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

Author: Mark Fletcher

Newsagency business analysis: for a newsagency without lottery products

Here’s an analysis I did last week for a newsagency that does not have lottery products. This business is in a town with economic challenges. It’s a business navigating changes.  While there are some numbers that are not ideal, there are others showing opportunity.

Thanks for sharing your Jan-Mar 2014 versus 2013 data. I have looked through this and have some comments of the results.

Being a newsagency without lottery products you have the challenge of needing to generate traffic for what you sell only – i.e. you can’t rely on the regular lottery purchase or superdraws to drive traffic. I think this leads to a more pure retail situation you can leverage as the good retailer you are.

Overall, I can see your traffic is down 9% yet your revenue is only down 5%. This means you have lifted efficiency – I can see this in items per sale, average sale value and average item value … all good measures to indicate efficiency.

  1. Cards. With this department delivering 9.93% of your sales, it is vitally important. While sales overall are down slightly, your Valentine’s increase of 13% is excellent. What did you do differently for Valentine’s Day? Whatever you did this year worked for you. It shows you can achieve growth in cards. If I were you I’d ensure you have the optimum range for your shop plus I would be looking at ways to drive card sales outside the card department since your customers have shown they like buying cards from you.
  2. Gifts. Your sales are up 5% for this department which accounts for 3.25% of your overall sales. What is interesting is your massive increase in novelty – this category now accounts for 9.11% of gifts whereas in 2013 it accounted for 3.56%. This is an indication of what your customers will buy. However, it is important to segment your gift displays – targeting the shopper: male, female, old young, for self, for an occasion.
  3. Magazines. Your sales are only down 2% – ahead of the industry average. What is brilliant if the growth you have achieved for women’s weeklies. Your sales are up 3% for this category that accounts for 24.28% of your overall magazine sales. Whatever you did to drive sales of weekly magazines – do more of it as it has worked! Plus craft and hobbies – up 11%. Who says you can’t grow magazine sales!
  4. Stationery. This is a challenge for you. I suggest you focus on pens as these account for23.58% of your stationery sales. How can you promote this category? Where is it located? Is there an opportunity to refresh with an out of store promotion and a staff focus to drive up-selling? My core point is that focus is needed here.
  5. Toys. Great to see the result here. Keep building on your success.
  6. Plush. A great start in this category for you. Based on your card sales you should be able to triple your plush number easily.

Being a non lottery newsagency you need to work your shop floor differently to others. This means focussing more attention of keeping offers fresh, ensuring your window attracts shoppers and marketing externally to remind people in town that you offer an excellent shopping range and experience that can save them going to a bigger town to shop.

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Newsagency management

Newsagents nervous about digital and print newspaper offers

I heard from several newsagents yesterday concerned about the promotion of a digital and print offer that appears to be targeting digital seven days and print two days a week.

We will have three key membership options; digital plus weekend newspaper delivery, digital plus 7 day newspaper delivery or digital-only membership. The best value package is a digital and weekend print newspaper delivery costing only $2.50 a week for the first 12 weeks (then $5 per week at full price).

I can understand newsagents feeling nervous. The reality is that we need to run our newsagency businesses for the future we want and with the knowledge of these and other changes and challenges. This is what News and other publishers are doing with offers such as these. I don’t like them but I acknowledge I’d probably do the same thing if I were them.

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Newsagency challenges

Disney Palace Pets on TV!

palacepetsNewsagents with the Disney Palace Pets range from Big Balloon should ensure they are in prime position in-store to leverage the TV ad campaign currently on air. It’s a good ad – targeting shoppers we want. Smart retailers make ads work for them through ideal placement.

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Gifts

Jewellery showing no signs of slowing

jewellery-sellingoutJewellery sales are rising in newsagencies. There is synergy with greeting cards and with magazines, yes magazines – we have customers purchasing some of the best everyday fashion magazines in the world so why not a bracelet or necklace to go with these?!

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Gifts

Take care comparing EFTPOS contracts

If you are called by a bank or another party to take on their EFTPOS service, take your time to research and compare the offer.

Ensure the fees are competitive, that there are no hidden extras and that any contract they want you to sign is for a period of time you are prepared to accept.

One contract I have just seen required the newsagent to sign up for three years, agree to an onerous contract break fee and accept any fee rise the bank may impose in that time.

