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

Month: February 2009

Hearst to launch e-reader and disrupt the supply chain

Fortune overnight reported what could be a game changing move by the Hearst Corporation:

Against a backdrop of plummeting ad revenue for newspapers and magazines, and rising costs for paper and delivery, Hearst Corp., is getting set to launch an electronic reader that it hopes can do for periodicals what Amazon’s Kindle is doing for books.

According to industry insiders, Hearst, which publishes magazines ranging from Cosmopolitan to Esquire and newspapers including the financially imperiled San Francisco Chronicle, has developed a wireless e-reader with a large-format screen suited to the reading and advertising requirements of newspapers and magazines. The device and underlying technology, which other publishers will be allowed to adapt, is likely to debut this year.

The Amazon Kindle, selling more than 300,000 devices last year and probably many more this year thanks to Oprah’s endorsement, has changed book reading for many.  The full impact on book sales will not be felt for a couple of years yet.  The Hearst move could do the same for newspapers (maybe) and magazines (more likely).

The stories circulating are that the Hearst device will have a bigger screen and be foldable.  Both attributes would be crucial for a newspaper or magazine experience.

The device would work by downloading the latest content, to which the customer is subscribed, from the publisher.  The supply chain shrinks.  The use of paper is eliminated as well as the distribution network including retailers like newsagencies and similar businesses.

Hearst has a track record for investing in disruptive technology.  See the announcement from Eink 1998 about Hearst participating in a capital raising for the further development of eink technology.  They remain an investor today.

There is considerable coverage of this move by Hearst including the predictable: Can Hearst save newspapers with an e-reader? at PC World.  More than 500 blog posts have been published on this in the last 24 hours.

I have been talking about this type of technology for years and see the move by Hearst as inevitable.  My concern is that newsagents are not engaged in discussion about this.  Indeed, they either do not believe that their model will be disrupted by technology or that existing suppliers will involve them somehow in a new model.

New technology will impact sales of magazines and newspapers.  It is already but today’s economic climate is masking the true impact.  I would like to see on-going thoughtful (politics free) discussion about this issue among newsagents. While there has been some here over the years and at workshops I have run, there has been little truly useful engagement.

The coverage overnight about the move by Hearst is significant for Australian newsagents.  It will be interesting to see if newsagents agree.

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Media disruption

Loving nudists

tan_magazine.JPGTan magazine has an excellent sell through in our Forest Hill store. We sell between ten and twelve copies of the fourteen we receive each issue. The sales are excellent for a small special-interest indie magazine. It beats some big name monthlies.

What I like is that customers will come to us for Tan because of its special-interest status whereas they can go to a myriad of outlets for these other major monthlies.

We are wondering if we should leverage our success with the Tan and run a promotion. We could do nude day but I think our landlord would have an issue with that. Maybe we will go with a fig leaf display. We want to come up with something to see if we can increase sales further.

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magazines

HP74 ink – only $25.95

Big W is advertising HP 74 ink for $32.84.  Our price is $25.95.  Big W is advertising the HP 56/57 twin pack for $81.98.  Our price is $69.95.

Big W claims to be committed to giving customers low prices on everything they sell.  When it comes to ink, Big W is not offering low prices.  Our newsagency and other newsXpress newsagencies with the Hot Ink! offer beat them on key popular items.

Where Big W can beat us is in convincing consumers that anything in a Big W store is at a low price.  Kudos to their marketing for acheieving this.  As is the case with some of their ink, the marketing claim is not maatched by aaction in store.

To be fair, there are plenty of products where Big W beats us.  I’m happy to have a win.

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newsagency marketing

2009 sales benchmark results

I’ll be sending out the results of the first newsagent sales benchmark study for 2009 to participating newsagents this weekend.  This is the only current data available as to the sales health of the channel.  Several suppliers have also sought access to the data, to provide them with an understanding of trading conditions.

Industry associations ought to concentrate on this type of existing and available benchmark activity rather than plotting how to make more money from newsagents.

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Newsagency challenges

Computer Shopper goes digital in the US

cshop.jpgPaidContent reports that Computer Shopper, the US magazine for computer and related products buyers, is quitting its print edition and going 100% online from its April issue. While it is no surprise – because of the challenge facing computer titles -news like this on top of other recent closures brings the challenges of many magazines into focus.

