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

Month: February 2008

The free newspaper challenge

In Sydney on Monday night this week I saw, again, the distribution of mX on the streets in the city and at railway stations. There’s no effort necessary, commuters step up for their free newspaper.  While mX is not a patch on the daily paid for newspapers, it’s popular.

Some commentators wonder if the free daily model will become the norm.  Certainly in the US and Europe, in major cities, it’s popular and many of the free daily newspapers are almost as substantial as paid for product.

While I don’t know the future of free dailies here in Australia, I do know that free dailies are something newsagents ought to think about and discuss.  Do we see a role for ourselves if the free daily model expanded?  Some newsagents are involved already but only a few.  How would we react if a publisher asked us to be a pick up point for a free daily in our newsagencies?  Some of us participate already permitting free local newspapers to be collected from our shops.  Do we open a conversation with a publisher before they start to think about these things?  We have a track record for reacting as opposed to leading on issues of change.

I don’t know where free daily newspapers will end up nor do I know their impact on the newsagency model but I’d sure like to engage in active discussion on the issues.

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Media disruption

New Biggest Loser books

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It will be interesting to see if The Biggest Loser brand works with the new Food & Exercise Diary and the Complete Calorie & Fat Counter. We have very similar products under other branding and while sales are good, I’d expect the TV show connection to drive the latest releases to the top.

We have put The Biggest Loser products at the counter since the TV show is on every weeknight. Once the TV show is over so we’re better off getting in early.

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magazines

Great magazine cover drives sales

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The latest issue of Harper’s Bazaar has been a huge success thanks, I think, to the stunning cover. It stands out amid the bright colours of the other magazines around it – people notice it. Brilliant. The key for newsagents is to display the cover and not just the masthead. Do this and it walks out the door.

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magazines

Recalling sunglasses

It’s good to see the folks at Marie Claire respond quickly yesterday to a call from the ACCC for them to recall the brown sunglasses given away with the magazine last month in a campaign run in partnership with Cancer Council Australia. Newsagents have been shielded from having to process – not that I’d expect many pairs of glasses to come back.

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magazines

Promoting K-Mart

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I was interested to see this sign in the centre where we have our newsagency in Frankston. My initial reaction was wow, great promotion for Real Living. Then I realised it was an ad for K-Mart. At least that’s what I think it is.

I’d prefer to see our shop connected with this. We sell the magazine. Sure, K-Mart does too but their real focus is the products in the magazine.

Now when I look at the magazine on our shelves I feel as if we are promoting K-Mart. I know we’re not directly but this connection between the magazine and K-Mart is pretty strong.

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magazines

Selling Forest Hill

I have made a decision to put our newsagency at Forest Hill, newsXpress Forest Hill, on the market.  I have owned this business for twelve years and feel that it is time to pass this business to others to take it on the next part of its journey.  It’s in healthy shape.

 

I purchased Forest Hill in February 1996 to provide hands on experience for myself and our team at Tower Systems.  It has played an important role in helping us build better software for newsagents and has acted as a place where we and newsagent suppliers can test new standards and products.  Forest Hill and the experience it has provided is a key reason Tower Systems is by far the largest supplier of software to newsagents.

 

Purchasing Quayside Newsagency in Frankston late last year maintains our excellent hands-on connection with operating a newsagency.  Indeed, as we embark on a major shop-fit and a realignment of product mix, we have a new playground in which to explore the newsagency of the future.  I am also a significant shareholder in newsXpress Watergardens which offers a different hands-on experience in pursuit of a bright future for newsagents.

 

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. 

 

I appreciate that this sounds like heresy to some looking to exit soon.  I have looked at how other businesses are valued and I think that for the health of our channel we need to debate this issue today.  Hence my comments here, to encourage a conversation about how we value our businesses when we sell them.  We owe it to the future health of the channel to talk about this issue.

 

In line with my thinking, I have not put a price on Forest Hill.  We are inviting offers.  Interested parties who complete a non disclosure will be provided all the information they need to make an informed decision.  We will let the market find its level.  Of course, there may be no interest in which case we will implement t plan B – and, yes, we do have a good plan B.

