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

Month: September 2011

Due diligence tips if you are buying a newsagency

My work with my newsagency software company, Tower Systems, sees me get involved in many change of newsagency ownership situations. Often, the involvement is sought to help get to the bottom of a dispute. If the purchaser undertook reasonable due diligence many of the disputes I see could have been avoided.

Here is my incomplete due diligence list. I say incomplete as it is what I suggest you do which is so often forgotten:

  • Use an accountant who is knowledgeable about newsagencies to audit the figures provided by the vendor.
  • Do not use the vendor’s solicitor or accountant.
  • Request sales reports direct from the software being used in the business – for comparison against the sales numbers in the P&L.
  • Request a list of customer accounts in a spreadsheet with customer name and purchases in the last year. Look for related party transactions and large customers and ensure that their value is secured.
  • Review roster sheets with claimed hours worked.
  • Request a full list of inventory sorted by when the item last sold. Pay attention to items which have not sold in the last year.
  • Consider having the stock take on settlement done using the computer system in the business – this is far better and more accurate than having a stock take done externally. It also leaves you with a valuable asset – accurate stock on hand data.
  • Request a list of all forward orders placed in the name of the business. This is especially important leading up to major seasons such as Christmas.

This list is by no means complete. I have listed items which tend to be overlooked.

There will be some newsagents who are not happy with me publishing this list. If you have nothing to hide then why worry? Transparency around a good business can only add value.

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buying a newsagency

If this is the experience of all classified advertisers

I was helping a friend manage their classified ads with a regional newspaper this week and wanted to search for one of their ads by content.  No, this was not possible.  I would have preferred to place the ad online, controlling the content myself.  No, this was not possible.   So, while the rest of the world embraces search and gets how important this is in business, this newspaper had to use some other, more arcane, method to find the ad.  The experience overall was awful, a real turn off for anyone wanting to advertise on the classified pages of this newspaper.

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Media disruption

UK newsagents set to act on Guardian margin cut

The Guardian newspaper in the UK this week increased the price of its weekday edition from £1 to £1.20 and cut its retailer margin at the same time from 25 per cent to 24 per cent.  This has resulted in understandable anger among newsagents as reported by the Press Gazette.  This is not the first newspaper margin cut in the UK this year.  Maybe it’s a (bad) sign of the times.

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Newsagency challenges

Excellent visual merchandising of 2012 diaries

diaries-2012.JPGClick on the image to see an excellent visual merchandising display of 2012 diaries created by the team at one of my newsagencies.  This display is different to our usual diary display.  Most newsagents prefer to stack diaries on the shelves.  This display embraces the colour and shapes of the products.  The result is a boost in browsing and this, of course, drives sales.  It’s an excellent display in my view and will help us drive better diary sales than last year.

The challenge for newsagents is to go beyond the usual in displaying products like diaries and being creative.  If you’re not sure what to do, ask someone – there are plenty of visual merchandising experts who can help.  The photo itself offers excellent ideas.

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Diaries

Promoting Wheels and car magazines

mags-wheelsoct11.JPGThe team at on of my stores is cleverly promoting our car magazine sections with this front of store Wheels magazine display.

While the display itself is terrific, it is their specially made sign at the bottom off the sign letting our shoppers know that we have more car magazines at the back off the store which I see as a really smart move.

We have to grab every opportunity available to us.

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magazines

The newsagent position re magazines is stronger

mags-overallsmall.jpgRecent (welcome) moves by Express Publications offering greater commission for all newsagents plus other commercial moves by some publishers reflect a shift in the newsagent / magazine publisher relationship. Publishers are demonstrating that they get the importance of our channel and are prepared to negotiate terms which reflect this.

While we have a way to go to achieve what supermarkets achieve with their various methods of compensation, the recent moves show that we are in a period of change, welcome change.

The newsagents best positioned to leverage the commercial benefits which could be available to us are those who manage their magazine department professionally and with great care from the top of the business down.

While I have noted here previously the challenges for magazine sales, they remain one of the most in not the most important product category in our stores.

Newsagents who leave managing magazines to a junior or unengaged employee do so at their own peril.

I obsess about magazines because I know that a good magazine department drives traffic and sales basket efficiency.

Publishers will treat newsagents differently. Those who engage are set to make more money than those who do not.

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magazines

Free newspapers causing difficulties for newsagents

I have heard stories from four newsagents this week where customers have complained that the newsagent wanted to charge for a newspaper which was free elsewhere. It is bound to happen given the growth in outlets where newspapers are given away: airports, gyms, coffee shops, supermarkets. All of these free newspapers are educating shoppers and newsagents are having to deal with this.

My view is that any supplier respecting their product would not give it away as freely as newspaper publishers appear to be prepared to do right now, especially not when they have retailers who rely on newspaper sales for their businesses and who support newspapers and newspaper promotions.

If publishers do not address this and respect retail newsagents there will be a clash.

The best solutions is that publishers stop giving away their product.