A low EFTPOS fee deal you are offered today could be gone quickly, leaving the newsagent locked into an uncompetitive deal.

Those promoting an EFTPOS deal to newsagents ought to ensure that their deal stacks up as being good for newsagents. If any industry association promotes, endorses or otherwise guides newsagents to a specific deal they are effectively placing their stamp of approval on the deal. They need to disclose the due diligence undertaken and any commercial benefit for them they may receive.

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EFTPOS fees

An opportunity for newsagents leveraging strong interest in Pilates

pilatesPliates is huge in Australia at the moment and this 10 Minute Pilates magbook is an opportunity for us to leverage this extraordinary interest. I was talking with a customer on the weekend who bought the title without a second thought. She wanted to know what other Pilates titles we could get in for her. We have this title in the best spot with Women’s Health and related titles.

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magazines

Promoting Your Model Railway Village

partwmodernrailwayWe are promoting the Your Model Railway Village partwork launch in our partworks section as well as with train magazines – leveraging the  TV campaign on air right now. Partworks  do well for us – they currently account for 16.75% of magazine sales.

Partworks are important for newsagents because they are a habit based product and because partworks shoppers have one of the best spending profiles of a destination shopper in a newsagency.

While there are occasional supply challenges, my most recent experience is nothing but positive.

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magazines

Sunday newsagency management tip: knowing the numbers

Every business can be broken down and worked back to numbers, measurements, that can indicate the success or otherwise of a business. Increasing the right number by a small percentage can have a bigger impact than you might expect.

Take sales revenue in a newsagency and work this back: revenue is made up of a number of customer transactions(baskets), these are a function of destination or browsing shopping (minutes per visit and aisles walked), browsing shopping is a function of shop layout, tactical product placement, shop-floor engagement or other in-store promotion, this shop floor activity is a function of bodies through the door, and this is a function of word of mouth, memory from previous experience, advertising or happenstance (passing by).

You can measure each of these things – although I doubt any newsagent has the time to do this thoroughly. but if you did, you could predict the financial benefit of an increase of, say, 5% more people through the door. Just knowing the financial value could focus your attention on this one activity – getting people through the door.

While I doubt newsagents have enough time to measure everything they could measure, just knowing foot traffic passing the shop, the nu,her who enter the shop and the number (and value) of sales in a day could have you looking at your business differently.

The moment you know your conversion rate, the percentage of shoppers who enter through your door who spend money, is the moment your point of attention changes.

Please don’t think this is too hard or that it relates to a newsagency bigger than yours. In writing this I am thinking of newsagencies of any size. They all come back to numbers. Start somewhere. Get to know your business numbers and chase results.

A good example of the use of numbers is the gifts to cards sati. Some years ago I started measuring this and determined a benchmark newsagents should aim for is gift revenue equal to 35% of card revenue. Some newsagents pursued this just because they had a number, a target. Some achieved it and then passed it – because of the target.

Data can be a valuable motivator.

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Management tip

Sunday newsagency marketing tip: write a letter

While I understand the focus on using social media, email and other technologies for marketing your newsagency business, let’s not forget the good old letter mailed through the postal service.

A well written letter pitching your business could get people thinking about you. better than that, it could get them through your front door.

If you have a customer database – and you should! – use it two or three times a year to write to them. here are some letter options:

  1. Saying thank you.  I short letter saying thank you to your customers is excellent use of a letter. Include a voucher for their use next time they shop.
  2. Launching a new range. if what you have is genuinely new, write to let your customers know and invite them to see the range first-hand.
  3. Supporting a community group. A letter asking your customers to support an event connected with a group your business supports is excellent use of a letter.
  4. Standing for something – like SHOP LOCAL! A letter gives you space to explain why shopping local is important to the community and those who live there – more so that a poster or a slogan on a bumper sticker.

A letter can be an effective marketing tool – more so that than a few years ago when it was used more often by business.

Start writing!

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marketing

Using the Hallmark AFL card range to highlight rivalries

aflcompetitionThe Hallmark licenced AFL card range is selling very well for us. We are pushing it with placement of a stand at the front of the store and placing cards for rival teams next to each other – like the Carlton and Collingwood cards.

What is interesting about these Hallmark AFL cards is that they are purchased not only by people giving them to someone based on the team followed by the recipient but some are also purchases because the recipient hates a team with a passion. This secondary market – based on a team a recipient hates – is strong. It is an opportunity we suggest with success to customers looking for a card.