 

I have appointed Denis King as the broker to handle the sale.  I have known Denis for years and have done business with him in the past.

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About us

Hot Ink promotion kicks in

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The flyers sent out around each of our newsagencies have just hit promoting the latest Hot Ink offer.  The last couple of days have been like turning on a hose – previously good daily sales have gone through the roof.  People bring the flyer in looking for specific product.

The promotion is based on national pricing. It beats Big W, Dick Smith, Australia Post and JB Hi Fi. It builds trust and this trust has a flow on effect in stationery and other sales – and we maintain a healthy margin.

Dropping 25,000 flyers around a newsagency is considered too big a commitment to some newsagents. I’ve tested this approach in several locations now and I know it works – especially in demographics where one would least expect it to work. The key is to be patient because it takes a couple of cycles to build trust and break buying habits.

I appreciate that I’m promoting newsXpress with this blog post (a group of which I am a Director). Their Hot Ink promotion is very successful not just in my newsagencies but many others. It’s bottom line evidence of the value of membership of newsXpress.

It is by playing in areas like this that we can ensure relevance with out customers. Newsagents not in this space, in a professional way, are at l

We still operate our online ink and toner business- Inkfast. That serves an entirely different clientèle since it is national, online only and primarily focused on toner.

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newsagency marketing

The cost of shrinkage

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Better Photoshop Techniques sells for $24.95. Our buy price is $18.71. One copy stolen costs us the GP from three sales. This happened to us this week, a copy stolen. It’s frustrating because of the high cover price. It hits harder than losing a $3.95 magazine. No wonder newsagents automatically early return higher priced magazines.  The cost of the theft risk is too high.

I’d like to see discussion opened on the cost of magazine shrinkage. At the moment newsagents wear 100% of the cost and with it costing between 3% and 5% of turnover we’re losing the battle. The problem is even worse since we do not control what we receive and therefore cannot manage our risk as effectively ads we otherwise might.

While publishers could say that we ought to better manage the risk in store, this is not easily done in higher rent situations where occupancy costs can be 15% or even higher, labour at 12%, expenses at 5% and, well, there is nothing left in the 25% GP for magazines for the kind of on the ground security necessary to stop magazine theft.

In my newsagencies the team is vigilant and, yes, people are caught.   But we also miss people – we see a report weekly of the cost of magazine theft as we return product.

I’d like publishers and distributors to discuss the shrinkage problem with newsagents.  It is unfair for newsagents to continue to carry the high cost while they, publishers and distribution, support moving top selling product outside the newsagency channel.

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magazines

Andrew Symonds Alpha cover

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Kudos to Andrew Symonds for his success in the IPL bidding in India overnight. I’m especially happy given that Symonds is on the cover of the latest issue of Alpha sports magazine. In response to the amazing bidding result for Symonds, we’ve placed Alpha in a high traffic area to capture heightened interest over the next few days. It’s the kind of opportunistic action we need to take as retailers. Hopefully it works and sales of Alpha kick as a result.

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magazines

Free Trading Post

A representative from the Trading Post visited one of our newsagencies earlier this week, counted our stock and asked us to give away the remaining copies for free. They even stamped the stock with the stamp you can see on the photo below. The did the same for Things That Go.

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I am not sure of what to make of this. While a free Trading Post is nice, what does this mean for the long term? Will our customers expect it again? Is this part of a bigger plan?

I’d have preferred to have been given advance notice and an opportunity for a discussion about strategy so we could make the most of the offer at our main counter – rather than leaving the stamped stock in the usual display unit.

If these publications are going entirely free, as I expect, then they ought to talk with newsagents about being part of the free model. I’m okay with that and would welcome people coming in to collect a free Trading Post as long as I have a say on how it is pitched and where it is located.

