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

Month: January 2007

Memo Steve Bracks: Say no to Coles and Safeway selling scratch tickets

The Victorian State Government is soon to decide on who has the licence to sell lottery product here. Greek lottery company, Intralot, is said to be well placed to win the right to run scratchie games. Their pitch, apparently, is that they will sell these through supermarkets. As if Coles and Safeway need to extend their range further into small business territory.

If Steve Bracks takes scratch tickets away from newsagencies and lottery small businesses he joins a growing line of politicians who care less about small businesses and those they employ.

Newsagents and other small businesses have had scratch tickets since their introduction. We service the market well and adhere to responsible gambling regulations. There is no reason to take this business from newsagents – certainly no reason to line the pockets of Coles and Safeway shareholders.

Driving traffic to newsagencies is a finely tuned balance of products and services. Continually chipping away at that runs the risk of bringing the house down. Giving scratch ticket product to Coles and Safeway could take as much as 10% of gambling gross profit and a chunk of traffic leading to other sales. Newsagents will need to respond by cutting staff. How does this work for the State Government?

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Lotteries

NDD, the company that keeps on giving

On October 22, 2006 we received 10 copies of Modern Hair and Beauty 2nd edition. We returned 4. Today we received 3 copies of the exact same issue of this title. Distributors call it a reissue. Newsagents call it a scam. This cash grab by NDD is another example of unconscionable conduct. The hair category is oversupplied with titles. While they will claim that the 6 sold is evidence there may be demand for the reissue, the reality is that new issues of other titles have come out and this now old product will only give off the wrong message for a business trying to look current.

Reissues are ought to be banned unless a panel of newsagents (the ones who fund the practice) say otherwise title by title

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magazines

The revolution will not be televised or printed.

Jeff Jarvis at BuzzMachine blogs and writes in The Guardian about how YouTube has lead frogged TV (and print):

The revolution will not be televised. It will be YouTubed. The open TV of the people is already turning into a powerful instrument of politics – of communication, message, and image – in the next US presidential election. Witness: Democrats Hillary Clinton, Barack Obama and John Edwards; Republican Sam Brownback; and more candidates just announced their runs for the White House not in network-news interviews, nor in big, public events, but instead in their own online videos.

There are so many fronts on which YouTube and similar can replace old channels – as blogging has done for those with opinions.

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Media disruption

Overcrowding in children’s magazine space

The children’s magazine space is crowded with titles and sales are flat at best, falling in around 33% of stores I see data for. While key branded product such as Wiggles, K-Zone and Saddle Club are okay, the category is filled with me too product. The range in the photo below, recently distributed by Network, is a good example of this- high retail price, long shelf life and not unique from what’s on offer in the category.

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While I understand the need to bring in new titles to build sales, the $300+ investment in these four titles in this category is unlikely to be cash-flow positive for newsagents.

We need to introduce a cost of entry for new titles which respects our real-estate and labour costs. This barrier will qualify new titles and ensure that publishers and distributors do not take advantage of us.

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magazines

Is Optus about to cut newsagent income?

Following Vodafone late last year and Virgin Mobile (an Optus company) list month, Optus is rumored to be set to cut commission paid to newsagents for selling recharge product. The rumor is a cut of 33%, taking commission to 5%. Newsagents need to make 8% for recharge to be a viable transaction. At 5%, Vodafone and Virgin Mobile recharge are loss making. We know that when Vodafone cut newsagents to 5% it was paying Coles 16%.

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Newsagency challenges

Government owned Australia Post makes drought worse for newsagents

The latest stationery catalogue released by Australia Post as part of their push deeper into newsagent territory is working. As posted here before, my question for Senator Coonan, the Minister responsible for the Government owned Australia Post, is what part of the Australian Postal Corporation Act 1989 permits Australia Post to sell shredders, dictionaries, maths and other software packs, calculators, USB sticks, safes, office labelers and the many other office products in the catalogue?

