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

Month: May 2017

Sunday newsagency marketing tip: be smart with photos

Next time you the a product photo that you plan to use in marketing, make sure it is the best photo it can be.

My advice is to put more than one product in a photo.

Pose the items so they tell a story beyond the products themselves.

Have fun.

Don’t overthink the photo as any social media content is scrolled past in a second or two, unless you are lucky.

In the example here I have a unicorn gift items in front of  frame. I felt the two worked well together, playing off each other.

8 likes
marketing

The suburban newsagency card department

This post is an update on the high street location business we opened a week ago. This is a business we purchased from the administrator of a failing specialty card and gift business. The business has been opened with minimal capex. Indeed, the only capex has been for signage.

In the middle of the shop we stuck with the existing card fixtures for the next few months while we learned about the local shoppers and what they like. The reaction in the first week has been terrific.

We took off some gift shelving that was on the top of the card unit, to create better across the shop sight lines.

Here is what the card department looks like with around 1,200 pockets filled:

6 likes
Greeting Cards

Promoting the WIN A CAR! competition to drive magazine sales

I urge newsagents to serve this coupon on POS software receipts during the WIN A CAR! promotion from Pacific Magazines. Every touch point you can offer for a promotion like this is valuable. Shopper receipts are an ideal way to reach existing shoppers.

Out of store, use the collateral from Pacific. I have used the art below on Facebook from Thursday morning this week to reach people:

The more touchpoints the better for this newsagent-only campaign.

In my own situation these touchpoints include social media, at the entrance to the business, at the weekly magazine display, on receipts and at the counter.

Experience with past campaigns like this one is that the greater the engagement the greater the sales uplift. That greater engagement is on each of us in retail. pacific has provided the collateral. All we need do is use it.

To those preparing to comment here and complain about poor magazine margin and that you have better things to promote – don’t comment. Instead, engage with this proven promotion and leverage incremental business. The alternative is you chase magazines out of your shop. There is no win from that.

4 likes
marketing

Have I wasted my money on a subscription to The Age?

In February this year, in support of professional journalism, I subscribes to the Washington Post, the New York Times and The Age. I wrote about it here and here.

In the wake of the news Wednesday that Fairfax is cutting editorial staff by 25%, I wonder if the subscription for The Age is a good move. I signed on as a subscriber to support quality independent journalism. I feel dudded. Fairfax titles already struggle because of limited journalist resources. The 25% cut will hit hard.

What is a trusted newspaper if it does not have journalists creating the product at the core of the business? As Mark Day wrote in The Australian yesterday:

Fairfax says it intends to use more contributors to fill its column­s, but it intends to pay them less. It is a recipe for disaster, for if a publishing company cannot­ offer journalistic quality, it has nothing to offer. You can’t keep cutting the core of the business because, soon, there will be no business left.

I get it that Fairfax is in a tough situation. All print media is. My outsider view is that the company should have sought savings by cutting print editions. I expect they are losing money on print at least four days a week. I say that thinking of how thin the papers are some days. It is embarrassing what we charge for what feels like a pamphlet more so than a newspaper.

My thinking is: cut the weekday editions, produce beautiful bumper weekend editions and make money off of print and drive the migration to digital for weekday. Maybe would keep a Wednesday edition but certainly not Monday, Tuesday and Thursday. Make Friday a Friday / Saturday newspaper.

Cutting loss making print editions should mean the company is better resourced to create the journalism that is its differentiator. Or am I missing something here?

The other move I’d make is to deliver a digital experience that is best-practice. Currently from fair fax it is far from best practice. As a subscriber to the Washington Post I am enjoying a terrific online news experience that also provides access to quality journalism. The digital experience itself is key, especially on a pone as I suspect the majority of news site accesses are from a phone or mobile device.

The Washington Post tech and design team have produced a platform that makes me happy to pay for access, for the experience. Their investment in quality journalism reminds me my subscription is a good investment. This is what Fairfax needs to provide. Right now, their online experience gives me too much clickbait and a browsing experience that is not ideal for the iPhone.

