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

Month: September 2010

Fat Prevention challenges fixtures

prevention-sep2010.JPGThe excellent fixtures provided by Pacific Magazines for Prevention magazine don’t work with the latest issue out today.

The free Avon eye cream bagged with the magazine makes the package challenging to display.  We have opted for a dump bin approach – as shown in the photo.  Look next to the dump bin and see how the magazine looks in the Pacific stand sent last month for their health titles.

Who was not doing their job when considering the production of the latest issue?  While I like the idea of a gift to drive sales, I do not like that it does not work with the display units created for the title now traditional magazine fixturing.

When supermarkets are sent bulky magazines packaged with free gifts they are sent display units … why not newsagents?  Because we are treated poorly compared to supermarkets – by most publishers!

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magazine distribution

August newsagent trading shows slight improvement

August appeared to be a better month for newsagents if the data I have seen from a number of stores is anything to go by. While magazines reported a decline, the decline was not as significant as in the previous six months. Greeting card sales, too, fared better as did stationery.

I expect that the average results for the month will be:

Magazines. Down 4%. Food is still the stand out reporting more double digit revenue growth. Weeklies reported an average decline of 3%.  What is concerning is the data I have seen is a further decline in special interest titles – these are a key point of difference for newsagents.

Cards. Down 1%. While I am seeing some growth in everyday, lifestyle appears to have some challenges.

Stationery. Down 2%. This is not quite accurate since ink is in this number in many newsagencies. Stores strong in ink are reporting double digit growth.

Newspapers. Down 3%.

The numbers noted above are based on a same store comarison of August 2010 compared to August 2009.

In two of my stores, books are delivering excellent growth – double digit in fact. We use books on the dance floor as the basket builder. Shoppers do not come to us, usually, for books. They add books to the basket on impulse.

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Newsagency benchmark

The cash flow drain of long shelf life magazines

smallpuzzlemags.JPGThe small puzzle magazines which are published by Pacific and ACP under the That’s Life and Take 5 brands respectively are not performing as well as they need to in shopping centre newsagencies.  Each magazine pocket needs to return $8.00 a month and above just to break even.

The minimum gross profit per pocket per month is higher this year than last since most newsagents in shopping centres face an annual rental increase of 5% or more and an annual labour cost increase of 4% and more.

The long shelf life and the volume of stock received brings these small puzzle titles into focus when assessing magazine performance based on a cash flow measure.  They are cash flow negative in stores for which I have data.  We cannot afford them to be cash flow negative.

I would prefer to see the publishers use a sales based replenishment process for supplying newsagents.  Send the average sales volume for the last three issues and top up through the on-sale as required.  This stops newsagency businesses being the bankers to the publishers.

While ACP has rolled our SBR for some of its titles, this initiative needs to be more widely adopted across the channel.

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crosswords

Amazing Father’s Day card sales

dads-day.JPGAs is the case with the Father’s Day season, the last few days were the big sale days according to the stores from which I have seen data.  Yesterday was excellent with card sales ranging from $1,500 through to $2,700 for the one day.

I worked in three different stores across the day and was fascinated to find that in two, most sales were single cards whereas in the third, many sales were three and four Father’s Day cards.  I am planning a more analysis thorough on card purchasing patterns.

Driving multiple card purchases in a single sale without giving away margin and outside of key seasons has to be a core goal of newsagents given the extraordinary margin from card sales.

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Greeting Cards

Having fun with the Art of Crochet

crochet-magazine.JPGCheck out the behind the counter display promoting The Art of Crochet created by the team at newsXpress Knox, a store in which I have a 50% interest.  It is a fun engagement with the title – terrific visual merchandising.  Customers are commenting on the display and buying part one of the series.

Too often we just put a title on the shelf or in a display bin.  Going the extra step and engaging with the title is which can drive real incremental business.  It also shows off the newsagent difference.  You will never see engagement like this in supermarket, petrol or convenience channels.

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partworks

Father’s Day book sale a winner

fathers-day-booksale.JPGOur Father’s Day book sale is working a treat with new traffic generated as well as excellent impulse business from existing customers.

