I am disappointed at the ever increasing number of bagged magazines from Bauer. We received two this week. Each bagged offer requires additional pocket allocation. They don’t drive incremental business and each time I have asked for data to support the publisher claim it has not been forthcoming. If I was presented evidence I might look at them differently. As it stands, these bagged magazines only serve to educate shoppers to not pay full price in my view.
I am regularly asked to assess the performance of newsagency businesses and comment on what I see in their data. What follows below is the feedback I provided to one new newsagent earlier this week. I share it here with their permission:
The comments I make below are not intended to offend you however it is possible they will. They are direct, to the point as I have found there is value in calling it as I see it. The comments reflect what I see is the state of your business as represented in the Monthly Sales Comparison Report for April through June 2013 compared to 2012.
Your business data is the best assessment of business performance as it does not lie as long as you use the system to track all sales.
I have broken the assessment down by various parts of the business.
- TRAFFIC. Number of sales is down by 13%. This is very significant, considerably above average for a newsagency. It makes me wonder how you are marketing the business externally – advertising, promotion, offers.
- SALES. Revenue is down by 11%. Also very high and concerning.
- CARDS. You are not arriving stock properly – see unknown category. You should talk with support about getting this sorted out. This could be because you may have changed card companies. The sales decline is on par with the rest of the business.
- CIGARETTES. The decline here is less than for the average for the business. This is good news. However, be careful since there is no upside in tobacco product sales.
- CONFECTIONERY. 22% decline. Worse than the business average. You need to take action here. Look at your product range, your display and your pricing. Something is not working for you. Also look at the value of your sock. If you have more than $1,000 in stock you;re losing money. Act with urgency here.
- GIFTS. You are managing the data poorly. What does assorted gifts mean. Assorted gifts account for 67.72% of your sales. Categories are supposed to guide you meaningful information. I like to see: male, female, teens, kids, babies. Or: home, traditional, retro, funky. Categories should help guide your decisions. Assorted is meaningless. So, get your data right – the help desk can help you with this. In terms of sales, the 7% decline is just below the business average so that is good news.
- LOTTO. 12% up is good news. My question is what are you doing to leverage lotto customer traffic? Are you helping your lotto customer spend on other products you offer? your data suggests not.
- MAGAZINES. Unit sales down 21% and revenue down 18%. Both are bad numbers compared to the rest of your business and the average for the newsagency channel. This situation needs urgent action. When did you last do a full magazine relay? If not in the last six months get to it urgently. Take a fresh approach with magazine location and display. One you get the layout right I’d look at some form of magazine related promotion to reward people who are especially loyal to you.
– Your data shows that Motoring titles are your top performing, accounting for 17.10% of your magazine sales. Wow! This is your hero category for the men’s section. Sport at 9.40% is also doing well.
– Your women’s titles are troubled. Women’s Weeklies are down 22% in unit sales and Women’s Interests down 25%. Has something happened in your newsagency to turn women off? I ask this question seriously. These declines need arresting first followed by rebuilding.
– You are under-performing newsagency channel averages when it comes to Food (2.06% of sales), Crosswords (2.03%), Music (1.84%) and Teenager (0.62%). It would be easy to blame this on your shoppers. Your challenge as a retailer is to look at where you have them placed and how you promote them.- NEWSPAPERS. Unit sales are down 14% and revenue down 9%. The unit sales decline is the real worry as it’s worse than the overall average for the business.
- SCRATCH TICKETS. A 27% decline in sales is dreadful. The traditional decline I am seeing in Queensland is around 15% so your business is performing worse that the statewide trend. The question is what are you doing about this. A shopkeeper will shrug their shoulders. A retailer will work on an action plan and then implement the action plan.
- STATIONERY. This is a good news department. Your sales are down 10%, slightly less than the average for the business. While not good, at least it is close to the average for your business. In this department again you have Assorted as a category. This is useless. It accounts for 41.60% of sales and we can’t further assess this. Pens, Pencils and Markers is the next big category at 11.07% of sales. They declined only 5% and this is excellent news. What are you doing there as it is working better than for other products? You should talk to your GNS rep and ask them to conduct a review of your stationery. They could guide you to relay stationery to tell a better retail story.
With non lottery product sales of $300K for the quarter and an average of 3,600 sales transacted each week you have a sound business base. What happens from here is up to you. If this were me I’d be urgently overhauling my approach to key traffic driver categories in the business:Lotto, magazines, stationery and cards. I’d engage with suppliers for help. I’d also develop a series of plans for change in the business to give customers a fresh experience. Once I had that where I wanted it I’d promote the business externally. I can’t stress enough the importance of external promotion of the business.
The best business growth is that achieved over time through a series of small steps: a small bump in traffic, a small bump in the average spend and a small bump in the margin you achieve on the items you price for yourself.
I appreciate you’ve not even been in the business for a year. Since it’s your money invested, the future of the business comes down to you. Get your data right, set your focus on a plan and get cracking on that plan.
