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

Author: Mark Fletcher

Coles and News Corp. agree on newspaper returns processing changes

Distribution newsagents in Queensland have been advised by News Corp. of changes to the processing and handling of News Corp. newspaper returns. An outside party has been contracted to handle returns processing from the physical to the data aspects.

The change is significant as it contracts out work previously done by owls and newsagents to a third party, considerably further removing the newsagent from providing services previously core to their function. However, News says there will be no change to commission.

The good news for newsagents is that whilst the new process essentially means less work for you, there is no change to your distribution commission for Coles Supermarkets.

It does not make long term commercial sense for News to pay for work not being done.

There is no indication which party, Coles or News, is paying for the externally supplied services.

News explains the reasoning for the move with:

Coles Supermarkets recognise the complexity and challenges for both store staff and the servicing Newsagents. Appointing a third party enables one individual person the responsibility for the entire returns component thereby minimizing the risk of non-compliance. The appointed third party also brings a technological solution to eliminate paper forms, faxes, manual data entry, etc.

It is disappointing News has not taken up the opportunity to eliminate more paper forms, faxes and manual data entry for newsagents.

Download a copy of the News Corp. announcement here.

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Newsagency management

No appointment sick certificates for employees

I’m in Perth and drove past a pharmacy offering no appointment sick certificates for employees – on a billboard on the main road.

I thought it was a joke. It is not. Pharmacists can issue medical certificates for minor conditions. This pharmacy is promoting that service in a way that appears to encourage sickies.

I wish I had a photo to show you it. The billboard is bright, like they are selling the day off. It is also situated on a road you;d travel to a nice beach, very convenient.

Sick days are are right but they need to be respected. Make it too easy to get the day off and the right can be abused as employers can find with some employees magically using the exact number of days available just in time for the anniversary.

While don’t think we need to reduce the sick/personal leave allowance, there should not be promotion of an easy route to getting a medical certificate. Further, I’d be happy for pharmacists to not have the right to produce these.

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Ethics

Some newsagents concerned about lack of Disney story book collateral

disI’m opening this thread for a newsagent concerned about the collateral received from News Corp. for promoting the Disney story books. They say the one blow up character and two posters are not enough for what appears to be a big promotion.

My advice if you’re concerned about the collateral received is to contact News.

If you comment here and want more collateral, include your store details so News Corp. people reading this can contact you.

This is the first time I have noticed the blow up collateral. It’s a good idea but challenging to display if you don’t fill it with helium as some are finding.

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Newspaper marketing

Good counter pitch from Hallmark

hmkcompThe counter decals provided by Hallmark for promoting the picnic hamper giveaway for Valentine’s Day are terrific as they provide us with a reminder at the point of purchase of the promotion. We have ours placed next to the hamper – to help us pitch the purchase of Valentine’s Day cards.

Have you bought a Valentine’s Day card you – you could win this picnic hamper – this is the type of pitch that could help you drive Valentine’s Day card sales.

One of the best ways to increase sales is to ask. Too often in Australian newsagencies we do not ask.

One way to make it easier to ask is to have an opportunity. In our case this Valentine’s Day, the opportunity to win the picnic hamper is an ideal opportunity.

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Greeting Cards

A small but good gift fair – ideal for newsagents

melgiftThe Melbourne Gift Fair which ended Tuesday was a small event, a fraction of the size other Melbourne and Sydney fairs – but it was good value. It was easier to get around, less crowded – meaning one noticed more. I found it particularly useful for talking to suppliers of products you rarely see in a newsagency. As the fair was not as busy they were open to conversations about the type of business we are trying to create and why they need to consider us outside of what they think the shingle stands for.

I am a fan of smaller trade shows as they are easier to digest. If I had my way, events the size of the recent Melbourne fair would be done in Adelaide, Perth and Tasmania – as newsagencies, gift shops and homewares stores in those states would support them.

The massive Sydney and Melbourne fairs are challenging, particularly to small retailers looking for change for their businesses.

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Gifts

Staples in talks to buy Office Depot

The US media is full of reports that US stationery / office products giant Staples is in talks to purchase smaller rival Office Depot for a reported US$6.3B.

