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

Author: Mark Fletcher

News Corp deal makes Coles look cheap and newsagencies look expensive

appalling-insideoutNews Corp’s Inside Out magazine is on sale at Coles for $6.00, $2.20 less than the price in newsagencies and other retail outlets.

How is it that this News Corp. title can be sold to shoppers at Coles for less than newsagents pay for it?

Why would newsagents not early return all Inside Out stock right away in protest at this deal?

One of my newsagencies is directly in front of Coles. This deal makes us look expensive. It plays into the Coles advertising that they are driving prices down.

I’d love to know if there is a deeper deal between News Corp. and Coles that could see other deals that make newsagencies look expensive to what Coles offers.

Once you consider this Inside Out deal and last week’s Woman’s Day deal, supermarkets certainly have newsagents in their sights and some suppliers appear willing to play with them. We need to remind these suppliers that we are a strong national channel.

Other newsagent suppliers note: resist pressure from Coles to join them on the race to lower margin business. The more shoppers you turn away from newsagents the more you rely on the likes of Coles and think for a moment what that world looks like to you.

Note: I moved this post from yesterday to today to keep the issue in the spotlight.

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Ethics

Relegating The Age to a lower shelf

fairfaxcutbackWe have moved The Age down from our main newspaper shelf on weekdays given the low sales volume. Sales are not paying for the space.

We have filled the space with popular magazine titles that we think will interest newspaper shoppers. The magazine mix will change over time based on what we think will work best from here. It’s all about return on shelf space.

On Saturdays The Age will be back on the top shelf due to higher sales and the physical size of the issue.

From time to time we will give The Age  time in the sun just as we support any lower volume title.

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Newspapers

Moving AWW cover of Turia Pitt covered

awwcoverjul2014The impact of the moving cover shot on The Australian Women’s Weekly featuring ultra marathon runner Turia Pitt is diluted with the placement of a free Chocolate cookbook covering almost half the cover.

The stuck on chocolate cookbook plus the Priceline catalogue on the back page make this a messy issue to display when customers browse the magazine and shove it back into the shelves, damaging the stuck-on attachments.

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magazines

Network overloads PlayStation Australia magazine

magsplatstWe can’t work out why Network Services would increase our supply of PlayStation Australia when we have not been selling out. There is nothing in this issue to justify the increase. All we can put it down to is that Network has spare stock they need to send out in order to charge the publisher distribution fees. Network wouldn’t do this to Coles.

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Magazine oversupply

Cigarette management a key factor in newsagency employee theft

How cigarette stock is managed in a newsagency provides an excellent indication of the employee theft risk. If a business does not track all movements of cigarette stock it is more likely to be victim of employee theft.

I choose cigarettes because tracking all stock movements is easy and because cigarettes are often stolen by employees if they think sock movements are not being tracked.

Do you track all cigarette stock movement? If not, why not? Tracking it shows your employees that you are serious about an accurate stock count. It also helps you order more accurately and thereby not over stock. It also quickly identifies any discrepancy in stock on hand.

I have seen businesses where there was no tracking of cigarette movement, stock was stolen and plenty of cash was stolen because the criminal employee know that management of the business was weak.

My experience of uncovering and tracking employee theft in newsagencies and assisting police and prosecutors is that a business introducing and maintaining tight control on cigarette stock movement will reduce the incidence of employee theft.

Why newsagents would not do this is beyond me.

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Newsagency management

Where it goes newsagency profit flyer updated

whereitgoesI have updated the flyer I published here last year that was designed to help advise newsagent employees where the profit made in the business goes. The updates improve clarity of the message.  Click here to download the document in Microsoft Word format. Feel free to change it as appropriate to your needs.

By informing employees of where all revenue received by the business goes we are trusting them and hopefully encouraging more valuable engagement in the running of the business.

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Newsagency management

American shopping malls a dying breed

BqkQoj6IYAAKHuyMore and more reports are coming out of the US about shopping malls that are closing and being abandoned. What’s interesting is that it’s mall based shopping that is challenged and not shopping itself. The New Yorker has an interesting report quoting Rick Caruso, CEO of the company with malls delivering best-practice per square metre sales. Caruso malls are outdoors and more about the LA lifestyle experience.

