Month: January 2009

Officeworks, the expensive stationery retailer, is in the process of negotiating arrangements to sell News Ltd newspapers in its stationery businesses. Each News Ltd office (Herald and Weekly Times in Victoria, Queensland Newspapers in QLD, Advertiser Newspaper in SA, MATP in Sydney etc) is in the process of working with Officeworks on the details at present.

The News Ltd offices appear to be approaching this differently in each state. Some, it would seem, more fairly than others.

While I accept that News needs to put its products where it thinks it can achieve incremental sales, every newspaper sold outside a newsagency is further dilution of newsagencies as the go to stores for news and information.  I am not calling for protection here, just noting that specialist news and information retailers are valuable and at some point we will look back and wonder when we decided they are not.

I have informally put the newsagent case to several people in News Ltd over the last 24 hours and all I can get, in most cases at least, is the company line. But that is their job I guess.

The reality is that News Ltd executives have no idea if this will achieve incremental sales. They will not know until the deal is long done. I am aware that nationally, the News plan is to conduct a trial.  However, I am skeptical of this as such a trial needs to actively include newsagents in areas where Officeworks is to get product and to run for at least six months to gavther enough data.  Will they ensure they have accurate base sales data?  Will they look at basket data as well because of the knnock on effect?  Will they measure newsagency store traffic before and during the trial?  A trial is more than putting the product in and then measuring what happens.

They risk moving sales from newsagencies, as their moves into supermarkets, convenience stores, petrol outlets and all manner of other retailers has done.

In the meantime, in some states, News Ltd demands that newsagents place their newspapers in the most expensive location in-store and that they have expensive purpose made shop fitting installed. Newsagents who stand to suffer from the Officeworks move could consider refusing to accede to these demands without more proactive support from News.

In one state, News looks set to supply an Officeworks location which is 150 metres from a newsagency, 50 metres from a supermarket selling newspapers and 50 metres from another well-established sub agent. Where is the sense in that?

News will say that the distribution newsagent still makes their money as Officeworks will be supplied as a sub agent. While that is as it should be, for the work they will do, it is the retail channel that suffers.

The more retailers selling newspapers, the less specialist newsagencies are as the go to news and information outlets.

Oh, and News will wonder why anger grows in the newsagency channel in some states about the labour intensive freebie.

Footnote: I labelled Officeworks as expensive at the start of this blog post.   They spend a lot of money promoting their price guarantee where they will beat anyone elses advertised price by 5%.  Price check Officeworks against nearby newsagencies and you will find many everyday stationery items at lower prices in newsagencies. The key difference is that newsagents do not have the budget to tell consumers that they are cheaper or at least look cheaper as is the case with Officeworks.

As part of their Doombusters Campaign, the Gold Coast Bulletin is offering their Monday to Friday editions for half price. The consumer needs to clip a coupon and present this to the newsagent the next day to get the paper at half price. The newsagent has to collect the coupons and submit them to the Gold Coast Bulletin to be reimbursed for the discount.

While I am all for innovative marketing around newspapers, this campaign is administratively messy. It also, for a whole month, educates consumers that the newspaper is worth 50 cents and not the usual dollar.  It will be interesting to see if this remains a February only deal.  It will also be interesting to see if there is any counter offer – maybe not because of the Gold Coast location.

The newspaper publisher has not advised the QNF, the state association, of the campaign. Nor have they let the software companies know – those responsible for back end infrastructure to make the process financially accurate, efficient and easy for newsagents.

I am glad that this is a newsagent only offer but am frustrated at how it has been communicated and is proposed to be managed.  To have the details released one working day prior to implementation is nuts.  It feels desperate.