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

Author: Mark Fletcher

Magazine sales decline 9.5% in Q1 2021 compared to 2019

I am close to completing the January – March 2021 versus 2019 newsagency sales benchmark study and am surprised by the extent of decline for magazines.

Magazine unit sales are down, on average, 9.5%. The surprise that only 2 of the 150+ businesses that submitted data reported an increase in magazine sales. What highlights that for me is that 78% of the respondent businesses reported an increase in overall revenue. This is the surprise – the extent of business revenue growth in businesses reporting significant decline in magazine sales.

The trajectory for magazines pre Covid continues.

Note: I am comparing 2021 with 2019 as 2020 for many businesses was an aberration because of lockdown and our channel being open while plenty of competitors were closed.

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magazines

The throw rug sale that’s worth 60 magazine sales in the newsagency

The story of the sale of this woollen throw is one magazine publishers could benefit reading as it speaks to the common margin opportunity for gift and homewares items that so many of us are selling in our businesses now. It also speaks to stock turn and the broader business narrative opportunity for us … as opposed to the challenged narrative for print magazines.

We received the throw rug in-store Tuesday afternoon. We sold it Thursday lunch time. The price was $180.00 with a cost price of $90.00. The $90 in gross profit translates to what we would make from 60 magazines based on overage cover price.

Selling items of this value and more is easy from the high street newsagency. The key is to buy well. For the rug, the keys were product quality, colour and the cold weather in Melbourne.

The throw rug was space efficient. It didn’t have any time-consuming data management requirements. We chose it. It expanded the reach of the business. These are all factors that don’t play when it comes to magazines.

I could just as easily write about a lamp shade, an ottoman, a work of art or a beautiful hand made vase. Many newsagents are diversifying into mid to higher price point items and having success with quite short stock-turn cycles. With GP sitting at 50% and more and with many of these items helping to attract new shoppers, it’s natural we compare their performance to newspapers, imagines and other legacy agency lines.

I mention magazines in this post as our channel continues to be a vital channel for magazine publishers. However, as more newsagents do well from a more diverse and GP valuable mix of products, the more we will look across at magazines and wonder.

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magazines

Emailing and then calling … ugh!

It happened again today. Someone emailed about a matter and called a couple of minutes later. They started the call saying I just emailed you. They then proceeded to cover each point in the email.

What a waste of time duplicating communication.

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Ugh!

Advice on reducing visual noise in your newsagency

If you give your customers too many things to look at inside or outside your business, they will notice less.  Your choices show them what you want them to look at

Less is more. Have less visual noise, less visual pollution, and more will be noticed.

Show your customers what you want them to notice by giving that product, range or display fresh air (visually) around it.

Stand at the door of your business and scan around counting the signs you can read and displays you can see. How many are there? More messages, more signs = less noticing them. yes, less is more.

Here is advice for less visual noise in your business:

  1. Edit. Every few days stand at the front of the shop and review your signage and edit the mix.
  2. Posters. Do not put up magazine or newspaper posters. There is no evidence doing so increases sales.
  3. Housekeeping notices. Have all customer notices, such as your exchange policy, discount voucher policy, minimum eftpos charge etc, all in the one unobtrusive place.
  4. Call to action signs. If you have items on sale or discounted, place them all in the one location, a designated sale location in your business, with simple and professional signage.
  5. Product signs. For product signage in-store, be consistent in style and look. Smaller signs next to products will work better than big signs from the ceiling – how often do your shoppers walk in looking up anyway?
  6. Colour block. Colour blocked product is more appealing to the eye, it looks less messy, less noisy.
  7. The counter. Again, edit for clarity, edit for focus on the messages that really matter.

Reducing visual noise will improve the experience for your shoppers and for those who work in the business. It will focus everyone on what you decide matters the most right now.

This is part of an extensive package of business management advice newsXpress provides its members.

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Management tip

The simple product sticker move that works

Major retailers often use was / now price labels to show shoppers a product discount. This type of product discount labelling is rarer in small business retail. But, it shouldn’t be. It works.

I am grateful to have been able to see how was / now price labels work in retail compared to the more traditional for small business larger poster with or above discounted products.

A trial was done is a small business retail situation in a controlled way with the only changes as noted – introducing the was / price stickers and removing all other discount related messages. The products were maintained in the same location in-store.

Switching to was / now labels and removing the posters increased up-take 500%. The base was okay. The growth from the was / now price label move will see the end of line items quit sooner,. freeing cash and space for the business and better addressing the opportunity cost issue.

This type of label can be produced through your POS software. it’s easy, low cost and likely to work. If you have items you are quitting, I recommend it.

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Management tip

Beware the end of shift balance fail cover-up

I heard about a retail business where the store manager was sick of dealing with the register not balancing and so they introduced a cash tin under the counter into which they added cash when they were over and from which they took cash when they were under.

