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

Month: April 2020

FFS! News Corp. puts papers in 100 Chemist Warehouse outlets

News Corp has announced that it is putting its papers into 100 Chemist Warehouse shops. Here is their media release.

News Corp Australia and Chemist Warehouse have joined forces to make trusted newspapers available to customers during the coronavirus pandemic.

From this week, 100 Chemist Warehouse stores across New South Wales, Victoria, Queensland and South Australia will become a point of sale for News Corp’s metro mastheads, The Daily Telegraph, Herald Sun, The Courier Mail and The Advertiser.

Pharmacies as well as news brands have both seen consumer demand surge in the past two months, as Australians stock up on wellbeing products and turn to trusted sources for information and analysis on the crisis.

Lou Barrett, managing director of national sales for News Corp Australia said: “We’re always looking for new ways to assist our clients and their customers and given we’ve seen a spike in audience demand for our products, it makes perfect sense to have them available for sale in Chemist Warehouse stores.”

Lia Heim, group marketing manager at Chemist Warehouse said: “As an essential service ourselves, the ability to provide our customers with another essential service within our stores, that being trusted newspapers, means that shoppers can minimise their travel within the local community whilst remaining updated and informed.”

The initiative will operate on a trial basis until July and, pending the result, may be extended to 400 stores nationwide.

Newsagents are wondering is the News Corp move to sell papers through Chemist Warehouse is a move by the company to break away from these local family businesses. It certainly looks that way. That said, I suspect them move is News Corp. working with a valuable, long-term, advertising partner.

Given the Chemist Warehouse model, look for free papers to be offered when shoppers spend above a certain amount, like News Corp regularly runs in supermarkets. These campaigns hurt local newsagency over the counter sales.

Regardless of the reason, the News Corp decision will hurt small business newsagents emotionally and, possibly, financially, and this is bad news for the channel.

What do I think? I think this move sucks. There is nothing good about it for newsagents. The move by News is socially irresponsible right now.

Our channel has been a good and faithful servant of News Corp for decades. Putting up with cuts to margin and watching as they preference supermarkets with sweet deals.

It seems to me that News Corp. does not care for our channel.

8 likes
Ethics

Some retailers closing stores for online

Just about every day we  read stories of retailers retreating from physical stores to online as a result of a seismic shift in online purchases. The Nine papers yesterday reported such a move by Accent Group.

Shares in major footwear retailer Accent Group soared 20 per cent after it announced plans to shut stores and shift major parts of its business online as part of a full re-evaluation of its 522-strong store network.

The ASX-listed operator of brands such as Platypus, Athlete’s Foot and Hype DC told investors on Monday it had witnessed a “seismic” shift towards online spending after stores were shut during the coronavirus-induced lockdown.

Digital sales have jumped from an average of $250,000 per day in early March to as much as $1.1 million per day during the last two weeks of April, a surge chief executive Daniel Agostinelli said was likely to persist.

“It is clear that there has been a seismic and most likely enduring shift in consumer behaviour away from traditional shopping centres to shopping online,” he said.

Plenty of newsagents are making the move. I see it through my POS software company, which develops websites for retailers too. I also see it through my work with newsXpress and the well-established integrated web strategy it has with and for its member retailers.

The current lockdown has educated shoppers about many things, including shopping online. Previous age barriers have been broken through as have barriers as to what people would actually buy online.

Being nimble is key now, nimble for the next few months and especially nimble about what is likely to follow this period.

We are in a period of change upon change upon change, and through all this there is opportunity, as businesses like Accent Group are leveraging.

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Newsagency management

GOOD NEWS: Small business landlords support small business

Here are examples of small business landlords supporting small business retailers, including newsagents, with rent relief.

  1. 2 months rent free, April and May, without being asked.
  2. 1 month rent free and 50% off for May and June, without being asked.
  3. 75% off for six months, after one request for help.
  4. 50% off for 3 months, after one request.
  5. A 100% credit for March, 50% off April and 25% off May, after one request.
  6. 50% off for 3 months, after one request.
  7. 2 months rent free, after visiting the shop a week ago and seeing it and the street empty.
  8. No rent increase, which was due as per the lease from May, and a discount of 33% for the next for months, after one request.
  9. 25% off for April, with no request, and then 50% off for the next 3 months after being given the revenue figures for the business.
  10. 2 months rent free, 2 months half price and 2 months 25% off, after one request and a phone call to discuss.

