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

Month: January 2017

Newspaper ad revenue down 11.3%

Newsagents should read the Mediaweek report about newspaper ade revenue. Print ad revenue declines 11.3% in 2016.

Australia’s news media sector has reported $2.28 billion in advertising revenue for calendar year 2016, according to the latest News Media Index with data collated by SMI. It remains the third largest media sector based on advertising revenue.

Digital revenue grew by 9.9%, print declined by 11.3% and newspaper-inserted magazines (NIMs) declined by 9.2%.

Print revenue continues to account for around 80% of total sector ad revenue.

Add this to the unit sales decline we are seeing in newsagencies and you can understand the challenge ahead for any business relying on the sale of print newspapers in their business model.

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Media disruption

Growing your newsagency business

Looking at business performance data as part of the latest newsagency sales benchmark study, I have spent time on the data for one of my own businesses. I shot a video to explain what I saw and describe the growth opportunities I see for newsagents in 2017.

I am exploring some of the themes in this video in new workshops scheduled to start in a couple of weeks: Newsagency of the Future: confronting 2017 and beyond. The first round of the newsagent-only sessions are available:

Access is free. Book online.

Note: while the video is branded newsXpress, the points are relevant to any newsagent.

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Newsagency management

Lottoland marketing differentiates their offer

It is pitches like this from Lottoland that given them a point of difference – you can bet with five Australian lottery games in a week for $1.

This packaging by Lottoland is a point of difference. Lottery retailers have nothing like it. This another reason why newsagents need to be aware of the Lottoland model and how it could change the habits of the regular small lottery punter.

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Lotteries

Coles pitching in the mini cookbook space

Coles is offering a free mini cookbook for purchases over $50.00. The cookbooks look like the mini cookbooks from Bauer.

It’s a smart offer from Coles even if the real value is minimal. Making it a series plays well for people who collect.

My interest is Coles using a magazine as the gift with purchase. There was a time when mini cookbooks had more value than this.

6 likes
magazines

Q4 2016 NEWSAGENCY SALES BENCHMARK RESULTS.

The December 2016 quarter was dreadful for traditional newsagency businesses with challenging declines impacting all key traffic generating categories.

The headlines, however, from the December quarter, are the extraordinary results achieved by some who shared their data:

  1. A third of participating newsagency businesses doubled gift sales in the December 2016 quarter compared to 2015.
  2. The most successful newsagency in gifts did over $100,000 in gift sales the quarter. This is a regional newsagency in a high street situation.
  3. The most successful newsagency in the plush category did over $70,000 in plush revenue in the quarter.
  4. The most successful newsagency in GP shift moved from a business average GP of 29% to 36% in the quarter comparing 2016 with 2015.
  5. One business achieved $10,000 in online sales in the quarter.
  6. The most successful newsagency overall achieved a 24% increase in revenue in the quarter compared to 2015.

These are good stories. There are plenty of them.

So, while the headline numbers below will concern plenty, there is good news to read and good news to create.

For this study, I have looked at data from 171 newsagencies – large and small, city and country, shopping centre and high street and from all Newspower, the various versions of Nextra and newsXpress as well as independent.
Overall, Q4 2016 delivered better results than Q3. Here are the overall results:

  • Customer traffic. 67% of newsagents report average decline of 2.6%.
  • Overall sales. 63% reported an average revenue decline of 3.6%.
  • Basket depth. 65% report a 1.2% decrease in basket size.
  • Basket dollar value. 67% report a decrease in basket value of 2.1%.
  • Discounting. 27% of respondents use a structured loyalty offer such as points or some other discount.

Benchmark results by key departments:

  1. Magazines. 78% report an average decline in unit sales of 11.7%. Previously strong categories such as motoring, food, women’s weeklies, women’s interests and men’s interests led the charge. Crosswords, special interest and crafts are the best performing categories.
  2. Newspapers.  81% report average decline in over the counter unit sales of 11.6%. The numbers in city based businesses are dreadful.
  3. Greeting cards.  52% of report average revenue increase of 2%.
  4. Lotteries. 58% of those with lotteries report average decline of 2% in transactions.
  5. Stationery.  85% of newsagents report a decline, with an average of 2.7%.
  6. Ink.  22% of stores report ink separately. Of these, 51% reported increase of 2%.
  7. Gifts. Of the 72% with gifts, 74% report average growth of 6.9%.
  8. Tobacco. Of the 44% with tobacco, 85% report an average decline of 11%.
  9. Confectionery. Of the 51% with confectionery, 60% report an average decline of 4%.
  10. Toys. Of the 16% with toys, 780% report growth of 6.7%.

