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

Month: July 2007

Extending the gift related range

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The success we are having with the Compendium range in our Sophie Randall gift shop is encouraging us to add it to our newsagency. While we can see that each business attracts different customers, our feeling is that this range will work especially well for seasons such as Father’s Day and Christmas.

We want to move the newsagency away from traditional newsagency lines at these seasons. While some of this competes with the offerings of card companies, my vewi is that a broader range of suppliers for seasons would be healthy.

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Greeting Cards

Knitting Made Easy

We are using the launch of the Knitting Made Easy partwork to promote our other knitting, quilting and craft magazines. Around this display we are promoting many other titles and hopefully building add-on sales and some good return business.

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While there continue to be supply problems with partworks, I see the TV promotion of special interest titles as an opportunity to introduce the new traffic to other parts of the newsagency where we satisfy that special interest.

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magazines

Using magazine sales decay

The sales decay experienced by weekly magazines in newsagencies is quite different to that the same titles experience in other retailers. For the top selling titles: New Idea, Woman’s Day, NW, Take 5, That’s Life and Who, the first tow on sale days are crucial. The graph below – for capital city based newsagencies – shows the decay over the seven day on sale period for these titles plus TV Week – the line with the least sharp decline. In rural and regional newsagencies the decay curve is not as sharp.

mag_sales_decay.JPG

I produce this graph weekly and compare the decay curve for major titles against previous weeks – in part to track in store activity and in part to predict where the week will end.

Reporting on sales decay for major weekly titles can set the merchandising agenda for a newsagency if the newsagent wants to be data driven in decision making. We have seen stores go from a set and forget approach to merchandising to a proactive approach where displays are driven by data – seeing two titles occupy prime space over the course of a week rather than one.

That’s Life and Take 5 and the titles with the sharpest decay based on the data I have seen. Sales growth is there for the taking for newsagents who aggressively pitch these titles on Wednesdays and Thursdays.

The decay reporting direct from within the Tower Systems software makes tracking this growth easy.

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magazines

Buying another newsagency

Over the weekend I signed a contract to purchase another newsagency. I will disclose the location in a week or so once we get certainty from the landlord. I mention it here because part of the process of reaching a decision to proceed was considering the future of the newsagency channel. While I think there will be fewer newsagencies, my view is that good businesses will prosper.

The newsagency I am purchasing does not have home deliveries or lottery products. This makes it a more pure offering – traffic is not skewed by jackpots and labour is not diverted by home delivery requirements during the day. It is the purity of the offering which is interesting. It means less regulation and therefore greater freedom in navigating change.

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Newsagency challenges

T3 magazine confusion

t3_julaug.JPGWe really need to sort out this T3 problem. Here are the covers of the two issues we have on the shelves at the moment: the issue on the left is the Australian edition and is dated August 2007 and on the right is the UK edition and it is dated July 2007.

Having different issues of what is, for the most part, the same magazine on the shelves at the same time is nuts so we will cancel the UK edition – but this should not happen in the first place. I wish commonsense would prevail – it happens with more titles than just T3.

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magazines

A wall of boxes

Newsagents across Australia were confronted by boxes of two new partworks today. Here is our wall of boxes:

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I am sure the James Bond car series will be a hit – it better be, we have no storage room.

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partworks

Browsers in the shop

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I have a relaxed view of browsers in my newsagency. That we welcome people to visit and read to their heart’s desire is part of our appeal. Regulars and first timers are welcome equally. It is especially enjoyable to see dads on a Saturday introducing their children to the tradition. Occasionally, however, browsers cross the line. When that happens we take a firm view.

If they photocopy something from a magazine, we make them buy the magazine or newspaper. If they tear out a page, we make them buy it. If they start to write a recipe or something else from a magazine, we ask them to buy it or leave.

While it is easier to do nothing and thereby avoid confrontation, action is essential – we’re in business after all.

The grey area is the regulars, the customers who come in, read the newspaper – even taking sections apart – and put it back on the rack for sale. They can be a barrier for other shoppers. They also damage product. At the moment, while we don’t stop them, we do work around them and demonstrate that they are in the way. Sometimes it works but mostly it does not. We know we need to tackle this as there are three or four customers who spend nothing and help themselves daily.

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magazines

Spinners and spinners

inspired.JPGI am not a fan of spinners as they impact sight lines and generally clutter the store. They can also cause customers to trip over.

This spinner from Avery is different: it is lower in profile, well anchored and quite attractive. It connects our business with the respected Avery brand and I like that. Brands are important in newsagencies.

The product mix is, overall, new for us and to present it in this more corporate way than one would usually see in a newsagency is welcome.

We have introduced the spinner and its unique product in a high traffic area before moving it to its planned home near our range of ink and toner.

During school holidays we are likely to bring the spinner out as part of our activity offering – the t-shirt printing kit would especially appeal to holiday time.

