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Month: July 2010

Fairfax listening to stakeholders on magazines

I was fortunate to meet with Adam Gray, General Manager of Fairfax Media Publication Solutions and Damien Wouda, National Account Manager of FMPS, today to discuss the transition from NDD to Fairfax.  I did this as owner of Tower Systems, a Director of newsXpress and as a newsagent. They are meeting many people in the newsagency channel to canvass the best approach to further establishing their magazine distribution business.

I appreciated and enjoyed the questions they asked and the openness of the discussion.

Today’s meeting was not about conclusions.  I am not about to publish here the details of the discussions since it is the decisions they ultimately make which will matter.

I cannot recall a magazine distributor demonstrating the level of genuine interest in options that I experienced today.

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magazine distribution

Amazon sells more e-books than hardcover books

From a press release from Amazon yesterday…

the Kindle format has now overtaken the hardcover format. Amazon.com customers now purchase more Kindle books than hardcover books–astonishing when you consider that we’ve been selling hardcover books for 15 years, and Kindle books for 33 months.

While there is plenty of discussion online about the Amazon spin (See David Carnoy’s article at CNet for balance), there is no denying that they are experiencing healthy numbers.

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Media disruption

Promoting Women’s Health

whealth-july2010.JPGWe are using an in-location display to promote the latest issue of Women’s Health.  We also have a couple of pockets of the title above our women’s weeklies titles.  Women’s Health is the most recognisable title in this segment – the simple display not only promotes the magazine but also the broader segment – it is worth giving up four pockets for this.

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magazines

Promoting Cleo and lip gloss

cleo-july2010.JPGWe are promoting Cleo magazine at the entrance to our women’s magazine aisle.  This display uses the ACP basket builder stand – dressed especially for Cleo.  I am thinking that it is time we moved this stand from this location – it has been situated here for months.  While the displays look good, customers get used to an offer always being here.  Promotional displays work best when they disrupt traffic.

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magazines

What do magazine publishers want from newsagents?

slow-cooker-competition.jpgThe flyer from News Magazines seeking newsagent engagement in promoting the latest issue of Australian Good Taste represents what is wrong with many publisher promotions in my view.  It offers a reward for a great display which is left up for the longest time.  There is no reward sales achievement and no reward for being clever.

So what is the message I am to take away from this?  Of course it is do great displays.  Yep, billboards are what publishers want.  More so than sales.  More so than smart retailer engagement.  Oh, and they want the display up for a long time.  Yes, that makes sense.

It is unfair of me to single out News Magazines as most magazine publishers take the same approach.

If magazine publishers want newsagents to grow sales, they should stop offering prizes for great displays.  Great displays act as billboards in our high traffic businesses and probably help sales in other retail channels.

Magazine publishers should start rewarding newsagents for performance and clever engagement.

  • Reward the best incremental sales achieved. Sure achieving sales growth is harder than creating pretty display but retail is all about sales right?!
  • Reward smart tactical placement.  A clever placement of Australian Good Taste, for example with weekly magazines or in a simple counter display could be far more valuable than a pretty display.
  • Reward clever retail theatre.  Warrick Hosking cooked with his slow cooker live in store and sold 20 copies of the Slow Cooker cookbook.  This was a one day display but it sold out all remaining stock.  Our own Moroccan cookbook display is not the type of billboard display publishers like but I betit will sell more magazines.

Some magazine publishers moan that newsagents do not engage as business people.  That is because you don’t treat them as business people.

Stop offering cash rewards for good displays.  It sends the wrong message.

Treat me like a business person in every engagement and I am more likely to act like a business person.

What do magazine publishers want from newsagents?  Sales, I hope.

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magazines

Newsagents, beware of long term agreements

Newsagents who have been in their businesses for some years will know the risks associated with long term agreements.  Remember Bill Express?  This experience alone ought to be enough of a reason for newsagents to be wary of long term agreements with onerous penalty clauses.  If faced with a supplier demanding you sign a five year agreement, ask why it is that you need to lock yourself in for such a long period?

I know of newsagents who want to get out of marketing groups but can’t because of a five year agreement.  One I know has had to deal with lawyers over this.  It is easier to get out of a marriage.

Before you sign up to a long term agreement, ask why?  We know from Bill Express that there was a very good reason.

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Newsagency challenges

Preparing to promote Women’s Weekly Moroccan cookbook

moroccan-food.JPGOn Saturday I purchased some props and created a trial display for ACP’s new Women’s Weekly Moroccan Cookbook.  I say “trial” because our initial stock has sold well and I am waiting in replenishment stock before I go live with this display and other initiatives.

