this problem. Newsagents and other small local businesses are doing it tough as are the farmers.

The photo is from a CSIRO report on El Nino.

Most people think of Australia Post for sending mail. But in truth that’s just one of the many things we do for business.

From the Australia Post business services website.

Australia Post is saying don’t think of us as a mail service, think of us as your stationery supplier, your printer, your fulfillment service. This mocks the Postal Corporation Act 1989. Section 14 requires Australia Post to provide a postal service first and foremost:

The principal function of Australia Post is to supply postal services within Australia and between Australia and places outside Australia.

Section 15 talks about permitted subsidiary functions:

A subsidiary function of Australia Post is to carry on, outside Australia, any business or activity relating to postal services.

Section 16 talks about other permitted functions:

Functions—incidental businesses and activities

(1) The functions of Australia Post include the carrying on, within or outside Australia, of any business or activity that is incidental to: (a) the supplying of postal services under section 14; or (b) the carrying on of any business or activity under section 15.
(2) Without limiting subsection (1), the functions of Australia Post include the carrying on, within or outside Australia, of any business or activity that is capable of being conveniently carried on: (a) by the use of resources that are not immediately required in carrying out Australia Post’s principal or subsidiary function; or (b) in the course of: (i) supplying postal services under section 14; or (ii) carrying on any business or activity under section 15.

On this government’s watch Australia Post has taken millions of dollars in revenue from small business. The situation is getting worse.

While farmers fight the effects of the drought, newsagents have to also content with the impact of our own government taking sales from our registers. At least farmers get financial relief from the government. Maybe that is being paid out of dividends paid by Australia Post.

It’s like withdrawal in newsagencies this week. No Steve Irwin story on the cover of New Idea or Woman’s Day. No lottery jackpots. Yep, the first ‘normal’ week in newsagencies in a long time.

UPDATE 10/10: The post below refers to a MySpace profile which has been made private in the last 24 hours. When I found the profile by accident using Google it was public. Following Julz’ comments (below) I have slightly modified the original post.

Julz is 17 and works at a Nextra newsagency somewhere in Brisbane. She dislikes her job as she has told the world through her MySpace blog:

so everyone knows how much i disslike my job at nextra right?

well…..

i’m QUITTINGG!!!!! wooooottttt

and have a new job at David Jones in the city – young contemp womens fashion

n e way enough with the smileys…ok one more…

so come visit me at nextra, i’ll only be there like 2 weeks more, and get your free gum while you still can!!

Julz is entitled to her view. What concerns me is that she seems intent on taking out her dislike for her job on her employer – or am I misunderstanding the line about free gum? I’d like to know what Julz has said to her employer about the job and how her employer responded. Have they made an effort to make the job more enjoyable while continuing to serve the needs of the business? How would David Jones’ management feel if they read Julz’ comments – would they still give her a job?

Blogging provides Julz and millions like her a place to publish her feelings and opinions. She, like her My Space friends, needs to understand the consequences. For example, I’d expect that human resources departments will trawl through My Space and other public places for what is not submitted in resumes. This blog entry would knock Julz out of contention.

There are jobs in this world which are not great, especially if you’re 17 and just starting your working life. The best way to make those jobs bearable and even enjoyable is to work with your boss. Maybe there is not one else to do the crap tasks. So be it. Maybe discussion will lead to compromise and a more enjoyable job. Bitching about it at My Space and quitting for a job at David Jones does not fix a problem Julz is likely to take with her.

I am all for employees venting publicly – as long as they have taken the matter as far as they can within the business in pursuit of a fair resolution.

PS. I’m not spending hours trawling My Space for what people working with me think. Julz’ blog came up via a Google blog search for newsagency references.

It’s good to see mainstream media asking some questions about the big business approach of the National Breast Cancer Foundation. This Fairfax article (Sydney Morning Herald and The Sunday Age) asks questions but does not dig deep enough. In a previous post I documented the deal done by the NBCF with Woolworths for the distribution of their Pink Ribbon magazine.

If you believe the spin put out by the NBCF, the deal helps them reach more people. I’d say that is nonsense. Instead of Pink Ribbon being prominently displayed to a broad cross-section of the community, a new style Pink Ribbon is to be distributed as a -tip-=on, a free stuck on giveaway, with Women’s Weekly. Pink Ribbon readers want to buy the magazine. I know from what they say at our counter that they are frustrated that they have to go to Woolworths (Safeway).