The owner was furious when they discovered this cover-up. And, rightly so.

Rather than get to the root cause of an over or under at end of shift, the manager was lazy and hid the problem. No wonder the business has not been performing well.

Discipline is key in retail as in the use of any retail management software. Hiding problems is not good for business. A manager doing this secretly is not serving the business or its owners well.

My advice on balancing the register to to do so in a way that is accurate and in service of the business.

I have seen systems that show up front what the expected cash is. This is a mistake as people can pocket any cash that is over.

There are many reasons a register can balance over or under. The only way to address any systemic causes of this is to see the problem, track back to the cause each time and improve the management of the business.

Having a tin of cash under the counter to enable you to always balance is a fool’s game. It looks and feels like fraud. It’s as bad as retailers who do a no sale on the register to take out cash for personal spending. That behaviour in front of employees shows them what’s acceptable.

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Newsagency management

The federal budget misses a small business led job creation opportunity

The federal budget last night promised the spending of truckloads of cash on projects designed to create jobs. Almost all the forecast spending would be big business related.

While big projects do help the economy and deliver much-needed new or enhanced infrastructure, there are other ways the federal government could spend more to more immediately boost jobs, and boost the economy.

It’s in small businesses, like retail, local service businesses, local software companies and other local businesses where job creation is easy and fast.

The challenge for the government is that a small business focussed job creation investment would be based on many channel specific investments. They may see that as too hard. They could see it as spreading the risk and thereby spreading the reward.

Thousands of targeted investments could deliver more sustainable economic and jobs benefits than one big billion big project spend.

But … I am not against the big projects. What I propose is in addition to those big projects.

Let me unpack this from the small business software company perspective since that a space I know well. My POS software business competes with a bunch of overseas businesses. While we are doing well, we’d be grateful to do even better.

A dollar spent with us provides more value for Australia than a dollar spent with an overseas competition, much more.

The government would say we benefit from the extension of the instant asset write off. They are right, we do. But, so do all software companies.

Personally, I’d prefer to see the government offer a financial incentive to retailers buying or renting Australian made and Australian supported software. This would see the government investment spent in Australia, more tax revenue for Australia and more job creation.

Let me break that down. In a company like ours, we respond quickly to demand and can hire for entry level help desk roles quickly, offering people new to software and tech entry-level roles. We could be creating jobs in months, and not years like the big projects funded in the budget. And, the jobs we create come with training that positions the new hires for long-term roles in tech.

We can offer a pathway for people with retail experience to develop good tech skills. We can also offer a pathway for older folks to develop a new career in tech. We can offer people with families and challenging schedules flexibility that is family-friendly. We are not alone in being able to do these things. Indeed, there are plenty of service related businesses that can do this.

Another benefit of supporting local specialty business software companies like ours is that they nurture better business efficiency, benefiting the businesses in which the software is used. This benefits the economy. And, since they are small businesses, they will be nimble in leveraging the improved efficiency within their community.

In both of these examples, the software company and local specialty retail, tax dollars stay in Australia, employment growth is more certain and faster, local communities benefit and the economy is, overall, stronger sooner.

My example here is one of hundreds or thousands the federal government could employ to rapidly boost employment. They should look at businesses that can respond quickly to demand. They would be local businesses serving local communities.

Covid has proven the importance of local. Many who started working from home through Covid will continue, permanently. This presents opportunities for local infrastructure and this is where local small businesses can play a role – businesses that will make a more valuable tax contribution and businesses that can hire for demand more rapidly.

The federal budget is a missed opportunity in the job creation front. It reads like it’s from people who have little understanding how small business works – that we can respond quickly.

I get that politicians will say dealing with a small number of big businesses is easier than wrangling thousands of small businesses. To that I would say try it.

Small businesses in Australia are a resource that few politicians have ever successfully tapped. I am in federal Treasurer Josh Frydenberg’s electorate. I have written to him about these things. He’s not responded. However, he continues to email me about all the good things he has announced.

I am confident that many investments in buy Australian initiatives with and for a variety of small business channels could deliver early job creation wins, a boost in tax revenue and welcome economic support for regional and rural Australian communities.

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Social responsibility

Make sure you are fully across the changes relating to casual employment

Changes to casual employment in Australia are now in effect. Click here to see the details as pblished by the Fair Work Ombudsman.

Employers have to give every new casual employee a Casual Employment Information Statement (the CEIS) before, or as soon as possible after, they start their new job.

Small business employers need to give their existing casual employees a copy of the CEIS as soon as possible after 27 March 2021. Other employers have to give their existing casual employees a copy of the CEIS as soon as possible after 27 September 2021.