The merging of the two businesses, if it proceeded, would create a company of extraordinary size and might.

Staples in Australia owns what was Corporate Express. We have little understanding here of what they have they done in the US in the retail stationery space. Imagine Officeworks but better: more aggressive, more locations, more engaged with small business customers.

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Stationery

Where is good news for newsagents? Here is good news for newsagents!

crdAlmost every day there is optimism reflected in one or more posts here. While one or two think the benchmark results published today are negative, the results are actually positive because of the good news being experienced by some newsagents.

Optimism is in the eye of the beholder.

One of several items of good news in the results in the card department in my own newsagency. In a shopping centre with plenty of competition from majors as well as independents, card sales are up 16% year on year.

Others can achieve and are achieving similar success.

This is good news for the channel as it shows that independent newsagency businesses can compete – even when selling the same Hallmark cards that are in two supermarkets, two majors and several independents. Our independent newsagency competes on service and value and the result is 16% year on year growth.

This is good news as other newsagents can achieve this too. Sure it’s hard work and involved detailed business planning and running your own race sometimes against what a supplier wants. The results speak for themselves.

It’s not too late for newsagents to reinvent their businesses and to chase their own optimism.

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Greeting Cards

Tough December quarter for newsagents in the latest newsagency sales benchmark study

Australian small business Newsagents had a tough December quarter according to the latest newsagency sales benchmark study. Key performance indicators show traffic and revenue are down for many businesses in the channel.

Long-term core traffic drivers of magazines, newspapers and tobacco are challenges for newsagents. They can be lifted but it takes newsagents breaking free from the past.

Newer categories of gifts, toys and ink are growing for many.

The good news is the continuing trend – some newsagencies are growing faster than many retail businesses.

Here are the headline numbers:

  • Customer traffic. 65% of newsagents recorded an average traffic decline of 2.9%.
  • Overall newsagency sales decline. 67% reported an average revenue decline of 4.6%.
  • Basket depth. 52% reported a decrease in basket size (items in the basket) of 2.6%.
  • Basket dollar value. 18% of newsagents an average increase in basket value of 3.1%.
  • Discounting. Is increasing with 21% of respondents using a structured loyalty offer.
  • Circulation product sales. Newspaper and magazine sales continue to decline.

Now more than ever, newsagency businesses are not all the same. The gap between those in decline and those growing is greater than ever. Newsagents make choices every day that can help a business grow or hold it back.

It would be wrong to make a common statement about how they (we) are doing as there is no common situation.

Benchmark results by key departments:

  1. Magazines. 80.4% of newsagents reported an average decline (in units) of magazine sales of 6.75%. 19.6% reported average growth of 3.2%. The weeklies lead decline.
  2. Newspapers. 83.6% reported average decline of 3.4% in unit sales.
  3. Greeting cards.6% of newsagents reported average growth of 3.8%.
  4. Stationery. 72.3% of newsagents reported an average decline of 4.3%.
  5. Ink. 41% of stores report ink separately. Of these, 51% reported growth of 2%.
  6. Gifts. Surprisingly, 12.2% of newsagencies do not sell gifts. Of those with gifts, 86.2% reported average growth of 9.8% and 13.8% reported an average 6.3%.
  7. Tobacco. 38% of newsagencies in the study group do not sell tobacco products. This is a decline of 30% over a year ago. Of those with tobacco, 72% reported an average decline of 4.3% while 28% reported an average increase in sales of 3.6%.
  8. Confectionery. 62% of stores reported an average decline of 3.5%.
  9. Toys. 32% of stores reported toys separately. Of these 72% reported growth of 4.7%.

The strong are getting stronger and the weak are getting weaker. There is no geographic or demographic trend to this.

Product mix shift. The shift in product mix I have seen over the last two quarters is continuing. Within the expanding gift categories I can see some newsagents selling more expensive gifts. It is fascinating seeing these changes taking place.

I have not included my newsagency in this study. Here’s why: My numbers are outside the average and I did not want them to skew the results. I don’t mean this to sound arrogant.

