Hey, do I get extra pay for February 29 since this year has 366 days and my pay is for 365 days. That’s what Ben Fielding wanted to know at our Forest Hill store. It’s the funniest thing I’ve heard all week. not that I should laugh at his expense. But, well, I am. Even though we explained how he’s paid I suspect that Ben still thinks he should get an extra day of pay. I can’t wait for April 1. Sorry Ben.
We sold out of Good Taste in 24 hours with a display at the counter. If we’d placed the title in its usual location we would not have achieved the result.
This counter location for titles with giveaways works! I’d rather sell out of a title than have sales drip over the month, especially when it’s a title pushed hard in supermarkets – Good Taste is a house title for Woolworths / Safeway.
JULY 2008 UPDATE => for my latest posts on Bill Express, click here.
Bill Express (ASX code – BXP) has unleashed a firestorm of anger among newsagents, its retail network, by removing a long standing marketing subsidy making the relationship loss making for many. The subsidy was removed prior to Bill Express advising newsagents.
The Bill Express action risks newsagents turning off the service and the company being without its retail network. This would upset biller partners as well as telcos such as Telstra, Optus and Vodafone who rely on newsagents to sell recharge through the Bill Express / newsagent relationship.
Some newsagents are calling for a national boycott of Bill Express, some have already stopped accepting bill payment through Bill Express and some are researching possible legal avenues – several having met with lawyers already.
Removal of the marketing subsidy is a high risk strategy by Bill Express. They knew it yet they proceeded. They were told prior to the announcement how newsagents would react yet the proceeded. My assessment is that they chose the lesser of two evils, they chose to save their cash.
In 2003, Bill Express was a small start up in need of capital and a retail network. Newsagents provided both on the promise of shared profit. 3,500 signed up – committing to leases valued at $25,000 each, taking the financial risk and unlocking around $87.5 million in free capital for Bill Express. I was skeptical and arrived late at the Bill Express table. In hindsight, my skepticism was well placed as were the tough questions put by some in the industry.
But that’s history now, newsagents signed up, we delivered the retail network and capital to Bill Express. We signed contracts which are difficult to terminate. Thanks to the withdrawal of the marketing subsidy, we are burdened with around $3,000 a year more in bottom line costs. This is our reward for our extraordinary support. Bill Express, in the meantime, has added $875,000 a month to their bottom line by removing the marketing subsidy.
It is easy to see the winner in this. But it was always going to be so. Bill Express was clever to spin the impression that the subsidy would remain while always knowing that it would end.
It is instructive to break down the four-part Bill Express offer: The bill payment side is loss making; the in store advertising screen system XIP media is a failure; the BOPO debit card is, well, very slow at getting off the ground. Bill Express, as part of their spin to newsagents this week, uses an example showing I can make money if I sign up one new BOPO customer every day. I currently sign up, on average 1.5 a month. One a day is a huge stretch for something with slim margins and a high labour cost; the Dialtime phone recharge component is the only money making aspect for newsagents. However, what we make from this is diluted by the now chunky Bill Express fees.
The numbers put to newsagents by Bill Express this week to show how they can make money are not being believed. Indeed, they make matters worse for Bill Express as they show an organisation out of touch with its retail network.
Recovery from the loss of faith among newsagents looks insurmountable. I wonder at what point Bill Express will have to make an announcement to the ASX about this.
I am conflicted in the Bill Express matter. Seven months ago, I and my team at Tower Systems started work on eziPass, a software product which competes with Bill Express. We developed this product and exclusively integrated it with our newsagency point of sale software. We have also developed a stand alone version which will be available in a matter of weeks free to all newsagents. Up to a week ago, 220 newsagents had signed up with eziPass. Sign ups have increased considerably since the Bill Express announcement this week.
While eziPass competes with Bill Express, my work and that of Tower Systems is pro-bono for newsagents. Neither I nor Tower Systems nor any business assocoiated with me makes money from eziPass. I know that by not taking a cut I was able to maximise the return newsagents achieved from selling phone recharge, attraction tickets, tollway passes and the 300 products through eziPass. This is why many eziPass assessible products have a better margin for newsagents.