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Stationery

VTAC Guide season

vtac_2007.JPGIt is VTAC Guide (a book listing tertiary courses) season in Victoria so we are using part of the dance floor to promote them.

Past experience tells us that we have a few days to move the bulk of the stock before sales slow to a dribble – history shows that between 75% and 80% of all stock is sold in the first week and the remainder over the next three months.

With something like the VTAC guide there is no point in being all that pretty – hence the trestle table stuck in this high traffic area. This approach gives the feeling of urgency and hence serves our goal this year to sell 200 to 300 within a week.

We have a display of stationery next to the VTAC Guide to attract add-on sales from people driven to us for the guide.

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magazines

Good giveaway with New Idea and Famous

bueno.JPGI’ve written here before about the frustration of some magazine freebies which are poorly stuck on covers and do more harm than good – the Boost Bar with Alpha ladst month was like this, falling off everywhere.

The free Bueno chocolate being given away this week with New Idea and Famous in some newsagencies is a well executed offer.

By providing the chocolate separate to the magazines makes for neater shelves. It also allows us to get the thanks when we give the customers the chocolate bar – this is a nice bonus.

Handing the chocolate personally certainly adds value to the gift and provides an opportunity for the customer to connect the gift more with the newsagency than if it were just stuck on. Everyone likes to feel special and this promotion works in with that.

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magazines

Cartridge rescue good for the environment

cartridge_rescue.JPGSince we promote the sale of ink and toner products inside and outside our newsagency, a complimentary recycle service is essential.

Six months ago we replaced our Planet Ark cartridge recycle arrangements with an arrangement which we feel is more friendly to the environment. All cartridges returned by customers are sent to Cartridge Rescue which reuses them. More than 90% of all they receive are reused – to date, the folks at Cartridge Rescue have reused 2 million cartridges. This is far better than chopping the used cartridges and making them into something else: reuse before recycle is their mantra.

Given that newsagents cop flack in the media from time to time over plastic bags and paper waste (Thanks John Dee of Planet Ark), it is good to be part of positive action on an environmental issue. Talking about Cartridge Rescue with customers provides another reason for them to visit our store when they run out of ink – to take care of the spent cartridge appropriately and to buy a replacement – a win win.

newsXpress organised the Cartridge rescue relationship and rolled it out through the entire network of stores – these are listed at the Cartridge rescue website.

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Social responsibility

Location location – selling Darrell Lea

d_lea.JPGWe moved one of our Darrell Lea stands to the front counter and sales jumped significantly. While this is not the preferred location, so we are told, the sales speak for themselves.

We figured we would leave the stand here for a month and then move it on – we like the idea of constant movement around the counter and front of the shop to show a business on the move.

Too many newsagents operate a set and forget model – leaving too many products and categories in the same place for too long and therefore encouraging customers to become store blind. We are surprised how many have said – oh, you have Darrell Lea. We have had Darrell Lea for five years.

Sales over the last two weeks show that Darrell Lea products can work in an impulse situation.

FOOTNOTE: See the Herald Sun stand next to the Darrell Lea unit? It continues to help drive newspaper sales at the the front high traffic lottery counter.

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confectionary

Diana sells magazines

New Idea is strong this week in stores I have seen thanks to its Diana series. The same is true of the Australian Women’s Weekly with its stunning Diana souvenir – I’d be surprised if it is not a sell out.

The extra traffic generated as a result is providing us with an opportunity to push the magazine club card and remind customers of our exclusive loyalty proposition.

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magazines

Art supplies and newsagencies

art_supplies.JPGFor two years we have offered a good selection of art supplies which we have sourced from Queensland based Mega Shed. Sales have been good and we’re nicely in the art space.

While the range has been good we have been disappointed that Mega Shed directly competes with us in their retail and online businesses. This disappointment is compounded by frustration over delivery costs. They require us to order in pallet lots and this can be a challenge. When we cannot meet a pallet requirement, freight costs are extraordinary.

When they are out of stock it is frustrating to find the same product in stock in their retail business.

We are not continuing our relationship with Mega Shed and will instead seek a relationship with a more commercially astute art supplier – a partner who specialises in wholesaling rather than retailing.

Art supplies are an excellent add-on product for newsagencies. The key is getting a good range of product at a fair price and with good backup stock availability.

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art supplies

Benchmark project for newsagents

We have commenced a benchmark project with around 50 newsagencies, delving deep into the businesses to streamline benchmarking processes so that comparisons are easy and reliable.

While benchmark studies have been undertaken in the past, they are snapshots and rely on data from a range of sources. Our goal is continual benchmarking from one IT platform source. All of the newsagents participating are using the Tower Systems software.

Knowing, for example, that a shopping centre based newsagency needs sales of $8,000 per square metre is the bar. Our software tracks sales by department, category and supplier by floor space allocation. This enables us to report on these and other views against the industry goal benchmark and thereby facilitate local store decisions on, say, supplier. It also allows us to consider adjusting the industry benchmark if the reported data from the group is radically different.