I wrote to Senator Coonan on September 26 and am yet to receive a credible response. This lack of accountability shames the Federal Government. That it allows and even encourages its own retail network of 863 100% Government owned stores aggressively pursue products well covered by small business newsagents makes a mockery of its small business credentials.

I should note that one of Senator Coonan’s assistants did respond but the letter did not address any of my letter. I wrote again on December 5 and have only received a brief letter indicating that the Minister will respond. One day maybe. In the meantime, the Government profits from sales taken from my newsagency.

A big disappointment in this catalogue is the introduction by Australia Post of the Smiggle stationery range. While they have every right to place their product wherever they can, I would have been happier seeing them support a small business network established in their space rather than supporting a government business trying to chase the small business network out of town.

As I have said in recent posts on this topic:

Government ownership and regulation makes Australia Post stores destination stores. My newsagency does not have this monopoly advantage. Australia Post is abusing this advantage to encroach more and more into space previously the domain of newsagencies, some supermarkets and stationery stores. 

I cannot land consumers to my store for the same low cost of Australia Post.

I cannot leverage a national brand like Australia Post to buy competitively.

I cannot control my opening and closing hours.

I cannot get the rent discount of an “essential service”.

I do not have a government protected postal service brand with which to leverage the sale of unrelated items.

When farmers talk of the impact of droughts the government steps in with assistance. When auto makers talk of the impact of cheap imports the government steps in and helps. When newsagents talk of the impact of Australia Post the government ignores us.

Australia Post is our drought. For many years now it has been draining newsagencies of revenue. Many are close to death.

How many newsagencies need to close as a result of Australia Post competition before we see action?

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Australia Post

Search by singing or humming

This has nothing to do with newsagencies but, then, it has everything…Midomi lets you search for a song or music by singing or humming. You can also register songs by singing or humming. It also connects people by what they register and search for. It’s this kind of borderless search and interaction which represents challenge for traditional retailers like newsagents to understand and cope with. People’s online lives and interactions will evolve and become more exciting while their offline life will feel more and more like a nostalgic journey.

I’d love someone to come into my shop hum a tune when they’re searching for something.

Midomi is onto something.

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Web 2.0

Fighting visual noise in retail

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Newsagencies are visually noisy making it a challenge for publishers and other suppliers to gain consumer attention for their products. New Idea this week cuts through with their yellow on black masthead. It actually helps Woman’s Day when situated next to each other.

The latest issue of Real Living, out today, was a surprise in the other direction – at first glance the cover looks washed out – see the photo of our feature display below. However, once we put the stock into the shelves next to other titles it stands out very well. Indeed, better than the more colourful titles. It’s an example of how pulling back visually can work well.

real-living2.JPG

This issue of Real Living is one which works better without a feature display or, maybe, with backing colours which better support its soft tones.

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magazines

Publisher compensation?

Things have gone very quiet in NSW about the matter before the Industrial Court. So quiet in fact that I suspect an agreement may have been reached. The question will be whether Fairfax has paid or is paying the newsagent for taking over their newspaper distribution territory. If any money has or does change hands it would create a precedent of interest to newsagents. Such compensation has been a no-go zone in discussions between newsagents and publishers since deregulation in 1999.

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Newsagency challenges

UK supermarket investigation shows us the way

The UK Competition Commission has issued an interim report, which outlines its “Emerging Thinking” behind its current investigation into the grocery sector. The investigation includes consideration of the supply of newspapers and magazines to supermarkets. The Emerging Thinking document looks at a range of issues often discussed here in Australia in terms of supermarket behaviour: market power, below-cost selling, price flexing and demand withholding.

The UK Office of Fair Trading, which referred the matter to the Competition Commission, claims to have reasonable grounds for suspecting that trading practices with supermarkets restricts competition. These are my words – read the full terms of reference.

The next phase of the investigation is around local trading.

