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

Author: Mark Fletcher

The scare campaign by newsagent associations has damaged the image of the newsagency channel

Newsagent associations in Australia are not helping their newsagents with their talking down of the channel by claiming damage will be done if this or that protection is not offered.

For much of the last year they have run a negative campaign about lotteries on the east Coast and the issue of whether tatts places products into supermarket owned businesses.

NANA, the NSW Association lead and the ANF nationally supported the claim newsagencies would close. This is what is feeding into media attention on any matter affecting our channel right now.

This week it was the closure of Taylor Square newsagency that brought out journalists asking if this was a tipping point. Last week journalists were asking if the closure of Zoo magazine was a tipping point. I am gad I was approached so I could provide my opinions on both news items.

While the campaigns by the associations have raised awareness of the newsagency channel, the awareness is about imminent demise if this or that does not happen. Embedded in the claims by the associations is that newsagency businesses are on the edge, close to collapse if one more thing does not go their way.

The image of our businesses as fragile is an image created and promoted by the newsagency associations.

Shame on them for talking us down and for using the claim of fragility to support regulatory protection. This is not leadership – it a declaration of defeat. Plain dumb. And now, in the press and on social media this week, we are seeing the success of the association campaigns, we are seeing that people get that the channel is fragile and will collapse if one more thing does not go our way.

The newsagency channel is not fragile. Newsagency businesses are not fragile.  Okay, some are. But these businesses are not the channel.

There are many strong and growing newsagencies. Newsagencies succeeding at attracting new shoppers and selling more to existing shoppers. Some are doing it without lottery products. Others have moved away fro legacy products into appealing ne product categories. Others finely balance between the traditional and the not so traditional.

Rather than talk about these successes, we again see this week calls for protection and the threat of closure.

What an utter failure of leadership and a waste of millions of dollars of newsagent funds in supporting these industry associations.

I urge newsagents enjoying good times to talk about them: to the local paper, on facebook, on Twitter. Talk about growth, a bright future and your relevance in your local area. Talk up your business and the channel. You don’t have to share the secrets of your success – but certainly share the good news of your success.

Bad news sells. This is why the shrill campaigns of the associations plays so well with the media. Those of us who are optimistic about the future of the newsagency channel need to talk about this to counter the work of those being paid to represent newsagents. We need to pitch our good news for the truth it is and for the future of the channel in the Australian psyche.

Unfortunately, newsagents are allowing the associations to get away with poor leadership. Some agree because they want protection from regulation while others shrug their shoulders and do not want to have to become involved to fix it. Me, I refuse to support it and have not been an association member for years.

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Newsagency management

How can you sell cards to new customers if you leave them in the card department?

I have seen four or five card shops in New York this week with displays of greeting cards and wrap in their shopfront windows. Yes, they are pitching cards to people on the street. I have written about this several times before – that we ought to promote cards outside the card department, we should use them to drive traffic for our businesses. A display like you can see in this photo pitches the shop as a card specialist whereas a spinner of cards does not.

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Greeting Cards

Terrific pens at the counter display

State News is a rare business in the US, the closest type of store to an Australian newsagency. They sell newspapers, magazines, cards, stationery, candy, party goods, toys, plush and more. Check out the pen department. It is at the counter. It drives impulse purchases. A placement like this in a newsagency in Australia would be disruptive for sure.

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Stationery

Q3 2015 newsagency benchmark study announced

I emailed newsagents this morning seeking data for the Q3 2015 newsagency sales benchmark study. You can read the results of the Q2 study here. I am excited to see trends and generally check on the health of the channel.

Q3 2015 NEWSAGENCY SALES BENCHMARK STUDY.
I am preparing a fresh benchmark study for the newsagency channel to look at the latest sales trends overall and in key product categories. This study will help newsagents see the future based on the data trends. It will also reveal the difference between emerging newsagency model changes. Click here for my last report.

How to participate.

  1. Please run a Monthly Sales Comparison Report for 01/07/2015 – 30/09/2015 compared to 01/07/2014 – 30/09/2014.
  2. Tick the category box.
  3. Tick to exclude home delivery and sub agent data.
  4. DO NOT tick the supplier box.
  5. Preview the report on the screen. Save as a PDF and email this to me at mark@towersystems.com.au.

