I have heard from several newsagents in Queensland this week who are concerned at the move by Tatts to sweep retailer accounts twice a week.
This post today is at their request, to open the topic for discussion by those who already experience this and those who expect it to commence soon.
Please share your experiences.
I was surprised to see Darrell Lea liquorice at Officeworks in Pitt Street Sydney yesterday. The Officeworks price is $1.00 per pack higher than I can easily find it elsewhere. So much of the Officeworks low prices claim in their expensive ad campaigns.
The other surprise was the placement of the product in a dump bin, next to what look like cheap products. This is not the type of representation I expect to see for a quality brand.
Dump bins in Australian retail typically suggest a deal. This is not a deal.
If you sell Darrell Lea and have an Officeworks nearby, be aware.
newsXpress kicks off a national TV campaign today, launching its EXCLUSIVE National Beanie Boo Week, to coincide with the launch of six exclusive to newsXpress Beanie Boos. Here is the call to action TVC:
This campaign is not costing newsXpress members anything. In addition to the TVC, newsXpress has provided members free stock to give away, A1 posters for in-store, flyers for local distribution, a colouring competition and more. Do a Google search for Beanie Boos and see our online strategy. The store-connected newsXpress site is the second highest ranked Australian site – ahead of Toys R Us and KidStuff.
The Beanie Boo TV commercial and National Beanie Boo Week campaign by newsXpress are part of an integrated campaign of transformation. Regulars here would know I think transformation is mission critical for newsagents.
Through careful targeting, newsXpress guides members to find new shoppers in four valuable and specific demographics with little overlap. This is all about finding new traffic, which is vital for any newsagency business.
Through new products and some exclusive products, in-store engagement, online marketing and other activities, newsXpress is helping members not only find new traffic but to lift overall business GP.
The newsXpress online strategy is driving in-store traffic as well as online sales. In a few hours yesterday, for example, one of our six public websites generated more than $1,000 in sales for several newsXpress stores and led to calls and emails to newsXpress members seeking out products.
My opinion is the old-school traditional newsagency has no future. Further, the old-school traditional retail business website has no future. The brand focus is paying off with local newsXpress businesses being found easily when people are searching on their phones and online for popular brands.
I am a Director of newsXpress.
I took this photo in a newsagency recently. This business tries hard to display magazines well yet every week they are sent far more than they can reasonable display.
Magazine publishers take a look – you cause this.
This is one section of the magazine department. There are two others like this.
No wonder there are newsagency businesses without a magazine department.
Pacific Magazines has announced the sale of some titles and the closure of Girlfriend as we know it today – moving to seasonal and trend-based issues. Here is the announcement.
I am shocked that in 2016 there are still newsagents who store their newspaper wrapping machine in the shop window – blocking a view inside the shop and not using the window to display products for sale.
This is crazy! Yet is is happening today.
No matter how small the town and how little passing traffic you get, a shop window ought to be treated with respect and offer a window on the retail business. It is the most valuable retail real estate after all.
Using a street frontage window as storage space is ridiculous, clearly not the kind of move you would expect from a retailer.
The answer to my question How does a wrapping machine in the shop window drive traffic? is: it doesn’t. To me, a wrapping machine in the window says this shop is not worth visiting, whatsoever. The shop must be old-school to of date and more focussed on one retail activity. Surely it cannot have any products of interest.
I was surprised to see this newsagent exclusive adult colouring magazine pack with free felt Paper Mate pens. I say surprised because I’d not heard about it. Usually, good national promotions get noticed. I only discovered the pack last week. I like the pack and that it is exclusive to newsagency businesses.
While adult colouring is not the segment it once was, there is enough remaining interest for quality titles to warrant some regular space allocation.
We are promoting Home Beautiful at the front of the newsagency to make the most of the Christmas tag and Washi tape. We are promoting on social media as this quality of gift is a sure new traffic driver as it is only in selected newsagents and Woolworths.
This has been a challenging quarter for newsagents. The overall traffic decline is one of the largest in recent benchmark studies.
The decline is due to declines in traffic for core newsagency lines: newspapers, magazines, tobacco and stationery. The increase in transaction count for lotteries is not driving an increase in non lottery product purchases. Indeed, lotteries is one of the most inefficient product categories in newsagencies – by this I mean, people purchase lottery products and nothing else in a visit, like the majority of newspaper purchases.
The good news in the survey is the improved performance in newsagency businesses embracing change. New traffic drivers are working and expansion in gifts, toys and other better margin categories are improving the overall GP story in these businesses.
There is no doubt change is afoot in the newsagency channel. There is considerable evidence in this latest benchmark study of greater difference between businesses. The gap between those performing the best and those performing the worst is the biggest I have ever seen.
The data pool for this survey is the broadest I have had in the last two years in terms of different rooftops represented and number. I am grateful to the bigger pool of 170+ newsagents participating.