While there is a risk in any investigation, I am certain that Australian Newsagents and other small retailers would welcome a similar investigation here. The conditions are worse than the UK with just two retail giants controlling the grocery, liquor and fuel sectors. Newsagents have a voice at the table in the UK and this is far more valuable than the many words of comfort (and little action) from Australian politicians in our direction for the last decade.

The UK investigation, while a long way from completion, provides UK newsagents and small retailers with information they would otherwise not have known. Some myths are dispelled and others proven to have substance.

Newsagents in Australia ought to work on engaging the Productivity Commission, the ACCC and the Australian Government Competitive Neutrality Complaints Office in research so that we too can better understand the state of play and, maybe, help our politicians make better decisions affecting newsagencies and other small businesses.

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Newsagency challenges

Happy Valentines Day – Shane Warne and Simone Callahan get back together

Reports that Simone and Shane seem set to get back together will ensure the strong start to the year in the women’s weeklies category continues. The Age says that New Idea has exclusive photos. We know from last year that Simone has great pull – I’d expect New Idea to come close to selling out this week with the FIJI photos of the couple.

Opportunistic as it is, a big local story like this is essential to the vitality of magazine sales. We’ll embrace the romance and use it as a key part of our Valentines Day theming – it’s perfect timing! Thanks Shane and Simone!

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magazines

Leveraging lottery traffic

Here’s an example of how we leverage lottery traffic into better business. To the left is a pen offer and to the right is a magazine offer. To compensate at our key newspaper traffic point we often promote a lottery offer.

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Yes, we are breaking supplier rules by doing this. It’s my business and I need to maximise the return. The sales figures speak for themselves – the lottery company is happy.

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Lotteries

Former newspaper executive writes about life inside the tornado

The problem facing metropolitan newspapers is essentially the same one encountered by department stores. Department stores are facing a tough slog everywhere because almost everything they do can be done better by a specialist retailer. There were many specialist providers chipping away at the motoring, real estate, business, employment and sport sections of papers. In 1998, Fairfax – then John Fairfax Holdings Ltd and now Fairfax Media Ltd – had an enviable newspaper franchise with a deserved reputation for strong, independent journalism and dedicated readers. Although this resulted in pricing power in the market, the source of revenue that leveraged the company’s business model was under threat.

This is an excerpt from The Fairfax Experience: What the Management Texts Didn’t Teach Me, by Fred Hilmer (former CEO of Fairfax) with Barbara Drury.

The excerpts published in The Australian so far are a fascinating insight into how Fairfax was dealing with competition and technology driven disruption.

Like any of these books it is, in part, an attempt by the author to control history. Newsagents will find the book interesting because the challenges navigated then (and now) by Fairfax are challenges faced by newsagents. Fairfax experienced a chipping away at its core revenue stream. We do in our newsagencies as well. The difference is that Fairfax is resourced with advice to guide a road forward whereas newsagents are too much under the pump from current suppliers; too under resourced; too ignorant (or all of the above) to engage in pursuing their road forward.

Fred Hilmer’s book is published Feb 1.

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Newsagency challenges

Kudos to Fairfax for page one euthanasia story

A common positioning in any debate about the future of newspapers is that they will evolve away from breaking news. The Age and Sydney Morning Herald today on page one publish a story which I feel reflects that evolution. It’s a story about an Australian Doctor with a terminal illness who traveled to Switzerland to die.

James Button’s story about Dr John Elliott and his desire to die with dignity is compelling reading – his words are appropriately sensitive while dealing with a highly emotive and often misunderstood topic.

While coverage of euthanasia is not new, such page one prominence in an Australian newspaper is.

I don’t know if Fairfax, publisher of The Age and The Sydney Morning Herald has made a conscious decision on less time sensitive lead stories or whether this is a one off. I hope it’s the former and that they are adjusting their offering in response to changes in consumer habits in terms of accessing news.

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Newspapers

The drug pusher and the junkie who wants to go clean

Newsagents have been the magazine specialists in Australia for more than 100 years. Even in today’s highly competitive market where around 50% of magazines are sold in supermarkets, petrol outlets and convenience stores, newsagents remain committed to the category. They see their range of magazines as a point of difference.

