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

Month: March 2011

Good SMH report of EFTPOS issue

Michael West had an excellent report in The Sydney Morning Herald on Saturday about the EFTPOS fee issue raised by the recent EPAL announcement.  If you are not up to speed with this issue, please read my blog posts here and here.

Jewellers, too, are taking up the issue – see the report in Jeweller Magazine.  The report includes this straightforward explanation:

Under the new system, there will be a new 5 cents interchange fee for standard point-of-sale transactions of $15 or more. For transactions below $15, there will be no fee and retailers will get 15 cents for each cash-out transaction they perform.

The new system replaces the old one where retailers and their banks received a rebate of approximately 5 cents per EFTPOS transaction.

Newsagents need to act if they want their voice to be heard about the new EFTPOS fee regime.  Not acting could mean that the changes proceed and this would mean that Coles and Woolworths would have another competitive advantage over us.  Imagine what a consumer would decide if wanting to purchase more than $15 worth of magazines, stationery or greeting cards.  Do the go to the newsagent where there is likely to be a surcharge or do the go to one of the big two where there is no surcharge.

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EFTPOS fees

The amazing magazine display

ballaratcakebook.JPGClick on the image for a better look at the stunning display creates at newsXpress Ballarat in Victoria to promote the classic Children’s Birthday Cake Book.  As I mentioned last week, this cookbook is selling extremely well.  I know of stores where more than 50 copies have been sold.  This display at Ballarat is designed to leverage off the already proven success.  Customers see it as they enter the store.  Since most purchases are on impulse, the additional margin dollars per sale are tremendously valuable. I’d urge newsagents to copy the idea.

Check out other recent magazine promotion successes I blogged about earlier in the week.

Just a note on the birthday cake book.  The newsXpress newsagency marketing group identified this as a sales opportunity prior to its release last month. It provided its members with tactics for driving sales success.  The result is above average sales and extra margin dollars banked.  The group had the same success with the Slow Cooker cookbook last year with ACP air freighting in additional stock to keep up with newsXpress demand.

I’d be glad to receive photos from any newsagency of stunning displays which are driving exceptional sales.  The more we can share and motivate the better.

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magazines

The perpetual magazine relay

mag-relay.JPGWe are engaged in what I would call a perpetual magazine relay in one of my newsagencies.  Not a week goes by without is moving categories and rearranging titles.  This work is done based on analysis of sales data and considering customer flow.  We chase growth first up and then consider how we can support falling titles and categories.  Our attention to layout keeps the magazine offer fresh.  This is good in a shopping centre situation where some days up to half your customers may not be regulars.

While our perpetual relay may seem extreme, think about the other extreme – newsagencies where the location of magazines is not reviewed.

My experience is that a major magazine relay needs to be undertaken at least once a year.  If this is not done, newsagency employees and customers become store blind and the shop can feel like it is not moving with the times.  While some older customers will complain after a relay, the sales lift will make those few complaints worthwhile.

A relay in a newsagency with around 1,200 magazine pockets will take two people around half a day to complete as long as good planning has been undertaken in advance.

In our newsagency where we are engaged in a perpetual relay, we spend less than a hour a week.

If you want to do a magazine relay but are not sure where to start, call or email me and I’d be glad to help out.

Do something though – don’t be an old school newsagent with the same magazine layout year in year out.

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magazines

What are you doing about the EFTPOS fee hike?

Further to my blog post yesterday about the small business EFTPOS fee hike, what are newsagents reading this doing about it?  I hope that you have written, emailed and called your local member of parliament, your local chamber of commerce, your local senators and your bank.

Here we have a new fee structure which EPAL decided under direction from from the Payment System Board which is part of the Reserve Bank. This all had its genesis in 2006 when there were reforms were made to EFTPOS.

Coles and Woolworths have cleverly positioned themselves to have a seat at the EPAL table.  How the RBA has allowed this and the evident lack of representation for independent and small retailers is a question which must be asked.

The latest EFTPOS changes are supposed to increase competition.  This is true if you see Coles and Woolworths being given a valuable financial free kick to compete with independent and small businesses as being fair competition.

So, what are you doing about this?  Yesterday I posted a letter drafted and provided by the ANF.  I urge all newsagents to engage in this campaign. This is important people.