I will email the results to all participating newsagents and publish the results on the Australian Newsagency Blog as a community service.

Tower Systems serves in excess of 1,860+ newsagents with best practice newsagency software.

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Newsagency benchmark

Are you doing enough to change your newsagency for the future?

Plenty of newsagents are changing their businesses, bringing new products – indeed, whole new categories, reconfiguring floor space, removing newsagency-like fixtures, hiring non newsagency experienced staff and promoting outside the business.

I get to see the scope of change in data newsagents share when they reach out for advice or submit data for the sales benchmark studies I undertake. This is encouraging to see, exciting in fact.

But I wonder if the change I am seeing is enough. The failure to change played a role in the closure of Taylor Square Newsagency last week as I wrote here yesterday.

Today I am thinking about newsagent who have changed their businesses. Take the newsagency that has grown overall non agency Gross Profit from 29% to 34%, reduced operating costs and positioned the business so it is making a reasonable profit. Is this enough? Has the newsagent done enough to secure their future?

I am asking because of a discussion I am having with the owner of the newsagency at the moment. They know I am writing about it here without sharing any identifying information.

The owner thinks they have made enough changes, that they can keep doing what we are doing. They think this because after years of break even trading, the 2014/15 financial year was nicely profitable and 2015/16 will be profitable with their steady as she goes approach.

I can understand this thinking as their position today is considerably better than last year and the years before.

While they have made good moves and are seeing good results, they need to reach for more. They need to have a higher goal of GP growth, they need to see more new faces coming into the business, they need to trade more outside what is traditional for a newsagency.

I want them to push harder because I think trading conditions will be harder, more challenging … economically, retail, competition wise operating cost pressure and the cost of finance. I think it is healthy to expect tougher conditions and to respond as early as possible before such conditions eventuate. And if they do not eventuate, you have a better business anyway.

If your newsagency business is doing okay, if your numbers are improving, if you are profitable, I urge you to not rest on laurels. I urge you to push harder, chase more growth, reach way outside your business in pursuit of new traffic as this is where your brightest future is.

The reason for doing this is simple: the more profitable your newsagency the more valuable the business will be to a purchaser when you come to sell it or the more use it will be in funding your own future lifestyle.

If you are going and are happy with your business, ask yourself: can you do better and if so, what’s the plan?

The plan needs to be broadly based, driving the appeal of the business across age groups, interests and genders. Unlike some expect, it will be a plan of many small steps rather than one big move. It will be local and personal. It will take you on a journey further away from the newsagency shingle.

Most important: the plan will not stop. A great result as being seen in the newsagency I am working with at the moment does not mean you can rest. Indeed, it ought to encourage you to push harder. That is the point of this post.

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Management tip

Massive comic department

Check out the amazing range of comics at Midtown Comics in New York. This is one of three locations they have in the city. This photo shows a third of the first floor of the two-floor business. Their range is inspiring and their strategies fascinating. I learnt a lot.

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magazines

Now this is a party shop

Most newsagencies have a party section. Some go deep into this category selling costumes, balloon features and more. It is a space our channel was well known for decades ago, one today that has moved to specialist retail. In the US I have seen some amazing party shops, like this one on 14th Street in New York that I visited today. While the population density is different, you can over come that to an extent by creating an offer people will travel to shop.

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Newsagency management

The NSW newsagent association shows it’s out of touch

Today’s Australian Financial Review has a report into the closure of Taylor Square Newsagency and implications for our channel. Misa Han interviewed the owner of Taylor Square, myself, the owner of newsXpress Bell Park and Greg Handley, the President of NANA, the NSW / ACT newsagent association.

I am disappointed at what Greg Handley is reported to have said.

Newsagent peak body estimates more than one in three newsagencies may face closure if Coles and Woolworths enter the lottery market.

“Newsagents cannot match Coles and Woolworths with their bargaining powers. They could do the same thing with what they’ve done with vegetables and say you get $1 milk if you buy lottery tickets,” Newsagents Association of NSW and ACT president Greg Handley said.

“It’s not that it’s protecting newsagents, it’s for small business. The rationale behind it is to keep a process that where those people have paid good money on a fee for the right to sell the lotteries, they made the lotteries products very profitable for the NSW government and in the process the NSW government got a lot of money when it sold that to Tatts.”