Also, the Fair Work Commission has issued a decision that impacts the award under which employees in newsagencies are paid. This from the Fair Work Ombudsman website:

Modern Award Review – Junior rates under the Retail Award

The Fair Work Commission has issued a decision that changes the way juniors are paid under the Retail Award. From the first full pay period on or after 1 May 2021, junior rates will only apply for classification levels 1, 2 and 3.

Use our Pay guides or Pay Calculator to find the new rates and allowances.

A junior is an employee under 21 years of age. Use our Pay Calculator to calculate junior pay rates.

Juniors get paid a percentage of the relevant adult pay rate unless the award, enterprise agreement or other registered agreement doesn’t have junior rates.

The percentages that apply are usually based on the employee’s age and increase on their next birthday.

These are important changes newsagents need to be across.

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Newsagency management

Growing card sales in the newsagency

Growing card sales in newsagencies is valuable business given the margin and responsiveness of cards to  engagement.

The store for which the graph has been produced as part of a deep dive to the pocket level into card performance and done without card company engagement, has achieved excellent growth while at the same time reducing space allocated to cards and reducing the capital invested in cards. This is a win, win, win … an extraordinary result.

The key for this business has been data. Every decision has been based on evidence, data. Every decision has been subsequently tested, by data. Decisions that have not worked as well as needed have been replaced or adjusted, guided by data.

My point is, newsagents can sell more cards, make more money from cards, by leveraging their own business data.

Pitch warning. This is a newsXpress initiative. It has developed comprehensive intellectual property that leveraged data from the Tower Systems software, overlays this with pocket and caption data and then produces the most thorough card performance analysis you will find. It covers cards on the wood as well as spinners. It is fearless when considering suppliers.

The intellectual property has been tested in plenty of stores and in every single case, double digit growth in card revenue has been achieved. Oh, any double digit growth, I mean anything between 15% and 60%. Usually on the back of no additional capital investment.

I doubt a card company itself could achieve this since the analysis that feeds the business decisions I am talking about it from the store level. Card companies know what they sell in and what they take back as returns down the track. It is the over the counter sales data that is key. Also, if you have more than one card company, only your data can be useful in a whole of business view.

Card sales are up. Not just because of what I am writing about here. They are up generally because people are connecting more. Smart newsagents are leveraging this, riding the wave to maximise the opportunity its for their business.

The work behind the results I am writing about here is considerable. But so, too, is the financial reward. And, the reward travels beyond card revenue since happy card shoppers add other items to their basket in a visit. This is the icing that is so valuable.

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Greeting Cards

The Source in Melbourne is closed

The Source newsagency in Melbourne was lauded fifteen years ago as an innovative newsagency. It offered a fresh approach back in the mid 2000s. In recent years it was not as innovative. I was in the city Monday and stopped by The Source and discovered it had closed.

After following the online trail from The Source to its ‘sister’ online shop NoteMaker I then find Milligram, a group of several stores in the stationery space. It’s at Milligram where you can see retail innovation in stationery and associated categories. It’s worth checking out.

A colleague shopped one of the Millgram stores this week, in Chadstone., They were very impressed. They said the store is a representation of several leading niche retailers in this space in the US.

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Stationery

Non traditional Mother’s Day gifts

There is a sameness to Mother’s Day gifts pitched by traditional newsagency suppliers. We have been pitched their products for years and, over that time, they have not evolved much.

We are grateful to have non traditional newsagency suppliers who offer different product through which we can pitch a freshness.

This photo is one of the displays of non traditional Mother’s Day gifts. None of this product has been bought for the season, but it works for the season. Shopper reaction has been terrific.

These core seasons in our channel are changing, offering us opportunities for change in-store.

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Newsagency management

Sydney gift fair success

I was at the Sydney Gift Fair a few weeks ago representing newsXpress, the newsagency marketing group I own. I connected with several suppliers in niches not well represented in the newsagency channel.

The good news is that each has agreed to supply newsXpress stores. While this is good news for newsXpress members, it is good news for the suppliers as it opens their unique products to a new retail channel.

That the suppliers quickly got on board is a change. In the past, prospective suppliers have taken months to agree to sell into the newsagency channel, primarily because of how they remember newsagency shops and not because of what they see plenty of them as today.

The other interesting factor here is the price range. Most of the new products are priced at $100 to $500. While our channel has historically done well at the low end gift and homewares price point, we have not done as well as we could at the higher price point end. Hopefully that is changing.

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Gifts

What Ovato could learn from greeting card companies

For many years I have urged management at Ovato, formerly Gordon and Gotch, to provide newsagents with the ability to control their own magazine supply. My argument was that giving newsagents control over range of titles and quantities received would see newsagents stock and sell more magazines.

The historic master / servant relationship with newsagents got in the way.