Let me know if I can help in any way.
Target is advertising the Robo Fish to $8 toy I wrote about here at the weekend. We sold through all our stock at full price – $15 a unit. While the Target volumes will be higher our achievement is better as it is down to our retail skills rather that falling back on price alone.
I know mass-merchants like Target will continue to discount much of what they sell as this is their only trick. I hope that more suppliers will realise the damage discounting to their brands and that they pull back from mass and focus more on us independent retailers.
Our success at full price with Robo Fish and other brand releases I have written about here is proof of what newsagents can achieve.
Our school holiday promotion of the Top Model range has been working well. This promotion is being run at the counter toward the front of the shop.
We have also placed the Top Model magazine in the display with good success. Indeed, it’s good to get magazine and higher GP sales from the one brand.
Our overall Top Model product sales are also being helped by the free manicure set on offer for purchases over $50.
I love the sign one of our team members created of their own accord to go above the soft toy snakes we have in-store. The sign is different to what you often see drawing attention to products in a newsagency. The red and yellow colour choice cuts through. It also projects a bit of fun and that’s important for things like these snakes that are not a destination for our shoppers.
I am told that the ATO has around two million tax packs printed and ready for use and that they are not using newsagents to distribute these because only between 20% and 25% of those we distributed in the past were submitted as tax returns.
When challenged about the paltry $8 fee we have been paid to distribute 400 postcards, put up a sign and answer customer questions, I am told that this figure was set between the ATO and the magazine distributor, that it was allowed for in a contract between the two parties.
The decision to send out postcards and not the packs was about saving money. The result has been to push onto small business newsagents considerable cost, having us spend our money covering what should be an ATO funded service.
I’d be interested in knowing the fee the magazine distributor got for their part in the ATO tax pack mess.
Based on the questions I know are being asked in my own newsagencies it is clear there remains strong interest in easy taxpayer access to the tax packs. I’d suggest a metric of completed returns versus tax packs in circulation is not ideal since people used the tax packs for more than completing their return.
It is not too late for the ATO to change its mind and distribute the tax packs. My suggestion would be that they distribute a smaller allocation, say 50%. This would provide relief for taxpayers and newsagents. A smaller allocation could be part of a better publicised phase out of paper based tax returns.
The current situation is appalling. It shows how out of touch management at the ATO is when it comes to customer service.
Saving money for the ATO by pushing a significant customer service obligation on to newsagents without fair compensation is disgusting. I’d suggest that the ATO approach on this matter is a breach of their Taxpayers’ Charter a charter that includes:
It is fundamental to the system of self assessment that taxpayers must have sufficient confidence in the collecting authority—confidence that we will provide them with the information they need and that we will act fairly and treat taxpayers according to their individual circumstances. We believe we need to position ourselves in such a way that demonstrates to Australians that we are fair and reasonable and that we treat people according to their individual compliance behaviour.
We have the life-size Ironman cardboard cutout located at the end of our main magazine aisle attracting attention down to our men’s magazines as well as our technology related magazines. You can’t miss Ironman from part way into the store. We have him placed here not only to draw traffic to the rear of the store but also to drive sales of the expanded cardboard cutout range.
Click on the image if you’d like to see a larger version.
While book retailers have their challenges, US book retailer Barnes & Noble have additional challenges as Laura Hazard Owen writes at paidContent.
Writing at Editor & Publisher, John K Hartman, professor of journalism at Central Michigan University, says that frequency reductions for daily newspapers do not work. This is interesting because of the speculation as to what is next for some Australian daily newspapers.
I am sure people in newspaper publishing companies here are looking at what has been tried in the US and elsewhere. Hartman’s assessment would be of interest to them. Some of his comments mirror those of Greg Hywood, Fairfax CEO – that they will continue to publish as long as the numbers work. Right now for most Fairfax titles, the economic model is more a function of the demographic of their typical reader than sheer circulation volume.
My view is that it’s essential for newsagents is for to control when you get out of newspapers rather than someone else deciding this for you.
We have the postcard advising taxpayers how to access the Tax Pack in the location where we would usually have the tax pack available. I am yet to decide how long we leave the postcards here since the $8 we are receiving is not paying for this space. We have to balance the disrespect for us with our desire to serve our customers. suspect it’s newsagent customer service that led to us being ripped off over the Tax Packs.
We’re promoting the latest issue of Prevention magazine with this in-location display as well as a placement of the display unit at the counter. The counter placement will change at the end of the week to a run with weekly magazines. Prevention responds well in our store to off-location support at the counter and elsewhere.
News Limited has announced an across the board increase of 25% for it’s capital city Sunday newspapers except for The Sunday Tasmanian which will experience a 10% price increase.
The price rise takes effect from July 21.
For almost fifteen years newsagents called on News Limited to increase cover prices with no success. It’s only when sales started to seriously decline that the company acted. Now, newsagents are wondering if recent rises, including this one for Sunday titles, are too much. Several newsagents contacted me yesterday saying they expect sales to fall.