Mr Handley said newsagents typically rely on lottery sales for somewhere between 20 to 85 per cent of their profit.

What a defeatist message. It’s a dinosaur view about the extinction of our channel, a view I do not share. Hardly had a perfect opportunity to show leadership for newsagents and instead used the we deserve protection argument. Between the lines in his argument is a call for newsagents to quit NANA and invest their money in more proactive pursuits.

I had a long interview with the journalist. She wanted to fully understand the issues and look at this from multiple sides. I am happy the optimism I hear from so many newsXpress newsagents is reflected in the article.

I also wrote here about the closure of Taylor Square Newsagency this morning.

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Newsagency management

My advice if you think closing and walking away from your newsagency business is the only option available to you

Taylor Square newsagency in Sydney closed Friday last week after decades of service to Darlinghurst locals, many who partied in the area and many more who travelled there for their unparalleled range of magazines. The Piggott family were passionate about magazines.

The report cites the NSW government lockout laws as a major cause of the closure.

While I understand the impact of the lockout laws on overnight traffic, they would have less effect on the main part of the trading day from 7am to 6pm when most business is done.

While I am sure the lockout laws played a role as did the messy and drawn out changes to Oxford Street, I think other factors played a role – magazine sales, newspaper sales, the positioning of the business in a changing retail environment and out of store engagement by the business.

The biggest challenge faced by Mark and John Piggott is the same faced by many newsagents – how to drive the relevance of the newsagency in a rapidly changing world. We talked about this in the context of the business many times over the years. Our discussions were based on an assessment of their own business data, evident trends forecast in their data, trends that lead to the closure Friday of the business.

I wish this business had not closed. I wish John and Mark were running a reinvigorated and reinvented business today. I wish they were running a new Taylor Square Newsagency that was known for innovation as well as maintaining a stunning range of magazines.

Several times over the years I pitched structural changes to Mark and John including:

  1. Reducing opening hours by carving out the late night hours that are not profitable.
  2. Replacing underperforming legacy categories and introducing specific new traffic generating lines.
  3. Cutting magazine space to drive a better return on space.
  4. Out of store marketing to reach new traffic – people not currently aware of the business.

I appreciate these four points are not as simple as they look. Embedded in each is fundamental structural change to the business to make it relevant to today. Take the second item, several times I looked at this business point two alone should have resulted in more than 50% floorspace change by bringing in completely new product categories to open the appeal of the business beyond those who still remember what a newsagency was from the 1950s and 1960s. Those customers are dying, we need businesses that are relevant to the those spending money today. They don’t care about the newsagency of yesteryear, they care about what they like today – regardless of the shingle under which they purchase it.

It is not my intent with this post to come across as someone dancing on the fresh grave of Taylor Square Newsagency. Rather, I want newsagents to use news of the closure to shake themselves into realising that it is not too late to change and that change does not mean ignoring key categories at the core of a successful newsagency, categories we need such as magazines, newspapers, greeting cards and stationery.

It takes guts to embrace and chase change. The sooner you engage with this the better. From where I stand, the best encouragement you will get will not come from traditional sources of newsagency management advice such as your industry association of the National Newsagent magazine – they are rooted in the past.

My inspiration comes from looking far outside the channel at trade shows for other channels, at other retailers and at trends online. We have to have the guts to play outside the limitations of our shingle. We have to have the foresight to see a business beyond the traditional. We have to chase customers never thought we could attract.

But most of all we have to do something.

Complaining is not a management activity.

Here is my top-level practical advice for any newsagent contemplating closing:

  1. Dig depict your data and look for green shoots of good news onto which you can attach growth.
  2. Stop doing what is not profitable.
  3. Be a retailer and not an agent.
  4. Find products that will generate traffic in your location.
  5. Refuse to be restricted by the shingle under which you trade
  6. Change, change and change your business.
  7. Join a marketing group or at least partner with an outside force that will challenge you and open you to opportunities you don’t see today.

There are plenty of newsagents enjoying good results and feeling optimistic. I think anyone can.

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Newsagency management

Now this is a magazine shop

Got to spend time in this magazine shop in New York yesterday and today. The range is extraordinary and their customer service excellent. Their model is inspiring. It is helped by lower rent and lower labour costs than what we have.