In each case, the landlords and tenants have acted respectfully and cooperatively. Indeed, most landlords have gone beyond what has been sought through the mandatory national code as put in place by the national cabinet.

This is great news.

Well done small business landlords. They have come through for small business retailers in timely and genuinely helpful ways.

The 10 stories above are only some I have heard of. They are representative though. There are small business high street retailers happy today to have the landlord they have, appreciating their support and the relief it provides.

Many landlords of small business retail tenancies are small business owners themselves with only 1, 2 or a few commercial properties in their portfolio. Many acted before state or territory governments moved on taxes and other costs. This is small business helping small business.

We talk about heroes these days, the health front line team members, cleaners, teachers, drivers and others keeping the economy running. I’d attach that label to the landlords who are supporting small business retailers, especially those in essential businesses. The landlord actions through rent reductions and other help is wonderful to see, and appreciated.

There are wonderful people in Australia who are helping in everyday ways, often beyond their capacity.  Some of these small business landlords are in that group. Thank you!

7 likes
Ethics

COSBOA: The big landlord problem is now obvious for all to see – small businesses need intervention

The Council of Small Business Organisations of Australia, of which ALNA is an active member, is lobbying on behalf of small business retailers. Here is their complete release on this, a release that draws on an earlier release from ALNA:

The big landlord problem is now obvious for all to see – small businesses need intervention

COSBOA calls upon the biggest landlords in Australia to set an example of responsible behaviour in a time of crisis, and to start acting in good faith with the proposed Mandatory Commercial Tenancy Code (“the Code”). Some landlords are doing the right thing, but many, including the largest ones, are still unwilling to share the financial impact of social distancing.

Peter Strong, CEO of COSBOA, stated “The COVID-19 issues for small business are many, as they are for everyone. We recognise that thanks to strong leadership, federal and state/territory governments have flattened the COVID-19 curve. A consequence of this, however, has been an extraordinary drop in our retail foot traffic. This is not the fault of tenants or their landlords, but one of the most pressing issues is getting landlords to engage genuinely and effectively with their small business tenants to fairly relieve their rent burden when they have few or no customers. As we work hard on the other big issue, employment, through the JobKeeper program, we have to also deal with the immediate challenge around rent and retail leasing. A business cannot use JobKeeper if it is bankrupted, or will be, by a landlord.”

COSBOA sees the best solution now is for the states to legislate that all retail tenants who are eligible under The Code and who are the most vulnerable, like businesses with less than $2 million turnover, have an immediate three-month waiver for April to June on rent, with support from government to share this cost with landlords.

This will clear the decks with immediate support and we won’t lose businesses unnecessarily. It can be followed by good faith negotiations under the code. Mediation can occur if it is required, as is the intent of the Code.

Mr Strong added “the fact is that payment of rent is not possible for a large proportion of small businesses in malls and the current behaviour of the landlords will create tens of thousands of bankrupt businesses. The development of the JobKeeper program would be meaningless if a business was bankrupt and the owner of the business was in deep despair. However, landlords overwhelmingly seem to fail to understand we are in a crisis.”

COSBOA understands this is not a federal issue as the states are responsible for legislating the leasing regulations required for the proposed Code now.

Mr Strong also added “we see the West Australian Government have led the way with yesterday’s announcement of $100 million in land tax relief grants available for commercial landlords who waive rent for 3-months for small business tenants who have suffered a 30 per cent drop in turnover due to the impact of COVID-19.

Where the federal government can help is to bring forward changes to sensibly increase the thresholds for Unfair Contract Terms (UCT). This will provide fairness for small business tenants from aggressive contracts and leases. It must be acknowledged that the Prime Minister and the Treasurer have confronted this problem, and they have probably discovered what we in small business have known for decades: that the biggest landlords are not the most constructive, contributing members of our society.”

Many businesses need outcomes now or at least in the next few weeks, not the next few months. Unfortunately, we do not see this happening. There is also the recent intervention of the ACCC which has given many landlords the ability to share information about their tenants. This has provided those landlords the opportunity to legally connive and then take similar ‘actions’ with tenants. These landlords appear to be using the authorisation and The Code (even though it is not legislated yet) to co-ordinate and provide a protective mechanism for themselves while complicating and deferring outcomes for tenants.