There is good news in these benchmark results, especially for newsagents who are working their business as retailers.
Benchmark results by key departments:
Here are some insights from analysis of the data:
DOES THE NEWSAGENCY CHANNEL HAVE A FUTURE?
Given the number of poor performing businesses in the channel it is looking more likely that the channel as a channel does not have a future. In this situation it could be replaced by multiple channels trading under different names. It all depends how each of the marketing groups position themselves over the next year or two.
Urgent change is vital to the future of newsagency businesses. Change on the shop floor to inventory range, shop layout and how those who work in the shop sell.
BLAME.
I blame every supplier who agitated, facilitated and supported in any way the move of papers and magazines into other retail businesses. That move alone in the 1990s put the channel on the path it is on today. As the migration of traffic and revenue to these other businesses made the impact for newsagents of digital disruption a far greater burden to bear.
Today, some of these same suppliers treat newsagents as if still in a regulated environment, effectively making newsagents less competitive than the other outlets they supply. Shame on them.
What these suppliers have today in the newsagency channel is a careful what you wish for moment. Yet most are in denial.
THE ERA OF THE AGENT IS OVER.
Relying on a small percentage of a sale acting as an agent was never a long term business model as it relies on the generosity of the supplier. As we have seen in recent years with falling commission from transport tickets, phone recharge, phone cards and, in real terms, lottery products, agency business has become less valuable.
While there are some who love being an agent for Ladbrokes and other services, you have to ask where the long-term benefit is as these customers are unlikely to be the loyal customers a retail business needs for the long term. I don’t see a long term benefit.
Newsagents who transitioned to being retailers have fared better. There are many success stories including those from businesses that have sustained a considerable decline in revenue but increased profit thanks to a managed GP shift.
It is hard work being an engaged retailer compared to an agent. However, the rewards are greater as you are building a business that attracts loyal shoppers. This is why we should not fear the breakdown of the channel as a channel.
OPTIMISTIC.
I am optimistic for my own newsagency businesses and for the businesses of many newsagents. Well considered changes implemented without high capital cost 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:
Mark Fletcher.
Email | mark@towersystems.com.au
M | 0418 321 338
Marketing advice from newsagency suppliers is usually advice that best suits the supplier. This is all about their products being presented in a consistent way. Following their advice can mute your voice, your point of difference.
My advice today is don’t blindly promote as a supplier suggests. Promote in a way that best suits your specific business.
Theft is a cost of doing business in retail. Don’t let theft divert your attention from the bigger picture. Don’t let it get you putting up signs that turn customers off. Don’t let it get you hiding stock from customers.
I see too many retailers obsessing about theft to a point where their obsession costs the business more than the theft they are trying to avoid.
This photo shows what used to be the newspaper stand in this newsagency I visited in in Queensland. The old newspaper stand went from floor to ceiling and reached out toward the front of the store by at least 1.2 metres. The location is just inside the entrance to the small 70 square metre shop in a shopping centre – prime and expensive space. This old newspaper stand location is easily seen from outside the front of the shop, it is perfect for attracting shoppers.
The newspaper stand was completely removed from the business and papers put in a more space efficient stand, still at the front of the shop. The new stand takes up a quarter of the space and is situated in less-expensive real estate at the front.
In the place of the old newspaper stand is the stand of gift items you can see in the photo. This stand has been setup to facilitate easy change.
Take a look at how this change is working:
Newspaper sales in the business have not been harmed by the move.
Yesterday morning, an office worker who works nearby noticed the gifts, and spent $175.00 in a single purchase from the new stand. They came back and spent another $65.00 in a second transaction. This is a new customer for the business purchasing new items for the business. Te total gross profit from the two transactions was $108.00.
This newsagent would need to sell 453 copies of their local daily newspaper to achieve $108.00 in gross profit.
The value of the move goes beyond the two transactions yesterday.
Newspapers are available in more than thirty outlets within a five minute walk of this newsagency. They are also regularly given away metres away from the business by the publisher. The gifts in the stand are not so easily available. Indeed, you wold need to drive to find the closest competitor.
This new customer discovered yesterday as a result of the strategic move to move the newspaper stand is set to be far more valuable to the business over the long term than a newspaper customer won by the stand being in this same location.
The story here presents an argument to use to the newspaper publisher rep who may pressure you to not remove their stand or the magazine publisher who may challenge you considering moving the front of store prime retail space currently allocated to magazines.
This post is about strategy, strategy for finding new traffic, strategy for growing the overall GP of your business, strategy for attracting shoppers who will return to make more valuable purchases.
Every newsagent can do what this newsagent I visited yesterday has done. Every newsagent can transition their business. The steps do not need to be big or bold. They can be often and small.
