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

Author: Mark Fletcher

Big business: the power of one large account to force suppliers to change

Check out a quote from Richard Goyder, CEO of Wesfarmers, from a couple of weeks ago in The Australian Financial Review:

Any business in this country has to be looking at how efficient it is. Our business is not to prop up inefficient suppliers but supply great products to our customers in the best way we can.

This is very true. The problem for newsagents is that we have contracts in place with Gotch and Network that see us propping up inefficient suppliers. We are treated differently to our competitors by these companies, with less efficiency, and this costs us tremendously.

There was a crisis meeting of all newsagent associations almost a year and a half ago about this and to my knowledge nothing has happened.

I predict that once the issue of newspaper home delivery efficiency and value is resolved, more newsagents will turn their eye to the value of magazines. I have already heard of several newsagents actively considering closing their magazine distributor accounts because of inefficiencies they cannot overcome due to the poor business practices of Gotch and Network.

Magazine publishers should get engaged in the issue of supply efficiency – otherwise they will find newsagents not wanting to carry the category.

Richard Goyder is lucky, his one account is so big that suppliers must take notice.

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magazine distribution

Stunning look for Real Living

I love the monochrome look for the latest issue of Real Living magazine. Indeed, the look has encouraged us to put this issue in the spotlight. In addition to excellent full cover placement as shown in the photo, our plan today is to promote the title outside its usual space – with an appropriately monochromatic display.

Looking down the aisle of magazines, this issue of Real Living stands out. Kudos to those behind this look.

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magazines

Promoting Slow Cooker 3

We are cautiously promoting the AWW Slow Cooker 3 cookbook. I say cautiously because Slow Cooker 2 was a dud for us – on the back of Slow Cooker 1 being an amazing success selling between 200 and 300 copies.

Others flocked to the slow cooker space once they saw the success AWW had with their first slow cooker title and this segment saturation, in my view, diluted interest in Slow Cooker 2.

We are promoting Slow Cooker 3 in three locations this launch week including the location in the photo – with our range of AWW cookbook titles.

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magazines

More evidence of structural change in retail

The Australian Financial Review today has a report about how David Jones is dealing with structural change in retail. I urge newsagents to read the article.

The key takeaway for me is the acknowledgement by David Jones’ CEO Paul Zahra of the structural change confronted by retailers. The scope of the structural change is considerable, it goes to the very foundation of retail – what people buy, when they buy and how they buy. It challenges what we invest in our businesses and our plans for our future.

I cover this in the Newsagency of the Future workshop series.

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retail

One Direction lollypops demonstrate abuse of the newsagent magazine distribution model

We are early returning the two boxes on One Direction lollypops and patches we received with our magazines last week. We should never have been sent these in the first place.

Besides the lollypop / patch packs not being magazines, I have no interest in selling One Direction product for 25% GP.

The other issue is that we have nowhere to place them except at the counter and I use that space for products for much higher gross profit.

I have access to a broad range of more relevant One Direction product from which I can achieve 50% gross profit and more. I’ll take the magazines but nothing else.  I don’t need a magazine distribution company getting into this space – their interests are not aligned with mine.

That newsagents have been sent this and have to fund its return is another example of the disadvantage we face over other retailers selling magazines. The costs of being in the magazine space are far greater for us that for petrol, convenience and supermarket outlets. This disadvantage could hinder competition if newsagents get out of magazine altogether because of our continued inability to manage magazine (and other product supply to our businesses by magazine distributors.

Having to pay to send this product back disgusts me.

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confectionary

Multiple locations for for My Kitchen Rules cookbook

Our strategy of displaying the My Kitchen Rules cookbook in multiple locations worked for us. At three separate locations – the front of the shop, mid point and toward the back – we have this product on show, ready for purchase as part of our Mother’s Day strategy. We saw an uplift in sales. It was the free standing unit near Mother’s day gifts that worked well for us. We will pull back to two locations now that the season is over.