My numbers all off a good base, are: Cards up 16% with Everyday Counter up 21% and it accounting for 32.02% of all sales, Diaries up 83%, Gifts up 69%, Magazines up 2%, Women’s Weeklies magazines (New Idea, Who, Woman’s Day, Famous etc) up 9%, Plush up 6% and accounting for 8.2% of overall sales and Toys up 42%. This business does not have lotteries and does not sell tobacco products.

Traffic is up 6%. Average sale value – up 8%. Average items per sale – up 3%. Overall average GP – up 14%. Each of these measurement points compounds on the other, delivering a very strong result for the business.

This growth is as a result of careful planning and pursuing what we stand for. This newsagency is in an outer suburban Westfield centre in Melbourne with around 300 stores including majors, another newsagency, two Coles supermarkets, Wild, Typo, several large independent card shops and twelve gifts shops. Competition is strong.

I include my own data here for comparison and to illustrate that I walk the walk with newsagents. When I encourage newsagents to try things it is because I do so my own business. I put my money where my mouth is.

What we do in this business any newsagent can do. Growth is achievable.

Newsagencies are good businesses to own. It would be wrong to say that the declines reported in this study reflect badly on the future of the channel. I think the results reflect badly on some operators, newsagents not chasing change.

The best type of newsagency to own is the one where you have the most control over what you sell and where you generate traffic for several product categories where average gross profit is 50% or higher.

The most important advice I have for newsagents has not changed: Run your business today as if today is your pay day. Too many newsagents continue to run their businesses as if their pay day is when they sell – this will not happen.

This year on year same-store newsagency sales benchmark study is an analysis of basket data from 167 newsagencies: city and country, shopping centre and high street, banner groups (Newspower, Nextra, newsXpress) and independent. To be included, a newsagency must have been using the industry standard Tower Systems newsagency software for both analysis periods and be compliant with industry data standards. NOTE: I have done these benchmark studies for many years, drawing on my experience with the Tower newsagent community. Around 63% of newsagents with a computer system use Tower. I have eliminated data from businesses where I knew that unique local factors impacted on the sales data.

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Newsagency benchmark

Boar It Up Ya supports newsagents!

Screen Shot 2015-02-03 at 5.41.04 pmThe publisher of Boar It Up Ya is promoting newsagents ion social media in advance of the next issue.

Local publishers who specifically support our channel ought to be applauded, supported and loved by newsagents.

The support from Boar It Up Ya deserves support from us to encourage other publishers to do this. This social media support is more valuable than points in a publisher loyalty program.

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magazines

Fewer Australian newsagents selling cigarettes

In the October – December 2014 newsagency sales benchmark study, the findings from which will be released tomorrow, the number of newsagents selling cigarettes has declined. 38% of the 169 newsagency businesses in the study do not sell cigarettes. This is up from 29% in the same study a year earlier.

Put another way, the results of the latest newsagency sales benchmark study reveal that 30% of the newsagencies have quit cigarettes over the last year. I doubt this is reflective of the whole channel as many (but not all) newsagents who participate in the benchmark study are either transforming their businesses or preparing to.

There are several factors playing into this move by newsagents: concern about public health, falling sales, tougher competition and better margin elsewhere.

A consequence of the regulation of tobacco products is that supermarkets tend to do it better. They have a big service counter at the entrance – a cigarette counter I’d call it. The size is such that it promotes it better than your average newsagency business can behind or under the counter. Cigarettes at a supermarket are more noticeable than in a newsagency.

The focus on health through retail changes, packaging changes and intensified health warnings provide for little or no upside in from a pure retail sales perspective. If there is no upside in a product and no mechanism through which a retailer can engage to drive sales then it is time to consider quitting.

I have seen newsagencies recently remove their cigarette cupboards from behind the counter and replace them with a new display space for gifts or other higher margin lines and report a better return on lease space as a result. As more newsagents share stories about such transformation more will follow.

From my benchmark study and accompanying basket analysis I have developed a couple of benchmark data points for my discussions with newsagents. Cigarettes sales of under $2,000 a week warrant careful consideration. An inefficiency rating of 50% or more – the percentage of times when cigarettes are purchased and nothing else – ought to intensify focus.