Customer responses to recent newspaper price increases suggest that there will be plenty of complaints. As for lost sales – I expect there will be some. I think we are approaching a tipping point, a price point beyond which customers will not pay for a print newspaper.
It’s disappointing that the announcement from News also heralds a decline, albeit small, in newsagent margin.
I have recently been through a Fair Work Ombudsman facilitated mediation for one of my retail businesses and the experience was a reminder of the importance of record keeping.
While I can’t go into the detail of the specific situation, the ultimate resolution of the matter was helped by having access to records not only covering the usual data such as hours worked and pay rates but also other material.
Based on this experience I’d suggest that newsagents keep notes in employee files covering:
It is worth taking the time to keep this information for the one rare time you will need it.
If you are not sure about awards or conditions, call Fair Work – I’ve found their people to be knowledgable and helpful.
Network Services is gearing up to increase split deliveries for more selected high volume titles. However, they will not provide split deliveries to newsagents identified in their XchangeIT data as servicing sub agents. Split deliveries do not work as desired where a newsagent is servicing sub agents.
Newsagents with sub agents need to ensure they are use their newsagency software property for their sub agent situation to be taken into account.
On Saturday I saw another example of how what I call our front-ending loyalty approach benefits us and helps our customers. It’s based on using the Discount Vouchers facility in our software as opposed to the old approach of a VIP, points based, card.
A teenage boy purchased the airfreight edition of Doctor Who magazine for $17.50. This was a destination purchase. From when he entered the shop to returning to the counter with the purchase took no more than 90 seconds. When I gave him the receipt I pointed out the voucher on it offering $1.75 off the next purchase within the next 28 days. As I watched him leave the shop I noticed, mum, dad and another kid waiting for him. He showed them the receipt with the voucher. There was a brief discussion followed by dad coming in with the son. They soon returned to the counter with PC Powerplay Special #2 for $9.20 – after taking off $1.75.
The dad told me they are not regular shoppers in the centre. They stopped in for some suppliers on their way through for a family holiday a couple of hours away. Our front-ending loyalty approach generated an additional purchase for us. Instead of making $4.37 GP on the first magazine, we made $5.36 across two titles. I’d rather do this and have the family talking about what they saved with us than selling just one magazine and not having them talking about us.
Whether newsagents engage with this type of promotion is up to them. I share this story as another example of how this fresh approach to loyalty is working and how it is enabling me to connect with customers in a way that a traditional points based loyalty program cannot.
Footnote: The Discount Vouchers facility is available to anyone using the Tower Systems newsagency software or any software with the same facilities.
Being in a shopping centre presents us with many opportunities during school holidays. The centre fills with kids and families passing time. We make the most of the opportunity by moving stock that will appeal to the changed traffic. One move is the placement of stickers at the front of the newsagency. They attract shoppers and are a terrific and good-value basket builder.
Moves like this help newsagencies drive an above average basket value.
We have been promoting Batman Automobilia partwork launch with this aisle end placement. It’s working well, driving traffic and sales.
What I like about this particular partwork, beyond it being about batman (my favourite superhero) is it’s cross-generational appeal. On Saturday I saw a dad and his son discussing collecting the series together.
We’d been selling the Robo Fish for a few weeks before the TV campaign kicked in. As soon as we knew it was on air we moved the display and added the sign AS SEEN ON TV. Sales took off and I’d say this is because of the TV campaign.
The red sign was to reinforce it, as if to say – yes this what you saw on TV.
We have plenty of products in our newsagencies that are promoted in TV campaigns. Rather than promoting all of them like this, we choose the products with a point of difference, products out of the ordinary that people will remember, like these Robo Fish.
The TV campaign connection works at driving new traffic as well as getting existing shoppers considering the items.
This type of engagements starts with us being aware of what is on TV. Some supplies supply us (thank you!) while for others we need to find out for ourselves.
FYI, we downloaded the AS SEEN ON TV sign from the internet. It’s a common graphic representation of this – something people recognise.
We had these touch gloves in prime position for a few weeks without success. We moved them on and cut the price 25%. If we don’t see a response this week we’ll got to 50% and place them in another location.
We are unemotional about quitting products that are not delivering a required return. We’ve worked this figure out for our business based on our own situation. The numbers guide our actions.
I write this to encourage other newsagents to do the same. Look at your data and act in your best interests.
I see to many newsagents push back on taking this approach for sale or return products. I think sale or return terms make us lazy and suppliers, especially gift and related suppliers, know this and that’s why they offer them.
Retail really is about the numbers. Products not meeting minimum requirements have no place in your shop – the longer you keep them the harder it is for you to meet your numbers. Just abut any computer system can easily identify what’s not selling quickly enough in your newsagency.
Footnote: the touch gloves are a terrific product. They’re just not right for us.