While eziPass benefits from the difficulties in which Bill Express finds itself, Bill Express alone is responsible for its problems. It is responsible for promises made on its behalf to newsagents, the failure of the in store advertising screens, the slow uptake of BOPO and the now high cost of its old bill payment technology. eziPass is the smarter alternative. No expensive baggage. No capital outlay. No monthly fee. No onerous contract. No special computer hardware. There are fewer middlemen sharing the pie. It is integrated with point of sale for all 1,450 Tower newsagents and available from April for non Tower newsagents. Free.
I am pleased to be able to offer newsagents an alternative to Bill Express – for many it offers an attractive parachute.
The wrath expressed by newsagents over the last 48 hours is unlike anything I have seen before. They are angry and upset – with justification I would note. I am surprised that Bill Express has remained silent. It’s as if they are resigned to taking a hit because of their decision and that they’d prefer to weather this than reinstate the subsidy. Cash is king I guess.
Beyond the public anger being vented, some newsagents have sought legal advice on action against Bill Express over the removal of the subsidy and misrepresentations surrounding the benefits claimed prior to them signing up for the service. The problem for newsagents is the Bill Express contract many signed. It requires notice six months prior to the end of the agreement that a newsagent does not wish to roll over otherwise it is automatically renewed. Of course, most newsagents have not given such notice and have automatically renewed contracts.
My view is that the Bill Express contract will need to be tested in an appropriate forum. Whether this is tribunal such as the Consumer, Trader & Tenancy Tribunal in NSW or as high as a Supreme Court or somewhere in between remains to be seen. In the meantime, newsagents can vote through their actions by putting as little business through Bill Express as possible.
Heads up newsagents: Fairfax Media, the digital part of the newspaper publisher, is making an online play for Gen Y with a site currently called Kwerky. Here’s another newspaper publisher with a pure online play for a generation disconnected with newspapers.
We’ve found a good way to promote the free bueno chocolate with New Idea and Famous this week – using the acrylic unit in the photo with the magazine in one pocket and the chocolate in another, in front. It’s an easier pitch than having the magazines in their usual place and the chocolate bars at the counter. Our view is that for these up-sell promotions you have to show the premium with the product being promoted, it drives sales.
The brochure on the left has been pushed out far and wide by Australia Post. It makes the Post Office look like a phone retailer which they are in some locations. What is it with this government enterprise? Are they not happy with their postal service monopoly to the extent that they have to continue to take on small business. There are franchisees and independent small retailers across the country offering phones and related product. If there was a hole in coverage I’d understand but there isn’t. Australia Post’s government owned stores ought to get back to their roots and stop using their protection to hurt small businesses.
I apologise for the photo of this month’s Australian Photography magazine. It’s how it looks though, all packaged up in a sealed plastic bag like some porn product. Its’s not porn though. This month’s issue of Australian Photography is in a sealed bag because it is being given away with a copy of Great Walks magazine. While the package is a compelling offer, it’s not smart. Photography magazine buyers are keen browsers. how can they browse a magazine in a sealed plastic bag. They can’t. This is not smart retailing.
Here are some sales/marketing tips for Easter which I put together a week ago for Tower Systems users – I share it here in case some visitors find the ideas useful. Some are old chestnuts and others are, well, different.
Egg Hunt. Invite families in to hunt your store for eggs on one day. Make this a big event. Get the local paper to take some photos. Let the school, kinder and other groups know.
Easter Bonnet Parade. Invite oldies groups, retirement villages and similar places in to do a parade. This could be on the same day as the egg hunt. The more groups you involve the more your name will spread in the community.
Colouring contest. An oldie and a goodie. Get a good image and hive kids colour it in. The key is to display all the entries – note on the form that you will display all entries as this gets parents coming in to look at the work of their kids.
