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

Month: December 2016

More on the changes in the GP mix in Australian newsagencies

Further to my post Friday last week on Changes in the GP% mix in newsagency businesses, I share here analysis I do by GP group. I group products sold in my newsagencies by GP group. Note, these businesses do not have lotteries, tobacco or the usual agency product.

This analysis is for one day last week.

Screen Shot 2016-12-11 at 7.55.16 PMReading across the table, next to each GP band label is the revenue for that band and the percentage of total GP earned by the products in that band.

I find the table useful as it focusses attention on where the business makes its money.

Too often newsagents get caught up with the volume of low margin product. Too often they seek the business of low margin product. yet is is the high margin product that is undoubtedly the most valuable to the business. This very simple spreadsheet reflects that.

Our gross profit mix is changing and has to change more. With rent increasing 5% year on year and labour costs increasing 3% and more each year, the business has to make more. These challenges alone are sufficient to drive us to pursue more efficient products.  Efficiency to me is good GP products, higher end, turning at a sufficiently healthy rate to generate the growth in return for the business that is necessary to be able to stay ahead of the overhead increases.

I don’t do this analysis every day, week or even month. It is like taking a temperature reading. I do it quarterly or thereabouts, to ensure the business is sitting where I expect and at least where it needs to be.

Where there is all sorts of analysis one could do, I have found this simple spreadsheet useful in tracking the transition of the business because forward movement on transition is crucial to what we need to see in our businesses.

This GP band analysis can be done in any type of retail business as GP% is GP%, it does not require an analysis or understanding of specific products.

Change is the key here. We have to chase it every day because if we keep doing what we are doing we will only ever see the results we have seen and for many retailers that is not good.

11 likes
Newsagency management

Lottery marketing tactics in the spotlight in QLD

Screen Shot 2016-12-11 at 7.29.29 PMThe Courier Mail yesterday had this story about concerns regarding free betting offered as part of marketing. This story appears to be a result of agitation by Tatts on the issue – if you read the article.

Lottoland offers free betting as part of its promotional activity too so I suspect they would be in Tatts’ sight on this issue.

This issue should be of interest to newsagents as the migration of gambling dollars away fro traditional and more regulated gambling is serious.

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Lotteries

Do you send Christmas cards?

Talking with a newsagent yesterday they commented they never send Christmas cards, can’t see the point. This was in a discussion about business performance including discussion about falling card sales.

We need to help Australians understand the value of cards. One way we can do this is by personally engaging with the category ourselves, personally. Hence my question about sending Christmas cards.

We ought to show people the value of cards by sending them. Not only at Christmas time but at other times through the year, especially for non traditional occasions – to help Aussie understand how valued receiving a card can be.

Given card sales nationally and in our channel, this should be mission critical for us. It is up to us to pitch cards as an ideal way for expressing ourselves. Christmas is a terrific season for doing this.

10 likes
Greeting Cards

Changes in the GP% mix in newsagency businesses

I have been asked twice in the last month for basket analysis data for different types of newsagencies, to look at how they compare specifically in the percentage mix of products sold – using the basket and other data I have from the newsagency benchmark studies I do.

In each case, the request came from a party undertaking research into the current performance of the newsagency channel, to feed into projections they were developing to plot an expected future of the different types of newsagency businesses.

In my own analysis I group retail newsagencies in to three types. Here is one table of the top level analysis I shared on these three types of businesses:

Screen Shot 2016-12-08 at 10.13.28 PM

The purpose of this table is to show the difference in revenue contribution across key product categories for each of the three groupings of newsagency businesses as I see them.

While these groupings of mine are arbitrary, I have developed them after years of work in this area, looking at data from many newsagencies.

The results are what is happening, not what might happen but what is happening.

The traditional newsagency is the old-school business, the one reliant on papers, magazines, stationery, cards and tobacco. Oh, and probably lotteries in there too. However I did not include lotteries in this table as it is not relevant to the physical product based retail assessment I was looking at.

The transitioning newsagency is the one playing outside of what has been traditional. You will see a reasonable gift department and a retail focus more on seeking out new customers.

The advanced transitioning ‘newsagency’ is a business relying on non traditional newsagency lines for key traffic and selling traditional newsagency lines as the add on. There are not significant numbers of retail businesses in this group, yet. However, this group is rapidly growing.

This table surprises some suppliers, especially old-school newsagency suppliers as their model relies on the traditional and they wonder how to connect with those businesses that have eft the traditional model.

There is now doubt the newsagency channel is undergoing extraordinary change at a rapid pace. The purpose of this post is to share publicly there difference in terms of revenue breakdown percentages between the three broad groups as I define them in the hope it encourages newsagents to see where they sit and to consider further changes they can make.