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Newsagency challenges

Promoting Cleo magazine

mags-cleosep2011.JPGClick on the image for a larger version of another stunning visual merchandising display by Renee.  This time it’s her selection of backing colours which have helped make this display promoting Cleo stand out at the front of our newsagency.  Good displays need to get people to turn their heads, stop and engage with the product on offer.  This display does that thanks more to how Renee is supporting thee collateral provided by ACP Magazines as well as the magazine itself.  Be sure to click on the image.

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magazines

Fun gift products help make shopping more enjoyable

gift-hypo.JPGAs I blogged recently, we have been having some fun with a range of ‘pills’ like this one.  While it looks like a pill, it is actually a 10cm long foam stress ball – for the hypochondriac.  Shoppers laugh when they get what the product is.  Some then proceed to list who it would be ideal for.

Sales have been good – from a very simple hang sell display on a gift table facing into the shopping mall.

I like this type of product because it offers an unexpectedly enjoyable experience to most who notice it.  It is bound to help drive good word of mouth for our business too.  Plus, it broadens our range of gifts.

Gifts can mean so many things from the high end item for the home through to this simple and inexpensive stress ball.

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Gifts

Express Publications reacts to tough magazine conditions

The continuing decline in overall magazine sales has led to another publisher responding in an effort to get the attention of newsagents. Express Publications last week announced better margin and a reduced on-sale period for their titles in newsagencies. The move will see newsagents achieve 30% margin for some Express titles and 32.5% for other titles. This is a significant move from the usual 25% margin for magazines.

While I welcome the move, Express has not addressed the issue of bagged magazines (and the high retail space cost they represent), the expense of full copy returns or the desire among newsagents for a fair sell through target.

I would like Express to reduce their reliance on bagged product, eliminate full copy returns and set a minimum target sell through rate of 60% with a payment to newsagents if a title does not achieve the target.

Express could reasonably respond that they cannot afford to make these extra moves. The challenge is that newsagents cannot continue to carry the cost of full copy returns or a sell through rate of less than 60%.

Express also announced the new position of Director of Circulation. They devalued this good news by hiding contact behind a generic email address. Any company serious about customer service makes access to a real and named person easy by publishing direct contact numbers and a direct contact email address.  This could be easily fixed.

If Express made contact easier and more personal and addressed the other points I have noted they would win wild applause and support newsagents. They could expect their titles to receive special treatment and greater sales as a result.

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magazine subscriptions

Enhancing the Cookbook display

Another change from our recent magazine relay in the placement of our ACP cookbooks. We have increased the space allocation in an effort to drive sales of all formats. We have the new titles co-located with food titles in the women’s magazine aisle and the full range as shown below in another aisle.

You can see that we are giving the mini cookbooks equal space with the regular size titles. This is designed to lift sales of the mini cookbooks.

mags-cook.JPG

We will continue to treat launch titles differently with placement in impulse units at the front of the newsagency.

While we would have preferred to fit the full cookbook range in our women’s magazine aisle, this was not possible if we were to maintain a professional display of magazines.

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magazines

Great start to 2012 diary sales

diaries2012.JPGOur range of diaries for 2012 from The Last Diary Company and other companies have been selling well over the last three weeks. There are plenty of shoppers who are keen to get in early and purchase their diary which this year is barely two thirds old. We’re not doing anything special to promote the range other than have a terrific display set up in the aisle which also carries our food magazines.

Newsagents can own diaries. With other retailers play in this space, it is easy for us to own it in terms of range.

Diary customers are loyal. They will return to the retailer who provided the diary they prefer.

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Diaries

Newsagents scrambling to avoid the XchangeIT penalty

XchangeIT has written to newsagents who have consistently failed their timeliness, quality and or other criteria for sending magazine sales data from their businesses.  This action was first forecast over a year ago with regular reminders published since.

A flaw has been discovered in the timeliness criteria which XchangeIT has agreed to review.  This is where a newsagent may run their end of shift process prior to the end of the day, for sound operational reasons, and have some trading on that date before closing the business for the day.

Colleagues at my newsagency software company Tower Systems are navigating this gap in how XchangeIT expects newsagents to operate their businesses versus how some newsagents do operate their businesses.  The gap means that some newsagents who do send data recording all sales are set to be penalised because sales data for a day could be split across two sales files.

Immediately on being informed of the situation XchangeIT agreed to investigate.

In the meantime, I urge newsagents to treat the issue seriously and review their EDI related processes to avoid the XchangeIT penalty.

Footnote: if only magazine distributors would accept penalties for consistently poor performance as they are now imposing on newsagents through their XchangeIT operation.  The fines would cripple them.  Double standards are on show here.

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Newsagent representation

Strengthening the Women’s magazine offer

In the relay undertaken in one of my newsagencies on Saturday I have intensified the focus on women’s magazines, bringing more categories and segments of women’s titles into the one aisle, to make it easier for women to browse and purchase magazines. Previously, women had to shop three aisles to access the selection they can now see in one aisle.

