Wired magazine Editor-in-Chief Chris Anderson has pioneered new channels for his content, leading the way to the iPad. His attention has turned to Apps as a new model. Business Insider has published a fascinating interview with Chris Anderson about his plans.
This display of gifts for teachers at our counter is generating good interest. We have it placed next to graduation gifts. These teacher gifts are ideal for primary and low to mid high school. They are at a good price point – an easy impulse purchase decision.
End of year teacher gifts are another opportunity for leveraging better business from our good existing traffic.
Bank Guarantees are a regular part of a newsagency business, indeed any small business. In our channel, landlords and some suppliers require them to reduce their financial risk in the event of an insolvency event. For example, every newsagent would have a bank guarantee lodged with Network Services.
Prior to the Global Financial Crisis, a Bank Guarantee was fairly straightforward to obtain. Your bank would usually write the guarantee based on your overall position with them. That all changed last year as the impact of the GFC reverberated through Australian banks.
Today, most major banks require Bank Guarantees to be backed by cash on deposit or 100% securitisation with property where only up to 60% (or thereabouts) of the bank valuation of the property can be used.
In addition to tougher rules, the fees associated with Bank Guarantees have increased. One major bank dealing with newsagents has increased annual Bank Guarantees by 400%.
These one relatively cheap instruments of protection for creditors are now quite expensive. Which brings me to my core point…
The cost to the newsagency channel of the Network Services required Bank Guarantees has increased dramatically over the last two years. This is an additional cost we need to factor into our assessment of the profitability of the magazine department.
I would like to see the use of Bank Guarantees reduced for products over which we do not have reasonable control over our level of indebtedness – such as magazines. Such a move could free tens of millions of dollars for the newsagency channel.
We are developing a poster at my newsagency software company promoting magazines as a Christmas gift. The image to the left is where we are currently at. We hope to have the artwork completed next week and available through this blog and elsewhere. Last year, our Christmas magazine poster was downloaded 300+ times.
Magazines make an excellent give as they cater to known special interests. We have the opportunity to sell single copies as well as several issues in a row as a putaway.
The poster is as much for newsagency employees as it is for shoppers. I think that we sometimes forget that we have plenty of items available, like magazines, which will appeal as Christmas gifts.
I know I bang on here about the inequity of the magazine supply model. That does not stop me from embracing every opportunity I can think of to drive magazine sales.
I was disappointed to receive the Australian Women’s Weekly and Good Health double pack priced at $10.95 on Wednesday when we still had more than half our AWW stock and had just that day received the new issue of Good Health. My view is that these now regular discount offers from ACP are training customers to not pay full price for magazines.
The other issue with the offers is that my stock holding increases for what appears to be no commensurate increased in return on inventory investment.
Also, customers considering the discounted pack will often still browse the full price products before making a purchase decision.
I created a successful loyalty program for the magazine department which focuses on the whole department. This program is now widely used in the newsagency channel. It is designed to get customers spending more on magazines. It does not target any specific publisher. These title specific promotions do not focus on the whole magazine department.
I understand why ACP does it. I am under no contractual obligation to like it.
I have now reviewed the magazine sell through data I have been sent by 175 newsagencies. This unprecedented pool of data along with the newsagency sales benchmark data as well as magazine cash flow data combines to provide an extraordinary view of the performance of the current magazine supply model on newsagencies.
I have spoken to two government organisations about how the data could be used. I am also seeking independent advice and should have this in the next week or so.
My next update will be to the newsagents who have shared the data and I hope that it will outline a possible course of action.
The number of newsagencies offering the ABC Shop range within their stores is growing. Those I speak with tell me that sales are excellent. The most successful I have seen recently are in newsagencies in rural and regional situations.
The ABC Shop franchise appears to be well managed and the appointment of ourlets well controlled. This is a significant benefit to the newsagents who take it on – both in day to day trading and when it comes time to sell the business and determine a goodwill value.
I mention the ABC Shop opportunity today since plenty of newsagents are looking at diversification alternatives.
Yesterday, we were subject to a 71% increase in supply of FourFourTwo magazine without justification. Over the previous four issues, starting with the oldest, we have sold 1, 4, 1 and 2 copies. Yesterday, Network Services increased our supply from 7 copies to 12 copies.