Whether to sell cigarettes or not is a personal choice newsagents get to make for themselves. My advice is to be guided by your own business performance data, layer this with a realistic assessment of competition and then consider the opportunity of the freed space. Whatever you do, you must do it competitively and in ways which financially benefits the business from a growth, return on investment and return on floorspace perspectives.

I stopped selling cigarettes in my newsagency in 1998. Our sales then were around $1,500 a week. 65% of sales were inefficient – cigarettes and nothing else and of the remaining 35%, the majority companion products were newspapers. Our stock holding was $3,500, labour cost each week around two hours and shrinkage running at 2%. The numbers were not working so we quit. It did not affect newspaper sales or any other sales. Indeed, the space we saved was put to better use which generated a better return.

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Newsagency challenges

Australians are fired up about the power of the supermarkets

I’ve received two calls in the last few days about supermarkets and the harm they are doing to small businesses like newsagencies. Each caller made contact as they wanted offer support for newsagents, they wanted to know what they could do to help and what we were doing to fight back against the market power of the supermarkets.

I get calls because of what I write here all the time – but not often from people who are not newsagents or connected with newsagency suppliers. These two callers were everyday people who only connect with newsagencies when they shop.

To the second caller, in response to their question when they asked how they could help, I said stop shopping at one of the major supermarkets. Their response was they could’t afford and didn’t have time to shop at the butcher, greengrocer, baker and the like instead of a single shop.

And therein lies the challenge.

People are emotionally connected to the idea of small and independent retail businesses but when it comes to time and money, the savings of both get them spending at the two major supermarket chains in growing numbers. This is the challenge for small business retailers – to address what matters most to people, to serve the selfishness of Australian shoppers.

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Ethics

Here’s another magazine I wish I could cut from my newsagency

mag-killFranchising is another magazine I wish I could cut. If I’m lucky I sell one copy but that is rare. This infrequent sale has not been enough to get Network Services to reduce my supply to one or even to cut it altogether in favour of a more successful title. The performance of Franchising reinforces why we need control over they titles we are sent.

Have your say on this topic if you want control over the magazines you receive.

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magazine distribution

Crossword placement change drives newsagency sales

magscrossengCrossword magazine sales are up 6% year on year for us and while this is a terrific result compared to the channel average, we continue to embrace opportunities for more growth. Over the weekend, for example, we had four pockets space next to British magazines and so placed four crossword titles there. We did this because of observations of people purchasing British magazines often purchase crossword titles in the same transaction.

Data and observations can help us make better business decisions.

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crosswords

Bauer Media trials Woman’s Day price increase and botches newsagent engagement

wwdiscBauer Media is trialling a price increase for Woman’s Day to $4.40 in Western Australia while at the same time offering it through Coles for half price and continuing to chase sales by including it in a discount pack at 33% off.

What makes the WA price increase trial worse is the poor and after the event communication by the company and their appalling handling of the trial from an operational perspective – disrupting customer service in retail and home delivery newsagencies because of a fundamental lack of understanding of how newsagents manage each of Woman’s Day through their businesses for home delivery and cutaway customers.

Bauer created a new title code for the eight week trial, disconnecting from the usual title code which is used in newsagency software systems for managing deliveries and putaways. From what I understand they did not tell newsagents until after it started.

If what I am told is true, those isresponsible for newsagent liaison for this trial ought to be reprimanded for a botched job as they have failed newsagents and their customers.

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Ethics

Newsagents: do your homework before taking on the Lyoness

I’ve heard from a newsagent this week about the Lyoness loyalty program. They wanted to know what I thought. I first wrote about the Lyoness in 2013 here. The ACCC has taken action against the operator of the scheme. The Wikipedia page on the Lyoness has more history.

The Sydney Morning Herald published an article about Lyoness earlier this month.

I’m raising it here again today to provide newsagents links to articles which may be of interest. While I have never used it, from what I read, Lyoness not for me. I’ve got other strategies that are working well to drive sales and shopped loyalty.