This trend is one we need to watch and assess whether it is unique to the US or something we are likely to see in Australia because right now, we’re seeing more malls being built than close – leading some to say we are over served with retail space.

There was a time when being in a newsagency in a shopping mall was the preferred outlet. Today, that preferred location is more likely to be a high street situation in an area with a strong sense of community.

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retail

The world cup of beer

worldcupbeerIn a supermarket a few days ago I saw this World Cup themed display promoting beer. Whereas other retailers had displays of soccer balls and players, this retailers was focussed on the competition through products they sell. Very clever.

The display is also interesting because it adheres to the basics of good visual merchandising: pyramid in shape and telling a story.

While newsagencies don’t have the product range for this type of World Cup promotion, I am sure with some thought we could have done more to connect with this international event than just sell magazines, stickers and cards.

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visual merchandising

The unexpected gets noticed in retail

plantsIn a large book and clothing shop a couple of days ago I noticed a structural column in the middle of the shop that would otherwise be an eyesore was host to a beautiful garden with live plants shoppers were encouraged to touch.

Here, deep in the shopping mall and in the middle of a large busy shop, they had turned a challenge into an opportunity for left-field shopper engagement. Kids and adults stopped and touched the plants. Most smiled.

Using a structural column for this is unexpected. I found it made more interested in what else they were doing in the shop – kind of if they are smart enough to do this they must be doing some other cool things.

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visual merchandising

Using colour to underline a display

basecolourI love the use of the bright blue fabric to draw attention to the entrance display in this shoe shop I saw on the weekend. From across the mall you could see the blue. It was the brightest spot in the store, it drew you to have a look … and that’s the goal of any display.

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Colour blocking

Excellent visual merchandising example

vmdisplayI saw this coffee-themed display is a supermarket a few days ago and stopped to take in everything they had done to make such a stunning display.  I call it stunning because it stopped me in my tracks – it had everything: clear signage, a pyramid structure, an excellent range of products – from individual items to hampers – that combined told a story and additional information – see the blackboard. I’d say this is one of the best visual merchandising displays I’ve seen in a supermarket.

Go into a capital city shopping mall with major retailers and this is the type of display you see greeting shoppers at the entrance: pyramid in shape and telling a story, enticing shoppers to step into the business.

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retail

Smart retailers embrace colour blocking

cakecolourI’m posting this photo of an example of how a cake shop is using colour blocking to create a more visually effective display. We have many opportunities in our newsagencies to do this – to collect products together based on colour. The result should have a strong visual impact. It should also bring to the spotlight items that otherwise might not have had the opportunity.

I’ve added a new category of posts on the blog: colour blocking – to make it easier to see past posts about this.

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Colour blocking

Fewer lottery jackpots feeding a decline in sales

In the first half of 2013 there were 23 lottery jackpots with a first division pool of $15 million or above. In the first half of this year that number dropped to 19.

Newsagents looking to understand why lottery sales this year compared to last may be flat or down should look at the impact of jackpots on their lottery sales. While jackpots impact businesses differently, the reduction this year over last is certain to have impacted some.

Breaking doen the games is also useful in that Powerball has had more jackpots from what I can see yet this has not delivered the level of sales bounce retailers want in some businesses I have seen.

As the survey here in May revealed, jackpots play a vital role in driving shopper engagement with lottery products.

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Lotteries

Australia Post opens a conversation about its future

Newsagents, especially those with LPOs, ought to read the announcement from Australia Post last week about terms, services and other major developments.

Australia Post has moved to strengthen its vital regional and rural store network by announcing a package of initiatives that includes increased payments to post office operators and wider access to point-of-sale technology enabling customers to access more services.

Their rural sustainability package will be of particular interest:

Offering connection to Australia Post’s electronic point of sale system (EPOS) for 432 LPOs that currently use manual processes. This will allow these stores to offer customers additional services such as payment by credit card or EFTPOS and banking services
Increasing the minimum guaranteed annual payment for LPOs and introducing a minimum payment for CPAs
Increasing payments for providing working space to mail and parcel contractors
Increasing payments for representing Australia Post to the local community
Removing the EPOS transaction shortfall fee

In a move that respects the ownership Australians feel over Australia Post, they have opened an online conversation through which they are seeking feedback on a range of fronts including their announcement last week. Newsagents with LPOs ought to take a look at this as a channel through which to communicate with Australia Post about concerns.