Every year on year comparison report I have looked at has its own story. It reflects not only the challenges of small business retail but also the challenges of product categories, local challenges, owner challenges and more. The comparison data is a narrative for the business.

The number of newsagency businesses I see being run as victims of circumstances is concerning for them and for the channel. I am seeing too many traditional newsagencies, still. This has to stop if our channel is to have a future.

The benchmark dataset includes reports from businesses revealing tremendous transformation, reports filled with good news. This good news is not luck or good fortune. No, the good news is a result of business owners acting to pursue this future.

The excuse of our area is down or our street is down does not cut it any more as we have the capacity to easily reach beyond our street or suburb. Thanks to free access to social media and the lower than ever barrier to online sales, newsagents can sell outside their area. The idea of a territory is long gone.

You have to ask yourself daily, what have I done today to reach a new shopper, someone who does not know we exist? This is what successful businesses in the benchmark study are doing and doing well.
It is hard work in retail today and it will get harder. The response has to be practical, it has to come from within the business.

DOES THE NEWSAGENCY CHANNEL HAVE A FUTURE?
While I think the channel as people knew it in the past does not have a future, businesses we identify as newsagencies do have a future. I think engaged marketing groups will drive this as will entrepreneurial newsagents.

The most important change that could immediately help is for magazine publishers to treat newsagents as magazine specialists. They could do this by getting out of supermarkets and elsewhere. This would drive newsagent support in return for the boost in traffic. It would be a win win.

AGENCY IS OVER.
Some years ago there was a hope by some that parcels would save the channel. They have not. They are a fractional service delivering traffic of no value beyond the parcel connection.

My opinion remains – newsagents are better off out of the parcel business just as they are better off out of agency business.

OPTIMISTIC.
I am optimistic for my own newsagency businesses and for the businesses of many newsagents. Thoughtful changes based in business data and implemented with joy can attract new shoppers. The right products can bring people back to the business regularly. New customer bases can be found, valuable customer bases where we rely less on competing with supermarkets and others.

Good retailers can make a bright future.

HOW TO USE THESE RESULTS
Look at your own situation. Compare your year on year results with those detailed here. If you are doing worse, act. If you are doing better, celebrate briefly and then get back to it.

There is no time to lose. We are in a period of extraordinary change and challenge on many fronts and the best way to confront change and challenge is to lean in and bring it on.

The business owners of any newsagency are the single most important influence on their results.

WHY I DO THIS STUDY
My interest in the study is as a newsagent and as a supplier to the channel through Tower Systems and through newsXpress. I want the channel to grow for selfish reasons and because it has been my life since 1981. I am invested.

BENCHMARK GOALS
I am often asked for benchmark goals newsagents ought to aim for. Here are some benchmarks I have developed in my work with newsXpress and through Tower Systems:

  1. Gross profit: this is the goal gross profit for all product sales not taking into account any revenue or costs related to any agency business. The traditional newsagency average sits at 28% to 32%. For a newsagency focused on the future, the goal has to be at least 45%.
  2. Ratio of Gift revenue to Card revenue: 50% minimum. The goal ought to be 100% or more. If you do $100K a year in cards, target to do $100K in gifts, or more.
  3. Revenue per employee – $250 an hour minimum not including agency revenue. This is a contentious KPI. If you think it is not for you, work the numbers back and see what your number needs to be based on each labour hour in the business.
  4. Revenue PSQM $4,500 – $8,500 depending on country vs. city / high street to shopping centre and depending of product mix. Higher GP lower revenue required.
  5. Overall revenue mix percentage targets: Cards: 25%; Gifts/toys/plush: 25%; Stat: 10%; magazines/newspapers: 20%; other: 15%.
  6. FLOORSPACE ALLOCATION: Cards: 25%; Gifts/toys/plush: 25%; Stat: 8%; magazines/newspapers: 15%; other products: 15%; office/back room / counter: 12%. It’s rare you make money from an office or store room.
  7. Mark-up goals: Stationery: 125%; Gifts 110%; plush: 110%.
  8. Occupancy cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Location and situation are a big factor in this benchmark. For example, a large shopping centre business will have a higher cost than a high street situation.
  9. Labour cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Labour cost should include fair market costs for all who work in the business. (See above).

Tower Systems serves in excess of 1,750+ newsagents with best practice newsagency software.

Mark Fletcher
M | 0418 321 338

9 likes
Newsagency benchmark

Sunday newsagency challenge: are you prepared to quit a dead category?