Yes, this is a newsXpress business, yes, the strategies they are engaging with are newsXpress strategies. yes, I am a director of newsXpress. There is enough information in this post to inspire anyone on moves like I have outlined – regardless of the group you are in.
While some in the channel say rip out your newspaper stand and leave it at that, the better advice is to present viable long-term alternatives to re-locating newspapers to elsewhere and replacing them with a stand that enables moves like I have outlined here.
Any change requires you to think beyond a single move. You need to plan. This is where newsagency marketing groups should shine.
While I will publish the July – September newsagency sales benchmark results Monday, I note the following results for magazines:
These results are in line with the audit results as published at Mumbrella today.
I will have more to say on this on Monday once the report is completed.
If you ever needed evidence that Lottoland is targeting newsagents more so than Tatts, check out their latest TV commercial that has just started airing:
My question for newsagents with lotteries is: what are you doing about this?
Lottoland is attacking the small business newsagency channel as they see it as the weakest link in them gaining a stronger foothold in Australia. I hope you can see that – that they are targeting you ahead of the products you sell. And … Tatts does not appear to be in your corner.
As a newsXpress Director I can advise I have written to authorities about the misrepresentation of newsagents in the Lottoland TVCs, engaged with TV Standards, approached Lottoland Australia and approached Lottoland Europe. I have also written to the Chief Minister of the Northern territory where Lottoland has its licence. while I have little to show for the effort, the effort itself is important.
Also, in this place, representing all newsagents, I have written about Lottoland with some of those posts being picked up by news outlets.
I could be wrong but I suspect my effort is the only effort on behalf of newsagents on this. If others have engaged, please share what you have done.
This is not something to grumble about. No, it is something on which to act.
If you are in a marketing group, ask what they have done. If you are paying money to the ANF (ALNA), ask what they have done on your behalf.
I love this Paper Mate stand in Woolworths supermarkets. The only problem is they have it and our channel does not. It is a no-brainer that newsagents should have this state, in every newsagency, in the same location in-store at the same time and with the products on the stand offered at the same price, nationally. That we don’t have the stand is a failure that needs to be corrected before Woolworths takes more stationery revenue from our channel.
These are questions for distribution newsagents:
How long would it take you to establish an account and supply newspapers to a retail newsagent account where the business is run by a newsagent with six years experience in owning and running a newsagency, a good payment record for newspapers?
My experience is that such accounts are approved and opened in a day or two.
Do you ask for a deposit where the business persons known and has a good payment record?
I have heard of a deposit being required in rare situations.
In a situation this week, a newsagent with a good payment record has had to purchase newspapers at full retail price from the distribution newsagent sitting on the account application. Further, they have been told even if the account is approved a deposit of $2,000 will be required for an account that will amount to $1,000 a week.
The Australian Financial Review reported yesterday on the sale of the GNS headquarters in Padstow for $16 million.
The Lottoland Australian website claims four million players. That number is extraordinary. It is audited by KPMG so I trust it.
What we don’t know is how many of the four million are regular players. That percentage would be interesting to know. Regardless, having 4 million players at any time over the course of their first year her is extraordinary.
As I have noted here previously when writing about Lottoland, they market well. here is part of an email I received from them yesterday – I am a registered customer having tested their product a while back.
This is a compelling offer compared to how Tatts promotes products products. Look at it. Buy six games and they give you another three free.
Because it’s all done online, they can push the offer out quickly, gauge engagement quickly and get people playing again who may have taken a break. Their whole approach is different as there is no store and I think that is what newsagents don;t get about this challenger, there is no store.
This is why the Lottoland TVCs target newsagents, because this is where they are weak. To play lottery games in a newsagency you have to go to the newsagency you have to be in the store with the parking lines, credit card fees and more points of friction. To play Lottoland you don’t have these points of friction.
It is a very different game, promoted in a different way.
The TVC is about attracting new shoppers while the email marketing is about driving engagement among their database of customers, four million customers.
Marketers say emails get a minimum response rate of 2%. That is 80,000. Imagine if 80,000 played the six Powerball games. The revenue soon adds up.
Now think about what it would take for the newsagent lottery outlet network to sell the 80,000 tickets. 80,000 transactions at around 30 seconds each plus stating in line and parking and more, the time cost of the purchase would be in the order of four thousand person hours – allowing three minutes per transaction walking and / or parking time plus shopping time. Compare that to something like 400 person hours for the seconds it would take each of the 80,000 to make the purchase online.
My point here is Lottoland is an extraordinary game changer. I don;t want it to be because I want newsagents to flourish. However, it is what it is, a game changer in my view.
Be informed. Play it, let your business planning be informed by that experience.
Several newsagents approached me weeks ago about GNS stock supply challenges. I approached senior management at the company and was told that there were some supply issues that were now resolved. More newsagents have approached me this week about the same issue. One asked me to post about it here to see if other newsagents are currently experiencing stock supply challenges with GNS.
