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

Author: Mark Fletcher

Why I offered no goodwill and 75 cents in the dollar for stock to purchase a newsagency

I was approached recently to consider purchasing a newsagency which had been on the market for a long time. The owners were in dispute and wanted out urgently.

The figures provided were what I’d call creative. While I could see the business was losing money, a first time business buyer might have seen otherwise given how then information was presented.

The shop itself looked good, the shop fit quite new.  But it was old school. It would have looked relevant in 1980 but not today in 2014.

The business had lost one magazine distributor direct account. The stationery department looked okay but tired. the card department looked the best.

With plenty of the stock old and given the business was losing money I said I was not interested.  When pressed I said if I was to make an offer it wold be based on no goodwill and a payment of around 75 cents in the dollar of the wholesale cost of the stock. I said this knowing the business $50,000 in new stock and around $50,000 in replacing fittings – just to get started. So there was no point to me in rewarding the vendor for their poor management and poor decisions.

It turns out the vendor was told what I would pay – even though it was not an offer and was only mentioned in a highly conditional way.

The business has now been sold for a higher price than I would have contemplated. That tells me the purchaser has paid too much. The question on my mind is – has anyone told them they paid too much for the business?  If not, they will experience sticker shock within three months of settlement.

Those of us in the newsagency channel for the long-term owe those coming into the channel honest advice.

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Ethics

Using local products to strengthen your local voice

tinytracksThese Tiny Tracks CDs are produced by a local musician and they feature his arrangements and instrumentations of international music hits – in the form of lullabies to help kids relax and sleep. They are uniquely Australian product showing off Australian entrepreneurship.

Having Tiny Tracks at the counter or in the gift department enables us to promote the local connection and thereby give the business greater credibility in its local pitch.

Mother Hen, the company behind Tiny Tracks, is a preferred supplier to nextra and newsXpress. They will supply any newsagent.

This week I am drawing attention to several local suppliers newsagents could consider. Stocking products from these and similarly local suppliers adds credibility to our shop local pitch. To me, local products are products made and / or designed in Australia. If my newsagency was in a country area my focus would be more on products sourced even closer to home.

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Gifts

Magazines at the new Emporium centre in Melbourne

masnation-emporiumI checked out the new Magnation location in Melbourne’s just opened Emporium centre. They are presenting their range of special interest titles in a different way. magazines have less floorspace in a Magnation store today than when the group first started out years ago. I suspect this is a reflection of occupancy cost pressure.

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magazines

Good gift with purchase to promote

magsmotherandbabyThe gift with purchase with the latest issue of Mother & Baby magazine makes this a good issue to promote in a way that the full cover is on show – so the gift can be seen. We are using the opportunity to promote the title off-location – to get it in front of people not looking for the title.

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magazines

Health checks from Woolworths?

The announcement today that Woolworths intends to offer free heath checks is another example of why we need legislation to stop the growth of the supermarket duopoly in Australia. Indeed, politicians need to legislate to force a reduction of their market share.

Bob Katter was on TV tonight listing the businesses closed brown by the supermarkets. He included newsagents in his list. While I Tweeted Bob () to say we’re not dead yet, newsagents and every other small business owner in Australia needs to lobby their local politicians to call for legislation reining in Coles and Woolworths.

Enough is enough. We have to fight for our businesses, our families, our employees and ur communities.

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Ethics

Sell locally produced products for a better local pitch

chocgemsChocolate gems is a Brisbane based chocolate making business. Their products ware delicious. Better still, they are locally made. Newsagents wanting to pitch local chocolate should consider styocking Chocolate Gems products.  They can sell in bulk or in boxes – let them know your needs. You’ll find them easy to deal with. Selling Chocolage gems gives you an opportunity to promote that you;re supporting local Australian businesses.

Chocolate gems is a preferred supplier to nextra and newsXpress. They will supply any newsagent.

This week I am drawing attention to several local suppliers newsagents could consider. Stocking products from these and similarly local suppliers adds credibility to our shop local pitch. To me, local products are products made and / or designed in Australia. If my newsagency was in a country area my focus would be more on products sourced even closer to home.

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Newsagency management

STOP THE PRESSES! a must read book for newsagents

bookstopthepressesFilled with sad and frustrating stories and chronicling extraordinary mismanagement of a once-great company, STOP THE PRESSES! How greed, incompetence (and the internet) wrecked Fairfax by Ben Hill is an excellent book. It takes us through the history of the company, the impact of the internet and extraordinary mismanagement from the top down.

STOP THE PRESSES! also looks at what’s next. The Billionaires’ Playthings chapter is a must-read fort anyone interested in democracy in Australia and in the future of good journalism in Australia.

This is an excellent book. I highly recommend it.

