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

Author: Mark Fletcher

Spain’s lottery retailers strike for better margin

Spain’s lottery retailers went on strike last week as part of their campaign to list their commission from 4%. See the story from The Guardian.

The vendors, who had shut up shop for the day, say they deserve more than the 4% of the ticket price they currently get, arguing that 80 cents on a €20 ticket is not enough. They point out that their commission rate has been frozen for the past 17 years despite huge rises in living costs – not least Spain’s skyrocketing electricity prices.

“Prices go up, taxes go up and the commissions remain the same,” Natalia de la Fuente, the daughter of a lottery seller, told Reuters. “We have to pay our bills … This is impossible.”

4%. Sheesh, it makes the arrangements in Australia look good. But, from what I have seen of lottery outlets in Spain compared to Australia, the compliance cost there for retailers is much lower.

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Lotteries

Smart way to get newspaper home delivery customers to pay on time

While we don’t have many newsagents directly managing newspaper home deliveries in Australia any more, this competition for people paying their account from Lomas News in the UK is cool:

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Newspaper distribution

Major shopping centres less busy this Christmas?

Retailers in shopping centres are telling me that traffic this week before Christmas is down in the last two years. Click and collect sales are good as has been online for the last couple of months.

They put it down to people avoiding shopping places where there are likely to be large groups of people.

Not that they would release it but it would be good to get shopper traffic data from all shopping malls in Australia for the last two weeks for the last three years. If what I am hearing holds up, we’d see some centres down considerably, others steady and some even up.

A couple of NSW retailers I have spoken with say customers have contacted them to cancel LayBy collection saying they are too concerned about the virus. In each case they said in-store traffic is down 20% on 2019, the opposite of what they had seen through October and November, pre Omicron.

In my own situation, I have two businesses in major centres. One us up, way up, while the other is flat over the counter in-store but click and collect has surged. That second store has the centre’s Santa photo display out the front and it’s not booked out, not at all. That’s the best indicator of the challenge I am writing about.

On the high street we’re seeing a number Christmas, which is wonderful.

While I get push for personal responsibility, that is harder to plan for than government mandates controls, which are easier to plan for.

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Social responsibility

We bought a newsagency

Last week we bought a newsagency on Glenferrie Road Malvern in Victoria. It had been in the same family for almost 40 years and had stayed true to the traditions of years ago. We will take the same approach we did with the business we bought in Mount Waverley Victoria three years ago: slow and steady change, based on data, with a minimal capex budget and ensuring to not leave existing customers behind.

Here’s a short video I shot on day 2.

Already this week the shops is looking different. Each day it is changing, but with baby steps.

We are grateful to the family for the opportunity to pick up from where they left off serving Malvern shoppers.

Oh, and before the folks at Newspower shoot off a letter, the sign people are booked to remove the logo. Being Christmas and all accessing them has been challenging.

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buying a newsagency

When governments leave it up to people to be responsible

When the NSW government early last week shutdown check in at retail and did not follow the health advice on masks and other measures in retail, newsXpress shared the following with its members – in response to some requests for guidance:

Opinion / advice: Omicron, NSW and newsXpress businesses.

In NSW, QR codes are no longer mandatory in newsagencies, or in any retail. Deep cleans are no longer mandated in businesses where contact has occurred.

From the UK and Europe we can see that Omicron is transmitting quickly, and loading hospitals as a result. In the last few days we have seen this in NSW, too.

Our advice to newsXpress members in NSW is:

  1. Continue with QR code check in.
  2. Continue with staff wearing face masks. The NSW Chief Health Officer was clear with her advice on masks earlier this week, contradicting the advice from the health Minister. Dr Chant made it clear – wear masks, they work.
  3. Keep acrylic panels at the counter up.
  4. Continue to clean regularly.
  5. Continue to encourage staff to wash their hands.
  6. Continue to make masks and hand sanitiser freely available in the shop.
  7. Encourage all staff to get boosted as soon as they can. The government has cut the timing from 6 to 5 months. You can ask for it sooner and doctors will do this (I did that myself weeks ago).
  8. Message on social media about keeping the community safe, especially the vulnerable who cannot make decisions for themselves or who are health compromised.