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EFTPOS fees

Challenges for retailers in New Zealand

I have been in New Zealand twice in the last two weeks – returning yesterday from the latest trip. On each occasion I have had the opportunity to speak with a range of retailers. They are doing it tough, tougher than in Australia. The New Zealand economy was struggling before the Christchurch earthquake. Since this awful event shoppers have pulled back and this is impacting retail across the board.

The good news is that entrepreneurial retailers are employing new ways of attracting customers. The best I have seen is the local connection. This made me think of newsagents.

Pitching for local business in support of the local community is a strong message for New Zealanders who are working together to lift the country from the considerable economic and emotional cost of the Christchurch earthquake.

This same message works for Australian newsagents. It is our point of difference over other local outlets selling newspapers, magazines, greeting cards and stationery. Most newsagents can say: we live locally, we shop locally, we employ locally and we support local community groups and charities.

Making the local connection can be powerful for a business. It can be a way to rebuild in tough times as some New Zealand businesses I have seen this week show.

The key is to move forward. Too often I meet people, newsagents and other retailers, who wallow in self pity about economic conditions or personal circumstances. If that energy was directed into taking small steps forward they would find their situation improve. This is what I have seen earthquake affected retailers doing in New Zealand in the last week.

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Newsagency management

Promoting Precious Rocks and Gems at the counter

rocksgems.JPGWe are promoting the first issue of the Precious Rocks and Gems part series behind the counter at one of my newsagencies.  The display looks stunning (better than indicated by the photo) and it is driving good sales.  With most purchases on impulse I’m happy with that.

We are helped by having a rear counter wall built and lit for this type of feature display.

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partworks

How you can help fight on the EFTPOS issue

The ANF has generously provided a letter for newsagents to use to lobby parliamentarians of the EFTPOS issue. Click here for a copy of the letter which you can personalise and send.  I urge newsagent to engage with this. If the forecast changes proceed, we will face higher bank fees per EFTPOS transaction than major Coles and Woolworths. This will further erode consumer perception of newsagents and other smaller and independent retailers who compete with these two retail giants.

The ANF is lobbying from their end.  Tyro, the Broadband EFTPOS company is lobbying from their end.  Please engage in this campaign. The more newsagents who write the better.

Here is further background on this issue:

Eftpos Payments Australia Limited, EPAL, has been given the authority to set a multilateral fee only limited to the cap of 12 cents.

EPAL members are:

  • Australia and New Zealand Banking Group Limited
  • Australian Settlements Limited
  • Bank of Queensland Limited
  • Bendigo and Adelaide Bank Limited
  • Cashcard Limited
  • Citigroup Pty Limited
  • Commonwealth Bank of Australia
  • Coles Group Limited
  • Cuscal Limited
  • Indue Limited
  • National Australia Bank Limited
  • Suncorp Metway Limited
  • Westpac Banking Corporation
  • Woolworths Limited

On 27 November 2009, the RBA varied the EFTPOS Standard, based on the advice of the PSB. The purpose of the variation is to promote competition and efficiency in the Australia payments system by making the regulation of multilateral interchange fees in the EFTPOS system more consistent with that of the scheme debit system. The varied EFTPOS Standard imposes a cap on the weighted average of multilateral interchange fees set by the newly established EFTPOS scheme (EPAL) of 12 cents paid to the issuer – the same as for scheme debit interchange fees. The variation of the EFTPOS Standard is expected to enhance the ability of the EFTPOS system to compete with the international debt card schemes. The varied EFTPOS standard does not change the way in which bilateral interchange fees are regulated. Bilateral interchange fees on purchase transaction will remain regulated between 4 and 5 cents paid to the acquirer.

Check out this link.

The bilateral interchange fee clause allows Coles and Woolworths to avoid the fee increase. The next step is for the banks to terminate bilateral agreements and move to the multilateral agreement. Then the acquiring side of the banks has to decide on whether it will pass through the interchange fee increase from the issuing side to the merchants. It would be strange to expect that the banks raise the fee to then absorb it  And then the merchants have to decide on whether they pass through the increased costs to consumers via price increase, surcharge EFTPOS, reduce or eliminate EFTPOS acceptance or absorb the cost increase in their margins.