Reading STOP THE PRESSES! I found myself recalling my own experiences dealing with Fairfax. Through my software company I have been involved with people at Fairfax for over thirty years. In the first ten years Fairfax people were arrogant yet clear in decision making and action. In the next decade they appeared scared. In the last ten years then have looked incompetent.

I sold my distribution business six years ago. In the years since, as a retail only newsagent, Fairfax has done nothing to increase single copy sales. This is frustrating as it has ignored a unique retail network run by people who did want Fairfax to succeed.

I have been particularly interested in their approach on cover price. As the relevance and quality of the print product has declined they have increased the price they charge for it. Nuts!

On specific Fairfax products themselves. In my own home town, The Age is a small shadow of itself. Each day it is running old news, news I’ve read online or on my phone already. The people putting the newspaper together have not come to grips with the need to publish in print different content to what we can access online, they are not embracing the print medium in a compelling way.

Fairfax was the first publisher in Australia to sell space in page one of its newspapers with the stuck on ads that I often complain about. Their preparedness to see an ad that covers their own brand or headlines for page one stories was evidence, years ago, of them giving up on their brand and giving up on news.

Note: I was sent a review copy by the publisher.

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Newsagency management

Good Chef Bad Chef 3 looks good

goodcbadc3The preview copy of Good Chef bad Chef 3 that I received last week is very popular in the office. Sales of issues 1 and 2 suggest that issue 3 will be very popular on the newsagency shop floor. On sale next Monday, I’d urge newsagents to promote the title heavily and reorder early as this title will sell all through the on-sale.  I know of some who early returned there last issue only to order more to keep up with customer demand. Don’t early return this title as the accompanying TV show will drive excellent interest.

Inside Good Chef bad Chef 3 you will find some delicious recipes. I love the look of the Beef and Guinness Casserole and the Wile Mushroom Gratin and the Kentish Cherry Butter Pudding.

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magazines

Respectful F1 magazine cover

magsf1racingbrabhamThe Jack Brabham photo on the cover of F1 Racing respects a hero to Australian Formula 1 racing fans. We are respecting the cover with placement such that the full cover can be seen. This is an issue more will buy – beyond the regular purchasers of this title. Take a look at your placement of the title.

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magazines

Old NW discounted with current OK!

cheapNWI don’t like these discounted bagged magazines from Bauer: they waste space in already crowded magazine shelves. This latest offer is promoting NW magazine with the current OK! – an offer that does not make sense to me. We have no space so have relegated the offer to a rear pocket.

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magazines

Sell locally-sourced products and prove your pitch to the local community

theatre showIf we are to promote a shop local pitch to our local communities we need to source locally made and locally connected products. This week I will draw attention to several local suppliers newsagents could consider. Stocking products from these and similarly local suppliers adds credibility to our shop local pitch. To me, local products are products made and / or designed in Australia. If my newsagency was in a country area my focus would be more on products sourced even closer to home.

Just Kiddin is a Melbourne based company run by a talented designer who sells her own designs in the form of tents and other products for kids. Their tents are terrific: easy to display (hang them from the ceiling), well packaged and of high quality. While major retailers have cheaper products, the Just Kiddin tents are seen by shoppers as far superior. In one of my newsagencies we have sold more than 60 tents in the last year – that’s close to $6,000 worth. They are a good fit with newsagents who sell toys, cards for kids and kids magazines – yep, just about anyone.

I first found the products at the Home and Giving Fair in Melbourne. The business owner and product designer was on the stand offering excellent insights into the products.

Just Kiddin has been a newsXpress preferred supplier for quite some time. They will sell to others.

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Ethics

Promotion drives sales of address books

Our address book sales are up from $61.95 for the first three weeks of June 2013 to $340.22 in the first three weeks of June 2014. This 449% increase in address book revenue has been driven by a small in-store promotion of our address book range – proving the value of promoting smaller profit offerings from the stationery department.

The promoting cost us little in the way of time and space yet the return was excellent. Our main focus was to let shoppers know we had a range. There was no big aisle-end display. There was also no special price offer.

Newsagents can increase stationery sales by focussing on pitching sought-after products in a way that encourages convenience shopping.

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Stationery

Best practice display of kids magazines

magsholidayskidsSmall format kids magazines like K-Zone, D-Mag and Total Girl need to be displays with the fill magazine on show. This is especially true at school holidays time when we have more kids in our newsagencies. The gifts bagged with the magazines are more easily seen if the titles are on full cover display and not placed in the usual magazine fixtures in many newsagencies.

I urge newsagents to check today how they have these kids titles displayed.

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magazines

Sunday newsagency marketing tip: how to make the most of school holidays

holidaysSchool holidays present an excellent opportunity for all retailers including newsagents. They bring out shoppers we might not often see and shoppers who are usually open to purchasing items they might not consider outside school holiday times.

