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.
I read this site every morning and sometimes I feel like commenting on such issues but never do. I feel if we all got together and put all gripes etc aside and worked as one we would be alot better off. What would papers, lotteries etc think if we all started singing the same tune.
Greg,
I talk to many newsagents every week and my assessment is that we do, on many issues, sing the same tune. The challenge is that we are not represented in this way and have not been for years. We have let other agendas speak for us.
There is a way forward on this and that is to start with a fresh slate nationally without the baggage of the past and with an appropriate mechanism for driving compliance. However, that option has been on the table for several years. Newsagents, historically, do not engage.
While not the answer, this blog is a public place where newsagents can join a conversation about topics covered. I know suppliers read it from the calls and emails I get. Thanks for joining in.
Mark
News Ltd executives do not live in the real world at all. Anything for a sale no matter who they walk over. They still get their weekly pay cheque even if a promotion or an idea doesn’t work. Putting newspapers in Officeworks is just another idea that someone has thought up and they couldn’t care less if another business is already selling the same thing just 50 metres away.
I THINK IT’S “BLOODY RIDICULOUS”.
I for one would like to see a NEW national body for our industry. All repects to the new CEO of the ANF but you have walked into a storm that is never going end.
I have given the our national body(that has got no balls) plenty of time to sort themselves out and my resignation will be forthcoming next week.
Time to put the papers in the back of the shop .People come to newsagents to buy a paper it is not an impluse buy .Use the the numbers to sell other stock .We all sell well of lotto jackpots why not papers
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.
You have hit the nail on the head – take booklists for example. We have just finished filling orders for a local school and stationery orders (as distinct from text books) are down approx 35% on previous years despite us being 20% cheaper on average across all year levels than Officeworks. This is measured by pricing stationery brand for brand, product for product, line for line. Sure, we got beaten on some lines but across the board we averaged 18-23% less.
The difference – we don’t/cant put a brochure or catalogue out every few days advertising cheap prices on crap no-one really wants such as odd size exercise books, etc. Officeworks creates this huge impression that they are cheap when in reality they are so dear on most items it is laughable – but try explaining that to someone who is prepared to do a 100km round trip to shop there! And try buying single items from Officeworks on a lot of lines such as pens and pencils – there isn’t a lot of value in buying a 5 pack pf HB pencils when you only need one – but your local newsagent is more than happy to sell these items loose at cheaper unit prices.
I guess it highlights the value and power of good marketing!
I would never buy anything from Officeworks anyway so I’m certainly not buying newspapers from there.
We have a new office works about 1km from the store. Our back to school this year was 30% up on last year. Last year all the parents told us they went to office works and paid more than they did with me the year before. Customers are smarter than the marketers give them credit for.
“Will they ensure they have accurate base sales data?”
I hate to sound so very cynical, but in Qld, they obviously do not check. I personally spend about an hour every Saturday, checking and setting subs & shop supply numbers for the Courier Mail & The Australian (to ensure high sales & low returns), then entering them into News’ Connect system. All too often, my numbers are changed randomly or without regard for the consistency of our low returns. Add to that the recently changed Freedom Fuels stores (2 in our area which are now on Direct Accounts), for which we supplied the rep 8 weeks worth of history. The supplies have been set ridiculously high on some occasions, to the point where their returns are up over 30%. So, to clarify my long winded point, News might be given the data, but I have no doubt whatsoever that they will not use it.
Jim,
I echo your comments. We just put out our second flyer flogging ink and we are way cheaper than Officeworks & even more so than Aust. Post. I do good business out of and am fortunate that I don’t have an officworks in my town.
An analogy that springs to mind is that of Woolies. Over Christams they were selling rollwrap at $2.95 for 2.5m. Our rollwrap was $3.95 for 5m so we were 25% cheaper not to mention the superior quality of our product over their rubbish. Yet, I continued to see trolly after trolly going past my door with their rollwrap in it. Nuts!
As you and Mark pointed out consumers have that tenacious view that overall they must be getting a better deal at one of the majors simply because they are at one of the majors. The trolley is already there and going to the newsagency is one less trip I have to make if I simply get it here. I guess the old ‘newsagencies are dearer’ perception is also some peoples opinions.
Selling newspapers out of Officeworks is simply nuts and obviously a grab at some incremental sales. If this is the extent of their thinking on how to restrain falls in sales then in my opinion it can only get worse.
this isn’t about office works selling newspapers, but more about back to school. parents seem willing to go to office works because it is a major brand, and customers do come in and say that we do sell some things cheaper.
only problem with some parents is, is that they want exactly what’s on the list.
colouring pencils are colouring pencils (unless you’re an art student.) they’d rather spend $50+ on say..derwents, than a $7 pack of pencils which does the same job, just because that’s what it says on the booklist.