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magazines

Now is the time for small business retailers like newsagents to engage on penalty rates

With the new Malcolm Turnbull led government retailers including newsagents have a moment in time opportunity to engage on matters important to us, such as the issue of weekend penalty rates.

The new PM had spoken about the issue and we know the Productivity Commission is working on a report on this and employment terms more broadly.

I urge newsagents to leverage the opportunity of the new Turnbull government by letting local members and appropriate ministers know your views on penalty rates. The PM has said he wants to have an intelligent conversation on a range of matters. To our small businesses, weekend penalty rates are one such issue.

While some prefer shrill argument on the matter, the reality is there is plenty to discuss calmly and based on facts – and that is what is needed here. Calm discussion. Not in the media. Not by politicians and acolytes who refuse to consider any alternative to their view.

No, we need rational discussion on what could be, for the benefit of everyone.

My concern is specifically around weekend penalty rates. I’d like to see them pulled back to a 25% premium on top of regular hourly rates. I think 25% is fair. The current model is especially unfair in businesses where retailers have little control over the price of what they sell.

The adult casual employee hourly rate is $23.74 plus superannuation. Businesses have on-costs such as workcover and other overheads that need to be considered when assessing the cost of employees.

The Saturday rate for this casual employee is $25.64 while the Sunday rate is $37.98. The public holiday rate is $52.22.

I would prefer a flat penalty rate of $29.67 for Saturdays, Sundays and public holidays.

I know of many newsagents who would roster employees on for Sundays and public holidays if there was a lower cost of penalty rates – rather than working themselves. I also know of newsagents who would increase rostered hours if the hourly cost was less. Both examples show where people not getting shifts today would benefit.

There will be those who say such a move is not fair to the workers. I can understand that view since I am proposing we take something away they have today. However, $52.22 for a public holiday is unjustified in my view. I think it reduced the opportunity for more to get work. For many I speak with there is no burden of working a public holiday. Further, there is no bonus revenue windfall for the retailer, no extra capacity to pay a higher hourly cost.

Now is a good time to make the case to your local member of parliament and to the various new ministers who will consider the new government’s position on this matter.

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Newsagency challenges

Why I want higher margin better selling diaries

IMG_0012The space allocated to these diaries costs close to $40 a week in rent. That is what I need in gross profit each week to cover the space cost.

Publishers say the sale or return model mitigates risk along with the generosity of delayed billing. Neither of these things pay the rent and rent is the issue. It goes up 5% every year without fail. We either sell more or get higher GP$.

Unless publishers address the rent issue, newsagents will continue to reduce space allocated to lower margin product.

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magazine distribution

Why newspaper publishers need not worry if newsagents put newspapers at the back of the shop and why newsagents should place them there

More and more newsagents are placing newspapers deeper into the business, allocating less expensive space as well as allocating less space overall.

While newspaper cover prices now (finally) increase regularly, the additional margin dollars earned do not keep the return at a reasonable level because of the unit sales decline.

Newsagents cannot afford to provide front of store space to newspapers nor can we allocate the space needed for the old style publisher mandated fixtures that many of us called boat anchors. Publisher designed fixtures naturally feature specific mastheads, often taking more space than can be justified based on the return achieved.

Basket data analysis indicates newspapers are not the destination purchase they used to be.

The best approach I see is where newspapers are placed in generic fixtures toward the rear of the newsagency and in space that otherwise might not be financially valuable for the business. Customers will seek them out, especially if getting there is not too hard and if newspaper products are presented in a shopper friendly display where you place them.

My experience is that moving newspapers from the publisher preferred front of store display to a mid store or rear of store display does not, of itself, reduce newspaper sales.

Publishers do more to harm over the counter newspaper sales through home delivery discounts, supporting other retailers, deals with fast food outlets and by giving papers away. I see this as competition against my newsagency.

In response to all these activities newsagents need to treat newspapers as any other product. They have to pay their way. One way to do this is to encourage shoppers to shop the shop. This can be done by placing newspapers such that shoppers pass more other products to and from the newspaper stand. Placement needs to be tactical. get it right and newspapers can help drive a better return through a deeper shopping basket.