I’ve whacked Australia Post a bit here. This time, however, they deserve kudos and appreciation for how they are dealing with a complex set of challenges. A lesson for newsagents is that Australia Post is publicly embracing change on a range of fronts.

Thanks to Tech expert and commentator Paul Wallbank for the tip on this.

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Australia Post

Excellent example of attracting shoppers with a ‘deal’

cleverimpulseI passed a WH Smith store in Melbourne last week and they were using this 2 for $8 promotion to attract shoppers in-store.

While the deal was not good value in my view, the actual promotion was done in such a way so as to make it feel like a good deal.

The stand itself is excellent, ideal for this type or promotion. The supplier collateral, tailored to the stand, helps give shoppers confidence in the offer promoted.

There is nothing stopping newsagents who want to play in the c-store type space running deals like this on a stand like this.

With WH Smith expanding in Australia, expect to see more of this type of unit and promotion.

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Impulse lines

Launching Simpublica

simpublicaWe are supporting the launch of Simpublia magazine with prime placement in our science / news / related area. Simpublia is a good looking special interest title targeting readers of value of newsagencies – hence our support for the launch.

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magazines

Newsagency marketing groups / franchises and marketing funds

I’ve been asked a couple of times recently about marketing fees they pay to their franchise / newsagency marketing group and the obligations of the groups to disclose how the funds are spent.

One business owner told me their group, which operates under a franchise agreement, has refused to provide any visibility of marketing funds collected from members and how they have been spent. The group in question is collecting well over half a million dollars a year.

The law is clear on marketing funds for groups that fall under the franchise code of conduct.

Here is what the Trade Practices (Industry Codes – Franchising) Regulations 1998 says about this:

17            Marketing and other cooperative funds

(1)   If a franchise agreement provides that a franchisee must pay money to a marketing or other cooperative fund, the franchisor must:

(a)    within 4 months after the end of the last financial year, prepare an annual financial statement detailing all of the fund’s receipts and expenses for the last financial year; and

(b)    have the statement audited by a registered company auditor within 4 months after the end of the financial year to which it relates; and

(c)    give to the franchisee:

(i)    a copy of the statement, within 30 days of preparing the statement; and

(ii)    a copy of the auditor’s report, if such a report is required, within 30 days of preparing the report.

(2)   A franchisor does not have to comply with paragraph (1) (b) for a financial year if:

(a)    75% of the franchisor’s franchisees in Australia, who contribute to the fund, have voted to agree that the franchisor does not have to comply with the paragraph; and

(b)    that agreement is made within 3 months after the end of the financial year.

(3)   The agreement referred to in paragraph (2) (a) will remain in force for 3 years, and franchisees must vote, at the end of that time, in accordance with paragraph (2) (a), for the agreement to remain in force.

(4)   If a franchise agreement provides that a franchisee must pay money to a marketing or other cooperative fund, the reasonable costs of administering and auditing the fund must be paid from the fund.

If you are in a marketing group or any franchise group and contributing to a marketing fund, they have an obligation to report to you. If they have not been doing this you can report them to the ACCC.

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Ethics

Newsagents: beware scams

I’ve heard of several newsagents in the last few weeks being targeted by scammers. In one case it was an advertising scam where the caller asked if they wanted to continue with their charity magazine advertising – there was no magazine. In another case, a newsagent was contacted by a scammer posing to represent an energy provider.

It’s important your employees know what they can an cannot agree to on the phone. Be clear in the rules and avoid being hit by a scan. The ACCC Scamwatch website has excellent information on this. Be sure to look at the small busyness section.

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Ethics

Attracting geeks to the newsagency

raspberrypiThe Raspberry Pi is a cheap computer that has achieved mass appeal including with geeks. The Ultimate Guide to Raspberry Pi Magbook is a good title for promoting where geeks can see it and see your business as worth visiting. We are using this as a title to pitch relevance to a shopper who might otherwise not find products or titles relevant to them.