While this is a US title, the challenges it faces are here in Australia too.  So much computer magazine content is available online free.  The buyers of these titles are tech savvy so why pay foe what you can access for free?

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magazines

Promoting Delicious at the counter

fhn_delicious.JPGWe are promoting Delicious this weekend at the counter at our newsagencies. The free DVD featuring Bill Grainger qualifies it for this prime location. We’ve gone for the monochrome background to let the product feature and also because of not other collateral available to support the promotion.

Delicious is one of those titles which sells regularly through the month so promoting at this point should find some incremental business for us.

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magazines

The craziest retail competition of the year

ilot_crazy.jpgIntralot has released a consumer competition which can only be described as ridiculous. To enter you need to have four losing $2 lap time scratch tickets, four losing $3 bingo trifecta scratch tickets, one losing $5 poker night scratch ticket and one losing $10 $500K Gold ticket. Up for grabs is one of six $5,000 holidays in New Zealand. Entry is expensive and convoluted – you need to post the tickets to Intralot. The games themselves are old, I suspect this is why they are running the competition.

I love the idea of a second chance draw competition to drive traffic for the Intralot brand.make entry based on two tickets but not ten tickets.  base it on a current game, a successful game and not on these old games already rejected by consumers.

This competition, in its current form, is likely to fail.

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Lotteries

Bushfire disaster help

Robyn Ritchie of newsXpress Whittlesea, along with a group of Whittlesea women, is involved in an important bushfire recovery project focusing on two areas of recovery:

  • The Phoenix Group Project. A project which aims to replace treasured photos that were lost in the tragic events of Saturday the 7th February 2009. Anyone connected with someone affected by the bushfires – former neighbours from years ago, old boyfriends and girlfriends, past workmates etc. – is asked to look through old photo albums and find any pictures that feature, or would be of special significance to, the fire affected families. The website has details of how to pass these photos on securely.
  • The Disaster help Site. A furniture register website which aims to meet immediate needs of the fire affected families as they move into temporary accommodation. All items should be in good condition, clean and fully functional. Ideally, the items remain with you until required, but if storage is a problem, collection can be arranged.
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Social responsibility

Leveraging falling stationery sales

AAP reports that sales at Office Depot dropped 17% in North America in the fourth quarter – 18% when looking just at same store sales.  This fall demonstrates how challenged the office supplies business is in the United States and, most likely, worldwide.  Given the closure of OFIS by Harvey Norman and anecdotal evidence around, I’d expect significant sales falls in the large format stationery businesses here.

Newsagents have an opportunity here.  Shoppers who usually go to an Officeworks for a big stationery buy up or to purchase furniture or technology will put thoses purchases off and therefore not pick up general office suppliers yet they will still need general office supplies.

Newsagents ought to refocus attention on stationery, make sure every customer visiting your shop knows that you aren in this space with quality product at keen prices and backed by excellent customer service.

Newsagents are well poised to pick up stationery business in the current economic climate.  Whether we do that is up to us and the attention we bring to the category in our businesses.

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Newsagency opportunities

Modern Boating cuts issues

News Magazines this week announced a reduction in frequency for Modern Boating magazine.

The boating industry has slowed and as businesses revise budgets to fight the downturn, reductions in advertising are becoming necessary for many companies. Modern Boating has examined trends and will temporarily reduce its frequency. After the Dec/Jan, Feb and March 2009 issues, Modern Boating will publish June and December issues. This alteration to the usual schedule is a short-term measure that will be reviewed continuously. New on sale dates for the June and December issues are timed to coincide with high interest periods around boat show season and summer.

Publishers are not always this up front in Australia.  It is good to be in the loop.

Magazine distributors could follow this lead from News Magazines.  Boating magazine sales have fallen significantly in all but except a few lucky newsagencies.  The fair approach would be an overall reduction now rather than waiting the usual three months for such changes to be reflected in the scale out model.

Unfortunately, supply remains at 2008 levels for most titles, meaning that newsagents are being taxed unfairly.

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magazines

Experimenting with gifts

brumpy_gardener.JPGWe are continuing to experiment with gifts at our Frankston newsagency. A couple of weeks ago we put in a spinner of Gardeners’ Knee Pads. While we were skeptical, they have generated good sales and reminded us one again that we are not the customer. Indeed, this mantra is true in all demographic. In another of my businesses we brought in some beautiful Italian music boxes priced from $500 upwards. We still have them. We are not the customer.