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Media disruption

Stack em high, promoting partworks

As the photo shows, we have taken space on our dance floor to promote the Elvis, Star Trek, Treasurers of the Earth and BBC drama partworks which are all receiving strong attention at the moment.

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While there is nothing exceptionally pretty about these displays they work because they show our strength. As retailers often say, stack em high, watch em fly.

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magazines

A new competitor?

Is there a new player about to enter the newsagency traditional space of magazines and, maybe, lotteries? I have heard a couple of repoprts of a national retail brand keen to acquire into the newsagency space. I’d heard from a different source that they were also seeking to access top 20 magazine titles for their existing format.

While these are unconfirmed rumors at the moment, there is enough noise around them to warrant consideration even if only on a what if basis.  What is a new national retailer entered our space, selling the top 20 or so magazine titles?  What if they competed with us for lottery business?  What if they became more agressive in the greeting card business than they current seasons only approach?

We can sit on the side and watch these changes or we can embrace it in our businesses.  We are in the era of entrepreneurial newsagents .   These challenges separate business builders from process workers.  So, while the rumors concern me, they are highly motivating and will only lead to better newsagencies – if we want that.

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Newsagency challenges

Playboy forecasts a fall

Playboy has announced a fall in earnings and forecast a 30% fall in ad revenue from the magazine.  The Playboy consumer has easier and lower cost access to the articles and photos from a vast range of websites online.

Early indications from the latest Tower Systems newsagent benchmark project shows sales of adult magazines to have fallen by, on average, 12% in the eight months to January 31, 2008 in newsagencies compared to the eight months to Jan 31, 2007. No wonder ad revenue forecasts are gloomy.

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magazines

Free laptop for newsagents

Tower Systems is offering a free current model highly configured Dell laptop (with built in camera) to every newsagent purchasing a package from the company to celebrate the official launch of its national online training program for newsagents. The online training, in addition to face to face in-store training, a national free group training program and a national user meeting program is an exclusive service from Tower Systems which is bringing more and more newsagent together learning and sharing ideas.

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We have set no cap on the number of laptops being given away. The more the better!

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newsagent software

Airport newsagencies get it right

watermark_feb08.JPGI’ve been in airports in Melbourne, Brisbane and Sydney over the last 24 hours. The airport newsagencies, if you could impose such abroad shingle on then, are good businesses. Every product category has its space and every product earning its way. While I’m frustrated at what appears to be a beneficial magazine model, these businesses are clearly outcome focused.

I’m stating the obvious I know, but think about it. Are our 4,600 newsagencies in Australia as outcome focused? Have we configured our businesses for a maximum return week by week or are we hoping for a payday when we sell? Too many trading under the newsagency shingle have allowed their businesses to drift – too often into quicksand.

Some newsagencies I have seen recently are like the boring speech or overwritten novel – desperately in need to editing, cutting off unnecessary stock and tasks to focus on the core of our business. This is what the airport people have done, pared back, refined the model and created a business for their market. They have also created new looks – such as the Watermark Books store in the photo – magazines, books, stationery and coffee.

In searching for the newsagency of the future we have to let go of some of the past. This means editing our businesses to make them more relevant and interesting to consumers. No one will do it for us. This is our job.

These things are on my mind as I am preparing a couple in conference presentations around the theme of the newsagency of the future.

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retail

Mothering Sunday cards

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We’re embracing every possible greeting card season in our newsagencies, no matter how small or seemingly irrelevant to our customers.

If we want to be known as the card specialists it’s only appropriate we back this with commitment.  Take Mothering Sunday – Mother’s Day in the UK (March 2 this year) -  we have our cards up and, sure enough, they are selling.

What is especially nice is the thanks from customers who are happy that we remembered a season which is important to them.  It’s an opportunity to reinforce our point of difference.

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Greeting Cards

Making Elvis easier

Tower Systems earlier today released advice for its 1,450 newsagent users on how to handle the variable price model for the new Elvis partwork. This advice sheet, N5.1 at the Tower website, provides a data management standard to help ensure consistently accurate pricing for retail sales and putaways.