It can be hard to know when to stop doing something that is not providing the return it used to. This is a challenge pertinent to newsagents with several categories in the traditional newsagency business no longer performing at the level needed. The challenge for newsagents is having the guts to cut the category before it hurst the business. Data is your friend. Let the numbers tell you what to do.

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Newsagency challenges

Sunday newsagency management tip: don’t stock brand rip-offs

I am pleased to see more product brands protect their intellectual property by taking on retailers who stock knock-off products.

Most recently I have seen this action against a discount retailer selling fake Beanie Boos. The Rockhampton retailer was selling products at less than half price. This alone should have made people wary.

Check if the product you could soon spot the fake – the branding was sub standard, they face wonky, the trademark bright eyes dull and the product itself felt inferior.

Cheap products are cheap for a reason. A sales rep you have never seen before walking if unannounced and offering ‘brand name’ products cheap you need to ask tough questions. Brands have authorised distributors, check with them.

Selling fake products opens your business to seizure of these products and other action.

10 likes
Ethics

There was a time newspaper publishers used to worry about sell-outs

Newspaper publishers either publish content they value and want to see widely read or they see their product as a big ad catalogue that has to hit its numbers to keep working. The two products are from different eras and are quite different.

In the mid 1990s I had discussions with a senior newspaper publishing executive about early warning of newspaper sell-outs.

In the Tower Systems newsagency software was the ability to forecast when papers would sell out based on sales by 10am. The discussion was abut a data feed to the publisher from newsagents that could trigger replenishment action by 10am so papers could be in-store by 12 noon and the publisher not miss almost certain sales.

Back then, every over the counter newspaper sale was pursued with energy beyond what you could justify based on the financial return from the sale.

Newspaper companies were run by publishers back then.

Today, with the bean counters in charge, the focus is on return on investment. A lost newspaper sale does not have the same value to a bean counter today as it has to a newspaper publisher of old.

The opportunity is on my mind this week as more newsagents report sell outs and the lack of interest in publishers in resolving them. Even some newsagents care less about sell outs today that they did years ago.

The opportunity to predict sell outs remains, the will to bring the project to life does not.

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Newspapers

Terrific Baker’s Delight back to school promotion

I love the creative for the BTS promotion in Baker’s Delight stores. In addition to the on-screen promotions there was a banner at the back of the counter and a pitch at the front of the counter. All visuals were consistent. This visual consistency is important in driving shopper engagement.

Their use of colour pencils was smart as it provided an appealing base for the marketing collateral. I also love the cheerful headline for the collateral.

Well done Baker’s Delight!

3 likes
marketing

Governments need to address business price quoting just as they are addressing housing under quoting

Under quoting by real estate agents is an issue that gets plenty of medial and politician attention, especially in Victoria and New South wales where auctions appear to be more popular. In Victoria recently  one agent was fined and more are heading to court.

In our channel, the problem is the misrepresentation of the performance of the business. This is done several ways:

  1. The misstatement of the profit of the business by providing a blended P&L and not the P&L the business actually operates under.
  2. The valuation of stock as if it is all current when, too often, plenty of the stock sold with the business is not current.
  3. The value of business assets such as the computer system where they have no value because they have not been maintained or because the data is useless. Useless data = no business value.
  4. The misstatement of revenue because of manipulation to minimise tax.
  5. The misstatement of actual business costs because of poor records for owner time required in the business.

Some brokers are dreadful at preparing a business for sale and providing prospective purchasers with accurate and reliable data on which to make their decision. this can see people coming into the business unprepared and based on data that is completely wrong.

I have had two calls this week from people looking to buy newsagencies in Victoria and in each case the broker has not done their job in preparing the business. For example, they have a value for the computer system, considering it and the data an assist. In each case, the data in the computer system is useless, there is no stock on hand value, no tracking of each item sold and no compliance with industry data standards. A quick check by the lazy broker could have discovered this and counselled the newsagent to sort the data out to make the business more appealing.

People looking at buying a newsagency need to be fierce. They need to ask the tough questions, demand proof and only proceed when they are completely satisfied.

People selling their newsagency need to prepare the business, make it appealing,e sure all data is accurate and clean house so the sale is easy … otherwise, people like me, when asked for an opinion, say don’t do it, not this time.

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buying a newsagency

The Roald Dahl promotion with News Corp titles

News Corp has been sloppy in organising the Roald Dahl promotion that launches in ten-day. Rather than give the newsagency software companies a head’s up so they could provide timely advice, They told newsagents and left it for them to tell the software companies. Poor form News Corp.

I am surprised by the different communication. Click here for the NSW notice.  Click here for the VIC notice. The difference in style is considerable. Why the company feels this is necessary is beyond me.