I bought the props from Kasbah Moroccan Imports in Melbourne.

I’d like to cook in-store but in a 330 sqm shop in a shopping centre there are some challenges.

Promoted well in-store at the right locations, I think the Moroccan cookbook has the potential to perform almost as well as the Slow Cooker cookbook.  Like Slow Cooker, the Moroccan cookbook will more often be purchased on impulse.  $12.95 is a nice extension to the shopping basket.

As I mentioned when I first wrote about this two weeks ago…

  • Moroccan cooking is the new foodie ‘thing’.
  • Tagines, used to create many of the dishes, are selling like hot cakes in homewares stores.
  • The keyword tagine is the subject of 110,000 searches a month currently in Australia using Google. That is a quarter of all global searches for the keyword.
  • The keyword moroccan is searched 368,000 times a month in Australia using Google.
  • Moroccan food is delicious!

The other point to note about this cookbook, as with Slow Cooker, is that it works as a gift for guys as well as girls.

This title is an excellent tactical opportunity for newsagents in my view.

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magazines

Driving crossword sales

crosswords.JPGAt our newsXpress Knox store we are still growing our magazine business, having been open just eight months.  Being a smaller format store, just 130 squatre metres, we have space limitations.  Our team created this terrific display promoting a good selection of crossword titles at the entrance to our main magazine aisle to attract customers and entice them into the aisle.

Each week the offer on this aisle end changes, we are cycling through major title categories to show off our magazine range – preferring to display categories over individual titles.

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magazines

Do Collingwood fans read?

collingwood.JPGGroan … Collingwood made it to the top of the AFL ladder so I am trying the Collingwood magazine, Black & While, in an acrylic unit above the Herald Sun for this week.  It should work, we should get some sales from fair-weather fans.  I placed this on Sunday. If we have not seen any sales by Wednesday I’ll kick the title back to our sports section.  We have to be ruthless with these premium spaces above newspapers.

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Tactical display

Traveling with a magazine lover

In a cab in Newcastle today I met a passionate magazine lover.  Unprompted and not knowing of my interest in magazines, my cab driver told me what she loves about Woman’s Day and New Idea, her two best friends as she calls them.

She buys one on Monday and the other on Tuesday, swapping the title she buys Monday week about.

For close to half an hour she talked about the magazines and the current stories she loves.  I was looking around for a camera thinking it may have been some setup.  No, she was genuine.

It was terrific to hear her passion and the joy she gets from her gossip fix.

As we neared Williamtown airport I asked where she bought her magazines.  “Anywhere” was her answer.  “Not the newsagent?” I asked.  “I don’t care love, as long as I get my fix”.

This is the impact of pushing magazines into more retail outlets.  Customers will not connect their purchase with a retail shingle.  This impacts our businesses and the magazines outside the top sellers which rely on foot traffic to drive browsing and eventual purchase.

By facilitating and even encouraging other retail channels, magazine publishers and magazine distributors are harming the channel which has been so good to them.

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magazines

Geographic borders hold back the iPad

Just as the Internet is borderless, so should the iPad be … but it is not.  Here in Australia we do not have access to the books they have in the US yet.  We also cannot buy the same magazines.  If the iPad is to harness its full potential then publishers of content need to vieww the iPad community as a non geographic specific community.

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Media disruption

Cards, magazines, stationery suffer in newsagency sales downturn

Retail sales declined 4% in the Australian newsagency channel in the April through June 2010 quarter compared to the same period in 2009.

Magazines and greeting cards lead the decline with many newsagencies reporting a double-digit decline in sales in both key product categories.

The latest newsagent performance data is from the Tower Systems Sales Benchmark Study. Tower Systems undertakes these studies on behalf of newsagents. This Q2 2010 study is based on sales data from 120 newsagencies, trading under four different banners plus independents, businesses in capital city regional and rural situations.

Here are the headline numbers:

  • Overall sales. 71% of newsagencies reported a decline in sales for the quarter compared to the same period a year earlier. The average decline was 8%. Of the 29% reporting an increase in sales, the average increase was 2%.
  • Basket size. 42% of newsagents reported a decline in average shopping basket size, 26% reported no change and 32% reported an average increase of 1%. The average shopping basket size for the quarter is 1.48 items. Rural and regional newsagencies report a 20% deeper basket than capital city newsagencies.
  • Greeting cards. 76% of newsagents reported a decline in greeting card sales with the average decline 9%. On the 24% reporting an increase in greeting card sales, the average increase was 2%.
  • Stationery. 62% of newsagents reported a decline in stationery sales with the average decline 9%. On the 38% reporting an increase in stationery sales, the average increase was 3%.
  • Newspapers. 25% of newsagents reported a decline in newspaper sales with an average decline of just under 2%. 35% reported no change and 40% reported an increase of, on average, 1%.
  • Magazines. 75% of newsagents reported a decline in magazine sales with an average decline of 10%. The brunt of the decline appears to have been felt in special interest, teen, motoring and craft. Food was the stand out category with most newsagencies reporting growth – that is the Master Chef effect. Women’s weeklies reported a decline lower than the overall department average.