The leadership of Ovato did not like the idea and did not deliver this. They have maintained a system through which it is difficult for newsagents to manage their magazine title range and the quantity of inventory received. And, despite having access to accurate sales data, this appears to play only a moderate role in supply decisions within Ovato.

Magazine publishers should be frustrated buy this and here’s why …

For decades, newsagents could not easily choose the greeting cards they stock. The card companies had an antiquated and opaque process, that newsagents, for the most part, were happy to go along with.

Over the last two years, several major card companies have provided newsagents with complete control over ordering, including the ability to replace one design with another.

Looking at comprehensive pocket level before and after sales data, I am confident in saying that providing newsagents control over what card designs they stock is a key factor in above average growth in card sales. I am talking here about 20% and more year on year card revenue growth – even with the Covid period sliced out of the data.

The data study I have undertaken included businesses that did not change card suppliers – those that controlled what they stock grew revenue several times more than those that did not.

The message for magazine publishers is simple – if you want to grow magazine sales in the newsagency channel, give newsagents full control over what they stock. In my opinion, the failure of Ovato to enable this has held back magazine sales opportunities.

Are magazine publishers frustrated? probably not since they do not actively engage with newsagents. It’s one-way and sales of their titles suffer as a result.

Thankfully, some card companies have realised the commercial value to them from giving retail newsagents more control over what they stock. Kudos to them.

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magazine distribution

Ink is not the category it used to be for newsagents

There was a time when ink was massive for newsagents, with plenty of businesses turning over more than $10,000 a month, achieving excellent margin and doing this with minimal capital invested in inventory.

I know because around ten or so years ago out the back of one of my shops we were doing $350,000 a year in in sales.

Today, the ink market is fundamentally different.

Printer companies are selling more larger capacity printers, reducing the sales of ink in the first year or two.

Printer companies are launching printers, and associated cartridges, through major retailers, cutting out independents.

Margins are lower.

Shoppers are more price sensitive thanks to major retailer campaigns and thanks to more online businesses in the space.

Price sensitive shoppers are not loyal, making revenue from ink less predictable than ten or more years ago when ink did well because of in-store knowledge and service.

Should newsagents get out of ink? Has the category run its course in the channel?

There are plenty of newsagents doing well with ink. They are usually in regional Australia with a somewhat captive local market. However, the number of newsagents doing well with and making money from ink is considerably lower today than ten or so years ago. That’s what suppliers say.

Like anything in business, let your data guide your decisions. Consider your capital, labour and retail space investments against revenue over a year and assess this against alternative use of those assets.

Whereas ten or so years ago we could confidently say that every newsagent could do well with ink, today, that statement cannot be made.

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Newsagency management

Pitch fringe card captions for Mother’s Day

Newsagents have the best range of Mother’s Day cards in Australia. They have the fringe captions – Nan, Nanna, like a mum, and more. It is these fringe captions that can play a role in driving growth in Mother’s Day card sales.

Fringe captions provide opportunity.

Check out your range and select fringe captioned cards, like Nan and Nanna and give them a pitch on social media.

Too often I am seeing social media posts of a full stand and while that speaks to range, it fails to entice on real specialisation. That is where pitching the fringe captions is key.

People give a social media post a couple of seconds. A photo from a distance of a range is less like to entice than a photo of a single product up close in my experience. Mother’s Day gives newsagents the opportunity for the up close single product pitch.

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Greeting Cards

Vic. newsagents are not required to capture shopper contact details

There has been some confusion in media coverage in Victoria over the last couple of days on the modified contract tracing requirements released by the state government.

the requirements themselves are not confusing. It is some media outlets that have created the confusion.

Retail is exempted, as outlined explicitly here:

(9) An employer is not required to comply with the records requirement in subclause (7):

(a) where they are operating a Work Premises which is a market, market stall, a retail facility or retail shopping centre with respect to customers who attend that Work Premises, where it is not practicable to do so; or …

I was contacted by a newsagent yesterday who wanted my take as they thought they had to have a QR code setup at their entrance while a staff member said they did not require it. each had heard it from a different media outlet.

The regulations from the Chief health Officer are easy enough to follow.

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Social responsibility

Push-pop fad reaches a diverse mix of shoppers

Push-pops sell well thanks to the evolving range available from a diverse mix of suppliers and thanks to our ability too pitch these products to a broad mix of shoppers. From kids to people in their eighties, push-pops are fun and they also serve a health opportunity. It is this latter use that has them more widely used than traditional fad products.

While pitching them at the counter works a treat, we have also seen them work well with newspapers, weekly magazines and, especially, next to crosswords and it is the crossword shopper who gets them most easily from what we have seen.

This fad has a way to run, but be careful on the inventory you hold as like any fad, it will wane.

Tip: pitch the fun and the health value on social media as the right pitch will bring shoppers in to purchase.

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Gifts