Some of these landlords are asking for extensive information from tenants far in excess of what is required under The Code. This includes in many cases requests for P&Ls and balance sheets, not just disclosure of revenue impacts. They are also asking the retailer to demonstrate they have used all state and federal small business support packages first as well as bank assistance before they will consider any request. The landlords are creating significant additional and needless expenses for their tenants. These requests are time consuming, delay outcomes and require information which they really have no right to require (other than revenue impacts), and are not consistent with The Code or acting in good faith.

Mr Strong further added, “Bizarrely, some of the biggest landlords are asking tenants to predict their turnover for the next twelve months. This shows the landlords are not capable of forward planning yet expect small business people to do that planning for them. The federal government has deferred its own budget until November as it knows it cannot yet predict the future with any certainty, but the landlords expect small business people, under extreme personal stress, to produce a plan for the next twelve months. It is obvious that the authorisation landlords have been given by the ACCC should now be rescinded, and they must stop opportunistically asking for information that they do not need and that may harm these tenants in the long run.”

Note: The business folk and the employees who will be affected come from cafes, restaurants, newsagents, shoe stores, clothing shops, lottery agents and hairdressers among others and they need government help and good faith from their landlords to address this.

3 likes
retail leases

It’s time for all newsagents and their suppliers to engage with the 3 months rent free campaign

I urge newsagents and their suppliers to send this, or their own version of this, to politicians to drive maximum interest in a 3 months rent free campaign, to achieve for others what was achieved yesterday in WA. Here is the suggested text:

I am a small business retailer and retailers like me need your help. Thanks to strong leadership, federal and state / territory governments have flattened the COVID-19 curve. A consequence has been an extraordinary drop in retail foot traffic.

While we appreciate the 25% rent waiver we can negotiate with our landlord thanks to the mandatory code, it will not help. There are retailers like us who can’t cover wages let alone the 75% of usual rent. JobKeeper helps employees, not in paying rent.

We urge you to advocate for an immediate 3 month waiver of all rent, funded by government. Without this we think many independent local shops will close, families will lose their homes and demands on Centrelink dramatically increase.

This is urgent. Please help. Small businesses need you.

Here are email addresses you could use in addition to other state and federal politician email addresses you find – especially state leaders in your area.

senator.cormann@aph.gov.au
senator.cash@aph.gov.au
josh.frydenberg.mp@aph.gov.au
attorney@ag.gov.au
Christian.Porter.MP@aph.gov.au
department@treasury.gov.au
Peter.Dutton.MP@aph.gov.au
Karen.Andrews.MP@aph.gov.au
Chris.Bowen.MP@aph.gov.au
jim.chalmers.mp@aph.gov.au
mark.dreyfus.mp@aph.gov.au
senator.katy.gallagher@aph.gov.au
Brendan.O’Connor.MP@aph.gov.au

For the Prime Minister, use a feedback form on his website.

The more newsagents and their suppliers engage with this campaign the better.

I emailed 1,700 newsagents about this yesterday morning. I have also engaged with newsXpress members about this and they have been engaging with politicians, sending the email far and wide.

This is an important lobbying campaign by our channel. Even if your business is not down in revenue, you have colleagues who are and they need your support. The email have been written with that in mind.

17 likes
newsagency of the future

A retail tenancy win for small business in WA

Great news out of WA tonight with the state government announcing 3 months rent free for SMEs that have experiences a 30% decline in turnover. It is backdated to start from March 1, 2020. The government is providing landlords terrific financial support if they waive rent for 3 months for SMEs. The landlords have an excellent incentive because of this.

This is an excellent result from the WA government, a government that continues to deliver terrific results for small business retailers.

NOTE: the 3 months rent free is exactly what ALNA and all the newsagency marketing groups have been agitating for and suggested members write to politicians about.

3 likes
Ethics

Zoom workshop: winning sales online

I’m hosting two workshops, today and tomorrow at 10am, at which I will share examples of selling online.

We will research some of your competitors, popular keywords and more as part of understanding what selling online could look like. This will be a live research opportunity designed to give you insights you can leverage if you are planning a website for your business.

Come armed with questions and details of your competitors you’d like us to stalk.