The NBCF has decided that they would rather be on a supermarket shelf than on the shelves of a magazine specialist, that they would rather cozy with big business than small business.

It would be good to see Fairfax follow-up their story with more on the NBCF and their corporate deals. They should research whether these corporate deals lead to a disconnect with the community as I suspect is the case. Take Pink Ribbon – you are more likely to have had a conversation with a newsagency employee about the issue than would happed at a supermarket checkout. Isn’t awareness part of the NBCF mission? Based on the Pink Ribbon actions I am guessing not.

In the meantime, more newsagents are refusing to participate in other NBCF fund raising activities.

As the article by Fairfax suggests, cancer fund raising ought to be about the bigger picture rather than a body part.

Further to my blog entry three days ago about the takeover/merger of the Supanews newsagent group by Pacific Equity Partners’ Angus & Robertson group, I note with interest the opening paragraphs of their press release:

In a move that will change the face of the Australian newsagency industry forever, newsagency chain Supanews has announced a joint venture with Pacific Equity Partners-owned A&R Whitcoulls Group Holdings Pty Limited (ARW Group).

“We understand that this may ruffle a few feathers with the 5,000 independent operators in Australia,” says Adrian Gaskin, General Manager of Supanews.

The release, as is usual with such things, is full of spin. What they don’t say is that immediately upon the takeover / merger, the Supanews model was turned on its ear. Whereas in the past they only operated as a company store / franchise group, from yesterday they started pursuing existing newsagents to join by offering “NO ROYALTY”. That is, no franchise fee. This is an odd move for the group. If the Supanews model was so great, why take such a dramatic departure from that model the same day you announce the takeover / merger?

Go to the Supanews website and see how they try and attract newsagents to join Supanews:

…by becoming part of Supanews you eliminate the risk of us opening a store in direct competition to you.

Yeah, fear is a good motivator. Sure their website promotes other benefits but this one? Why?

A stronger Supanews will be good for newsagents. It will galvanise newsagents to be more competitive. The involvement of A&R Whitcoulls demonstrates that the channel is no longer a cottage industry. It also provides evidence that suppliers will treat newsagents differently. – something the newsXpress group has been demonstrating for the last two years as it has grown from 31 stores in February 2005 to 95 stores in September 2006. It forces suppliers to look at the channel in a different light – to take newsagents more seriously. It will also force newsXpress and Nextra to become even tougher competitors – I’m not sure about Newspower since it does not have the same commercial structure as newsXpress and Nextra.

If the new Supanews takes off it could also spell problems for independent newsagents. Magazine distributors, for example, will still have the same volume of rats and mice titles to distribute – titles outside the top, say, 200 – a strong disciplined Supanews will demand that their stores not be overloaded, meaning that independents will receive more of these titles.

I expect newsagents to be skeptical about the U-turn announced by Supanews yesterday in their invitation to join the group. It will take more than some text on a website to erase memory of Supanews.

Disclosure: I am a shareholder in and Director of newsXpress, a competitor of Supanews.

I have had $8,000 in revenue taken from my newsagency by a ‘genius’ allocations clerk at the PBL owned Network Services. Here’s how: Partwork publications are a point of difference for newsagents – we are the only retail channel offering partworks and many newsagents embrace them wholeheartedly. Funny Bones is one of the most popular partwork series to come to Australia from the UK. This De Agostini publication has been a huge hit here. In fact, it has been too successful. As with all partworks we encouraged our customers to sign up for our putaway service – we keep each copy aside and send them an SMS message when the stock arrives. It’s a premium service without any additional cost.

We have firm orders for ten copies of Funny Bones and have sold out of each issue we have been sent. We have not received the last four issues and have called and emailed with little success in getting a response until yesterday when we were advised that some genius within Network Services decided that our stock would serve their needs better if they sent it elsewhere. This is despite us selling out and them knowing that we sell out each issue.

The Network decision to cancel supply to my shop means I have to cancel the orders for the ten committed customers. Some may stop shopping with us. Over the life of the publication this could cost us $8,000 in direct lost revenue plus lost add on sales. Add on sales amount to $10.00 to $20.00 worth of purchases each time a customer collects a partwork issue. This equals an estimated $20,000 in revenue is at risk as result of the decision to cut supply.