The key newsagent departments of magazines and newspapers are reporting concerning declines – especially on the back of declines in 2009 over 2008.

The green shoots which were evident in the last benchmark study are not reflected in this new data except in some stores. For example, I have seen excellent growth for ink, books and gifts in some stores, but not across the channel.

Suppliers and industry leaders who care about a healthy newsagency channel will engage on the issues reflected in these benchmark numbers.  Those who do not engage will ignore the challenges at their peril.

The performance of the channel and the tough trading conditions many are experiencing ought to be the top priority topic at any conference, meeting or other newsagent channel gathering. The issues reflected in the numbers I have been looking at for the past week go to the heart of the future of the channel.

Besides the decline in core product categories and the overall sales decline, I am most concerned about our inefficient basket size.  Our basket performance is worse than our competitors: petrol, convenience, supermarkets, Australia Post, stationery businesses … yet no one appears worried.

The benchmark analysis process is time-consuming.  History has shown it to be accurate. I collect data for all sales for the periods being compared and analyse these in terms of unit sales (magazines, cards and newspapers) and revenue. Only data from stores adhering to industry IT standards is used.

I will publish a more complete report in the next couple of days.

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Newsagency benchmark

What will this election means for newsagents and small business?

If the last fifteen years are anything to go by, the 2010 federal election is likely to produce little in the way of results for newsagents.

John Howard was the last party leader to talk up newsagents – he used to remind us how he like the sound of the morning newspaper landing on the doorstep – but he offered little support for newsagents.

Even in terms of small business, both sides of politics have done little to genuinely support Australia’s small businesses.  They tend to prefer to give auto manufacturers, mining companies and other big businesses more attention and truckloads of cash.

I think that small business owners and newsagents have every right to cynical about all politicians.  Sure, some local members do engage and genuinely listen, but what have they actually done?

If I could control what the next government would deliver for Australian newsagency businesses, the families which rely on them for an income and the communities in which they serve, here is what I would like to see:

  • A Productivity Commission review of the impact of deregulation of newspaper and magazine distribution and sales facilitated by the Howard government in 1999.  It is appropriate that government holds its economic restructuring decisions up to the light to assess the impact and whether consumers have benefited as was expected and to assess the cost of the restructure on thousands of family businesses.  When government policy led to pharmacy closures, the government paid compensation.  Maybe compensation should have been offered for what was taken away in 1999.
  • An independent review into the retail business of the government owned Australia Post outlets and an assessment of their operation against current world best practice.  Australia Post continues to use its government ownership to unfairly compete through its government owned stores against family run newsagencies.  Family newsagencies would be stronger if the government owned retail outlets were not competing using a government protected monopoly brand.
  • An independent review of the Fair Work Act and the impact on small businesses.  There are too many stories of hardship for them to be made up.  I am not saying scrap it, just work harder at getting it right.
  • A thorough review of the magazine distribution system by the ACCC with individual newsagents given the opportunity to provide magazine sell through, cash-flow and other data to demonstrate the economic impact of the current model as it relates to newsagents compared to other magazine retailers – with a view to the ACCC extracting undertakings from magazine distributors.
  • The introduction of national retail lease standards and dispute resolutions processes for small businesses.  The differences between the states are considerable.
  • Regulatory(and legislative if necessary) support for the impact of changes to the newsagency channel as a result of disruption.  We will see considerable change in our businesses in the term of the next government.  Some of us have shop leases which will not permit us adjust our businesses sufficiently thorough the changes.

What newsagents, and small businesses generally, do not need from political candidates is platitudes.  We have had enough of those over the last fifteen years or so.

We keep hearing that small business is the backbone of the country.  It is time for politicians to demonstrate this.

The Small Business Minister ought to be one of the brightest and best ministers available, a fighter who can represent the constituency with passion and strength at the cabinet table.

Any small business advisory group should be made up of real small business people and not those who are politically connected.

A small business development plan needs to be created to encourage existing small businesses and to support entrepreneurship.

I would love small business issues to be front and centre in this campaign.  Somehow, I suspect we will be a footnote on the biggest personality content this country has ever seen.