I appreciate there is a strong desire to get back to life the way it was. That will not happen for years. Omicron was always coming as is the next significant variant and the one after that.

The more infections the stronger the breeding ground for virus variants.

From a business perspective you want to ensure that you can remain open.

What you do in your business is 100% up to you. We have shared this today in response to a couple of NSW members who asked us.

newsXpress also shared some collateral for positive reinforcement messaging on masks, including …

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Social responsibility

Is the Amazon Hub parcel pickup service a good fit for your newsagency?

Only you can answer this question for your business.

The core question, though, is: are you a retailer or an agent? An agent will want the transactional clip and therefore find the Amazon opportunity interesting. A retailer will wonder about the real commercial value of Amazon parcel collectors.

I have no interest in offering any form of parcel collection in any retail businesses. As a retailer, I see little value in any agency activity.

Parcel collectors rarely purchase anything else – no matter how thoughtfully you configure your shop to interrupt their path.

Parcel collectors bring to their parcel collection any feelings they have for the retailer source of the parcel, and this can be problematic.

Parcel collectors trend to be engaged … meaning they could rate you down for something outside your control.

Parcel collectors want speed. Often, they think they should be served ahead of others.

Sure there are some in our channel talking up parcel collection. Maybe find out the commercial relationships they have or their employer has with such services to understand their excitement. Buyer beware.

Newsagents I have spoken with recently who have offered parcel collection services have recommended against it.

If you think parcel collection could be for you, do your homework and ensure that providing such a service fits with your business plan and how you see your business into the future.

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Newsagency management

The Herald Sun today shows, again, it’s part of the problem

It’s embarrassing having the Herald Sun on display today. I think the front page ‘story’ about masks is lobbying, not journalism. The ‘story’ references NSW where the politicians decided masks were no longer required while, at the same time, their Chief Health Officer said masks should be worn.

Politicians, and media proprietor lobbyists can play their games, the science remains that transmission is greatly reduced where masks are worn.

Of course, news outlets have trotted out the usual ‘representatives’ of business complaining about masks. Those same media outlets should give more time to the scientific and medical experts.

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Social responsibility

Chronic staff shortage impacting retail and hospitality in Australia

Gee it’s hard to find reasonable candidates for retail. We have heard plenty about the challenges in hospitality – one excellent restaurant in Melbourne has halved their hours because of a lack of wait staff – but the extent of the retail staff shortage is recent.

I am advertising for people for three of my shops. In each situation we are offering $2 above the award hourly rate, and other benefits.

Seek has been unsuccessful. The same is true with social media. The platform working best right now is Indeed. But you have to be fast. For example, this week already, good and ideally experienced people we have contacted within half a day of applying have taken jobs elsewhere. Once we realised this we modified our approach, to get faster and on-point.

Thankfully, here we are on Thursday with three new hires, each having completed paid half-day trial shifts and ready for immediate start.

If the situation did not improve we were considering a longevity bonus at 3 or 6 months or something else to separate us from other businesses fishing in the same, almost empty, pond. This is especially true for good people.

The staff shortage in Australia is real. The impact os knocking through the economy.

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Social responsibility

The Age and Sydney Morning Herald Christmas 2021 and New Year publication details

The Sydney Morning Herald & The Age

  • There WILL NOT be a paper published on Christmas Day – Sat 25/12/21.