Dahl’s appeal notwithstanding, for the margin we make I am not a fan of these promotions. It is time for a fresh approach.

14 likes
Newspapers

Success with Pokemon plush in the newsagency

This is a terrific result, $1000 of Pokémon plush in a few weeks in the newsagency. Good margin, new traffic thanks to out of store marketing, nice impulse purchases from existing shoppers and an efficient return on floor space thanks to the small formal floor unit.

This is a win for a product you’d not find in a traditional newsagency.

7 likes
Newsagency opportunities

Will the AFL women’s league help drive sales?

Today’s Inside Football  features a cover story about the imminent launch of the AFL women’s league. This gives is an opportunity to gauge interest in the women’s league. In AFL crazy Melbourne it’s good to have the opportunity to reach a wider audience with AFL product. We are pitching the magazine with newspapers to drive impulse opportunities.

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magazines

When will Fairfax stop publishing The Age, SMH and AFR daily?

News Corp. continues its obsession with Fairfax by speculating in the The Australian about Fairfax plans to stop printing weekday newspapers.

My feeling is News is actively watching this as a Fairfax announcement would make it easier for News to make its own announcement.

The question for newsagents is: are you ready? This will happen, newspapers you sell today will stop being printed, are you ready?

FYI, I am on the record from last year saying I expect the changes to start this year. I expect that The Age, The Sydney Morning Herald and The Australian Financial Review will cease daily publication. Based on circulation numbers, the cost of print distribution and the continuing evolution in how we access and consume news, the print newspaper is redundant for today’s marketplace.

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Newspapers

The Reject Shop ups the ante on cards

The Reject Shop two doors away from the newsagency has started pitching cards on the lease line including these 75 cent cards. While colleagues tell me they have seen cards at this price before, I don’t recall seeing them. I can’t recall, either, seeing a strong pitch for cards on the lease line at The Reject Shop. While their shopper is not ur shopper, I look at the price and think how low will they go?

As for the cards, they are what I expect for the price, cheap, flimsy and clip-art graphics. However, they would only have them if they sell.

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Greeting Cards

ALNA facilitates meeting between WA Premier and newsagents on Lotterywest refit costs and challenges

On February 1, 2017, Western Australian newsagents have an opportunity to meet with West Australian Premier Colin Barnett at a forum to discuss growing converse about the growing costs associated with the new corporate image Lotterywest requires agents to install.

This is an important meeting that every WA newsagent who sells lotteries should attend.

Click here to see the letter from ALNA to the Premier.

Click here to see the notice for the ALNA facilitated meeting.

The core issues are the cost of the refit and the lack of economic justification for the refit. When I first saw the proposed refit in September 2015, the anticipated costs were significantly less than is the case today. On today’s numbers, it is possible small business newsagents will not achieve a reasonable return on the capital expenditure. This is not how it was meant to be.

I support the ALNA work in this area and I urge all newsagency marketing groups, newsagency software companies and other groupings of newsagents to support it. In my own newsXpress group we have shared the details of the ALNA work, with ALNA permission, and encouraged WA newsXpress members to attend this meeting. While I will be overseas, my fellow newsXpress director will be attending the forum with the WA Premier.

If you are a newsagent in Western Australia and have completed the Lotterywest refit, you may have business performance data that could be useful to the ALNA work in this area. I urge you to make contact with Ben Kearney from ALNA on ben@alna.net.au to discuss the impact of the refit in your business.

This issue feeds into the Tatts refit issue as the challenges are the same. tatts is requiring small business newsagents to undertake a considerable level of capital expenditure without reasonable financial justification for the capital expenditure. While I am not a lawyer, I suspect the ACCC may have a view about the moves by Lotterywest and Tatts.

With lottery purchases moving online at a considerable rate, it is appropriate to question the level of capital expenditure being required by Lotterywest and Tatts. Required expenditure has to be fair, justified and appropriate to the expected market conditions and trends over the period of which the capital expenditure is expected to financial perform for the business.

18 likes
Ethics

Associations and newspaper publishers

VANA is promoting what appears to be a series of News Corp. newsagent promotion event. I think associations need to be associations and not marketing arms for newspaper publishers. Also, this latest marketing from VANA indicates a visual disconnect from the national association, ALNA, with a very different looking logo.

5 likes
Newsagent representation

Kids magazines in Coles

Publishers should check out how the kids magazine area looked at a Melbourne inner city Coles supermarket on the weekend.

And if the excuse is it was there weekend that is no excuse. Any retail business that is open has an obligation to present products in the best possible way. My experience with Coles and magazines is they don’t care themselves.

6 likes
magazines
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