Easter of all nations. Invite your customers to write about Easter from the perspective of their nationality. Keep the brief histories to a page. See how many countries you can get represented. This could really help cross cultural boundaries and connect people who otherwise may not have met.
Window decoration. Invite a school class or kinder to paint your window in an Easter theme.
Egg race. Put a big chocolate egg on a small spoon and see who can race a distance around the shop without dropping the egg.
How to make a bonnet. Create an advice sheet or some flyer which helps people participate in Easter. There are other sheets you could do: why send an Easter card or traditional Easter meals etc. The more knowledgeable and useful you appear the more people will rely in you for seasonal connections.
Of course, the various events noted could all be done on the one day, creating something wonderful for all ages.
It seems that small is in with magazine publishers. We received Healthy Living from ACP magazines this week. I’m happy with the product and the category – health related titles are doing well. I’m unhappy with the long shelf life and more unhappy with the size. While they’d like us to put the title on the counter, I don’t have the space for that so it has to fit into magazine fixturing – which it doesn’t. What could have helped is the supply of fixturing with a universal clip of some sort which allows me to attach the display to the magazine stand. This way the title could look like it is part of the category rather than the poor cousin it looks today.
I appreciate that I am looking at this only from a newsagent perspective – supermarkets and other retailers will be happy with the stand supplied and the size of the product I am sure.
Douglas McLennan has written an excellent blog post about newspapers in the US and how they are dealing with challenges. He makes some interesting suggestions, especially the need to connect with small business.
I was surprised to see our supply of Australian Women’s Weekly increase 10% with the issue out today. There is no justification for this in our sales numbers.
Nationally, the audit figures for the six months to December 31, 2007 showed a circulation fall of 5.7% for AWW. So, I cannot work out why supply has increased. Other newsagents tell me their supply has increased on the back of falling sales as well. Something is odd here.
I would not mind if the increased supply was part of a marketing strategy but there is, as of this time, no evidence of that. So, we’re undertaking activity ourselves to try and move the stock. One idea we are pursuing is a farewell to Megan Gale pitch – she is giving up a successful modelling career so the cover is kind of her last hurrah in that role.
This oversupply such labour, space and cash out of newsagencies.
We’re taking a different approach with our counter based magazine offer this week. We’re not promoting magazines at all but educational books – as the photo shows. I liked the idea of resting magazines for a week.
The books were left from a book sale and rather than shove them to the back of the shop we made them a hero at the counter.
As is always the case with this space, it works – especially with the SALE sign (which took two minutes to do) on the stand and genuine bargains on display. Being located at our busiest sales counter helps too.
It’s a pleasure to see someone approach the counter with a newspaper and end up purchasing one of these impulse items.
Oh, it was Michael Luscombe, CEO of Woolworths, obscured by the ad for Smart Investor magazine stuck on the front cover of today’s Australian Financial Review.
The decision to stick this ad on top of news on the front page and over a news photo can’t have been made by newspaper people – I’d be shocked if they agreed to have their product compromised in such a way.
These stuck on ads tell us something about the respect, or lack thereof, the folks at Fairfax have for the medium which was once at the core of their business.
Beyond the ad itself is the disrespect folks at Fairfax show newsagents. They pressure us to promote Smart Investor in store and then they go and use products we sell to try and take sales of the title we are promoting from us. I can’t compete with the $43 off offer. Their pitch makes newsagents look expensive.
I think it is time for change in how newsagencies are valued. The multiple of between 3 and 4.5 times net earnings where net earnings is a figure with too many add-backs is not viable for incoming newsagents. It is more important for us to make our money week by week rather than relying on a parachute at the end. Ill informed purchasers find they have paid too much.
These words which I published last week in a post here have upset some newsagents. I can understand that. I am challenging the traditional way newsagencies are valued. I am proposing that instead of a high multiple on an often questionable net profit figure that we let the market find its level. This approach makes incoming newsagents more informed and surely that makes for a healthier channel in the future.
Newsagents need to debate these matters since they go to the viability of our channel in the future. It’s this long term view we need to take. At least I hope that’s the view newsagents take on this issue.