2 sessions: Apr 23, and 24 2020 10:00 AM Melbourne time.
https://zoom.us/j/96727738375?pwd=ZUprQzJKRDAxL3Z2YXNWTE80c2ZOQT09
Meeting ID: 967 2773 8375 Password: 004633

Everyone is welcome. There will be retailers from several channels there – it will not be newsagency specific.

2 likes
Newsagency management

If you are selling face masks or hand sanitiser…

If you are selling face masks or hand sanitiser, my suggestions are that you ensure product quality and that you charge a price reflective of public service.

Basic face masks at $5.50 each and 60ml of hand sanitiser for $12.99, which was available in one newsagency yesterday, reflect price gouging given that the masks can be bought wholesale for under a dollar and 60ml of hand sanitiser for $2.50.

Price gouging is a bad look for the retailer and the channel of which they are part.

9 likes
Ethics

SME retailers can’t carry the extraordinary cost of government COVID-19 decisions

Small business retailers have been left to carry an unfair burden through COVID-19.

The rent relief offered by the national cabinet’s mandatory code of conduct is too little, too late. I suspect it will send many small business retailers to the wall.

We need an urgent federal government funding of 100% of rent for 3 months. Otherwise, the economic impact will be devastating.

I say this based on how landlords are reacting and based on the experiences of several retailers as put to me. Here is one example I heard of yesterday. While the numbers change between stories, the situation itself does not change.

One shop in a major centre in NSW is down 75%. Revenue is $25,000 a week with a GP of 15% given the product mix, plenty of the revenue is lotteries. That is a GP of $3,750.00.

Wages sit at net $500 a week after you allow for JobKeeper. Rent for the business is $8,750.00 a week and the landlord has made it clear they will waive no more than $2,187.50 of that. The landlord has also required this retailer provide certified management accounts 2 years of P&Ls, tax returns, certified current revenue data, a personal assets and liabilities list and details of all grants and other COVID-19 related benefits tapped into by the business and its owner.

The business has a deficit of $3,312.50.

The business has an overdraft maced at $200,000. Their bank is reluctant to lend more as there are no assets to back this.

The owners have three maxed out credit cards and $10,000.00 in the bank.

Their latest BAS will release some welcome funds. However, the amount buys a week or two, no more.

This is a good business, which usually sold plenty of unique, high-margin, items. Through no fault of the owners, foot traffic has collapsed, leaving only low margin traffic visiting and even that is declining further this week.

With governments pumping truckloads of cash into private hospitals, media outlets, airlines and other businesses impacted, they are yet to pump any cash directly into retail. The mandatory code of conduct sees some state / territory tax waivers flow, but not much.

Only an immediate payment of 100% of rent for 3 months buys the time needed to understand the complexity of the situation. Without it, businesses like the example above will collapse, impacting not only the owners but all who rely on the business.

There is urgent concern among SME retailers that politicians do not understand the critical situation they face.

2 likes
Ethics

Landlords demand secrecy from SME tenants as they continue to push back on the MANDATORY CODE OF CONDUCT SME COMMERCIAL LEASING PRINCIPLES DURING COVID-19

Small business retailers can’t take a break in dealing with landlords over the collapse of retail traffic in shopping centres. Yesterday, several retailers told me that in addition to demands for extraordinary business and personal financial data, the landlords are demanding a signed confidentiality agreement.

Two requests I have seen make it clear that a signed confidentiality agreement is required before any discussions can proceed. This is despite existing leases covering confidentiality requirements.

It makes no sense that landlords are demanding more paperwork when they have a lease in place covering these requirements.

Every day this drags on is a day closer to small retail businesses going to the wall.

The behaviour of many shopping centre landlords in Australia is appalling. Their approach to dealing with the mandatory code as agreed by the national cabinet makes a mockery of the decisions by state and federal governments. The landlords are demonstrating that they are a law unto themselves.

On top of extraordinary demands for personal and business financial information, some landlords are refusing to put anything in writing, demanding that the matters are discussed. I suspect this is so there is no record of the discussions.

Shopping centres, major shopping centres, are empty. People are not visiting. This is not due to the retailers. The retailers should not have to bear the costs of their tenancy if the centre is not delivering the people expected to be in the centre in the usual course of business.

Governments have to step in here and help address what is now a crisis for independent small business retailers because the landlords are acting, together it seems, agains these most vulnerable retailers.