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magazines

Sunday newsagency marketing tip: use a celebrity to drive a traffic spike

Ricky Martin caused havoc when he visited the centre where I have one of my newsagencies yesterday. One entrance to our newsagency was blocked by people lined up to see him. The other entrance was hard to navigate because of the thousands wanting to see him on the stage just across from us.

The marketing people for shopping centres hire celebrities to spike traffic. This only works for the retailers if their sales are up. We can’t tell in this store since it’s our first Mother’s Day. The feeling, however, is that the Ricky Martin crowd hampered our sales by blocking traffic and making our part of the centre less appealing for shoppers who may have purchased Mother’s Day cards and gifts. But we don’t know for sure.

Despite the experience yesterday, I am all for newsagents using celebrities to drive a traffic spike. The keys are to choose a celebrity relevant to what you are promoting / selling and to live within your budget.

For as little as $1,000 you could get a celebrity in-store to boost a promotion. While anyone with a national profile will cost considerably more, a local radio personality, a local TV personality or a local reality show contestant could be accessed for this type of money. Promoted appropriately and for a decent amount of time you could get a good return on your investment.

If you want to get together with some nearby retailers, you could get someone with a higher profile for around $5,000. Well known comedians and current chart singers would appear for this amount – especially if they have something of their own to promote too.

We can’t rely on the name or type of our business to attract shoppers. We need to get outside our four walls and actively promote our shop, we need to grab only people in our catchment area and drag them in for a reason beyond what they remember about our business.  And, when they get there, we need to excite them and get them happily spending money with is.

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marketing

Sunday newsagency management tip: calculate what you need to earn per square meter

It’s important to know how much each square metre of retail space costs you so that you have a gross profit target when assessing the performance of stock. What I propose is not conventional. However, I have found it to provide a more genuinely useful assessment for newsagents.

Here are the steps I suggest:

  1. Calculate your retail space. Work out how many square metres of customer accessible retail space you have. Do not include the back room or space behind the counter.
  2. Calculate your costs. Tote up all the fixed or semi fixed costs fo your business: rent, outgoings, labour, power, marketing, insurance etc. Do not include any inventory costs.
  3. Divide your costs by your space. This gives you an annual cost a cost per square metre of retail space. It’s the gross profit you need per square meter to cover your costs.
  4. Divide the cost by 52 for the cost per week or your trading days per year to get a daily cost. WARNING: the daily cost per square metre is not for the feint hearted.

Once you have the number, get your daily or weekly sales data for a department and work out where you stand. Find out what departments are working and what are not. next, find out what categories within each department is working or not.

While this sounds time consuming, you could just focus on one part of the business that interests you the most.

The result is data that helps you manage your business by numbers. The result will be empowering for you.

Good newsagency software can do this for you – return on floor space and return on shelf space.

 

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Management tip

Is News Limited giving away free newspapers?

I heard Thursday from a regular here that they observed a Herald Sun branded vehicle delivering wrapped newspapers (throwing them) to every home in an outer suburban Melbourne suburban earlier this week. Our correspondent stopped and watched as every house in the street was delivered a newspaper.

Is anyone aware of a News campaign blanket delivering free newspapers like this?

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Newspapers

Mother’s Day in high gear

Today is the day most newsagencies will see Mother’s Day products sales peak.  If yesterday was anything to go by from the data I have seen this morning we’re in for a terrific day today.  Cards and gifts very strong.  Magazines way up for a Friday too – more than 50% in my stores.

It’s thrilling to see the high-end Mother’s Day cards sell very well. It makes me wonder if we could sell more of the large cards like I’ve seen in the UK.

Happy trading today everyone!  Enjoy!!

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Gifts

Dragons loved, just like owls

We are finding success with a range of dragon-themed gifts as part of out pitch around various animals and other special interest categories in our gift department.