Key to the project working is agreement between participants as to how products are categorised within their businesses.

We first considered this project when we undertook a study of data from 8 million shopping baskets in 2005. The results of that research demonstrated the value of newsagents working together to compare data.

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Newsagency challenges

Newsagent business works against newsagents

gns_newspower.JPGThis is the brochure form GNS to which I referred yesterday.

The exclusive offer from GNS is between 5% and 10% off selected stationery lines. It is offered exclusively to Newspower members but has been sent to other newsagents. Most items are priced less than OfficeSmart prices.

OfficeSmart is a GNS buying group for newsagents driving stationery – newsagents pay a premium to be part of OfficeSmart and are promised better pricing in return. Not this time.

As a GNS shareholder I am disappointed that they are using their resources to fund discounts for Newspower members to the detriment of their non Newspower members.

For a newsagent owned business it is sure making some odd decisions.

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Stationery

Poor lotteries processes cost money

Newsagents in NSW are facing an additional $900 in insurance fees as part of the fall out from the recent high profile case involving employee fraud in one lottery outlet. Had NSW Lotteries followed the processes established years ago by Tattersalls NSW newsagents would be better off today as such a fraud could not be committed. So, if I were a NSW newsagent facing this additional $900 in insurance costs I’d be asking NSW Lotteries why their processes remain open to abuse.

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Lotteries

GNS discounts for Newspower

GNS in Victoria has announced discounts on some stationery items exclusively for Newspower members. As a GNS shareholder of 11 years standing and owner of a newsXpress store I am disappointed that I am locked out of this pricing. I note that when newsXpress approached GNS to negotiate pricing arrangements a year ago GNS advised it would not offer pricing which disadvantaged any of its newsagent customers. I guess time has changed for them.

What is interesting to me is the third line forcing situation – that I have to pay money to company A (Newspower) so that I can get a discount from company B (GNS).

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Stationery

Stunning Women’s Weekly tribute to Diana

aww_aug07.JPGI would be shocked if the August issue of the Australian Women’s Weekly (out yesterday) is not a sell out. It is one of the classiest magazines I have ever seen. The cover is sensational and the free DVD attached of Diana is excellent value.

Congratulations to everyone at ACP Magazines involved.

This issue has been on sale for one day and early indications are that it is a winner. We are supporting it with a feature display in store, a front of shop display and our usual waterfall display in our women’s magazine area. We saw it as key to go hard and go early with this.

While there have been plenty of Diana covers over the years, the quality of the AWW production and that it stands out visually from the usually noisy newsagent magazine shelves make this the tribute to collect.

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magazines

Rejecting calendars

We have let our magazine distributors know that we do not want to receive calendars from them this year as we have negotiated more lucrative arrangements direct with calendar publishers and importers. It does not make sense to carry calendars which deliver 25% to 33% GP when we can carry similar or better product which delivers 60% to 75% GP. Also, given that the Government owned Australia Post post office opposite my newsagency will have some product similar to what the magazine distributors send, I would prefer to offer a genuine point of difference.

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Calendars

Shopping centre rent

I have been provided current financial data for a newsagent in a major regional centre on the eastern seaboard of Australia with an occupancy cost of 24.76% – double a reasonable benchmark. I bet that for a similar size tenancy in the same centre a national retailer is paying half or less per square metre. Despite excellent sales by any measure – for a newsagency or on a per square metre basis in a major centre, the exorbitant and ever increasing rent condemns this business to losing money.

If it were me, I’d be asking the ACCC or any state authority which may be interested whether an occupancy cost of 24.76% for a newsagency – where around half of what you sell has a GP of 25% – would be considered unconscionable.

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Newsagency challenges

Harry Potter Chess Set tears

harry_potter_chess.JPGMany newsagents across Australia are angry this week on discovering that supplies of the Harry Potter chess set partworks have been cut and they cannot get enough stock to satisfy customer demand.

Customers are angry when their firm order is not available – what is the point of such a firm order some ask. Kids are upset.

That the Harry Potter Chess Set has been a runaway success should not surprise anyone – yet it apparently has.

I love partworks like this Harry Potter series yet constant supply problems and an inability by the importer, distributor and UK publisher to solve the problem suggest it might be time to give up on them.

Newsagents are justified in their anger on what appears to be another partworks supply botch up and the damage it will cause in customer relationships. Newsagents deserve better.

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magazines

Better magazine allocations

Newsagents have received a letter from Horwitz Publications and Network Services committing to allocate quantities of Horwitz titles to ensure that supplies closely match expected sales. If this happens newsagents will cheer as it reflects a more appropriately tuned supply model – I expect supply to be on the basis of a target sell through rate of 70% or higher for anything less would not provide the return I am looking for.

Now if only all publishers and distributors would agree to such arrangements. It would be good for the environment.

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magazines