The attack dogs of the Network Services accounts department demonstrate no interest in newsagent concerns about oversupply, all they want is ‘their’ money. The only reason they can claim that it is ‘their’ money is because of what they supply. What I saw yesterday in one of my own stores with FourFourTwo is a good example unjustified over supply.
With Netonline not providing newsagents with fair and reasonable mechanisms through which we can control supply, and with early returns carrying a high labour and freight charge, sometimes late payment of the Network account is the only option for newsagents.
If Network really cared about the wellbeing of the newsagency channel they would invest time in running numbers, numbers like those I have been running in newsagencies over recent weeks. They would see that outside of ACP titles, many newsagents achieve a sell through of 40% or less. They would agree to minimum performance criteria and they would compensate newsagents for titles which do not meet this.
Yes, we early returned excess supply of FourFourTwo. That is not the point. The crime should never have been committed in the first place.
For reasons which escape me, our supply of F1 Racing magazine has been increased. I see no justification in our sales data whatsoever. Looking at the issue, there is nothing special inside to warrant a supply kick. These types of decisions by magazine distributors ought to have consequences for them. Instead, they have financial consequences for us.
Check out this interview from MediaBistro with John Lima, CEO of ScrollMotion, the company behind the new Esquire magazine app.
This new digital channel is all about delivering a new experience, different to print.
We have had these App Magnets in for a week today and have sold 80% of our initial stock. We placed them at the counter, in an excellent impulse purchase location.
Their success reinforces for me the value of existing good traffic in newsagencies and how careful buying is central to leveraging the traffic for good value impulse business. Their success also demonstrates the value of tactical placement over attractive displays for some products.
I thought Ralph magazine ceased publication dur to poor sales. This morning we received another Ralph related title which is apparently recycling Ralph content including photos of girls. While it may sell in some newsagencies, I don’t see it working in most. Call me a cynic but the girls of Ralph did not save Ralph so why roll them out now?
Now, more than ever, every magazine on our shelves need to pay its way. In a shopping centre newsagency this means 60% sell through or better. I am not expecting a 60% sell through for the Girls of Ralph.
Retail is tough in Australia right now, consumers are reducing discretionary spending and looking for deals on non discretionary spending. We feel this across our counters and we read about it in reports into the state of retail in Australia.
Thanks to the interest rate rise decision by the Reserve Bank yesterday and moves by the banks to pass on, at a premium in the case of the Commonwealth Bank shortly after the Reserve announcement, retail is set for a tougher than expected Christmas.
As I wrote here recently, I have seen signs of a nice kick in every day sales in newsagencies. Only time will tell if this is short lived.
Until yesterday I was anticipating a better Christmas than 2009 – that was a tough year because of the GFC fall out. Now I am not so sure. It all depends on how consumers react to the interest rates rise over the next few weeks.
I know that some newsagents will be devstated by the rate rise while others will not feel an impact at all.
Newsagents are more challenged in a tough retail environment than many retailers given the percentage of our traditional turnover which is from items over which we have little or no control of the selling price and given the limited control over our stock levels in the same product categories.
Now more than ever, I am focused on products which generate their own traffic, deliver better than average margin and over which I have far more control.
Creating a better Christmas includes better buying, better marketing, better in-store presentation and better selling.
Media Bistro, has published an interview with Doug Carlson, magazing director of Zinio, a digital magazine publishing platform. It’s a video newsagents and others involved with magazines will find fascinating.
Of course, Carlson is going to talk up the digital platforms. Here in Australia we are still a couple of years behind US trends but I suspact we are catching up fast.
We enjoy the opportunity of demonstrating our social conscience through the promotion of products in our newsagencies. Take the Amnesty International calendar. Making it a feature calendar for the week demonstrates our support for their work while at the same time providing an opportunity for supporters to support the cause. Yes, our support could be seen as commercially focused. However, if that were the case we would only promote calendars with cute dogs on the front as they sell the best. We have deliberately sourced a range of calendars which support causes about which we feel strongly. This calendar from Amnesty International is one from that range. We are proud to promote it.
Ross Dawson, a leading futurist, strategy advisor, and bestselling author predicts that newspapers in their present form will be irrelevant in Australia by 2022. He has published at his blog his reasoning for this prediction as well as predictions for other countries in his newspaper extinction timeline.