Sections

  • Good Food – WILL NOT be included in the Tuesday SMH and Age on Tue 28/12/21 and the first issue date it will return is Tue 25/01/22.
  • Money – WILL NOT be included in the Wednesday SMH and Age on Wed 22/12/21 and the first issue date it will return is Wed 19/01/22.
  • Good Weekend – WILL NOT be included in the Saturday SMH and Age on Sat 01/01/22 and the first issue date it will return is Sat 29/01/22.
  • Domain (Sat SMH) – WILL NOT be included in the Saturday SMH on Sat 01/01/22 and the first issue date it will return is Sat 29/01/22.
  • Domain (Sat AGE) – WILL NOT be included in the Saturday Age on Sat 01/01/22 and the first issue date it will return is 29/01/22.
  • Traveller – WILL NOT be included in the Saturday SMH and Age on Sat 01/01/22 and the first issue date it will return is Sat 08/01/22.
  • Sunday Life – WILL NOT be included in The Sun-Herald & The Sunday Age on Sun 26/12/21 and the first issue date it will return is Sun 30/01/22.

Tower Systems has released advice to Newsagency ts on how to handle the changes.

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Newspapers

Australian Financial Review Christmas 2021 / New Year publication details

CHRISTMAS BUMPER EDITION

· On Sale Thursday 23rd December, 2021 until Tuesday 28th December 2021 (inclusive),

· All Mon-Fri & Mon-Sat subscribers to be delivered the Christmas bumper edition on Thursday

23/12/2021.

· All Sat only subscribers to be delivered the Christmas bumper edition on Friday 24/12/2021.

· Returns for the Christmas bumper edition will be on your Connect returns form week commencing

Mon 03/01/2022.

NEW YEAR BUMPER EDITION

· On Sale Wednesday 29th December, 2021 until Monday 3rd January, 2022 (inclusive).

· All Mon-Fri & Mon-Sat subscribers to be delivered the New Year bumper edition on Wednesday

29/12/2021.

· All Sat only subscribers to be delivered the New Year bumper edition on Saturday 01/01/2022.

Tower Systems has released advice to Newsagency ts on how to handle the changes.

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Newspapers

Crosswords the powerhouse magazine segment in Aussie newsagencies

Looking deeper at the November 2021 sales data compared to 2019 for the newsagency businesses in the benchmark mix I wrote about last week … crosswords is a powerhouse segment in newsagencies.

While sales of women’s weeklies (New Idea, Woman’s Day etc) is far greater, crosswords account for, on average, 8.5% of all magazines sold. This is significant with most of these sales being for titles that are only in newsagencies.

Crossword shoppers are loyal, more likely to return to you if they know you stock the niche titles in which they are interested.

Crossword shoppers are more valuable. Our of all the magazine shoppers, they are more likely to buy cards, a high margin category and more likely to buy jigsaws, another good margin category.

Crossword shoppers respond to loyalty offers. Whether it’s an amount off based on purchase value or a future benefit from today’s purchases, they engage with loyalty programs and therefore are stickier to the business.

Crossword shoppers dwell. Dwell time increases shopper visit value in a well laid-out shop.

Crossword shoppers stick together. They talk, share their love of the puzzle and this word of mouth can help you find more shoppers.

The performance of crossword titles is better than most other magazine segments. This also makes it valuable.

While the paltry margin from crosswords is frustrating, it’s a product segment we can leverage and from which we can drive value by being engaged retailers and following the opportunities revealed in data.

I recommend having crosswords in two places within magazines, their traditional home and in a column next to weeklies. I’d also post about crosswords on social media as different titles speak to different co-horts of value: large print, cryptic and word circle are good examples of these. Talk about them as a good gift for young and old.

One of the best things you could try is a crossword lover club that meets up at your newsagency. I suspect they’d love this to meet fellow puzzlers and to be seen, it shows that you as a specialist retailer see their interest and respect it.

Crosswords are valuable in the newsagency. Take a look at your range and consider working with the distributor to expand it. Growth in crosswords will deliver growth elsewhere in the business.

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crosswords

Follow the cash in your newsagency

From the moment a customer hands over cash, it should be tracked in the business. Each point of a gap in tracking is a point of possible theft.