The sale has been promoted with catalogues delivered to several thousand homes around the centre – to drive traffic.  In store, we have the sale spread across two tables in prime position on the dance floor – to drive impulse business. This front of store placement of the stock also attracts people walking past in the shopping mall.

While it is pitched as a Father’s Day sale, more than half the books are for other occasions.  The children’s books especially – we will sell out.

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Book retailing

Fun with Julia Gillard and Tony Abbott

Our Julia Gillard lottery syndicate sold out early today while the Tony Abbott syndicate is slowly selling.  Customers have been enjoying the fun and making some good comments.  Using people or news topics for syndicates is an interesting way of engaging with customers. I like it.

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Lotteries

When your lease gets in the way of growing your business

cufflinks.JPGThese cufflinks are an ideal add-on to a card purchase.  The pair on the left are an ideal graduation gift for a male while the pair on the right make a nice Father’s Day gift.  Some newsagents in major shopping centres are facing a challenge from their landlord when they try and add items like cufflinks to their gift range since their leases do not explicitly state that they can sell gifts.

All it takes is a complaint from another tenant to get the landlord interested.  In my experience, the landlord tends to side with the more valuable tenant.

I have see situations where the extent of gifts is the store is explicitly limited to a percentage of turnover or floor space.  I have seen the same restriction on confectionery and even books – all traditional lines for newsagents.

A permitted use clause which states that you can carry traditional newsagency lines could be problematic at some point as it is open to interpretation as to what constitutes traditional newsagency lines.  In one case recently, the landlord said that books were not a traditional newsagency line.  The cost of mounting a case to prove otherwise was considerable.

In today’s rapidly changing marketplace, newsagents need to negotiate an appropriately flexible permitted use clause in their lease.  That said, landlords need to be fairer in managing permitted use.  I bet Australia Post did not have greeting cards, gifts, books and even BBQ sets covered in their permitted use clauses yet there was probably no push back.

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Gifts

Another magazine fails the bagged test

wealth-magazine.JPGThe latest issue of Wealth magazine offers up more evidence against the publisher argument that bagging a current issue of a magazine with an old issue boosts sales.  Yesterday, after more than a month with zero sales, I took Wealth off the shelves and returned all stock.  Clearly, the pitch of BONUS MAGAZINE INSIDE did nothing to drive sales.

Until I see irrefutable proof I will not accept that bagging an old issue of a magazine with a current issue drives a sales boost.

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magazines

Lack of faith in the Minogue sisters

monthly-sep2010.JPGI was surprised to see a significant dip in our supply for the latest issue of The Monthly.  While our sales data indicates a cut is warranted, the extent of the cut is odd, especially when considering that this month features Melbourne’s own Minogue sisters.  They alone should help drive additional sales.

Despite the cutback, we are promoting The Monthly with an in-location display placed so that everyone entering men’s magazine aisle, where The Monthly usually rests, sees the title as well as around 50% of women entering the women’s magazine aisle. With Kylie and Dannii Minogue on the cover the magazine has significantly broader appeal this month.  Someone appears to have missed that.

Hopefully, we sell out and make a point to someone about a missed opportunity.

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magazine distribution

Fairfax election day newspaper offer

fairfax-election-offer.jpgClick on the image to see a copy of a fax sent to a school by Fairfax inviting them to sell The Sydney Morning Herald on election day last month as a fundraiser. While I am not sure, I expect that other schools which were polling places received similar faxes.

The local newsagent was not party to the offer and only found it about it from the school.  There was no plan regarding compensation for sales.  As they note shows, they were expected to pick up unsold stock.

The more newspaper publishers promote sales outside the newsagency channel the greater the opportunity newsagencies fade as the go to retail outlet for newspapers. While the election day is a one off offer, I would have preferred to see Fairfax work with newsagents on a joint election day promotion.

As a retail newsagent I would like proactive engagement from publishers and fair business rewards for achieving incremental business. The current approach offers no incentive to grow newspaper sales.  They appear to be investing little attention into driving newsagency over the counter sales.