The Gardeners’ Knee Pads in Frankston work because they stand out, are keenly priced, meets the needs of our demographic and make for an inexpensive gift. Of course, the sayings on the knee pads are key in their appeal.

We bought these from Gibson. My understanding is that this spinner was one of the last they had left.

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Gifts

Make your own magazine

For two weeks recently at London’s Heathrow Airport, HSBC gave customers the opportunity to build their own magazine based on articles from a bunch of magazines. Over the two week event 2,030 personalised magazines were created. Click here to read more and see a promotional video created by HSBC about the campaign.  What a great way to present magazine content in a different way!

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magazines

Learning from Woolworths

There are a couple of current stories about the Woolworths group from which newsagents can learn.

The first story is about the introduction of Optometrist services in Big W. The arrival of Optometrist services in several Big W stores is being advertised heavily on Melbourne radio. It is a compelling pitch around professional service and low prices on glasses and contact lenses – a change from the traditional big W pitch.

The second story is in yesterday’s Australian Financial Review (p51) and relates to the company’s moves in the electronics area. They are rebranding 300 electronics outlets to the Dick Smith brand. The article by Sue Mitchell reports that refurbished Dick Smith stores are reporting 11.7% sales growth. It says the Woolworths is investing in its electronics offer in pursuit of JB HiFi.

Here is this giant of a company expanding its product / service offer in one channel and significantly refurbishing its offer in another channel. They are doing what good retailers do, what we newsagents should be doing.

We are smaller and therefore more nimble yet we, most of us at least, continue to ignore or resist change.

Our new shopfits are, more often than not, old and inflexible. Our ranges don’t seem to change. Our business practices are from decades ago and we leave control over much of what we do to key suppliers.

We have opportunities for significant change without the need for major capital investment yet many newsagents appear to be happy being the newsagent which has always been. These newsagents will see their businesses shrink.

Smart newsagents are attending events like the Reed Gift Fair in Sydney this week and other non newsagency channel trade shows. They are reducing space for traditional categories and creating space for new categories targeted at their demographic. Changes like this need to be local, we cannot move thee channel as a whole into new categories. That opportunity was lost, as it should have been, with deregulation.

But back to Woolworths, my newsXpress Forest Hill business is opposite a new Dick Smith store. It is an appealing retail offer, motivating to drive change in our business. The range of product is good, thee price points keen and the customer service friendly and knowledgeable – all points that we in small business accuse national retailers of neglecting.

Every time I walk past this Dick Smith store, I wonder what a Woolworths designed newsagency would look like.

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Newsagency challenges

English weekly magazine sales slump

fhn_elglish_mags.JPGI have noticed that sales for the English weeklies have fallen in stores for which I have data over the last three months. Titles such as Best, Pick me Up, Woman’s Own, Yours, Real People, Chat and Woman are down compared to last year. People’s Friend bucks this trend hwoever.  In the past when there has been a slump in sales of Australian women’s weeklies, the English titles have remained steady. Such appears to not be the case in this current economic cycle.

These English titles have been successful for us at Forest Hill.  If the current trend continues, we will need to consider reallocating space in this high traffic area of our newsagency.

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magazines

Calendars ticking along

frank_cal.JPGCalendars are continuing to sell at the rate of between ten and twenty a day at our newsagencies.  We are fortunate to be achieving a margin of 60% on the discounted price.  Watching customer behaviour, they are now more add-ons to existing purchases rather than destination purchases.  There are some categories in our businesses which we need to quit immediately the season is over and others which will work well beyond what we would think is a reasonable cut-off date.

We have found that by promoting at a specific price point – $5 – we attract more browsers.

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Calendars

Sales based replenishment project

The next version of the a major newsagent sales based replenishment program is a few weeks away.  Through Tower Systems I have been involved since SBR was first tested with newsagents years ago.  Each incarnation has been an improvement on the last.  I have seen that good sales data from compliant newsagencies has been used to refine the project.

This next incarnation of SBR is all about avoiding sell outs – something proactive newsagents will be pleased to hear.  It will drive good commercial outcomes.