This is on my mind today because a retailer colleague recently discovered an employee theft situation where the employee was able to steal undetected for many months because the business did not reconcile daily takings using their POS software. It was a manual process that was not regularly checked again st actual sales and even then, the checking was cursory.

More fool on the retailer for disinterest in managing cash.

The theft would have been stopped or at least seen sooner had they done their end of shift inside the POS software with that data feeding seamlessly and untouched by human hands through to Xero, the accounting software they use. Instead, they recorded cash manually and manually entered data into Xero.

This is a failure of process that was easily exploited by the thief.

Business systems exist to block this.

The more control a business owner exerts on their business by fully using their software and supporting this with black and white processes the less opportunity for employee theft.

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Newsagency management

Australian made is a factor in card buying decisions

Customers are loving the excellent range of locally made single and boxed Christmas cards. We know because of the comments.

I especially like the smart placement of Australian made by suppliers on their packaging. Here’s one example from a pack a boxed Christmas cards:

Here’s an example of the collateral from Henderson calling Australian made out with their Christmas singles:

I think the locally made story is one of several factors at the core of excellent Christmas card sales growth this year.

The products we put into our businesses reflect choices we make. If we pitch shop local, it starts with us.

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Social responsibility

Desperate plush offer to try and move stock

A local plush importer with product that looks very similar to major brand, category leading product is offering heavily discounted product. This is hitting retail at less than half the price of the established leading brand, and driving some confusion for shoppers and frustration for nearby retailers.

While suppliers need to do what they need to do to move stock, retailers in a well established and commercially lucrative category niche notice this and will remember it when ordering in the future.

There is little shopper loyalty to be found in business won solely on price.

I first noticed this situation when contacted by a couple of retailers who were frustrated that what to them looked like knock-off product was pitched nearby, challenging their $45,000 a year revenue from this category. Once they realised the supplier behind the move and that they purchased other product from them in a different category, they made some decisions.

I get that suppliers with an overstock situation need to move stock. This situation, however, feels different, even targeted against a competing brand.

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Ethics

AFR: Afterpay fees may be passed on to shoppers

The Australian Financial Review has this story:

Afterpay fees may be passed on to shoppers

Customers of Afterpay and Zip may be forced to pay buy now, pay later fees now borne by shopkeepers under plans for more intensive regulation of the fast-growing sector being considered by Treasurer Josh Frydenberg and the Reserve Bank of Australia.

Afterpay and Zip prevent merchants passing on the cost of buy now, pay later credit, which represents about 4 per cent of the price of purchased goods. Major BNPL providers processed $11.4 billion worth of sales in the year ended June 30, implying about $450 million of merchant fees.

The Treasurer said changes to modernise the regulation of the payment system would be settled by mid-2022 to accommodate new and emerging payment systems.

“This will include considering the appropriate treatment of services like buy now, pay later and digital wallets, including any new rules around fees and surcharging,” Mr Frydenberg told The Australian Financial Review on Wednesday.

The story does not feel right to me. By that I mean it feels like it is part of a political game and not an active consideration. I doubt the government would help small business while at the same time undertaking a move that the big business BNPL operators would not like.

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Social responsibility

Seven news: How the rise of ‘tap and go’ payments is hurting small businesses

Great to see mainstream media shine a light on this story about the soft of tap and go:

How the rise of ‘tap and go’ payments is hurting small businesses

Published: 08/12/2021Updated: Wednesday, 8 December 2021 3:04 PM AEDT

The rise of “tap and go” has seen grocery and fuel sellers slugged with higher transaction costs they can no longer absorb, a small business summit has been told.
Consumers don’t know that buying a coffee with a mobile phone might be making it harder for their favourite cafe or servo to remain in business because of steep transaction costs.

“Transaction costs are accelerating more than any other,” Mark McKenzie, chief executive of the Australasian Convenience and Petroleum Marketers Association said on Wednesday.