Magazine distributors and publishers often complain about the lack of compliance by newsagents in the areas of retail display, data management, adherence to terms and service. The complainers ought to consider their behaviour before complaining about the most cost effective and compliant retail network they have.

In recent years, newsagents- the junkies in the magazine space given the huge range of titles they carry – have been trying to get clean. They have sought to reduce oversupply and not overstock in the various categories. Magazine distributors, the pushers, have made this hard on newsagents. They don’t want their customers to get off the magazine drug.

Take NDD. They know the crossword category is well served with local and imported titles. Yet when one distributor decided not to continue with a range of imported titles because of poor sales they took up the contract. Look at what we received yesterday, January 26, 2007:

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These are Christmas titles from the UK. The competitions touted on the front page are over. They do not have any point of difference to the Australian product other than that they are more expensive. They have an 8 week shelf life. I doubt that any newsagent will make money from these titles.

NDD will make money. They get paid per copy distributed. So, they contract to take thousands of copies, push them out to their naive and disorganised junkie makes and sit back while the money rolls in. For NDD it’s easy money. For newsagents it is a scam.

The government, through the deregulation of the newspaper and magazine supply model in 1999, helped create the current situation. It is disappointing that they are not prepared to look at the impact of their decisions back then. Families are in distress because of the broken magazines supply model – because of the unconscionable behaviour of companies like NDD in distributing product which is not commercially viable for newsagents.

There is no other channel where a supplier can so easily send out product it knows will lose money for retailers as the newsagency channel.

The only solution for newsagents is to boycott grossly underperforming titles and distributors. These titles from NDD are a perfect example. They did not work when Gordon and Gotch had them. They will not work now. NDD does not care because it is paid for its services. Newsagents are left penniless like most junkies.

To the NDD executives reading this – I am not targeting you. Your behaviour in sending grossly underperforming product and long shelf life product brings attention upon yourselves.

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magazines

Grass-Roots Classifieds Momentum

We’ve received welcome coverage from Sandra Hanchard at Hitwise, the respected web traffic measurement company, on the impact sites like Find It is having on mainstream classified sites:

While the top 10 Classifieds websites accounted for 83.1% for the week ending 21 January 2006, they now comprise 75.3% for the week ending 20 January 2007. The decline of 7.8% in combined market share for the top 10 players means we’re seeing a more competitive industry. This is a trend for the major classifieds to keep an eye on.

Read the whole post here.

Newsagents, through over the counter grass roots efforts, are helping build Find It traffic and local community relevance – especially for our free community classifieds.

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Online classifieds

Sharing the love of my newsagency

We’re going to experiment with what we’ll call workplace love. We’re creating t-shirts for team members to wear if they want. The message of I love my newsagency personalises how they feel about their workplace. And making it optional makes the message more personal.

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Too often and in too many businesses customers encounter grumpy people. We want to provide an environment which focuses on the customer experience and we can’t do that until we focus on the employee experience.

In discussing the t-shirts with the team we’ll get to talk through what’s good and not so good about our workplace and, as a result, make changes to improve the experience for all. The t-shirts will help us facilitate any necessary change.

Newsagencies are visited, collectively, by millions every week. Customer service is often the only differentiator we have. By focusing on this in a personal way we can ensure that it works for us and not against us.

This is an initiative in my store only at this stage.

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marketing

Street marketing for online classifieds

We’re commencing the next phase of street marketing for Find It, the online classified site we’re building in partnership with newsagents. Here is a copy of a double sided card we’re handing out at key venues. We’ll hand out 100,000 and then assess the response.

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Of course we’re doing more than just these street cards. I’m posting this material here as an illustration of the more guerilla style marketing.

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marketing

US newspapers target mothers

Media Life Magazine has an excellent story about newspaper innovation. Lisa Snedeker writes about publisher interest in mums as the demographic of most corporate interest. The article is well worth reading. Chck out this passage:

Why didn’t someone think of moms before?