I’m glad to discuss the issue of newsagency valuations with anyone. I’d be glad to participate in open debate – not because I think I am right but because I think we ought to debate these things so we can work out what is right.
I want a viable newsagency channel long into the future. Hopefully the stone I budged down the hill last week will, in a small way, support that.
The Darrel Lea Easter egg range is drawing attention. The photo below shows around half the range we have in store. We have it on the dance floor, right at the front of the shop – nest to our range of Easter cards.
We made a decision a couple of years ago to promote aggressively at Easter and it has paid off ever since. While we’re competing with the major, we are competing and our customers are responding.
I’ve never heard of fashion tape before and when I found out it was the giveaway with OK! magazine this week (an exclusive newsXpress promotion) I was, well, surprised. It turns out, it’s the tape is the ultimate fashion accessory, helping keep closed attached to the body when otherwise they might fall off. Now that I understand, I can see it’s a smart giveaway – especially since this is th week of the Academy Awards. Knowing the back story of a giveaway can help make it more successful.
Easter is close and we have our Darrell Lea range out including this Thomas The Tank package. It includes an activity as well as the egg which is good. I’m curious about the management of brands such as Thomas since we access the eggs from one place, cards and bags from another, books another and toys another. While it’s impractical to have them all come through one supplier, it would be good if there was a more co-ordinated approach.
We are promoting our range of St Patrick’s Day cards away from the usual card display in one of our newsagencies. Our view is that some people may buy a card as an impulse and not as a destination purchase – hence this small display at the counter. We’ll move it around a bit including to thelottery counter where we expect it to be a hit.
Promoting small card seasons like this at the counter makes sense. Otherwise people have to remember the small season and then go hunting for the cards. Right now, St Patricks is overwhelmed by Easter cards in the regular card fixturing.
Newspaper publishers often seek to mitigate the impact of a price rise. Smart ones do this through promotions wh9ch add value to the product. Less smart publishers offer steep discounts off the increased price. Even less smart publishers offer steep discounts through one channel (home delivery) while expecting equally loyal customers through the other channel (retail) to cop it sweet.
This is what was behind the awful sticker stuck on the front of the Sydney Morning Herald this morning. The marketing department was seeking to mitigate the impact of their cover price increase. The offer disrespects their retail partners. It also disrespects existing home delivery customers. Oh, and it disrespects home delivery newsagents who stand to make less because of the Fairfax largesse.
70% off! What is that? It’s scared marketing that’s what it is. It’s, we know this paper is not worth what we are charging so we are prepared to cut the guts out of the price but only if you use the distribution channel which gives us more control, is more expensing and which is funded as a loss leader by small business people who can ill afford to have margin further cut.
I love the Sydney Morning Herald as a newspaper, it is worth the cover price increase. The game played out today, stuck on the masthead, cheapens the product and shows that some within Fairfax don’t share my faith in their newspaper.
My view is that Fairfax ought to have ridden through any downside of the price increase and come out in a week or two with a premium offer based on coupon redemption. Something of value which gets people buying at retail over seven or fourteen days. The Australian is doing this right now and my information says it is working. News Ltd is smart when it comes to these things.
What does today’s Sydney Morning Herald tell us about the state of the newspaper. As the photo below shows, the marketing department has succeeded in having their ad – for cheap home delivery – stuck on top of the masthead, obscuring the Sydney in the title.
I was shocked when I saw this when I arrived here this morning. At least the folks at The Age stick their ads over editorial, not the actual masthead itself. Journalists I correspond with in the US tell me they would bring on industrial action if their publisher permitted such an attack on the brand.
While I am no marketing expert, I would have thought that covering your brand in this way is a bad move.
On the home delivery offer itself, I doubt newsagents will be happy – they make less from a home delivery sale than retail from the product itself and add on sales through retail. A smart publisher would develop an incentive program with retailers so they can drive single copy sales. This is fertile ground yet of little interest to some publishers as they don;t have the same control they have through home delivery.