Merchants’ fee costs have become an essential service, on a par with electricity bills in their impact on a business, as leaps in technology run ahead of legacy banking systems, he told the Council of Small Business Organisations Australia (COSBOA) payments summit.

Ben Kearney, head of the Australian Lottery and Newsagents Association, said there had been a massive increase in contactless payments, particularly during the pandemic.
“It has become an enormous issue for our members because of cost,” he said. He said a $10 lottery ticket brings a $1 commission but then a 10 cent transaction fee would erase 10 per cent of that commission.

Payments expert Robbie MacDiarmid said $67 million per month in excessive fees was being paid by small businesses due to routing of payments.

COSBOA members want every transaction to be processed on a “least cost route”, including from digital wallets and phones, despite legacy issues for banks.

However, head of payments policy at the Reserve Bank of Australia Tony Richards said small merchants have low transaction costs by international standards. “Payment costs in Australia are much lower than in the United States,” he said. Dr Richards was not aware of any market where least cost routing was compulsory but he acknowledged treatment of payments made with digital wallets needed work.

He said least cost routing in mobile payments was not common and it would involve retrofitting payment systems and overriding consumer choice. ‘In some cases they’re just trying desperately to keep their head above water’ But Mr McKenzie says merchants are the customer of the service yet the supplier is making the decision about how they get that service, and that is innately wrong.

Meanwhile, COSBOA chief executive Alexi Boyd said business owners often didn’t know they were being slugged the maximum amount.

Nor would a consumer know that paying through a digital wallet like Apple Pay or Google Pay or doing a “tap and go” payment with their phone meant the transaction attracts fees were up to six times greater, she said.

I urge you to read the full story, and to share it on social media.

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EFTPOS fees

Strong November retail sales in small business newsagencies

I am grateful to the 56 newsagents who quickly shared their November 2021 vs. November 2019 sales results so I could compare and see how the channel appears to be faring this year. the dataset is a mix of businesses, city and country, in marketing groups and not. All bar two were not in major capital city shopping centres.

I compared 2021 with 2019 so as to check-in with pre-Covid trading and now, with relatively open retail settings.

After comparing data from all 56 businesses here are the averages for business performance measurement points and categories, comparing 2021 with 2019:

  • Revenue: Up 27%.
  • Sales count: Down 6%.
  • Basket value: Up 43%.
  • Items per basket: Up 10%.
  • Average item value: Up 38%.
  • Greeting card revenue: Up 24%.
  • Magazines unit sales: Down 15%.
  • Toy revenue: Up 45%.
  • Gift revenue: Up 30%.
  • Stationery revenue: Up 9%.

There are other categories but I’m not reporting them here as the dataset is small. For example, jewellery. I have data for five businesses and the growth is excellent, but the numbers are too small. Similar niche categories are: jigsaws,  calendars, baby, homewares and garden … all delivering excellent results.

Several businesses reported no revenue growth and several others with extraordinary growth.

It is in the average item value and items per basket where we see the value for a business in that the value compounds. Now, if you can get more shoppers returning, that compounds further.

Of particular interest is the ratio of gift revenue to cards. The goal here now is $3 to $1. Some were at $.5 to $1 and others at $10 to $1. The gap in performance is considerable. Any newsagency business can sustain excellent gift revenue. I have seen this in small towns of around 1,000 people in the area through to capital city businesses. When it comes to gift revenue, population size is not the mot important factor, your range choices and in-store engagement are.

Overall, this benchmark is showing excellent results – good growth not only in revenue but good growth in overall business GP%. This is vital as selling higher GP% items sets the business to be able to sustain a revenue decline without profit decline.

The newsagency channel is healthy. The average newsagency is reporting a revenue surge and a GP surge. Newsagents have every right to be happy. Well done to everyone involved.

…

I own and run three newsagencies. Over the years I have had three others. I own newsXpress, the newsagency marketing group.