Like we have found with owls, there is strong interest for dragons – particularly for people buying for younger shoppers. Our little dragon section is ticking along well.

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Gifts

Some newsagents are making excellent moves

It’s been a thrill this week to meet plenty of newsagents attending the first of the Newsagency of the Future workshops for 2013. I say thrill because I have noticed a change of mood. Whereas in past years there would be more attendees with a mindset of doom and gloom, this year I am meeting more newsagents who are either embracing change or who are preparing to embrace change.

I love to hear newsagents talking about playing outside the traditional newsagency square and exploring how far they can take their business.

One couple I spoke with are innovating in terms of products while another is building a café into their newsagency. This is all great stuff, exciting.

I’ll share more on the innovation I see and hear about when people are happy for more to be shared. In the meantime, this first week is drawing to a close with more good news than I expected to hear.

The image is the first slide in my presentation. It’s a photo I took at the Hong Kong Gift fair a couple of weeks ago. I use it to talk about complacency in the newsagency channel. Some of the newsagents I have spoken with this week are the opposite of complacent. As I said, it’s exciting.

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Newsagency management

Is this the oddest part series?

The Everything is Mathematical partworks was released in newsagencies this week. It’s an odd title, certainly not your usual part series. Beyond the limited appeal of the content, the retail package itself is dull, uninteresting. It does not led itself to retail display. This mar be a part series we kill off early given it drags us down and we’re not about to spend more than we should making it look good.

The comments from a team member in one of my newsagencies are insightful:

It’s a strange partwork in the sense of … who would want this? My first guess would be VCE teachers or students as the content is far too advanced to be placed with our kids magazines. I’ve placed it near Business, Science and I.T and we’ve sold the one since Monday.

I’ve checked out the website they promote on the front of part 1 – this is another reason to maybe ditch the title … no promotion of newsagents at all.  I don;t mind being used to promote their model but they should pay me more than a few cents to do this.

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magazine distribution

Launching DIRECTIONER – the world’s first One Direction magazine

We are promoting DIRECTIONER – a new magazine dedicated to covering all things One Direction.

We’re not sure how this title will go since 1D titles have tanked this year and it is still a while before the group tours here – September 2013.

Concerns aside, we will give DIRECTIONER a crack as it is new has has a more current look that other 1D products. I think the free DVD is a bonus we can promote around.

I am keen to see if we can leverage sales of One Direction product this year or to learn if this group has passed its use by date in a retail sense.

We are also promoting the availability of the title using social media (Facebook and Twitter) – in another test to gauge current interest in spending money on 1D titles.

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magazines

NANA misstates tobacco regulation situation

NANA sent out an email Friday last week saying The Federal Government has introduced a new tobacco standard (called the Competition and Consumer (Tobacco) Information Standard 2011) which will come into effect on 1 December 2013. This statement is not accurate.

As the explanatory statement accompanying the legislation notes, The Standard commences on 1 January 2012, with full implementation from
1 December 2012. The ‘new’ standard was introduced well over a year ago.

NANA’s email agitates around what it says a “new” standard. There is no new standard. The requirement to blend in tobacco packs with new images is not new. It will occur annually.  Newsagents using a just in time approach to inventory management will find that they have the new images in time.  There is a four month cross over period of the old and new pack images.

It is time consuming to manage pack changes in line with the requirements of the legislation – but plain packaging is all part of the government / community commitment to reduce smoking in Australia.

While I understand NANA lobbying to make wholesalers responsible for package compliance, retailers are the last line in ensuring compliance, the public face. I think retailers have to suck it up. I guess that’s easy for me to say – I don’t sell tobacco products in my newsagencies.

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Tobacco sales

Data shows how the Take 5 cash promotion works

This graph shows how the Take 5 campaign cash promotion worked for from Wednesday through to Sunday. The black line shows sales for the week and the red is the average achieved for the previous three weeks.  The graph shows that for the first five days sales were ahead of average.  I am particularly interested in the sales growth achieved Friday and Saturday.