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Newsagency challenges

Promoting MOJO magazine at the counter

mojo-magazine.JPGWe are promoting MOJO music magazine at the counter this weekend.  I figured that the AC/DC cover and accompanying CD might attract impulse purchases from our weekend shoppers.  It is a simple display – I am letting the magazine cover do all the work.  We put MOJO on the counter Friday and will cahnge the display Monday morning.

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magazines

Weekend retail and visual merchandising

There are many weekend specific opportunities in newsagencies given the difference in customer mix on Saturdays and Sundays compared to weekdays.

From my own experience, these include opportunities to promote at the counter, newspaper stand and other peak traffic locations:

  • Better Homes & Gardens, Notebook and Real Living.  Better Homes is the real stand out from this list, I have seen Friday through Sunday sales account for 75% of business in a month.
  • Sports titles.  With some newsagencies seeing more male shoppers buying newspapers on the weekends than weekdays, sports titles displayed with newspapers can work a treat.
  • Ink.  An ink promotion at the counter or in the window can open your ink offer to a completely different customer mix.
  • Kids gifts.  With kids shopping with parents, the weekend is an ideal time to have gifts at impulse locations for parents to ‘reward’ their shopping companions.
  • Lottery upsell.  With many weekend only shoppers, the weekend is an opportunity to bring forward purchases shoppers may have made elsewhere during the week.

The weekend shopper mix is quite different in many newsagencies.  It is smart for us to leverage this by ensuring that we have appropriate impulse purchase opportunities at the counter and high traffic locations and create fresh visual merchandising displays just for the weekend.

Newsagencies which are open seven days have an opportunity to grow weekend business by understanding the difference in the weekend shopper mix.

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Newsagency opportunities

Fairfax consults on magazine distribution

It is terrific to see that the folks at Fairfax Media Publication Solutions are consulting widely on how to handle their growing magazine portfolio with the takeover of some titles from NDD.  They are asking good questions and listening to the responses.

While commission will floow the existing Fairfax Media agreements, they are researching the implications of this for the long term.

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magazine distribution

Author ditches publisher for software co

The Wall Street Journal has an excellent story about author Ryu Murakami’s move to Apple’s iPad platform.

The digital package will include video content and set to music composed by Academy Award winning composer Ryuichi Sakamoto, according to the Japanese business daily Nikkei. The newspaper reports the e-book will cost 1,500 yen ($17) and will be ready to download pending Apple’s approval.

It will only be a matter of time before writers and others collaborate to publish what might have been a magazine in the print world direct to the iPad and, like Murakami, cut out the traditional publisher altogether.

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magazines

Hearst sells 10,000 copies of Popular Mechanics for iPad in 5 days

popular_mechanics.JPGFive days after launching its Popular Mechanics iPad app, US publisher Hearst has reported that it has sold 10,000 copies at US$1.99 apiece. Make that 10,001.  This is a nice app and nicely priced.  For magazine titles to sell on the iPad, they need to be priced lower than the print edition.  While I have only had half an hour so far with the Popular Mechanics issue, I like it.  The interactivity is terrific.  The 3D is excellent.

There is a 3D model embedded within a DIY Home story. You can interact with this in a way which shows off the iPad.  There is a live update of an earthquake map that will continue to feed live data long after the next issue is released. Popular Mechanics is closer to showing the difference between a paper and iPad reading experience.

I especially like that I could buy the app and latest issue from Australia.  Some publishers are managing content as they did across physical borders.

Paid Content has more details along with news that Hearst plans to release another dozen iPad apps by the end of the year.

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Media disruption

Australian Model Engineering – the putaway model

aust-model-engeneering.JPGWe receive 10 copies of each issue of Australian Model Engineering and 5 are putaway orders.  That is, we have standing orders from customers for them.  Special labels are printed with customer names and these copies are filed alphabetically behind the counter.  When customers collect then, we scan the customer specific barcode and record that they have collected their copy of the magazine.  We let customers know when each issue comes in by sending them a text message – our computer system does this automatically for us.  Plenty of other newsagents offer this premium putaway service.

I mention it today because more publishers are visiting this place and I suspect that they did not know about the premium putaway service newsagents offer.

I am using Australian Model Engineering magazine as my example because I love this magazine.  Not so much the subject matter,  it is above my knowledge and patience, but its sales efficiency.  50% sell through from putaways and usually another 30% to 50% from over  the counter sales.  If only every magazine could perform this well.  It pays for its space, more so than some titles inside the top 200 in terms of sales volume.

I hear of newsagents cutting magazine space and this worries me because titles like Australian Model Engineering will be cut.  As magazine specialists we need to carry this title and many like it.  Otherwise, we become glorified convenience stores when it comes to magazines.