It was a challenge to meet the goal of consolidating women’s magazines in the relay. We were aided by our flexible fixtures which carry more copies of each title per pocket than the usual magazine fixtures.

mags-womens.JPG

While it is very early days for the new relay we are very happy with the performance so far.

I’d urge all newsagents to look at their magazine layout and put in the effort for a relay if it has been more than a year since the last relay.

Footnote: the photo only shows one said of our women’s aisle.

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magazines

Magazine adjacencies an opportunity for newsagents

mags-bridehair.JPGBy placing certain magazine categories next to each other in our businesses we are able to drive sales of both. Take wedding and hair – they sit naturally next to each other yet I have seen newsagencies where they are some distance apart.

By considering and managing magazine adjacencies newsagents are able to drive sales efficiency from the department and bank more margin dollars from magazine sales.

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magazines

Promoting the latest Weight Watcher’s magazine

mags-weight.JPGWe have been promoting the latest issue of Weight Watcher’s magazine in the usual location with women’s health titles as well as this impulse location placement at the front of the magazine department.  Every time we bring this title out from itss usual location we achieve incremental sales – I’d encourage other newsagents to try this.  the sales are there.  it’s a matter of the cover being seen by someone at the right point in their consideration of weight related matters.    It’s an easy impulse purchase because of the trust in the brand.  In addition to this placement with weeklies we also give it a run with newspapers when space and time permit.

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magazines

Leveraging Smurf Kinder Surprise

smurf-kinder.JPGWe have been enjoying terrific success with a display unit of the Smurf themed Kinder Surprise at our main sales counter. With the movie opening last Thursday we received stock in ideal time to leverage interest.

The first unit sold through quickly and we’re well into our second unit. The new Smurf movie is proving to be one of the best movie merchandise opportunities we have had for some years – generating nice new traffic and excellent impulse purchase business.

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confectionary

The magazine relay shows off the newsagency difference

I completed a magazine relay in one of my newsagencies on Saturday, moving every title in all but two categories.  I am not talking about slight moves, no, this was a major shakeup to reshape the magazine shopper experience and to drive basket depth.

Men’s magazines, for example, were moved from an aisle into what I call a nook space – a reading area toward the rear of the store.  Very shopper friendly.  Plenty of space to gather and chat.  We now have more full face covers on display – showing off the full cover pitch from publishers.  It’s a reading smorgasbord for guys.

mags-mens.JPG

The photo does not do the display justice. You can see four bays – the whole area actually has six bays. Where we think shoppers will be prepared to look for titles we have fanned them so that we fit three or four titles where we would usually fit two titles.

I am very happy with the new look for magazines in this newsagency.  Now we wait to see the impact on sales.

For newsagents wondering about a relay, I recommend a relay at least once a year which some tactical changes in between times.  The goal here is to keep the magazine offer fresh for shoppers and for your team.  One of the most important ways to reflect your point of difference is in your magazine layout.

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magazines

Lovatts crossword title promotion

mags-lovattspromo.JPGWe have been running a promotion of Lovatts crossword and puzzle titles on an aisle end facing toward the front of the newsagency.  This display was setup to coincide with a magazine relay which resulted in all bar two small categories of magazines being moved.  Once the display comes down we will maintain a co-location strategy for crossword titles in with our women’s weeklies titles – the business driven from this additional placement is excellent.

The display in the photo, while simple, is effective.  we know from pocket counting that it is driving sales.

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crosswords

Women’s Health Bump new arrival

bump.jpgIt was good to see Women’s Health Bump go on sale yesterday.  We are supporting the title with a good display with pregnancy titles as well as a feature display at the counter.  Pregnancy magazines are due for a shake up and the arrival of Bump should achieve this.  The first issue looks terrific.

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magazines

Newsagents flock to the Sydney Gift Fair

gift-fair.JPGNewsagents have attended the Reed Gift Fair in Sydney this past weekend in huge numbers, far more than previous years.  The Tower Systems stand has engaged with many newsagents – we have been at this show regularly for years and so are in a position to gauge the jump in newsagent attendance.  It has been terrific to see such a massive increase in newsagent participation.  This shows that many in the channel are embracing change.

The Gift Fair is important because of the diversity of product on offer and the variety of business owners you get to mix with.

I am surprised that more newsagent suppliers do not embrace the Gift Fair opportunity … their loss I guess.

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Gifts

Help for newsagents doing it tough

A few weeks ago I put together a document I called Tips For Newsagents in Tough Times. I created this in response to requests for help from newsagents doing it tough. While some of the content is of more use to newsagents using the Tower Systems newsagency software, the seven pages of notes, tips and ideas could be useful to any newsagent.

We, each of us business owners, are accountable for our business position. Making excuses will result in us taking our eye off the ball and fixing what needs to be fixed.

If your business is experiencing tough times, you need to implements considerable personal and business changes to turn the situation around. If you change nothing, nothing will change for you. I firmly believe that we make our own success.

If you would like a copy of the document, please email me at mark@towersystems.com.au. It’s free. All I ask is that you let me know if the information share is of use.

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Newsagency challenges