To Newsagents asking what they should do I say stay away at least until the ACCC action is concluded and a result known. From all I read, it looks to me like a pyramid scheme with your income dependent on those you attract, layering on layers.

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Ethics

Here is why newsagents need more control over magazine supply

magsm26Further to my post two days ago about a possible new approach to magazine distribution, the supply this week of Menace To Society by Bauer Media’s Network Services to newsagents is a good example of why we need control. This is a title serving a narrow and declining in size niche. In my own newsagency it is a niche of no interest or value to us. If I had control, I’d have said no to the title. But network does to give me the opportunity to say no.

Network demand we take on the debt yet they give us no reasonable mechanism through which to control this. It’s unethical in my view.

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Ethics

Giving Lula support

magslulaThe current issue of Lula magazine looks cool. The different covers make it especially appealing. While not a local title – it’s from the UK – it fits on our shelves as a title offering a good point of difference in the niche area serving women from the late teens through to the early thirties – this is an important demo for newsagents.

We’re supporting the current issue of Lula with extra pockets for a few days next to Frankie.

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magazines

Good days for newspapers

The win by the Asian Cup Socceroos last night, the Queensland election result and the situation of Tony Abbott’s leadership status are all good newspaper stories. Each presents us with opportunities to drive impulse purchases – opportunities to not be shopkeepers waiting for people to come to you but to be retailers pitching papers to customers.

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Newspapers

Good collateral for Disney promotion

d-magicNews Corp. has good collateral supporting the launch of the Bring Home Some Magic Disney campaign. We are promoting this with Disney product already in-store and, hopefully, achieve sales of non newspaper lines as a result of the newspaper campaign. Of the collateral provided, I especially like the floor decals – they’re more use in my view than posters.

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Newspapers

Sunday newsagency management tip: know your traffic drivers

What are the top ten products or product categories that bring people to your retail newsagency? Are sales for these categories growing, declining or static?

if you can’t answer this question, find out. It should be easy with your newsagency software.  In my own Tower Systems Newsagency Software is’s the 10×10 report – a report listing the top 10 items (or categories) and the top 10 items (or categories) selling with the top 10.

Knowing the key traffic drivers and the projection of sales for these can help with business planning. Indeed, it’s essential to business planning. Information in traffic reports will indicate the sales efficiency of these products.

Take newspapers. The daily is usually #1 or #2 at generating traffic, sales are often in decline and sales are often inefficient – with 75% and more purchases the newspaper and nothing else. While this can sound bad, knowing it is good, knowing it allows you to plan for change within your business to make newspapers more efficient, to drive sales and to find other traffic generators.

Data revealing bad news can be good news for your business.

Talk to your software provider about the report you need to see your key traffic drivers. Unlock the data and make moves based on what it reveals. This is an opportunity for growth!

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Management tip

Sunday newsagency marketing tip: be bold, drive traffic

beboldGo big or go home is is a terrific mantra to have in your head when setting up displays. Pretty is good, big is better. Big and attractive is the best.

My marketing advice today for in-store displays is go big or go home. Build a big display around a known brand in a category for which you want to be known – preferably a new category for your business.

Build a display where the display has to attract new shoppers – rather than gaining sales off of existing traffic. While it’s good when a display achieved incremental business from existing traffic, this is not adding to the long-term health of your business. New traffic is key and one way you can win new traffic is with big bold displays promoting products people are likely to return to purchase over and over.

This display is from one of my newsagencies. It stands two metres tall. It represents a known-brand, range, age diversity and engagement. Launching us into this category, the dip;ay was excellent. Tracking sales we can see more than half of the purchases were single category – most likely they cam in for this.

A big bold display is key to the marketing of your retail newsagency.

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marketing

Interesting comments on today’s newspapers

news-papertA couple of customers commented on front page newspaper coverage of the news today – that the two major dailies did not cover the situation re the Prime Minister’s grip on power.  One commented The Saturday Paper looked like the better paper for this story – and they purchased it. When the papers are stacked up as shown in the photo, it’s telling for people buying a paper for the news.

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Newspapers
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