Cutting editorial staff at Fairfax right now does not make sense to me, not this round. Hopefully, we see The Guardian, BuzzFeed, HuffPost in Australia and others fill the gap with quality journalism as Fairfax management appears disinterested their core differentiator.

Footnote: I am serious is asking the question. It is what I first thought when I heard the news of Fairfax cutting 25% of editorial staff.

7 likes
newspaper masthead desecration

Newsagency benchmark results: Q1 2017

The March quarter was patchy for retail newsagency performance. While the overall channel performance was flat, plenty peaked and plenty troughed.

It is dangerous to look at the overall and take that as the performance metric for the channel. It is not, as many individual newsagents know.

Here are the headlines from the latest benchmark study:

  1. Gifts are the fastest growing product category. However, there is disagreement about what to call gifts with some putting toys in gifts while others run a separate toy department. Most newsagents with gifts reported double digit growth. The businesses with weaker gift sales are those with the more traditional, old-school newsagency, gift offering.
  2. Of the third of businesses with a separate toy department, year on year toy revenue is up close to double digits.
  3. Cards performed reasonably well with 2.8% growth in the quarter with everyday accounting for a strong proportion of the growth.
  4. Stationery was soft with a 1% increase in revenue.
  5. Books are making a resurgence with a third of participating stores showing a separate book department and this achieving close to double digit growth.
  6. Newspaper unit sales fell 10%.
  7. Magazine unit sales declined 9.5%.
  8. 45% of businesses have overall GP in the old-school band of 28% to 32%, 35% sit in the 30% to 35% band while only 20% run with GP above 35%. Those businesses, with GP at 35% or above, are the ones with a bright future as it is only them with the capacity to hope to weather annual labour and rent increases.

For this latest study, I have looked at data from 167 newsagencies – large and small, city and country, shopping centre and high street: Newspower, the various versions of Nextra and newsXpress as well as independent.

Overall, Q1 2017 delivered better results than Q3. Here are the overall results:

  • Customer traffic. 70% of newsagents report average decline of 1.8%.
  • Overall sales. 55% reported an average revenue decline of 3.0%.
  • Basket depth. 60% report a 1.5% decrease in basket size.
  • Basket dollar value. 65% report a decrease in basket value of 2%.

Some look at these and other data points to see how they compare and are relieved if they are not in the worst group. This is a mistake in my view.

The best way to use the benchmark results is to understand industry trends. For example, if your gifts are not growing by double digits and gift revenue is not more than card revenue then you have a problem. If you are not in toys enough to have a separate department and are not achieving growth in toys then you have a problem.

What does success look like? This is an important question as there are newsagents contemplating there is no upside, nothing worth fighting on for. I disagree. There is plenty of upside, for those prepared to create it for themselves.

I think any newsagency business can be successful, regardless of location and situation. This is more true today than at any time in the past thanks to what we can see being achieved online – not only in newsagency businesses but through other retail channels.

For a glimpse of success, take a look at these data points for one newsagency for which I have seen performance data:

  • Number of sales: up 5%
  • Average sale value: up 16%
  • Average item value: up 16%
  • Average items per transaction: up 3%
  • Overall revenue: up 21%.
  • Overall business GP: 40% (no lotteries or agency business).
  • Cards: revenue up 19% and accounts for 23.8% of overall revenue.
  • Magazines: unit sales down 2% but weeklies up 3% and overall revenue contribution is only 18%.
  • Gifts: revenue up 100% and account for 35% of all revenue.

Now, before you dismiss this as being an exception. This business is long established, in a highly competitive situation. It is debt free. What sets it apart is that every decision is made based on data, not gut, not emotion, but data. The business regularly promotes outside the business and in a way that is not common for a newsagency. In-store, this does not look like an average newsagency.

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.

I urge you 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.

DOES THE NEWSAGENCY CHANNEL HAVE A FUTURE?