There are plenty of products we can pitch to the Raspberry Pi fan: activity packs, geek-themed impulse lines, Dr Who products and plenty of licenced products. These and others are opportunities whereby we can use a magazine to attract a shopper who could be considerably more valuable to us than for the magazine purchase itself.

Check out the Raspberry Pi website to learn more about the customer – it’s fascinating.

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magazines

Woolworths retailer features Frankie at the counter

frankiecounterduxCheck out the very simple yet visually effective approach being taken by an outlet of the Woolworths owned Thomas Dux supermarket to promote the latest issue of Frankie magazine.

Note the lack of clutter at the counter –  this is a very smart, and I suspect effective, way of achieving impulse purchases of the popular magazine.

The Thomas Dux approach is different to what most newsagents would do. We can learn from this.

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magazines

Tatts promotes online purchases with competition

tattsplaymoneyTatts is running a competition that seeks to educate customers about purchasing entries online. Their $1,000 Play Money competition pouts you in the running if you purchase or renew your Tatts card, buy a ticket – and you’re in the running. The website seems to indicate that the buying of the ticket is done online – look at the tab: Buy online.

A check of the rules indicates that any ticket purchased using an eligible registration card gets you in the running. It’s a pity their website did not actively promote the retail network for this promotion.

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Lotteries

Sunday newsagency marketing tip: show the outcome to inspire sales

eifelShowing an outcome is common in advertising and marketing in all sorts of businesses. It can work just as well in a newsagency.

Take the humble jigsaw puzzle. By erecting the 3D Eiffel Tower and placing it as a centrepiece of our new Ravensberger jigsaw puzzle display we have attracted new shoppers, people who have not shopped with us before.

What products do you have in your newsagency that you can assemble or otherwise setup to show the outcome your customers can achieve? Expect to increase sales! 

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marketing tip

Sunday newsagency management tip: know your benchmarks

What percentage of sales revenue do you spend on rent, labour and marketing. These are three key business performance indicators yet they are often not top of mind for newsagents. Labour should cost between 9% and 11% of revenue, rent should cost between 11% and 13% and marketing should cost between 2% and 5% if you are to be competitive.

If your costs are lower, good. If they are higher, you have work to do.

FYI, when I talk about revenue it is revenue from all products and commission from all agency business.

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Management tip

Publishers ought to price newspapers based on the shelf life of the product

rushourThe shelf life of a daily newspaper is less now than at any other time in its history. Indeed, news stories are often out of date by the time the press machines start rolling.

While the price of other products with a limited shelf life, such as fresh food, is reduced as it nears expiry, newspapers hold their price until returns for pulping.

We ought to price newspapers on a sliding scale – the later in the day the cheaper they become. We could modify newsagency software to set a price based on time of day and to report sales by time direct to publishers.

While some will wait to get a few cents off the price of a newspaper, I doubt those who purchase newspapers for the full experience will care.

I’d suggest full cover price until 2pm at which time its drops to 25% off and then for the last hours of the trading day it drops to 50% off. A trial could test if the timing and the discount quantum is right.

The goals need to be zero returns plus more people purchasing newspapers.

My core  interest is in getting more print newspapers in the hands of shoppers who pay something for the privilege. A stand at the front of the newsagency, facing into the mall, offering The Age or The Herald Sun at half price at, say, 4pm could achieve just that. I’d expect getting fifty cents in the dollar is better value for the publisher and their advertisers than copies being returned unsold and having to be pulped.

Given the challenges facing newspapers including falling over the counter sales, falling subscriptions and falling advertising revenue, it is time to experiment with creative solutions. This idea of pricing that accepts a newspaper has a diminishing value with time is the type of fresh idea we need to consider. As a retail only newsagents it’s an idea I’d embrace. It is certainly more interesting to me that the forever promoted subscription deals that try and lure my customers to get their newspapers elsewhere.

I took the photo at the fruit salad counter of David Jones in Sydney, half an hour before they were to close for the night a couple of weeks ago. In this last half hour they slash the price of fruit salads to get rid of them, so they can start fresh in the morning.

Seeing the popularity of the counter at this time of the day is what started me thinking about this idea for newspapers. If I’m in Sydney close to closing time for David Jones I head down to the fruit salad bar and pick up a tub for less than half price. Delicious!

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Newsagency management
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