We can grow card sales in our newsagencies with current product, placed tactically and pitched through shop floor engagement with customers.

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Greeting Cards

Promoting George on Who cover

georgeThe news of the George Clooney engagement was timed perfectly for the cover of Who magazine this week. We’re making the most of the opportunity with full cover placement at the front of our weekly magazines. This placement also makes our weekly titles offer look fresh.

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magazines

The genius behind Mad magazine dies

Al Feldstein took over a struggling Mad magazine in 1956 and made it arguable the best humour magazine ever. That’s certainly my view. Mad was the first magazine I can recall reading. When I worked at Pakenham Newsagency while still in high school it was the one magazine I’d read regularly. I loved it.  Spy vs. Spy, the back page fold ins and other features were things to read offer and over.

Feldstein died recently. The New York Times has an excellent obituary.

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magazines

Newsagency performance analysis highlights the value of pursuing change

Here’s a report I did for a newsagent recently assessing the performance of their rural business. This is an interesting newsagency business because of the transition path they are walking their business through and the wins they are achieving as a result.  here is what I wrote to them:

Overall, the figures are good despite their being a revenue decline as you are transitioning the business to a higher margin offering as evidenced by your excellent growth in gifts.  It’s important you see these results as the next step with more steps to go.
Your overall traffic is down 7% yet your revenue is down 5%. This reflects an 11% increase in items per sale. The key to growth in profitability for a newsagency today is growth across a range of measurement points: traffic, items in the basket. GP per sale, operating cost per $ earned and labour cost per $ earned.
Based on the data in your reports there are several ideas I’d work on if I were you:
  1. Weekly magazines. These account for 42.55% of all magazines you sell and they are down 9% year on year – not far off your overall traffic decline. I can see you started discount vouchers recently. I expect that this will help lift weekly magazine sales. The program usually takes three months to settle in. That said, you need to look for more that you can do to drive weekly magazine sales: make sure they are located in a couple of locations, engage in a front of store promotion, use your other marketing tools to pitch the category.
  2. Other magazines. Look at what you can do to drive these so that you are not as reliant on weeklies. For example, are your men’s titles well located and well promoted. Do men have their own area? they like that.
  3. Lotto. Your growth is excellent. Are you doing anything to leverage lotto traffic for other product categories to drive efficiency from the lotto shopper? What do they see on the way in and on the way out? What do they see at the counter?
  4. Gifts. You’ve gone from selling 92 last year to 412 this year. Stick to your patch, keep expanding based on what is working. But use small steps to stay within budget.
  5. Ink. Your entry into this category is an excellent start-up success. 106 cartridges in your first three months shows you can expect to have sales of $15,000 a year or more from this category. Take care with buying – to stay within the brands that are working for you.
  6. Drinks and confectionery. Your sales growth is excellent and this makes me wonder about a margin opportunity. Could you increase your prices of selected popular items slightly to make the convenience of your offering more valuable to you?
  7. Stationery. This appears to be a transitioning department for you with a significant sales fall. Or, are your eyes off the ball?  Take a look at the numbers and see what you can do to lift. Location? Range?
  8. Plush. Wow. A new product category and you;re doing over $100 a week. As a ratio of plush to cards – you’re in good shape. I suspect you have plenty more growth ahead.
  9. Cards. Your data suggests more work is needed to settle the recent changes in. Is the range ideal? Do you have good price points? Are your staff well trained in selling cards?  Have you considered promoting cards off-location – i.e. to your excellent lotto and magazines traffic?
You should be proud of how 2014 has started for you. I think you have an excellent rest of the year ahead for you.
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Newsagency benchmark

FIFA World Cup ad promoting newsagents

Check out the TV ad promoting newsagents as the go to retailers for the Panini FIFA World Cup Sticker Collection that goes on sale next week in Australian newsagencies.

They have also been promoting the stickers through social media – again pitching newsagents as the go to retailers.

The stickers are distributed through Network Services.

This is a great opportunity for us.

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Newsagency opportunities

Day five of a five-day back to basics newsagency management challenge: marketing

This week I am shining a light on five back to basics areas of our newsagency businesses over which we can make a difference for the good of our business and the benefit of our customers.

By back to basics I mean parts of our business that define us and can separate us from others.