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Newspaper marketing

Newsagents who ignore the value of partworks lose money

I know of some newsagents who early returned issue 1 of the Art of Crochet part series, deciding to not sell this title. Some soon realised the mistake they made once customers came in asking for the title.

Art of Crochet is delivering excellent traffic to newsagencies – thanks to the TV campaign. In our own case, we are finding that many customers also purchase other items.

Indeed, my newsagency shopping basket research shows that partworks customers are 33% more likely to purchase something in addition to the partwork when they visit the store than a regular magazine customer. 33% more likely! That is a bankable statistic. It is one reason I love partworks.

Some newsagents have said that they didn’t know it would be so successful and this is why they returned the stock. While the distributor and importer did a lousy job presenting the opportunity to newsagents I think that newsagents ought to have been more proactive in researching the title. It would have been easy to do some quick research before deciding to early return the stock.

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magazines

Why I prefer Star Trader over Trader Tag

While both Star Trader and Trader Tag are similar publications my preference is for Star Trader because it is supplied direct to my business and this provides me with a double the margin compared with that for Trader Tag. Being in a shopping centre you have to focus on margin.  Unless a title is generating considerably more foot traffic than another title, margin is the most important factor.

The only way to fix this for retail only newsagents is to look at an alternative distribution channel.

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Newsagency opportunities

Merchandising Vogue Australia

vogue-inloc.JPGWhile I complained about the packaging of the latest issue of Vogue yesterday, we did manage to create a waterfall display which actually looks quite compelling.  The large bag just fits into a magazine pocket.  Stacked in as column, as we have them, the display breaks up the women’s magazine aisle quite nicely – it is noticeable from the entrance to the aisle.

Most of our stock is in a dump bin on the dance floor as we feel that this issue will appeal to people who are infrequent purchasers of the title.

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magazines

Newsagency fixtures available

We move out of our current location at Forest Hill Chase Shopping Centre on September 13 and the shop will be gutted the next day to make way for construction by the landlord as part of the extension of the shopping centre. If anyone wants newsagency fixtures they would be welcome to take whatever they want the next day. However, you would need to arrange this with us in advance.

We are moving to a temporary location for six months before building a new shop in the centre.

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Newsagency opportunities

Magazine subscription promotion in newsagencies

Newsagents are being invited by the ANF to participate in a trial selling magazine subscriptions.  I am told they are trying to get in before Australia Post rolls out iSubscribe subscriptions in Post Offices.

I am frustrated that ACP Magazines and Pacific Magazines have been slow to engage with newsagents on the subscription opportunity.  We should have had this running five years ago or more.  The technology was ready then without the need for middlemen.

Any offer ought to be generous and either based on a chunky payment for a one year sub or slightly lower if we opt to participate in trail.  I really like the idea of tail revenue.

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magazine subscriptions

M2 magazine cover-up

m2-blocked.JPGWARNING: The last time I wrote about this topic a merchandiser responsible for the placement of a backing card unfairly got into trouble. This blog post is not about merchandisers. It is about deals magazine distributors do selling access to my space without compensating me.

The distributor for M2 magazine arranged Iand probably paid) for this header card to be placed behind the stock for M2. I doubt that the magazine distributors are organising this for free. If I am right then I ought to be paid a fee for allowing this to be done in my store.

Publishers need to realise that while they pay distributors a fee to place header cards, create displays and use newsagent space in a range of ways, newsagents are not compensated.

While some will say that our compensation comes in the form of sales, this is not always the case.

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magazines

Promoting the latest Better Basics

better-basics-aug2010.JPGWe are promoting Better Basics with an in-location display above the Australian Women’s Weekly in the busiest location of our magazine department.  We also have it located in with our food tiles plus one pocket of the title in the column of food titles in with our other weeklies.

We plan a weekend counter promotion from Friday as well. Better Basics is very popular, especially after a push on the Better Homes & Gardens TV show – which I hope they do this week!

Better Basics is a perfect impulse item for newsagents since it is not as frequent as most magazines – we know that it responds well to our co-location strategy and from allocating prime counter space for the weekend.