Yes! Absolutely. If you are prepared to shrug off what has been traditional for a newsagency business, stop hoarding, embrace change and embrace social media – you can have a bright future. The transformation from traditional to the new world has to be urgent and dramatic.

AGENCY IS OVER.

My opinion remains – there is no upside in any agency parts of the business.

OPTIMISTIC.

I am optimistic for my own newsagency businesses and for the businesses of many newsagents. Indeed I have opened a new outlet in the last couple of weeks.

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.

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).

Mark Fletcher.

Email: mark@towersystems.com.au  Website: www.towersystems.com.au  Blog: www.newsagencyblog.com.au

M | 0418 321 338

9 likes
Newsagency benchmark

Local prizes help drive seasonal sales in the newsagency

I have written here before abut the value of local prizes for driving shopper traffic. This is especially true at seasonal times, such as Mother’s Day. The right local prize can generate net new traffic when it is actively promoted outside the business.

We are promoting this beautiful T2 gift pack knowing that one of our customers will win a pack, as each participating store has their own T2 prize pack to give away to one lucky shopper of Hallmark Mother’s Day cards.

While a more valuable national prize may have a headline appeal, I have found it is easier to sell this prize will be done by one of our customers. That pitch is made even easier when the prize pack is perfectly targeted for a season  like this T2 prize pack.

The T2 pack also works as it fits well with our everyday female gift line. It compliments what we offer, making the message of the prize pack valuable beyond the season.

The newsXpress exclusive T2 Mother’s Day prize pack is part of the Hallmark / newsXpress relationship.

The total campaign has a value of in excess of $50,000. I suspect this is the most valuable Mother’s Day campaign in the newsagency channel inn 2017.

8 likes
marketing

Plug and play magazine fixtures

I like this wall of magazines I saw in Hong Kong – for the volume of stock it can hold, the ease of change and the way it displays each title – with plenty ty of the cover on show. Use similar fixtures except my pockets a a bit deeper – eliminating the need to waterfall most titles.

3 likes
magazines

The importance of exclusive products for small business retailers

Having access to exclusive products is key to differentiation for any business. In the supermarkets they use home brands to achieve this while major toy, homewares and gift businesses buy in bulk products exclusive to their banner.

Typo is a good example of an exclusive focussed business. Almost all of what they sell in Typo brand. While you can get similar elsewhere, for Typo the products are tweaked in a way to make then a genuine exclusive.

Exclusivity means price comparison is harder. It also means you can play with your offers in a way that benefits your margin. Take a careful look at Typo and you will see how they do this.

Kikki.k is another store that sells its own products – for all the reasons noted above.

I have been in Hong Kong at the gift fair this weekend, looking at products for newsXpress. At this fair, talking with buyers from major retail groups, the value of exclusivity was reinforced in a brutal way.

On one stand a small business retailer with six shops was looking at a new hot product at the same time a buyer was from a national retailer from the same country. The national retailer buyer was able to commit to purchasing one hundred times the small business retailer could commit to. In return, the buyer sought, and was given, exclusivity.

In this world of borderless retail, having products that no one else has is important. The best way to achieve this is to be as close as possible to the source of the products.

This is a big challenge for retailers who buy by themselves from everyday wholesalers.

It is also a big challenge for banner groups that don’t attend the international trade shows to access new products before their usual local wholesalers have the products in their catalogues.

Exclusivity can be accessed in a number of ways. The best approach depends on the product line and the supplier attitude to exclusivity. I have seen it work well in a range of categories, where exclusive products have been key in driving net new traffic for the the engaged retailers.

Getting the exclusive product is the start, next comes the in-store pitch, out of store marketing and commitment of all involved to make it work.

5 likes
Newsagency management
Trending Articles

Fairfax changes approach to TV Guide, disrespects newsagents

Published on April 20, 2011

What do you think of the Powerball changes?

Published on February 16, 2018

IPS releases new magazine contracts

Published on June 21, 2011