This is why I support an immediate three months rent free arrangement – to provide time for politicians to actually understand the problem and to realise that their decisions so far, while made with the best intent, have disadvantaged small business retailers and pushed SME retail to the brink of collapse … because of appalling behaviour of shopping centre landlords.

While it sounds melodramatic, this is a crisis for many families around Australia. It has been made a crisis by the landlords and their disinterest in fair resolution of the situation brought about through no fault of SME tenants yet for which SME tenants are having to carry the majority of the financial cost.

5 likes
Ethics

How small business retail tenancy landlords are ignoring the national cabinet’s MANDATORY CODE OF CONDUCT SME COMMERCIAL LEASING PRINCIPLES DURING COVID-19

More and more landlords are pressuring independent small business retailers to provide information prior to them considering negotiating rent relief.

It appears to be that these landlords are doing everything possible to delay agreeing to any offer.

There appears to be a co-ordinated campaign by landlords to slow access to relief to small business tenants. Here is an example of communication I have seen from a national real estate company sent to all tenants in a small shopping centre.

The landlord is sympathetic to the impacts of COVID-19 and echo the Prime Minister’s comments that Landlord’s and Tenants need to work together during this unprecedented time. 

Following the announcement from the Prime Minister and National Cabinet on 7 April 2020, there has been further clarity on the proposed amendments to legislation and the now released Mandatory Code of Conduct. 

As stressed by the Prime Minister, tenants are still obligated to honour their leases and its terms throughout this period. The landlord is committed to providing an equitable solution, but we expect tenants to respond in kind. 

The landlord is willing to provide support to retailers so all parties can emerge from the current challenging environment. We would recommend that all tenants have the following information prepared, so we can move quickly on any responses and support all retailers in a proportionate and equitable manner. 

  • • Evidence that the business has made application for the “Job Keeper” assistance and has a turnover of less than $50 million (in which case the mandatory code will apply); 
  • • A statement of financial position, outlining income, expenses, assets and liabilities (preferably audited or certified by a chartered accountant), as at 31st March 2020; 
  • • Year to date and recent financial year financial statements for the impacted tenancy 
  • • FY’19 and year to date FY’20 P&L 
  • • Balance Sheet; 
  • • Sales turnover history for 24 months to March 2020 by a Certified Accountant 
  • • Documented evidence of their application and acceptance for assistance from the ATO, State Govt, Federal Govt. and Franchisor where applicable. 
  • • Report from an accountant or financial advisor with evidence that the business has experienced a substantial reduction in its ability to pay rent due to the impacts of COVID- 19; 
  • • Summary of major debt obligations and whether any repayment holiday has been offered by the financier; 
  • • Other relevant information depending on the nature of the business, for 
  • instance, evidence of a decline in sales or loss of clients/projects and the consequential anticipated turnover for the current quarter, which shows how circumstances have changed as a result of COVID-19 since 1 March 2020; 
  • • What arrangements are currently in place for the ongoing operation of the business, such as work from home arrangements and whether staff have been stood down; and 
  • • Whether the tenant holds business interruption insurance that covers the payment of rent and outgoings and if the circumstances for a claim on that insurance have been triggered. 
  • • Business Plan looking forward as to actions planned post lockdown and beyond. 

We thank you for your understanding during this difficult and unprecedent time. 

The code of conduct is clear. Plenty of the information being requested by this real estate agent is not covered by the code. Worse still, plenty of what they are requesting will require small business retailers to spend unnecessarily to provide the information.

Take the supply of turnover data. Most shopping centre retailers provide turnover data monthly. To now ask for certified data, which will cost more, is nonsense. It’s like the landlords say they do not trust the data they have bene receiving for years.

4 likes
Ethics

VANA shows it’s out of touch, again

The VANA created wannabe national group, NLNA (not to be confused with ALNA, the real national body serving newsagents) emailed newsagents last week saying they had been busy serving newsagents through COVID-19. They demonstrated this by providing access to a supply of hand sanitiser. Once again, arriving at the party late thanks to many many suppliers of hand sanitiser reaching out to newsagents over previous weeks.

1 likes
Newsagent representation

How some retail landlords are misbehaving in dealing with COVID-19 relief requests from tenants

Here is a list of information requested by some retail tenancy landlords, including some shopping centre landlords where tenants have registered for JobKeeper, advised they qualify for JobKeeper and provided retail turnover data (in the usual format supplied to the landlord) showing declines of between 30% and 75%. Landlords have asked for information prior to opening discussions on rent.