We have been able to develop this useful advice since we own two newsagencies and have a significant share in a third.

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newsagent software

Plush counter

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We are experimenting with small toy/plush products at the counter in one of our stores. We think they will be a good impulse item!

This is part of our play outside the traditional newsagency mix of confectionery at the counter. Think about it – in a major centre with, say, 200 stores, confectionery is available from at least 30 outlets whereas small plush like this is in one, maybe two outlets. While some small plush will work better than others, we are committed to experimenting to find a good mix for newsagencies.

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Gifts

Cheap cards turn me off

I was at a premium retail business yesterday and walking into the shop I passed a stand of $1.00 “quality” cards.  I thought what an odd message – I pass cheap cards as I enter a premium business.  Why not better quality cards?  Because they don’t sell said the retailer.  When did you last try?  Well, I haven’t.   Why make the decision for the customers?  It’s frustrating sometimes seeing confusing messages like this.

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Greeting Cards

Footy is back

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Footy is back is the theme for the category based magazine display we have at the counter.

By footy we mean AFL, of course!  Here in Victoria there is no other football than AFL, for the masses at least.

The display makes sense with all the footy titles now out from the season preview to the yearbook and a couple of club specific publications.

Footy is important to us beyond these magazines – the Herald Sun usually runs an excellent promotion around cards and we also sell close to 1,000 packs of AFL endorsed footy cards.  So, the display reinforces our commitment to the code as the pre-season gets under way.

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Customer Service

DIY magazine

Shelfmade is a yet to launch website which claims it will allow users to publish their favourite online content as a personalised print magazine.  It’s an interesting approach to connecting new media content in an old media form.  The site has no details on print runs and distribution – key if the magazine is to be for more than one person.

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magazines

Elvis is in the building

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Elvis has arrived.  We’re thrilled to have the new Official Collectors Edition of Elvis artefacts and other items now in-store.  This partwork will go off like a rocket with Elvis fans.  Issue #1 is only $2.95 we we have it on display at the front of the shop.

With the TV campaign driving people exclusively to newsagencies it makes sense that we promote the Elvis partwork aggressively.  The distributor is comitted to ensuring we have stock for customers who commit beyond the first issue – so we’re busy signing people up.  Newsagent exclusivity covers for most of the frustrations of the supply model.

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magazines

Calling all Star Trek fans

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Star Trek fans will be happy to see the original series has been repackaged into a definitive magazine and DVD collection.

We are promoting the Star Trek partwork series at the front of our newsagencies.

As we do with all partworks, we offer a putaway service with issue #1 and navigate this carefully (noisily) with the distributor to ensure that we can serve our loyal customers.

We know from basket data that partworks customers are commercially efficient, valuable, for newsagents – hence our front of shop promotion of series like this Star Trek launch.

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magazines

Closed for the winner

We confirmed for a customer yesterday that they had one first division in Saturday night’s lottery draw.  They thought they had won but were thrilled with the confirmation.  The lottery kiosk they purchased the ticket from, in our centre, was closed – as they are every Sunday.  While that’s their business, it diminishes the Tattersalls brand to have outlets in seven day trading centres closed.  This is retail after all!

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Lotteries

Australia Post wants 10% more

Australia Post is seeking a 10% increase in the price of posting a basic letter. The ACCC has announced an assessment of the proposal. I would prefer to see the new Labor Government conduct a review of postal services before any decision is made on this increase request.

European countries in 1997 agreed to a regulatory framework which sought to gradually limit the exclusivity of the postal services in each country. eGov monitor has more on this.

My beef with Australia Post is that their 865 government owned retail outlets have agressively gone after newsagency customers over the last ten years. They have leveraged their government protected monopoly over maiol services to bring customers to these retail locations for a fraction o the cost to newsagents to attract customers. This is a Government business taking business from family run operations. It’s unfair and hurts family run newsagencies.

So, I’d prefer a broader inquiry before the 10% increase is considered – what is best for Australians in the area of competition policy in relation to a postal service.

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Australia Post