Today, I want to challenge how you market your business.

Marketing to me is promoting your business outside your four walls in pursuit of attracting new traffic. Marketing is essential to the financial health of any retail business. Get it right and you make more money. Get it wrong and you have a cost with no upside. Do nothing and you could see your traffic decline and at some point wonder why.

Businesses we compete with, such as supermarkets, national stationery outlets as well as gift shops all have marketing benchmark budgets. Newsagents have not had this but it is time we did. In my view, a newsagency marketing spend benchmark should be that we spend at least 1% of our retail turnover (including agency product commission) – as a minimum marketing benchmark.

Many of our competitors would have a 2% of turnover marketing budget, some even more.

Marketing spending would include: marketing group fees, advertising, comity group sponsorship and payment for visual merchandising services.

So, how much do you spend marketing your newsagency? If it is less than 1% of turnover then it is not enough.

Depending on where you get your marketing advice you could also tap into free marketing opportunities such as social media like Facebook, Twitter, Google +, Instagram and Pinterest. Then there is your vehicles, your shop window, flyers put in local letterboxes … many activities where the $$$ spend can be low and balanced by a labour investment.

Marketing is a simple equation. Spend more and get more. Spend less and get less. Do nothing and you fall behind.

Whereas in the past newsagents could rely on some products to generate traffic, today’s landscape requires our active engagement in marketing.

So, how much do you spend marketing your newsagency? If it is less than 1% of turnover then it is not enough.

The goal of this series of back to basics newsagency management advice is to get you revisiting parts of your business that you may not be paying enough attention to. This should help imporrove basket size, drive traffic and get you better engaged with your newsagency business.

If your business declining this is more likely to be through your action/inaction than any external factor. Own it, crash through the issues and plans for and build a stronger business. It can be done.

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marketing

The most amazing Hong Kong Gift Fair

giftfairI got back to Australia yesterday after a busy few days this week at the Hong Kong Gift Fair. With more than 4,000 exhibitors and 100,000+ attendees, this was a busy fair. There were plenty of newsagent suppliers there as well as some newsagents.

The fair is an excellent opportunity to spot trends. For example, whereas three years ago when many of us were stocking our first interactive products, the Fair that year had little interactive product. This year, many companies had interactive products – showing to me that what was unique then is now everyday.

I saw plenty of innovative products and got to talk with suppliers of some products that a few years ago newsagents would not have stocked.

What is clear is that gifts as a category is broader now than ever before. This is both exciting and challenging. Exciting because we have plenty of places in which to play and challenging because we are really only just starting out in this product category.

While I appreciate that getting to the Hong Kong Gift Fair is difficult for many newsagents, it is worth it in terms of the inspiration, advice and opportunities you encounter.

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Gifts

Selling guns is retail

gunshopI know of a couple of newsagents who sell guns but not automatic and semi-automatic weapons like I saw in the window of a gun shop I visited earlier this week. They, they had what looked like everything you’d need for a private army. Some pretty crazy stuff.

Once I got over the shock of the weapons on show in their window I found myself critically appraising their lack of good visual merchandising. retail is retail after all.

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Ugh!

Gamers are loyal magazine shoppers

minecraftComputer nerds, geeks and gamers love their magazines so I was pleased to see we had the How To Do Everything In Minecraft magbook. It gives our IT section greater credibility in my view. We have it on show front and centre in this section since our biggest magazine competitors do not have the title.

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magazines

Promoting Country Style

countstyleWe are giving there latest issue of Australian Country Style magazine extra attention over the weekend because of the Crabtree & Evelyn moisturising hand cream gift with purchase. It’s a well-targeted gift that should drive sales. I noticed it being given extra attention in a couple of supermarkets yesterday.

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magazines

What’s in the National Commission of Audit report for newsagents?

The National Commission of Audit report was released in Canberra today and like any special interest group I expect newsagents to be asking what’s in this for us, how will we be affected.

It’s the call for flu privatisation of Australia Post that plays closest to our backyard. While I am all for a privatised Australia Post, especially their retail network, the impact would depend on how it’s done. On the retail network, for example, I’d give first right to local newsagents to acquire. But I doubt that will happen.

The Audit Report itself is what you’d expect from economic conservatives. The commission was put together in a highly charged political climate and backed by shrill about a budget crisis that is more fiction than fact in my view.

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Australia Post
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