Along with thousands of others I am in Sydney today for the Gift Fair. Actually, there are three fairs in three locations. I’ll be there for the day. Others from our retail businesses will spend longer.
What’s interesting about Gift Fair is how the retailers interact with suppliers. They are in a marketplace where the retailer chooses what they want to sell, how much of the range and they control display and price. The fair is a true marketplace. Buyers and sellers are excited. Businesses live or die based on the decisions made.
Newsagents, for significant parts of their businesses, don’t have this control. It shows at trade show in those product categories and in the way newsagents and suppliers interact with each other. If only all a newsagency was as commercial and free as in the gift space. I think you’d find many more entrepreneurial newsagents.
I’m excited about today. We are looking for products for our Sophie Randall gift shops as well as our three newsagencies. It’s going to be a fun!
Dennis Publishing, the publisher of the highly successful Monkey digital magazine, has launched Gizmo, a consumer technology digital magazine. They claim it’s a world first. Gizmo will be free, just like Monkey. Dennis Publishing publishes more than 50 titles. They are leaders when it comes to successful digital launches.
It is news like this which newsagents need to consider when planning shop fits. What is the best retail fixturing for magazines in this new world? How much space do we allocate? Do we focus on the top selling titles or the titles others don’t sell?
More publishers will pursue online models like the folks at Dennis are successful with. They have to. What we have to do is to pursue the future as we see it for ourselves. Too few newsagents are doing this, they are waiting for publishers and other suppliers to take their hand to the future.
Spin Digital magazine has struck a deal with iTunes and MySpace to provide members access to Spin Digital free for 12 months – according to Digital magazines. They say they are using the digital edition to drive print subscription sales. That’s an odd goal given the interaction of the MySpace and itTunes generation with print, or lack thereof.
It seemed like a good idea at the time – an in store marketing campaign which sought to turn magazine browsers into greeting card customers. The idea didn’t work and now we’re processing the learnings from the experience.
I came up with the idea and convinced my colleagues at newsXpress to test it through five newsXpress locations. The tests, over the last month or so, have not resulted in the incremental sales I expected.
We designed coupons, business card size, had them professionally printed and offered these to people browsing magazines at high browser time – late night shoppers and guys on Saturdays and Sundays. We focused on guys as they are less likely to buy cards. The coupon was redeemable that day only and offered 25% off cards.
That test did not work does not concern us. We had a go and have learnt something from that. We’re likely to regroup and try again. All good marketing is developed this way – testing, tweaking and more testing. Some of the successes I blog about here are the end result of countless hours of hard work. I have faith in the concept at the heart of this idea, there are elements of the execution which need work such as the coupon itself, the pitch and even the core offer.
I see it as important that we work at leveraging existing traffic in addition to drawing new traffic. You cannot do one and not the other. While we drive our stores to up-sell themselves, it is always good to find ways to facilitate team member interaction with customers beyond a hello or a smile. Standing behind the counter serving doesn’t cut it nor does the gimmick promotions of If I don’t ask you about such and such you get a free thing. We need to engage with our customers and add value to their visit. It was belief in these things which led to the development of the coupon campaign.
There are some in the newsagency channel who are happy to report other’s failure. They see it as a badge of dishonour and gleefully gossip about it. Having a go is part of being Australian and part of what we newsagents need to do now more than ever. When was the last time you tried something challenging in our newsagency? I mean really challenging? Your competitors are doing it all the time so why not you?
Every day we make a change in the newsagencies I own – from moving product categories to creating a display outside of what suppliers ask us to do to running an local promotion to shifting product at the counter. This sense of perpetual motion is key to stopping customers and team members becoming store blind. Change is something we enjoy an celebrate.
The greeting card up-sell didn’t work. In the numbers game of marketing it strengthens the chances of the next idea working.
Why have I blogged about this? It’s important to me to be open with you here about ideas which don’t work so the learnings can be shared and to demonstrate that failure is an important part of success.
Thanks for reading.