The lobbying by newsagents and other independent retailers has to mobilise media, politicians and associations so as to move the EPAL board members to revise their fee increase decision. It is untimely and unjustifiable to raise EFTPOS fees. The merchants carry most of the burden involved in upgrading the EFTPOS network for EMV (chip) and contactless. They should continue to benefit from the negative interchange fee.

In my view it is grossly unfair that small retailers like newsagents are slugged with the fee to fund EFTPOS, when Woolworths and Coles are not.

Please engage in this campaign.

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EFTPOS fees

How much is a Woolworths or a Coles tenancy worth compared to a newsagency?

I have been sent tenancy data for a regional shopping centre which shows that one of the two largest supermarkets in Australia pays $292 per square metre while an independent newsagent is expected to pay three times that in rent.

The situation is even worse once you factor in that the major supermarket makes no contribution to outgoings – these are all covered in the small independent retailers.

The major supermarket has generous rent review provisions which small business retailers are all on anything from CPI + 1% through to a flat 5% annually.

The final kick in the guts to independent retailers at this regional shopping centre is in the area of lease term.  The major supermarket has a 20 year lease with two ten year options.  Independent retailers are given a five year lease and no option.

While I appreciate that there is a considerable difference between Coles and Woolworths and an independently owned newsagency, it is clear to me that we independents are funding the supermarkets.

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Newsagency challenges

Coles and Woolworths – our biggest competitors

Coles and Woolworths continue to focus on taking business from newsagents with considerable investment in revamped magazine, greeting card and stationery offers within their supermarkets.  Coles is continuing to tweak its newsagency within a supermarket concept.

Newsagents need to be aware of this direct attack while they read my other two blog posts today.  These giants are moving on us on a range of fronts.  the questions is – are we prepared to fight?

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Newsagency challenges

Comparing magazine distributor performance

magazine-performance.jpgThe 1,700 newsagents using the Tower Systems newsagency software can very easily compare the performance of magazine distributors (or any supplier for that matter) across trading periods.  Using the Monthly Sales Comparison report in one newsagency earlier this week, I was interested in magazine performance for the first two weeks of March 2011 compared to 2010.

Click on the tiny image to see what I am talking about.  I have clipped out three lines from the the page report to illustrate the value of comparing magazine distributors.

In the newsagency for which I ran the report, magazine unit sales overall are down 8% comparing the two week periods from different years.  As the small sample of the report shows in the image, for women’s weeklies, unit sales are down 16% for Network Services titles and 6% for Gordon & Gotch titles. Indeed, for most of the report in this newsagency for this trading period Gotch titles perform better than Network titles.

I think it is important that newsagents have this information.

It would be even better if newsagents could take this a step further and report easily by publisher.  Sadly, the data provided with electronic invoices does not identify publisher so the onlyto achieve such a comparison would be with manual work and this would be too time consuming for newsagents.

Magazine distributors and publishers committed to transparency would provide newsagents with a publisher code for each title.  As things currently stand, we can only easily report on the data at the distributor level.   (I should note that in some reports we do strip our Pacific Magazines titles from Gotch and ACP titles from Network – this is done with manual work separating these.)

Outside of magazines, in various departments this easy supplier level performance comparison can be useful for newsagents: greeting cards, tobacco and stationery.

From a magazine perspective, the supplier breakdown by category enables newsagents to assess distributor performance and to use this when considering space allocation and current supply action.

Now, a note about the sample size.  I do not recommend that newsagents compare trading periods for two weeks as I have done for this example.  Comparisons should be at least a month.  Ideally, three months – comparing to the same three months a year earlier.

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magazine distribution

Magazine activity generating sales

Here is how some of our  recent magazine displays and promotions we have run and about which I have blogged have worked:

  • Better Homes and Gardens.  We placed a display unit next to the copier.  10 additional copies sold over two days this past weekend compared to average for the same days of the week for the same week of on-sale.
  • Melbourne Home Design + Living.  Created a counter display to drive impulse purchases.  Sold out in just over a week.  Chasing more stock.
  • New Idea.  Created a power end display promoting to greeting card shoppers.  15% sales uplift compared to average for the first three days of on-sale.
  • Children’s Birthday Cake Book.  Various displays driving sales of 30+ copies.  We are planning to take this promotion to new heights as soon as we get more stock.