We have actively promoted Funny Bones in our shop since its launch, giving over prime real-estate in pursuit of long term customers. In return for our gift of labour and real-estate we have been abused and no one cares. We have taken this issue and other similar issues with partworks to the Australian distributor, Bissett Magazines, with no success. As I said to Bissett and Network yesterday:

How newsagents are treated over partworks makes me question the viability of being the ‘magazine specialist’. I am tired of getting done over. I am tired of dealing with incompetent people making decisions which hurt my business. I am tired of working hard to launch a new product only to have it taken elsewhere once the hard yards have been done (Alpha, Cosmos, Funny Bones etc). How would Coles or Woolworths react if Network and Bissett treated them in this way? They would demand compensation for sure.

Stupid. Stupid. Stupid.

I love partworks and partwork customers. It’s the suppliers and distributors who are killing this golden goose for newsagents.

Having turned its back on newsagents by doing an exclusive deal with ACP magazines and Woolworths to sell its popular Pink Ribbon magazine this year, the National Breast Cancer Foundation has gone cap in hand, through the News Ltd subsidiary, The Herald and Weekly Times, to ask newsagents to sell fund raising merchandise. Here’s part of the note newsagents received yesterday:

The Herald and Weekly Times and National Breast Cancer Foundation (NBCF) would like your help in raising much-needed funds for breast cancer research. We’re seeking your support in selling pink ribbons, pins and wristbands throughout the month of October.

Each pack contains; 25 ribbons ($2.00 each); 10 enamel pins ($5.00 each); 5 diamante pins ($10.00 each); 10 wristbands ($3.00 each)

Please note all products are GST exempt, due to this being a charitable fund raising cause.
…

As this is a charity, we are asking that newsagents support this initiative commission-free on sales of the ribbons and badges.

Some newsagents are refusing to be part of this fund raiser because of the decision by the NBCF to turn their back on years of support from newsagents for their Pink Ribbon magazine in pursuit of a questionable corporate deal with Woolworths.

The NBCF needs to decide if they wish to be half pregnant or not. Previously newsagents offered the magazine, these fund raiser products, greeting cards, branded stationery and other products to support the cause. Taking the magazine away rips at the core of a newsagency. It says that the NBCF considers newsagents irrelevant in the magazine space. It also confuses consumers. Already we have been turning people away in my shop. When we tell them it’s a Woolworths (Safeway) exclusive some say they won’t buy the magazine.

Given the rejection of my business by the NBCF I’ll let them find other outlets for their wrist bands and other products. There are other charities I’ll gladly support. Indeed we are raising funds in my shop at the moment for three. (To their credit The H&WT has provided newsagents with the ability to opt out of this fund raiser.)

The NBCF issues aside, most newsagents actively support between 15 and 30 over the counter fund raisers a year. By support I mean: counter space, labour and poster space – plus time at the end balancing the cash and covering for theft. We also donate to local schools, clubs and charities. Plus, many newsagents give in other ways.

Maybe it is churlish of me to refuse to participate in this fund raiser. The NBCF has handled this badly. They have brought this upon themselves. Besides, they have enough big business mates on their side. Their communication with newsagents has been poor. I wrote to them over a week ago about the Pink Ribbon issue and they have not yet responded.

A&R Whitcoulls Group Holdings Pty Limited (Angus & Robertson, Whitcoulls and Calendar Club) is to form a joint venture with the owners of Supanews which will purchase the business of Supanews. The new business, Supanews retail, will operate the Supanews retail stores and newsagent franchise group.

A&R Whitcoulls is owned by Pacfic Equity Partners.

This is a significant move by a successful corporate player into the newsagent space. I’ll be curious to watch as the impact of the takeover emerges. Supanews has caused considerable upset among newsagents in its pursuit of retail real-estate. There has been talk of disappointment by some franchisees. I know the Bayside Frankston shop switched from a franchisee operated business to corporate over the weekend.

Margin in newsagencies is tight and this makes the traditional franchise model challenging.

Update: (4/10) I have received advice that the takeover has not yet proceeded. An announcement is expected tomorrow.

Several newsagents have contacted me today saying that there are reports in NSW newspapers saying that the NSW Government has announced that 7_Eleven is to trial selling lottery products. If this is true it is the actions of a government which cares little for small business and does not understand the fine balance of traffic to newsagencies. If this reported trial proceeds to full roll-out newsagencies will close as a result. Newsagents need to contact Grant McBride, the Minister for Gaming and Racing on mindgr@dgr.nsw.gov.au.