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magazine distribution

Using weekly magazine traffic to sell other titles

weeklies_july2010.JPGFor years now we have used space above our weekly titles to promote other magazines.  The mix changes at least one a week and sometimes more often.  We start the week using the top two pockets for monthly titles and tack more space as the week unfolds.  Click on the photo to see a larger version of how we were using this space Wednesday afternoon.

Our strategy here is to extend sales which include one of the major weeklies.  The titles which we find respond best in this space are: Notebook, Real Living, Better Homes & Gardens,  Diabetic Living, Good Health, Women’s Health, Gardening Australia and Master Chef.

We obsess about basket size and seize every opportunity available to us, at high traffic locations, to attract impulse purchase decisions.  These few pockets above the weeklies are highly valuable to us, especially on the weekends.

My question for other newsagents is: how are you using this space above high-volume weeklies?   What we are doing is simple.  Iw ould note, however, that this is not a task to delegate. Think about the titles you have and your customers.  You want to put in front of them titles theyare likely to buy.

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magazines

Newsagent Facebook training a hit

It was a full house for the industry’s first ever group training on how to setup a Facebook page this morning – hosted by my software company Tower Systems.  In the hour-long session a new Facebook account and business page were established, photos loaded and other Facebook facilities engaged.

While Tower will continue to offer free online Facebook training, we are also producing a training video as much of what is needed can be better covered in this medium.

Click here for updated advice on how to promote your newsagency using Facebook.  I first published this a month ago and have just updated it.

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Newsagency opportunities

Magazine sales plummet in newsagencies

Magazine unit sales fell in 72% of newsagencies in the second quarter of 2010 compared to the same period in 2009 according to data from the latest Newsagent Sales Benchmark Study.  Of the 72% of newsagencies reporting a decline (from a study pool of 120), 59% experienced a decline of 10% or more.

This steep decline is on the back of a significant decline in the same quarter a year earlier.  It continues the trend of a 7% decline reported in the first quarter of 2010.  Magazines, a key traffic generator for newsagencies, are in trouble.

Curiously, the decline for women’s weeklies titles (New Idea, Woman’s Day, Famous, NW, OK!, That’s Life and Take 5), was lower than the overall average for the category.

In almost every newsagency reporting decline, sales in the food segment increased.  This is the Master Chef, and for many, ACP Women’s Weekly Slow Cooker impact.

So why such a steep decline in magazine sales in newsagencies?  Outside of leakage from newsagencies to convenience, I put the decline down to economic conditions – more so than the impact of the Internet or mobile technology. Money is tight.  You see it the way people shop.  We see fewer sales today with two and three magazines.

I expect the decline to get worse before it gets better.

Outside of the loss of sales, the impact is magnified for newsagents as they continue to receive volume for most titles at 2009 levels.  The cash-flow drain is unsustainable for some newsagents.  This is compounded by shop rental increases of 5% and more year on year, labour cost increases of 10% and general operating cost increases of 10%.

I would like to see magazine publishers, magazine distributors and newsagents respond to the magazine sales crisis by meeting to discuss the situation and possible solutions.  Something has to give, and very soon!  Publishers and magazine distributors need newsagency businesses to be strong.  Another few months of this and the channel will start to shrink

The Newsagent Sales Benchmark Study relies on accurate sales data from a pool of 120 newsagencies spread across shopping centre, high street, regional and rural situations.  I have been conducting the study for years and the results have been borne out in audit and other results released.

I will publish the full results of the latest Sales Benchmark Study on Monday.

The 1,700 Newsagents using the Tower Systems newsagency software can easily check their own year on year performance using the Monthly Sales Comparison Report.

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magazines

Are magazine cover mounts losing their value?

dolly_watch.JPGOur sales for the last issue of Dolly magazine which went off sale yesterday morning matched our average for the title.  This is despite a $49.95 watch being mounted to the cover of the magazine.  I expected at least some sales bump.

Are magazine cover mounts losing value?  Is suspect they are given the frequency of use of them over the last couple of years.  There are only so many bags, scarves, beanies, journals or t-shirts a customer will collect before realising that the bonus has become the norm.

Cover mounts are like a drug for some titles.  The challenge will be to withdraw safely.

From a newsagent’s perspective, the occasional cover mount for a title is great, it is seen as a genuine bonus and it gives us a reason to really push that issue.

Titles which have more than a couple of cover mounts a year are no longer that special.  They also demand more space than usual and this significantly increases the cost to the retailer.  With each magazine pocket costing $1.90 a week in rent, a title with a wide cover mount costs $3.80 a week in rent.  I need $15.20 a week in sales per double pocket to pay for the space.

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magazines