In my own newsagency newspapers are two thrifts into the shop, on the front of the main magazine aisle. They are well laid out. The full cover of each of the top selling newspapers is on show, helping to drive impulse purchases. from time to time we supplement this with counter promotion – based on the cover story. We also occasionally contemplate lease line promotion – again based on the cover story.

Newspaper publishers think that supplying a purpose made fixture gets newsagents to place newspapers in a better location. Those days of a nice stand driving behaviour are gone. Now, our focus is on financial return on floorspace, inventory and labour. One way to improve return is through a contribution to space cost. Any publisher offering this will get my attention.

In the meantime, my advice to newsagents is to exert control on where newspapers are best located in your business to make the best possible use of space for your personal benefit.

To publishers I say – don’t see this move as negative. rather see it as newsagents finding a way to keep newspapers in the newsagency longer. The alternative is they quit them altogether.

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Newsagency management

Leveraging the Oprah cover on AWW

Screen Shot 2015-09-28 at 3.16.41 amI am leveraging Oprah on The Australian Women’s Weekly through social media and other out of store promotions. This type of promotion is simple, free or low cost and effective at linking the newsagency business with a respected star and the magazine. I urge all newsagents to promote magazines in this way. It’s smart business.

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marketing

Sunday newsagency challenge: display cards off-location

IMG_9721Place a selection of cards from a caption away from the card department, in context with the display with which you place them. This photo shows placement of graduation cards with graduation gifts. We are selling six to eight cards a week from this off-location placement. I suspect most purchases have not been destination purchases. In other words – people have purchased a card from here on impulse because we have the cards placed here.

Try this tip and expect to sell more cards.

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Management tip

Sunday newsagency management tip: track business performance daily

Screen Shot 2015-09-25 at 8.40.25 amI get a text message and email daily of sales by departments for each of my retail businesses. The message is sent without any human intervention. It tells me the business has closed for the day. In a couple of instances it has revealed an unacceptably early closure. The most important benefit is knowing how key departments are performing without having to log in a check.

While the text messages and emails are no substitute for professional business reporting, they are real time check-in with performance.

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Management tip

Sunday marketing tip: make your own showbags

It is Royal Show time in Melbourne and one way to drive interest in your business in-store and online is to create showboats for sale or giveaway to customers. This could be your opportunity to quit stock and push perceived value.

Even if it is not show time in your area, it is school holidays, or close to, so why not have a show bag for kids, for fun and to show your business as pitching something different to other retailers for this time of the year.

Gather a mix of items together, set a date for the promotion, maybe have some rules around age and some activity you want them to undertake. Invite suppliers to provide samples. HAVE FUN!

This is a simple low-cost marketing tip that could work in any newsagency any time.

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marketing

Mindfood a bright Spring title

IMG_0024The latest issue of Mindfood is a magazine you may ant to get out of the usual magazine fixture and place on full display. The cover is bright and appealing – the kind of cover that gets a magazine picked up and considered. I love it.

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magazines

Newsagents need to be careful with Star Wars products

I am told unauthorised Star Wars products were being pitched to newsagents last week. The person pitching was seeking orders, secured with a deposit. The company they claimed to be from is not an authorised Star Wars licenced product supplier. While the products could be legit – but it is hard to tell at this point – the process feels far from legit.

My advice to newsagents is to be careful. The Star wars licence will be fiercely protected,. You do not want to be caught with products that are not authorised.

Do not pay a deposit to any supplier, especially one pitching in-store for the first time without an appointment. Right there are alarm bells.

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Ethics

Example of poor magazine label placement in the newsagency

IMG_9987In my view the only magazines you need label are low volume monthlies. If you do label, get it right. This photo shows worst-practice labelling. The label covers the most important word on the cover of Quarterly Essay.

Removing the label – on the right of the photo – makes this title more compelling and the topic more easily understood.

I urge newsagents to remind team members about the proper placement of labels. Get it right is it should help drive sales.

Also, take time to reassess the titles you label. Label less and save time and money.

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Newsagency management

Cats and dogs sell magazines in the newsagency

IMG_9996 (1)As the Seven Network discovered recently, people love cat and dog videos. I know from calendar sales cats and dogs are popular. This is why I have the latest issue of That’s Life out in a feature off-location position to leverage interest in the pets. The free booklet is a perfect reason to give this issue of That’s Life a promotional boost.

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magazines
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