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magazines

Poor packaging mars Vogue promotion

vogue-bag-aug10.JPGThe bag with this month’s Vogue magazine is a good cut through promotion.  It stands out on the shelves.  The problem is the plastic bag the magazine and the free bag gift and packaged in.  It is thin.  More than a third of our stock was damaged.  Some of the gift bags were damaged or dirtied as a result.  Size is also a problem – This requires a double width pocket and you can only fit one magazine in the double width.  While we have half a waterfall of stock displayed this way, we have more stock displayed in the dump bin in the photo on the dance floor.

Attention to execution is key for a successful premium promotion.  This latest promotion damages the Vogue brand in my eyes – I say that after having to try and repair packaging for many of the units we received yesterday morning.

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magazines

Take care with some XchangeIT advice

My newsagency software company is getting calls from newsagents encountering issues following changing some system settings under the direction of XchangeIT.  While the XchangeIT support people have the best intentions at heart, some changes are best left to the people who know more about specific system settings.

Newsagents who are advised to change settings on their computer system by XchangeIT ought to check first that the advice is approved by their software company.

This situation is quite recent and I am hopeful that it will be addressed quickly.

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newsagent software

Why the magazine distribution model should concern politicians

returns-august112010.JPGPoliticians concerned about the climate change and the environment ought to take a look at the Australian magazine distribution model.

Every week we remove several trolley loads of unsold magazines from our shelves and either dump them for recycling or create more carbon emissions by returning unsold stock to the supplier warehouse.  I am sure that this process is repeated in newsagencies across the country.

Beyond the labour, real-estate and opportunity cost to newsagents of magazines which fail to sell, there is a significant cost to the environment of the current magazine distribution model:

  • The carbon footprint of overseas magazine titles being freighted to Australia is significant when compared to locally printed titles.  Do we really need an overseas title competing with a locally produced title?
  • The carbon footprint of a returns system which requires around half of unsold stock to be returned to the magazine distributor – presumably to be sent somewhere else for a second crack at a sale – is for dubious economic value.
  • The wastage of unsold stock which is left to be trashed locally.  Not all unsold magazines are recycled.  There is also the carbon cost of sending this underperforming stock in the first place to be considered.

If you take the top 200 magazines out of the mix you soon see a serious level of paper and carbon waste in the magazine distribution model.  There are titles which consistently sell under 50% of what are sent to many newsagencies.  While complaints always bring out excuses, there is no excuse which justifies such waste and damage to the environment.

There is no penalty on magazine distributors for supplying more magazines than they know will sell.  Some publishers operate under a model where underperforming titles do not harm their bottom line.  This lack of a penalty could be a factor in the environmental laziness of the model.

I would welcome politicians (the Greens with the balance of power in the Senate from next year?) to look at the magazine model from the perspective of its impact on the environment for this would bring issues of concern to newsagents into focus.

There ought to be an acceptable return percentage agreed and a penalty imposed, to be paid to newsagents, for titles which do not meet this minimum  standard.  Further, such titles ought to be able to be recycled locally rather than returned as full copy returns.

This is good an avenue of investigation for newsagents – pursuing the magazine model as an environmental issue rather than purely a newsagent economics issue.

I raised this with Bob Brown’s office during the election and plan to raise it again once the current dust storm settles.

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magazine distribution

Major changes at Fairfax?

An article in the Australian Financial Review on Monday foreshadowed major changes at Fairfax, especially for The Age and the The Sydney Morning Herald.  While the next announcements are expected to be more about editorial than distribution, it has been suggested to me that a distribution review could lead to a shake up in the model.

The issue, as always, is about cost.  The cost of landing a newspaper on a subscriber’s lawn is considerable.  It is natural that publishers are looking for ways to cut distribution costs.

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newspaper home delivery

Blackhawk gift card marketing collateral coming soon

blackhawk_1.jpgTower Systems is in the process of getting final artwork approval on two posters for newsagents selling Blackhawk gift cards.  Developed in-house by the Tower marketing team for exclusive use by the Tower Newsagent network, the posters are designed to encourage sales of gift cards along with greeting cards in newsagencies offering the Blackhawk range. Once Blackhawk approval is obtained, the artwork will be made available.

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Gifts