A good part was certainly that newspapers knew they already had moms, and in their ever-growing panic over declining circulation, the bigger issue has been snagging readers they didn’t have–and what they see as the next generation of readers–the young.

But another part has to do with the stodgy, male focus of traditional newspaper managers. As local monopolies, or near monopolies, papers traditionally put little value on understanding their readers’ different wants, operating on the premise that one paper fits all.

What’s caused all this to change is the realization, dawning on publishers and advertisers, that mothers are increasingly hard to reach through traditional mass media, such as the daily newspaper and network television. They are no longer a given, and that has made them a more valued demographic.

Mums are a big chunk of newsagent traffic. Our shops serve them through the journey of pregnancy, motherhood and well beyond. If newspapers were to focus specifically on the mum demographic as some are in the US newsagencies would be the ideal retail partner.

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Newspapers

Lottery counter gear

I’ve been contacted by people reading my postings here about lotteries commenting on the difference in equipment between the states. Here’s a photo of the full terminal – without giving away any Tattersalls secrets.

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Lotteries

Stoner magazine exploits newsagents

Stickypoint is “Australia’s latest and greatest cannabis magazine” – or so says their website. Distributed to newsagents today by Wrapaway, Stickypoint is another new title exploiting the low barrier to entry to the lucrative newsagent channel.

stickypoint1.JPGNewsagent generosity or stupidity allows Stickypoint to launch with little downside. Newsagents become their marketing arm and bankers. We guarantee eyeballs seeing the title and provide cash flow in advance of sales. Where else could a small publisher get such gifts?

Then there Stickypoint itself. I’d be surprised if there is a commercial market for a cannabis title. I received six copies and would be surprised to sell one – not because of any view I have about the subject matter but because of my demographic. This magazine was released to retailers in December. Newsagents have received their copies today. That suggests to me that we are their second tier retail channel. I can imagine the attitude – yeah, send it to newsagents, it costs us nothing!

stickypoint2.JPGStickypoint is a two cover magazine. The first cover (above) is the more traditional and the second (left) is chasing the girlie market. Neither title works visually in a newsagency. No matter where we place it, Stickypoint will look bad thanks to its low production values and a very dark cover.

It is disturbing that Wrapaway have entered this niche title space. The last thing newsagents need is another magazine distributor playing at this end. I hope everyone returns their Stickypoint stock right away and sends a message to the publishers and distributors.

I have retuned my 6 copies of Stickypoint and will not pay the amount invoiced. I did not order the title so why should Wrapaway have access to my cash?

I wonder if they approached Coles and Woolworths? Woolworths could carry the title as part of their renewed interest in farmers.

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magazines

Saturday newspaper sales versus efficiency

Data suggests newspaper efficiency for a newsagency improves as sales fall.

I have been tracking sales of newspapers in newsagencies on a Saturday for some time. While sales on other days of the week are flat or falling, Saturday seems to be the most volatile. Not in all newsagencies I should note – some are delivering excellent growth. With newspapers available in so many outlets now, newsagencies are not as important to the impulse purchase as they used to be – destination purchases make up more sales than before. This is reflected in growing efficiency of newspapers on a Saturday for newsagencies as shown in this graph.

sales-efficiency.JPG

Efficiency in the graph reflects basket depth when a newspaper is in the basket. From the data from the small group of newsagencies, newspapers sales have become more efficient as sales have fallen. This suggests that the newsagency is more of a destination for these customers, making the customers far more valuable for the newsagent.

While the vast majority of Saturday newspaper sales are single item and therefore inefficient sales, the upward trend on efficiency correlating with a fall in sales is interesting.

What does this really mean for newsagents? I’m not sure. I want to dig deeper into the data and look at other days of the week. I do know that if I can build more efficiency around newspapers I can neuter the impact of falling newspaper sales in my shop.

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Newsagency challenges
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