While we did promote this issue more than usual, I am certain that it is the cash promotion that drove sales.

We get hit with different promotions every week and it is hard to give each time in the spotlight. This is one reason I took the time to see the sales impact of this promotion. I plan to do it for more promotions, to build a better knowledge based about the promotions that work and those that don’t work.

I’d encourage other newsagents to do the same. Data provides us the best guidance for what we do in our businesses.

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Newsagency challenges

Terrific pitch for office milk delivery

I love the professional and enticing promotion I received by email, from The Milk Box offering milk delivery to the office. Their pitch was simple and enticing. It makes using them to get milk for the office easy.

I mention this today to show newsagents keen to win office supply business how others pursue promoting to businesses. What The Milk Box is doing is best practice in my view.  I love it.  I particularly love their headline pitch:

Let us do all the hard work.
Office Milk deliveries made easy.

They understand what’s important in organising office staff amenities. Their pitch is a lesson for newsagents chasing the same buyers.

The Milk Box is part of the same business behind the successful The Fruit Box.

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marketing

Feast marketing promotes newsagents

It’s always terrific seeing TV advertising promoting newsagents as a go to retailer for a product. I caught an ad on SBS promoting Feast. newsagents are specifically promoted as one of two retail channels offering the magazine – the other is supermarkets. The ad I saw last night was a reminder to get this latest issue of Feast out beyond food and in front of more shoppers in this first week of the on-sale.

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magazines

Travellers taking fewer of the free newspapers?

The stacks of free newspapers in Qantas Clubs used to be taken quickly with often none left by mid morning.  Over the last year I have noticed more left through the day. Then, yesterday, I noticed in Sydney that early in the evening they had a stack of newspapers placed near the escalator – as you head to your plane. This is a new move, suggesting a challenge to give away all the free newspapers they are allocated.

This is no surprise to those who have migrated to accessing news through their phone or some other mobile device. Paper based news is old and the medium redundant.

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Newspapers

It’s good that the lottery jackpots were won

The last thing newsagencies with lotteries would have wanted this week is a Powerball and / or OzLotto jackpot.

Besides concern that major lottery jackpots redirect cash from product purchases to lottery ticket purchases, there is the impact on the shop floor. Stretched newsagents direct labour to serving lottery customers and away from working the shop fllor. Suppliers, too, are impacted by being turned away as there is no time for appointment.

So, in this week vital to Mother’s Day sales, I reckon many newsagents with lotteries would be relieved that the jackpots went off last week.

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Lotteries

Who knew owls were popular?

We have a range of own related gift lines, more than in the photo. that are popular with our customers. It’s interesting tapping into opportunities like this, around interests such as owls. It’s arise but when you see something work it’s exciting and eye-opening.

We judge success on how quickly we turn a range. For gifts we have a high turn expectation, more than, for example, stationery.

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Gifts

Newsagents worse off with Optus?

Newsagents have been advised new commission rates following the elimination of jenlist as the distributor on behalf of Optus to newsaagnets. rahtre than Optus sharing the benefits of the elimination of a middleman, newsagents have been stung based on correspondence from the company.

Commission on phone sales remains the same but recharge has gone from 8% to 6% for standard recharge.

Anyone complaining to Optus was told to wait for an announcement form the company in a few weeks – curiously timed to come after we’re expected to sign up with the company.

I don’t plan on signing anything until there is clarity from Optus on margin.  Right now we have anything but clarity.

The Business development manager at Optus who is responsible for our channel is busy meeting the associations. I have suggested he would be better off working with newsagents and with marketing groups which have commercial relationships with newsagents.

Right now, Optus is on the back foot taking the business over from Jenlist. They have big shoes to fill and newsagents rightly expect to have a more lucrative arrangement with Optus cutting its costs.

21 likes
Newsagent suppliers
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