Dawson is well credentialed to write about these matters as he is Chairman of the Future Exploration think tank.
There is evidence in newspaper publisher activity indicating that they do not disagree with Dawson’s predictions.
As I have said here previously, it all comes down to the medium. As tablet computers and mobile phones become more ubiquitous, easier to use and have a lower cost, the new channel will replace the old. There is also the environmental issue which will be a key factor in change.
The best response from newsagents today is to ensure that our shops have the physical flexibility necessary to change with the times, to demand more control over our exposure to print media products and to make the most of print media sales opportunities in the short to medium term. Yes, there are good opportunities in our businesses if we are aggressive and tactical in our approach to handling magazines and newspapers.
I am aware of a number of newsagents receiving the following message from Network Services yesterday:
Return Claim (REF #2783726) has been rejected by Network Services as it does not meet the required file specification. Please follow up with your POS vendor accordingly.
• Document reference is not a valid return form number
My understanding is that there is a problem at the Network end which caused these to be issued. The Network advice to one of my stores was to not send that stock back this week. The problem for us is that the returns had been collected already.
UPDATE: (10:37am) This just in from Network:
The issue was that the forms where created but not sent out in VIC. They are being sent out now. We are also reviewing the Q&A that was set up for this as it should have been identified earlier. A new alert is being set up to assist.
For all forms received yesterday that were rejected at our end, we will push them through as supplementary returns today/tomorrow, it will require some time as each file needs to be manually edited and pushed through, some agents may also get duplication emails for the supps that were in those files that did make it through.
This is a good solution and a timely response.
We use shelf talkers to show the price of ink during our regular ink sales. We know from customer feedback that these professional shelf talkers are a key reason for our continued growth in the ink category.
For years, newsagents have bemoaned that they are price competitive with Officeworks and others on stationery yet shoppers prefer the majors. Officeworks and others do an excellent job in giving the impression that they are competitive on price. We can too.
Newsagents have historically not presented themselves in-store in a competitive way. This is what the shelf talkers are about, in part at least. They promote brand and price in an easy to read format. Looking at an ink wall it feels like the prices are competitive. Anyone checking will see that the prices are good.
We are promoting Christmas issue of Family Circle magazine at an aisle end as well as with our newspapers for the next week.
In our temporary 97 square metre location we have little space for displays and have to choose the titles we promote carefully. Our selection of Family Circle is based on good sales history and our theming of the store around getting ready for Christmas.
We returned all stock of Good Gardening, Grow Your Own Organic Food today. After a month on the shelves we have not sold a single copy. My initial blog post about this title on September 30 generated plenty of discussion including comments from the publisher. I’d like them and others to comment now that I have had four weeks of no sales. from where I sit, my sense is that my comments of a month ago were right.
While I support new titles, I am frustrated at the cost to newsagents for supporting them. We invest retail space and our time in the hope of making our 25% margin. The magazine distributor is paid regardless. Ad agencies and other service providers are paid regardless. Not us. The cost of the failure of this new title to sell in my store is for me to bare – including the cost of financing the publisher as it will take me until the end of December to get a credit for the stock being returned today.
We should be paid a fee by publishers for new titles until they pay for themselves.
The task of managing magazine cash flow in my newsagencies begins on the first Monday of the month. That’s today for November. Here is a summary of what we will do between today and the 20th of the month – our own internal end of month cut off:
I try and not early return out of spite or anger. However, on some heavy magazine arrival days there is certainly the temptation to do this.
We should not have to do this work. I would certainly like to not have to early return. It adds unnecessarily to our labour cost.
The only reason we have to do this work to manage cash flow is because we cannot trust the magazine distribution model.
Magazine distributors, when questioned about the fairness of the newsagent magazine distribution model, say that newsagents can early return – insinuating that this protects newsagents. Returns have considerable costs. A considerable portion of the costs is due to poor and unfair decisions by the magazine distributors.
The Australian is reporting this morning that apps will soon be launched for The Daily Telegraph and The Herald Sun and other News Limited capital cities dailies. My understanding is that these apps will be an advancement on the app for The Australian. They will also have a monthly fee.
For my money, I still like the New Zealand Herald app – it’s free and funky.