The SBR project is proof that not all software products used by newsagents are the same.  There is a reason some POS products have not been part of the SBR evolution.  Yes, I am crowing.  Hard work is paying off.  This is practical progress for newsagents as it gives us access to new tools at the same time as our competitors – well most newsagents at least.

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Newsagency opportunities

The $1 a year magazine subscription offer

amazonmags.jpgAs a reward for buying a DVD from Amazon.com last week, I received an email from the company saying I qualify for three amazing magazine subscription deals:

Thanks to your recent DVD order, you now qualify for a $1 subscription to Rolling Stone (1-year), Men’s Journal (1-year) or Us Weekly (2-month). You can purchase individually or combine for $1 each, up to three total.

The consumer in me loves an offer like this. If I was a US resident why would I not take up at least one of the deals? I am a fan of Rolling Stone magazine and to get this delivered for a year for $1 would be excellent.

The retailer in me cringes when I read about the deal as I know there must be plenty around like this – co-promotions with other products. While we see few of these in newsagencies I have seen them in fitness centres, fashion businesses and sports clubs.

Every heavily discounted magazine subscription sold outside the retail channel is another reason for a shopper to not visit a newsagency or other magazine outlet and this challenges the health of the category.

I understand the need for publishers to balance sales between retail, subscription deep-discount subscription and other channels. It is the retail channel which billboards mastheads and helps titles find new readers. While a deal like the one from Amazon which I received last week may generate subscriptions, I suspect that someone discovering Rolling Stone in my newsagency will engage more deeply with the title than someone who picked it up for 8.3 cents a copy.

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magazine subscriptions

Staples promoting private label stationery

In-store Marketing reports that US stationery retailer Staples is actively promoting its private label products with bold aisle end and other displays.

The chain is devoting a majority of endcaps to Staples-brand products, which are merchandised beneath headers that read, “Save the easy way” and “Save with Staples brand.” The theme is also communicated on ceiling banners and in-line headers in the seasonal department. Aisle violators in other departments feature product shots.

This an excellent story about how to position a house brand in today’s conditions. I especially like their whols of business approach from branding to the in-store message and external marketing.

The Staples investment in its house brand is different to how house brands were treated years ago.  It is clearly working well for them.

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Stationery

UK magazine results

According to the recent circulation figures the overall number of magazines sold or distributed in the UK has grown by 3.7% year-on-year, to reach a total net average of 81,227,572 in the final six months of 2008.

Creative Match has details of the July to December 2008 UK magazine audit.  The detail in the report is less rosy for some categories.

In the UK as in Australia, some titles are faring better than others in the current economic circumstances.  From data I see, this is varying area by area.  Our task as retailers is to see these trends and leverage them – that is, if a category is growing in our shop, provide more support and see if you can get an even better lift.

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magazines

We need to advertise lottery products

I head a radio advertisement tonight for Tattersalls lottery products in 7-Eleven outlets in Victoria.  It was a good ad, promoting the long opening hours and the convenience of 7-Eleven outlets.  It tapped beautifully into the dream people buy when the buy a lottery ticket.

Newsagents and other lottery agents need to respond to this.  However, any response will be a challenge since we operate under so many shingles: newsagents, chemists, lottery kiosks and within those there are many brands.But we cannot let such challenges stop us for if we do we leave 7-Eleven to have their airwaves to themselves in promoting lottery products.

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Lotteries

Better sales for Women’s Health

fh_whealth.JPGRecent sales research undertaken by Pacific Magazines indicates that when Women’s Health magazine is positioned next to marie claire or Madison it sells on average 17% more than if left in the more traditional health and fitness magazine area.

For more than a year we have co-located Women’s Health above our women’s weeklies. Thanks to the sales data from Pacific, we have placed a display of Women’s Health next to marie claire. I’d urge other newsagents to try this.

Breaking a title out of its usual place helps it find new buyers and drives sales. While this co-location has a labour cost, it is an excellent way of achieving a better sell-through and that’s what publishers and newsagents want.

Too often newsagents treat magazines as a set and forget business. While this makes management easier, it means you are less likely to achieve your full potential in sales. I know from my own experience that there are around thirty titles which consistently respond well to location change, co-location or promotion elsewhere in the business – without the need for a free gift or some other offer.

I’d encourage other publishers to share data from retail trials so that we can help newsagents have more options for change in their magazine department.

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magazines
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