School holidays present us with excellent commercial opportunities regardless of our newsagency location and situation.

Here are my suggestions for engaging with this recurring season:

  1. Treat school holidays as a season. Plan ahead with a clear focus in mind. Range a specific mix of products. Dress the shop for the opportunity.
  2. Change the entire front of your newsagency. With different and / or more people in the mall and on the street during school holidays than at other times this is your opportunity to get them noticing your business. Do this with a different looking shop front. All the products at the front of my newsagency are targeting kids as we are in a shopping centre and more shoppers in school holidays have kids with them than at most other times of the year.
  3. Range stock for the season. I love the idea of products that can be demonstrated – kinetic sand, bouncing balls, plush to hug, slime to throw and other equally interactive items to be demonstrated on the shop floor.
  4. Pitch an offer. Use the extra traffic as an opportunity to promote your value proposition. Promote deals in dump bins showing your offers as competitive against the majors in stationery, toy and gift categories.
  5. Engage your customers. School holidays are an excellent time for competitions or in store workshops.
  6. Engage your schools. Co-ordinate in advance with a local school an activity kids can do in the school holidays that connects with the curriculum. This can encourage the school to promote your business.
  7. Promote magazines. Magazines offer an excellent holiday pastime. Put together a display of school holiday fun and engagement from your magazine department. Get people looking at titles they might otherwise ignore during the year.
  8. Run a stationery sale. School holidays for some is about re-stocking supplies. It could be an ideal time to offer a deal on stationery.
  9. Have fun. Kids are on a break. They want to relax and enjoy themselves. Shopping is part of that. Help them have fun.

School holidays are not about dealing with more kids or being a child minding centre while parents browse magazines or even shop elsewhere. They are an opportunity to increase sales – by being proactive with the season.

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marketing

Sunday newsagency management tip: stand up for yourself

Every day I hear stories from newsagents about them being told what to do in their business by people outside their business. They are usually being told to do something they do not agree with, do not want to do or will not improve the financial return they achieve from their business.

Landlords, suppliers, advisors and employees often tell newsagents what to do in their businesses.

Historically, newsagents have been servants to publishers, as agents. Publishers were often brutal in enforcing their rules and demands. That continued as agents for lottery organisations (in most states but not all) with some representatives being brutal today in pushing newsagents to do what they want. In the magazine space, too, there are some supplier representatives who demand things of newsagents without a thought for the commercial value for newsagents.

It’s 2014 people.

Unless you have a contract that explicitly stipulates that you must do what supplier X demands, only accede to their demands if you agree and if you think it will put your business in a better petition.

Own your decisions.

There is no value in doing something you don’t agree with only because you are pressured. There is no commercial benefit from doing something, it failing and you complaining about it later.

It’s your business and your money at risk.

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Management tip

Your Knitting & Crochet Collection title sells out

bhgknittingThankfully, we are getting more stock of the Better Homes and Gardens branded Your Knitting & Crochet Collection Monday as we sold out Saturday. A couple walking past the newsagency on their away out of the centre noticed the poster and went in and picked up a copy. I saw this happen myself … it was another reminder of the value of a good poster out the front of the newsagency for an in-demand product driving a purchase. The customer left with an offer to entice them back.

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magazines

Double standards from Bauer on approving direct supply?

The Bauer requirement to prove a minimum sales volume in order to get a direct account does not appear to apply to all with one new account reportedly being approved by Bauer in a town already served with plenty of newsagents and in a small centre that has a challenged retail business track record. The history of the centre alone would highlight reasons for caution.

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magazine distribution

Great to see a small business fight the supermarket duopoly

10502467_810489645635731_8037353110881261883_nCheck out the photo of a sign in front of a local butcher a friend posted on Facebook yesterday. I love the direct and feisty words of this butcher who is making a plea for locals to support their small business and not the big supermarket.

With tougher competition from the supermarket dopily newsagents could engage in a campaign like this – educating shoppers about how Coles and Woolworths are taking business from us and highlighting what shoppers could miss if they ultimately win and see more small business newsagents and other local businesses closed.

We can’t stand by and do nothing. Like this butcher, we need to educate our customers with passion.

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Newsagency challenges

Coles out of date with magazines

colesoldawwThe issue of Australian Women’s Weekly on display in my local Coles supermarket is the old issue.  other they did not get their stock or they have not yet put out the new issue. Either way it presents an opportunity for the nearby newsagent. If it was me I’d be happy about this. Wins like this are rare.

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magazines

Too many copies of restored Cars

magsrestoredcarsOur supply of Retsored Cars Australia was increased without any justification in the sales data. While I like this Aussie magazine and want to support them, the publisher needs to ensure newsagents do not face an increase in supply without any justification in the sales data. Ugh!

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Magazine oversupply
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