Note: the list is not from the one landlord.

  1. Business bank statements for the last 2 years.
  2. Personal bank statements for the last 2 years for all business owners.
  3. Tax returns for the last 2 years, certified by your accountant.
  4. BAS statements for the last 2 years.
  5. A personal assets list for each owner or shareholder for the business.
  6. A full stock listing showing age and value of all stock.
  7. A list of all other businesses you own.
  8. A list of all other retail tenancies you have.
  9. Details of all state and federal government COVID-19 related funding and or grants you have applied for.

In my view, landlords have no right to this information. The CODE OF CONDUCT agreed by the national cabinet is clear. If a business applies and meets the criteria for JobKeeper, their lease falls within the details of the code.

The only data points that matters are comparative revenue. This can be provided in the form that has been used for years with most landlords. Their request for it in a different form is not part of the done. Indeed, I suggest that any such request is outside the good faith  goals of the code.

I think it is critical that retailers advise state and federal politicians when their landlords seek information outside the code, like any of the information on the above list. At the time of advising politicians, I also suggest advising the office of federal small business and family enterprise ombudsman, the shopping centre council of Australia, the treasurer, prime minister, premier / chief minister, local small business commissioner as well as your local council.

Landlords and tenants have clear obligations under the code. From what I am seeing, too many landlords are misbehaving in their requests for information. I doubt this is due to ignorance. I think it is to create a barrier to providing financial relief to tenants. If it continues, more retail businesses will close for good.

6 likes
Ethics

Magazine subscriptions up

Mediaweek is reporting a bump in magazine subscriptions:

Magazine subscriptions surge: isubscribe reports record uplift in sales
This week, magazine subscription retailer isubscribe is reporting a 29% uplift in sales for March 2020 and is on track to achieve an increase of over 50% in April. Those figures are just for print magazine subscriptions.

Digital subscriptions, typically a much smaller proportion of the overall magazine subscription market, have jumped 134% in volume for March and over 400% in volume as at 15th April. Health titles are experiencing the strongest growth, particularly Women’s Health magazine. The brand is still a Pacific Magazines publication given the impasse between Seven and Bauer over the sale of their magazine titles.

“It’s been a strong end to the first quarter and start of the second, due to the dramatic changes in community and consumer behaviour.” said Hunter Drinan (pictured), managing director, isubscribe.

“Together with additional media spend, particularly TV, there’s increased awareness of our products at a time when customers are wanting to keep their minds and bodies engaged, and they want support and inspiration for the projects they haven’t had time for until now.”

The magazine categories experiencing the strongest uplift on isubscribe are home and garden, kids, lifestyle and health and wellbeing magazines.

“We’ve seen a massive 60-150% increase in sales across those categories in April. The stand out performance has been our puzzle magazine category. While starting from a lower base than the major categories, it’s experienced an almost 300% increase in total sales for March and an over 1400% increase to date for April,” said Drinan.

“Working from home and home schooling also means more screen time in the house. People are seeking more traditional, ‘offline’ forms of entertainment such as reading books and magazines, walking or bike riding in the park.

“We’ve actually seen this trend building in recent years, particularly in relation to kids magazines. Big players are coming into the market to create educational, fun magazine products for kids. National Geographic launched National Geographic Kids in 2016 and it’s been the number one title across our business for over two years.”

2 likes
magazine subscriptions

Adjustments in WA on lotteries

This announcement from the premier has details:

  • Laws to protect retailers, players and the community during and after COVID-19

  • Temporary powers to enable Lotterywest to provide additional grants and fund other worthy grant programs

  • Prize payout period extended and claims made easier as part of social distancing measures and minimises retailers contact during COVID-19

  • Players to be able claim prizes regardless of travel restrictions, community isolation or due to temporary closure of retail outlets

  • New laws to further support the $159 million community COVID-19 Relief Fund

This information was sent to retailers:

Today, Wednesday 15 April 2020, Premier Mark McGowan announced some temporary changes, giving players more options to claim their prize. This is currently subject to legislative approval.

These changes include temporarily extending the prize claim period on selected valid winning tickets from 12 to 24 months, and also introducing the option for Lotterywest to receive prize claims from players via email, as well as claiming their prizes in-store or via post. You can read the Premier’s full media statement here.