Over to you.
It was good to see this sticker on a pack containing New Zealand Woman’s Day last week in New Zealand indicating the purchase of the pack raises funds for a local charity. This type of charity connection is a strong driver of boxed Christmas card purchases in newsagencies. It is a key factor in purchase decisions.
News Corp. newspapers are pushing its digital platform with ads in its newspapers promoting the free Samsung tablet with a twelve-month subscription. This is a compelling offer as the subscription cost is not far off the cost of the Samsung tablet they are giving away.
The offer values the news at 45.7 cents a day.
If I was News I’d be doing the same thing, maybe even more aggressively priced.
As a newsagent this offer reminds us there is no upside in print newspapers. While in some locations print is strong – such as tourist locations – the everyday regular customer will migrate as there is no point waiting to read a story you can have accessed close to the time the story was current.
Brands matter in retail and in our newsagencies. Brands provide us an opportunity to differentiate with competitors that are obsessed with house brands, usually inferior product sold for price more so than quality.
Brands invest in their customers and their retailers too. This is what gets shoppers shopping by brand. You only have to research online keyword searches to understand the importance of brands to the most valuable of shoppers.
I have been doing this recently, looking at what people search for when looking to buy and sure enough it is brands that matter.
With this in mind I was thrilled to see the new commercial from department store Harris Scarfe. Here it is…
I love their public declaration of love of brands. I love everything about this commercial, especially the choice of music. The Real Thing by Russell Morris is a perfect song for this TVC.
Come and see the real thing
Come and see the real thing
Come and see
Harris Scarfe and the brands they are partnered with are spending money on this TV commercial saying brands are the real thing. I agree with them.
Thinking about newsagencies, brands matter businesses. Take a look a stationery, people trust brands like Post-It, Scotch, Collins Debden, UHU, Pilot, Papermate, Bic and others. These brands are known, trusted. While unknown branded products are cheaper, people don’t look for them the same. They don’t search for them the same.
Brands promote themselves and, by extension, their retailers. Generic brands don’t promote themselves, they don’t promote their retailers.
In all departments in our businesses there are brands that matter, brands we ought to put ahead of cheap copies – because these brands will support us if we respect them like Harris Scarfe is in their TVC.
The Harris Scarfe TVC is a reminder of the relationship between retailers, shoppers and brands. We are more important to each other for the long-term than the relationship between retailers, shoppers and generic brands, copies.
I give preference to brands in each of my businesses including my newsagencies, I always have. Brands are important. Supporting them makes a valuable statement in our businesses.
I urge newsagents to stock and promote brands. Use them in out of store marketing. Like Harris Scarfe, be know as the brand business in your area.
The gifts coming with Better Homes and Gardens out this Thursday are terrific, very Typo like – something for us to pitch at the front of the newsagency.
Newsagents should place the BHG stand on the lease line, to drive traffic. It is a gift with purchase like this that can drive incremental magazine sales.
The calendar category has been challenging for years thanks to Calendar Club and their heavy discounts early. Their approach to discounting has taught shoppers to not pay full price f0r calendars. I have seen them pitching 2017 calendars at 25% off already.
While there are newsagents who do sell calendars at full price successfully, this can come with friction that can turn people off the business … without the business knowing it.
Pet Stock is strong in the calendar space, offering a large range of calendars pet lovers are sure to like. The brand they sell is Magnet and Steel. In the hand, to me, they don;t feel as good a quality as the Borwntrout range but I suspect that does not matter.
Pet Stock has 2017 calendars prices at buy 1 get 1 half price across their network of stores. While I was aware pet shops had calendars, I was surprised at the range I saw on the weekend.
More harden centres and homewares shops have calendars too – pushing this category into more retail outlets. This makes sense given the special interest nature of calendar titles.
The challenges are two fold – more outlets and discounting by major competitors.
With discounting so early in a season by national retailers, I wonder if the message to shoppers is: we have overpriced our products so we can make this discount pitch to you. That is what I would think if I was the shopper.
With only a limited range of calendar publishers at the premium end of the category price comparison is easy. This is why newsagents in this space need to look carefully at what others are doing.
I know of newsagency businesses where calendar sales are worth $15,000 a year. It is in these businesses where there needs to be a differentiating and commercial response to Calendar Club, Pet Stock and others. The best response is to switch focus and change the conversation. However, this is not easy.
If calendars are important to you, be informed about competitors and engaged with a differentiating offer. Make sure your investment is not harmed by the actions of big business competitors.
If you have items that you know are regularly stolen through regular spot stock takes consider these tips for managing to reduce the cost of theft.
The alternative is you complain about the problem and do nothing and that is not good management. Theft is something to be managed.