None of these promotions was requested or driven by publisher engagement.  We decided to promote the titles because we felt we could achieve incremental business by being proactive.  The results are excellent.  They demonstrate that by being engaged with magazines and tactical in promotion we can achieve sales growth.

Yes, magazines overall are challenged.  That does not mean we give up.  The results above and others I have written about here indicate that we can grab business in our newsagencies by leveraging our points of difference compared to supermarkets, convenience stores and petrol outlets.  They do the bare minimum and without thinking about.  We can be personal and genuinely engaged.  This is what drives incremental business.

We look at each magazine as an opportunity to do something more than the average.  The more we engage and measure results the more we learn and this makes our decisions better.

Yes, I think that many newsagents need to reduce their magazine range.  However, the more important need is for genuine engagement with the products pursuing the growth I am seeing for selected titles.

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magazines

Promoting Precious Rocks, Gems & Minerals partwork

mags-rocks.JPGWe are promoting the new part series, Precious Rocks, Gems & Minerals with this power end display facing onto our dance floor.  We expect it to sell well since Treasures of the Earth sold well and this latest partwork is similar to that.

While this title may not generate the traffic of Art of Knitting or other stellar partwork successes,  I expect it to garner a good following from existing shoppers and to drive some new traffic for us.

As newsagents are the only retailers, those of us who promote the title well are set to generate good business.

My sales benchmark data continues to show that partwork customers are 30% more like to purchase other items in store than a regular magazine customer.

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partworks

Promoting T3 magazine

mag-t3.JPGWe are promoting the latest issue of T3 magazine with this simple yet effective in-location display.  This is located part way down our men’s magazine aisle.  It stands out nicely.

As with all of these in-location displays, it will run for a week before we shine focus on another title in the aisle.

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magazines

I Love Magazines unit life extended

With the excellent I Love Magazines campaign coming to an end tomorrow, ACP Magazines is providing generic materials which can be used to extend the life of the stand.  Given the ease of moving the stand, I like the idea of extracting more value from this unit.

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magazines

Newspaper home delivery changes coming

We are set to see several changes in the handling of home delivery subscriptions this year.  Newsagency software companies are currently being briefed on some of the changes. I anticipate that briefings on other changes will take place in the next few months.  Some software in use will have to be modified to suit the changes.  Newsagents who don’t have current software could face some challenges depending on how the publishers deal with this.

In considering changes, publishers need to be pressured to think of the needs of newsagents and not just their own needs.  For example, for fifteen years newsagents have been calling for electronic statements to enable easier checking line by line.  An electronic statement could save a newsagent up to four man hours a week.  Multiply that across the channel and you soon see the value.  sadly, publishers put their needs ahead of the needs of newsagents.  Rather than save the channel thousands of man hours each week they would prefer to focus on getting better subscriber and other data at their end.

I am all for the changes mooted for 2011 but I would like to see more.  I would like to see software changes which genuinely save newsagents time and money in their businesses.

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newsagent software

Promoting The Outdoor Room at the counter

magoutdooroom.JPGWe are promoting the latest issue of The Outdoor Room at the counter.  This impulse purchase location is proving to be successful us in promoting home and living titles so it was an easy choice for promoting The Outdoor Room.  We will leave the display up for a week.  If we see good uplift and we have a demand on display space, we will locate the display for The Outdoor Room elsewhere.  As I have noted here recently, we think carefully about all of our displays.  Our space allocation and display time investment are all about driving a financial return.

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magazines

Promoting two House and Garden titles

mag-housegarden.JPGWe are promoting the latest issue of House and Garden magazine as well as the accompanying Decorator’s Handbook with this display on the dance floor, near the sales counter.  It looks stunning in the store if we do say so ourselves.

Click on the image for a larger version of the display.

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magazines

How does Universal Magazines justify sending out old magazines?

img_0139.JPGLast week, newsagents received this Pools and Outdoors Pack from Network Services.  Universal Magazines is the publisher.  Poolside Showcase is the title at the front of the packs I saw.  While being sold as a pack, this is effectively a reissue.  You can see old price labels from other newsagencies on the front magazine inside the pack.  Some copies of the front title I saw are damaged to the extent of not being of merchantable quality.I question whether this pack should have been sent to newsagents at all.  It is clearly old stock.