Change is our friend. We need to embrace it in every part of our businesses, urgently.

11 likes
Newsagency challenges

Brilliant teachers gifts

IMG_1852These teachers gifts that I saw at newsXpress Emerald in Queensland Tuesday show what a bit of thought can create – perfect gifts that will not break the bank and that give a laugh.

Retailers often seek out exclusive products from suppliers. Smart retailers make them for themselves.

I love this product idea.

Kudos to newsXpress Emerald.

 

11 likes
Gifts

Sanity competing in the calendar space

IMG_1853I noticed the calendar pitching a Sanity store in Emerald in Queensland – two calendars for $20.00, a 20% discount off the suggested retail price. While the multi-buy offer is compelling, that it was placed in the back corner of the shop without any supporting collateral left it to be an offer for those who shop the shop rather than driving traffic from front of store placement.

0 likes
Calendars

A warning to newsagents in the News Corp redundancies

The news of redundancies at News Corp. are something for newsagents to consider as they come on the back of an 11% decline in ad revenue in the first quarter of the company’s new reporting year.

The 11% decline in ad revenue matters to newsagents as this is a key figure in determining the value of putting the print product into the marketplace.

Worldwide, ad revenue in print newspapers is down, plummeting according to The Wall Street Journal – they say the global decline is expected to be 8.7% this year.

All of the gloomy data points in these stories and the year on year trajectory of the data points about newspapers tell us that print newspapers will end. The trends are too well established, habits have been changed forever.

Any newsagency business owner relying on newspapers for traffic needs to be fully aware of what is happening on newspapers. They need to factor the reality of the trend into their business plans. They need to know (or should have known more than a year ago) what the business needs to replace the traffic of newspapers.

Take the news of the redundancies this week as a prod to engage on the issue of replacing the newspaper traffic. Ensure you have a plan, and start implementing it. Many have already and for many of them it is going well.

6 likes
Newsagency challenges

Gotch helps newsagents ensure they have the top titles

Screen Shot 2016-12-06 at 5.37.05 PMI love the list from Gotch yesterday listing the top 50 titles. This is a good first step.  Next, I would love the list to be accessible online, by MPA category and segment. Then, I’d like the ability to click to easily order a title. This is how we can expand range and help sell more magazines, especially magazines in the long tail – niche titles that often get lost in the mix. This is what many newsagents want – an easy way to specialise without the risk of a pandora’s box being opened and unwanted titles being sent.

7 likes
magazine distribution

Elf on the Shelf sales flat?

I have seen the Elf on the Shelf product discounted by as much a 30%, which is odd as this item sold well last year through until the week before Christmas.  This year, in shops and online, I am seeing it discounted. This makes me wonder if the route to market change for this year has not worked as expected.

The retailers where I have seen Elf on the Shelf discounted have been more larger businesses where stock is given little time to perform before it is quit.

3 likes
Newsagency management

Superannuation story timely for newsagents

While the superannuation story that exploded Sunday claiming employers are underpaying 2.4m workers was more journalism by press release than genuine reporting, it does bringing focus the obligations of all employers in terms of superannuation.

Newsagents need to ensure they are up to date. They should emerge government resources to save time and red-tape. Yu don;t want to find yourself in trouble from an ATO audit.

Superannuation is not something to ignore. There are legal obligations on what has to be paid and when it has to be paid. Ignorance is no defence.

Like all compliance matters, the rogue behaviour of a minority  tarnish the rest. In our channel, I know of a couple of sold in distressed circumstances, leaving a superannuation debt yet having plenty for an overseas holiday. yet I know of plenty of newsagents who don’t even pay themselves so they can meet all employee and other obligations on time.

Superannuation is now in the spotlight thanks to the reports driven by a super fund on the weekend. Make sure your house is in order.

7 likes
Newsagency management

Confusing newspaper pricing

IMG_1790Maybe to the locals in Manchester in the UK the some days free some days paid approach for the Manchester Evening News makes sense. As a visitor to the Manchester last week I found the free / paid model odd, almost confusing as I recall checking the day of the week to see if it was a free day. They have been doing it for a while so it must work for them.

I think we are beyond a free versus paid model for the print product as the print product itself is the issue. There was time this model was a reasonable stepping stone from paid only. With more options today for direct brand / consumer engagement platforms like a newspaper (in print or digital) are not as important as they were a few years ago.

6 likes
Newspapers

GNS CEO apologises to newsagents

Paul Yardley, the new CEO of GNS wrote to newsagents last week:

Hi everyone,

I am writing to introduce myself as the new CEO of GNS. This is my sixth week in the job and I have been fortunate enough to meet some of you already on my travels around the country. I hope to meet many more of you in time.