The health and wellbeing of Lotterywest retailers and players is important to us. Due to COVID-19, health guidelines have encouraged cashless payments. We’re making these temporary changes in response to health concerns, and to support those who are not comfortable handling cash.

We’ll send you an email and terminal message confirming all the details once legislation has been approved. We expect this will be in the coming weeks.

3 likes
Lotteries

Why the national cabinet position is not sufficient help for retailers – SME retailers need a 100% rent subsidy for 3 months

While the decision of the national cabinet over a week ago on a mandatory code for retail tenancies of small to medium enterprises is welcome, it gets nowhere near addressing the urgent and dire financial challenges facing many small business retailers.

Having talked with many retailers in a range of channels since the adoption of the code, the biggest challenges are being faced by those in larger centres. Whereas many, not all but many, high street and independent landlords are agreeing deals that are usually considerably better than forecast in the code, shopping centre landlords are slow to negotiate and demonstrating no willingness to go beyond the code.

The code allows for a rent reduction based on the quantum of reduction in revenue. In one business I know of with base rent at $16,000 a month, turnover is down 50%. The code suggests a rent reduction of 50% on the basis of the revenue decline, with half of the reduction being waiver and half being a deferral.

The retailer in my example could expect a waiver of $4,000 a month and a deferral, to be paid later, of $4,000 a month. That is if their landlord is fair in their approach.

The decline hit the retailer from early March. The landlord says the code will not apply until April.

Prior to COVID-19, the business had annual revenue of $1,130,000. It’s average GP% then was 35%. Out of the $395,500 GP it paid $192,000 in rent, $143,000 in wages and $42,000 in overheads, leaving $18,000 in profit – in broad terms.

Revenue is now down 50% and is likely to fall further. In addition to the decline in revenue has been a shift in what shoppers purchase. The average GP% has fallen to 29%.

Here is what an average month looks like. This example does not allow for retail peaks and troughs, like winter. Revenue: $47,500. GP: $13,775. Rent: $8,000. Wages: $5,000 with hours significantly cut. Overheads: $2,800 with all possible cuts made. The business is in the hole for $2,025 a month. However, in the rent number in this example, I have not factored that half of the reduction, $4,000 is deferred, not waived. This makes the hole worse.

The owners are at maximum borrowings. They have no fixed assets against which to borrow.

The question the owners have is – do we continue to trade and lose $2,025 a month plus the $4,000 a month deferral and in six months and be at least $36,150 worse off? … knowing that realistically, the loss will be closer to $80,000 based on the current trajectory.

Talking to the owners their position is the government regulations on social distancing are what have stopped people shopping. They created the situation where our business is now no longer viable. While we support what they have done, they have left us with a financial obligation that we are considering not accepting. We think going into administration now is the best option for us, to not extend our personal exposure.

This scenario is not uncommon. It demonstrates the inadequacy of the SME retail tenancy code of conduct.

I accept it is a complex issue to address. I think that state and federal governments need to immediately agree to themselves fund 100% of occupancy costs, rent, outgoings, marketing, for 3 months from April, with a goal of a better plan being developed prior to the end of June.

That move would keep landlords and retail businesses afloat. The downstream benefit would be cash in the economy, people in jobs, fewer businesses collapsing and, I suspect, lives saved.

Note: this example is not one of my businesses and is not a newsXpress business.

18 likes
Retail tenancy

ACM closes non daily newspapers

ACM has announced that its non daily titles will close for the moment. These titles include: The Mercury, Gloucester Advocate, Lake Mail, Cessnock Advertiser, Singleton Argus, Dungog Chronicle, Muswellbrook Chronicle, Scone Advocate, Hunter Valley News and Newcastle Star.

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Newspapers

Today: free Zoom meeting for all newsagents

I’m hosting a free Zoom meeting today at 10am for any newsagents who want to join in. Let’s talk about business, coronavirus, opportunities, challenges and the future.

Topic: Newsagencies, corona and the future
Time: Apr 15, 2020 10:00 AM Melbourne time.

Join Zoom Meeting
https://zoom.us/j/92683339453?pwd=dHFBRzVPOUp5eDZUNk5HZVVLWDhGdz09

Meeting ID: 926 8333 9453 Password: 978756

Raise any topics you like. Ideally, come along to chat. Wile listeners are welcome, these meetings work well when more contribute.

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Newsagency management
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