It is not as if we need another pool or outdoors title – there are plenty on newsagent shelves already.

Universal Magazines has decided on a long on-sale for this pack, it is not due for return until week 26.  That is a ton of newsagent cash at risk, bankrolling the sending of this title to newsagents.  Yes, newsagents are funding the shipment of this old and questionable stock.

I would like to know the sell through for titles like Poolside Showcase from the the first time it was sent to newsagents.  If it did not achieve a 60% sell through it should not have been reissued through this pack.

I would like Universal Magazines to advise newsagents of the sell through of all of the titles in the pack – to justify their grab of newsagent cash through the reissue of this stock to us. They owe it to us since they are expecting us to pay for this stock which did not sell the first time it was sent out.

If Universal has such faith in this pack, why not let newsagents order it?  They will say that newsagents would not order the title and that such an approach is against the magazine distribution model.  I agree on both accounts.  Newsagents are smart.  They would take stock based on the financial return they will achieve.

I suspect that newsagents leaving this pack on their shelves for the full on sale will lose money once they account for their retail real estate, labour and shrinkage. So, no, newsagents would not order this title if they were give the opportunity.

That this pack has been sent looks to me like an abuse of small business newsagents.  If I am wrong and sales data justifies the decision then I will unreservedly apologise.

The folks at Universal Magazines will think that I am picking on them with this blog post.  I will let readers here be the judge of that. Someone in Universal decided to send out stock of dubious value and of questionable merchantable quality.  On those two counts alone Universal deserves to face some tough question from newsagents.

This is an ideal title for early returning, before the cutoff for the end of the month.

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magazine distribution

Dumping newspapers for Twitter

Ann Paterson has blogs that she has dumped print newspapers for Twitter and other online news sources.

Back in October I made the switch from newspapers to online news. My reasons for making the change were based in concerns about the quality and objectivity of the news I was getting from The West Australian and The Australian, though initially I hedged my bets and kept getting Saturday’s West for the TV guide, and one edition each week of The Australian and The Australian Financial Review for their higher education features. I work in public relations at a university and need to be across sector news.

Five months on and the only paper I get delivered now is Saturday’s West. Although I have been introduced to online TV guides, I can’t quite wean myself off the paper version. I am, however, coping quite happily without the other papers.

She goes on to explain her experiences and that having an iPad has made the transition easier.  Ann uses the Christchurch earthquake as an example.

I’m sure that newsagents will find Ann’s blog post interesting.  I hope it is motivating.

I have found myself checking twitter every few minutes since the first earthquake hit Japan last Friday.  I have been kept well informed, ahead of any mainstream media outlet.  With all of the news which has been around already this year, 2011 is the Year of the Tweet.

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Media disruption

Promoting New Idea this week

mag-newidea-mar11.JPGWe are promoting the latest issue of New Idea with the power end display shown in the photo facing onto our dance floor.  We selected New Idea because of the Schapelle Corby story and because we like the magazine.  New Idea sells well and responds well to feature promotion like this.  We know from sales history that SchapelleCorby related cover stories achieve a lift in sales.  So, promoting this issue beyond the usual promotion makes sound commercial sense.

We will leave the display up until at least Wednesday when we will assess sales and demands on space – like any newsagency we have limited premium display space available.

We also have this issue of New Idea in an impulse purchase location at the counter as well as the usual location for the title.

we make promotion decisions such as this based on the sames we think we can achieve.  While publishers do pitch for attention in newsagencies, it is important for each of us to promote what we know we can sell and, especially the titles for which we can achieve incremental business. After all, it is margin dollars which you can bank.

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magazines

Promoting Dolly magazine

mag-dolly0311.JPGWe have been promoting the latest issue of Dolly magazine wit this display in the reading area of our women’s magazines.  This is an area away from the main traffic of the store where women can comfortably browse.  It is an area which has helped drive sales growth in women’s titles as well as crossword titles.  While some guys veture down there, it is an  area where you will mainly find women shopping.  This is why we only promote titles such as Dolly here.

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magazines
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