We don’t have an Officeworks in our area but if we did, I can’t imagine customers specifically going to Officeworks to buy a newspaper. I also don’t think being able to buy a newspaper there would change their stationery purchasing habits.
Easy for me to say of course as I don’t face this problem in my area.
This is another reason why newsagents should start to shovel the midnight delivery abuse, the unexplained shortages and target dumping of their papers back at News.
For too long Ive been putting up with them giving bad payers new subscriptions after reporting to them what their customer was like.
If they want to do this we should be allowed to sell the paper at any price we like to recoup our costs. How can they say what the price of a paper should be it’s Bullsh..t
What other product has a set price now?
Bill exactly right, newspapers do bring people into your shop however I have just put mine two thirds in, although to early to tell, the only problem i am having is directing the customers to where they are located now.
Wendy, its like someone is playing with your mind! You put or adjust figures into connect depending on whats going on in your demographic which does take up valuable time and then to find out that its been rejected or some other figures put in their. Its Fairfax mainly for me and its got to the stage where I have to contact Illawarra’s circulation manager to put and lock the figures in for me.
While I accept that newspaper publishers have the right to put their product where they choose, they cannot turn newsagents off and on as their preferred channel or as the newspaper specialists.
I am especially frustrated because I have suggested ways them can drive incremental sales in the newsagency and they continue to do little beyond the usual give aways.
Mark
I wouldn’t be too concerned about losing sales….who goes to Officeworks to buy a newspaper? The odd sale here and there but not enough to make a difference….and also Mark, it would be great to see some blogs about subs….I am one and while I love to read about things in the newsagency channel that are applicable to my own business, subs are an important part of your business and mine…just a thought
The ANF should by now have gleaned that newsagents can undercut Officeworks etc, maybe they could fund an advertisement promoting the channel, yeah right, please excuse the cynicism.
By the way, anyone have any idea what ANF is planning to do for (rather than against) newsagents in 2009?
maybe they could fund an advertisement promoting the channel
What an interesting concept Norman – your cynicism is accepted and justified! The only channel promotion worthy of being called so has been funded by an individual supported by a few suppliers. This promotion has been applauded by many who have made good use of the free collateral provided and derided by the few too close to the rotting carcasses of the ANF and VANA to understand that the smell is not only that of representative organisations in their death throes but one of an industry in diabolical trouble unless politics and differences can be put aside and a united front shown, not only to suppliers but to customers as well.
I suspect that the ANF’s plan for 2009 includes gym visits, yoga sessions, expensive consultancies for their mates and any other exercises which will enable them to extricate their collective heads from the sand and neatly place them up their collective a..rses – maybe in 2010 when the ANF and VANA are long dead and buried we might see a line of redundant ANF/VANA directors, executive officers and marketing gurus out there with the few of us still in business wondering where it all went wrong and why we are still being screwed by suppliers and ignored by the customer!
Brilliantly put Jim!
Daniel,
The line between enwsagents and sub agents has become blurred over the years. I have been a sub for newspapers for over two years.
Mark
Jim,
While VANA and the ANF had full visibility of the TV and print campaign, they ignored it completely and therefore denied even greater coverage.
Newsagents missedc out as a result.
Mark
If office works have to be a subby to an agent and it is to close for comfort do what i do with woolworths next door i deliver the papers when i feel like it i don’t care what time it is i make sure i get maximiun sales in the morning and then they get there papers ,some saturdays i give them half in the morning and the rest at 1 pm when i close .I am not sure what the rules are as in the time frame .
The ANF took over when the industry was being de-regulated thanks to Fels and the ACCC. They helped the publishers screw us with their contracts, and we are still paying the price. I would love to see a contract the Coles, Woolworths, 7 Eleven etc have to sign. The monopoly was and still is with the publishers
I think that coles /woolies get paid for stocking fairfax and news limited stock because 9 out of 10 times their returns are rejected by news limted for being too late.
They must be paid, because the supermarket in our centre, hasn’t been faxing the returns to news ltd for nearly 2 years, despite us reminding them of their obligation. Good for us, but shows that the paper returns aren’t important. Also I see how many mags they return each week, can’t understand why they don’t change their allocation, see there must be some special deals being made.
do they pay for them at all could be a way of building circulation?
The whole idea is to over load the supermakets with stock and hope they do not return them makes there sales look good .They will also require that they are supplied so they do not run out of stock
I’m a that shops at Officeworks for Back To School. I’ve found Officeworks Cheaper than News Agents, Big W,Woolworths & all the rest and I do look at everybody Prices, with four kids I have to.