Let me start by saying “sorry”. GNS is owned by, and operated for, you – and we have not been doing a very good job. If you’re a customer of ours, our service levels have been poor. If you’re a shareholder, our profitability has been unacceptable. That needs to change, quickly, and I have already taken some important steps to start that change.

The stationery market is under intense and sustained pressure. The trends are clear: overall revenues are fragmenting to a broader retailer base and continuing to decline, margins are under pressure and costs continue to increase. We all must evolve to stay relevant. Each part of the industry needs to examine how (and whether) they create value relevant to the end purchaser of the products we make, import, distribute or retail.

I believe GNS has some real strengths – a large, loyal, interested and passionate customer base; employees with many decades’ experience of the industry; a nationwide distribution capability; and a strong balance sheet. These position us really well for the future.

But GNS has to do better. My priorities for us to do that in the short term are:

• We will refocus on our core promise so that orders are fulfilled on time and in full by eliminating delivery delays and out-of-stocks;
• We will put the customer at the heart of everything we do by listening, acting on feedback and understanding how needs differ, so we can service based on those needs; and
• We will drive out all unnecessary cost, wherever it occurs.

Earlier in November we completed a major refinancing of the business whereby we sold (and leased back) our NSW warehouse, enabling us to substantially reduce our bank debt and re-invest in inventory. That refinancing has put GNS on a financially secure footing and will support our ongoing improvement.

Over a slightly longer horizon, GNS needs to evolve into a highly efficient logistics business fit to support 21st century retailing. That means GNS needs to change substantially from where it is today, where our current operating model owes more to legacy and history than it does to being “fit for purpose”.

What that means is GNS must become a highly efficient, low-cost operator. We have made a simple task (buy, sell and ship stationery) far more complex and costly than it needs to be. So we will look to simplify our business, automate processes, reduce unnecessary costs and eliminate inefficiency in everything we do. And we will reinvest rapidly in the areas that will add to the end customer: great value product, customer-facing functions, and technology.

I do understand that some recent changes have caused angst, for example the closure of Cash & Carry, but I am committed to listening and responding to concerns on these. While hugely necessary to create the DC efficiencies that will allow reinvestment, I will implement ways to have customers access our warehouses periodically and see new product such as regular open evenings, an annual ‘Market Fair’-type event etc.

We have also overdone the centralisation of some functions vs a state-based approach, and we will look to make some changes to this shortly.

I know the industry has many questions for us as we start our transition. Some of those we can answer today but some require more work. To that end, we are undertaking a major review of all parts of our business and I will update you on the outcomes of that in the first quarter of 2017.

This is a critical time for the industry and for GNS, and it’s an exciting time for me to start working here because I believe the opportunities for GNS far outweigh the challenges. With our refinance complete, a refreshed focus and priorities, and renewed commitment to being the wholesale partner of choice for you, I am looking forward to the future.

I wish you very successful trading through the peak period and assure you of our ongoing support.

All the best,

Paul.

7 likes
Newsagency management

Sunday newsagency challenge: get it in writing!

I’d love a dollar for every story I have heard from newsagents about a supplier rep reportedly claiming something their company does not agree to. If a rep makes a claim or offers a promise, write it down and get them to sign and date it. It is amazing the promises, competitor claims and offers that cannot be put in writing … probably because they are not true.

Unless it is in writing, don’t believe it.

11 likes
Management tip

Sunday newsagency management tip: if customers can’t see it they can’t buy it

I know, this seems very basic, so basic in fact that it makes almost no sense to mention it. But mention it I must.

New stock received in your business cannot be purchased unless you take it out of the boxes, receive it into your retail management software, price it and place it on display for customers to see.

This is your job to do. Not a supplier. No, your job.

Do it and the new products you have received may sell.  On the other hand, if you prefer, leave the product in the boxes and complain to the supplier that their product does not sell.

9 likes
Management tip

Sunday newsagency marketing tip: use regular competitions to drive traffic

Competitions are a terrific way of attracting new shoppers to any retail business.

Key factors in the success success of competitions are:

  1. Running them regularly.
  2. Carefully targeting different demographics.
  3. Not overthinking the process.
  4. Not being too hung up on the prize.
  5. Recognising all participants.
  6. Celebrating winners.
  7. Promotion outside the business.

I know of small local retail businesses achieving engagement of 500+ in competitions. They have got there by being consistent and following the points noted above.

The best competitions are those you run yourself for your own business. Show yours is a genuinely local business.

5 likes
marketing

Using wrap to guide traffic

One retail stores I visited yesterday used boxes of roll-wrap to guide traffic on the shop floor.  It worked a treat.  here is how it looked in one part of the business.

IMG_1720

This is a simple idea that can work especially well at Christmas time. A manager in this store said this placement was key to them growing wrap sales away from the wrap section.

4 likes
Newsagency management
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