Footnote: I usually do newsagency sales benchmark studies comparing 3 and 6 month periods. 1 month is too small to call a tree on. However, it does provide an insight that can be useful not only in terms of performance but also in terms of transition, and that is evident in the data from this benchmark. More newsagents are evolving outside the lanes traditional to newsagency businesses.

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Newsagency benchmark

Updated checklist for anyone considering buying a newsagency

There has been a surge of interest in buying a newsagency in 2021. Retail businesses in our channel are appealing, and, looking out in the market, there are some excellent opportunities.

A common question I am asked by people who find me through this blog is what should I ask for when looking at buying a newsagency?

The question itself, when asked, indicates how green a prospective purchaser is when it comes to purchasing a business. My first advice is that they better understand the newsagency business of today, to understand what they could be buying into.

Here is an updated list of data I suggest prospective newsagency business purchasers access from the vendor or their representative:

  1. P&L from the accountant for the last two years. i.e. not a spreadsheet created for the purpose.
  2. A list of add-backs used to achieve a profit figure on which the asking price is based.
  3. Tax returns for the same two years. While note always appropriate given business structures, they can provide a cross check with the accountant P&L.
  4. Sales data reports, for the last two years, from the POS software in use – to verify the income claim. This source data is key.
  5. Sales data reports from the lottery terminal to verify the income claim.
  6. BAS forms to confirm data in the P&L.
  7. A list of all inventory in the business including the purchase price and date last sold for each item. And, copies of invoices from which you can randomly select to verify.
  8. A copy of the shop lease.
  9. A copy of any leases the vendor expects you to take on board.
  10. A list of all forward orders placed on behalf of the business.
  11. A list of all employees: name, hourly rate, nature of employment, start date, accrued leave and accrued long service leave.

This is good basic information, a starting point, which will enable any purchaser to undertake reasonable assessment of a business.

My advice to newsagents looking to sell who may be concerned about this list is: think about it now and focus on your business so the data I have listed looks good. The time to prepare your newsagency for sale is every day you are in the business.

This is why I say every day is your pay day. Run a smart, lean and profit focused business and you will have a good pay day today and a good one when you come to sell.

The most appealing businesses are those that are easier to run and are making money.

Sure a purchaser can turn a business around. They should get the rewards if they are expected to do that for your business.

The price you can sell your business for will be based on what it is making now.

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buying a newsagency

Having an A team and a B team is still necessary in retail in this Covid impacted world

Last year, a few months into Covid, plenty of retailers that could open set their roster so that the business could function of Covid impacted their workforce. They’d have an A team and a B team, and, sometimes, a C team.

I know of some newsagents continuing with this approach today, which makes sense given how much infection continues to spread in the community. In my own businesses we have them structured to minimise interruption should an infection hit the workplace.

The arrival of Omicron in Australia and news of the ease with which it spreads is a reminder, I think, of the importance on business owners to determine settings that appropriately serve the health and safety of all who work and shop in the business – regardless of state or territory government regulations.

I am fortunate to have spent the weekend in Sydney. It was interesting seeing retail outside of my home state Victoria. In big businesses the approach to protection pot employees and shoppers was more consistent than in small business.

In small businesses while check-in was monitored as was vaccine status, there was little checking of shopper distance and in most situations, no acrylics at the counter separating shoppers from employees.

For what it’s worth, I think all retail situations in Australia right now should have acrylic panels between shoppers and employees, along with easy access to hand sanitiser, free good quality masks for all employees and rest / cleaning breaks.

We keep hearing that there is no stopping Covid spreading. A business that is a point of infection does have to close, and be cleaned. Any step we can talk to reduce the opportunity for this the better in my view.

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marketing tip

The retail award is not enough to attract good candidates to retail jobs

$26.00 an hour is proving to be insufficient to attract good candidates to basic retail assistant roles in Melbourne and Sydney.

This is my recent experience and the experience of several retailers I have spoken with in both marketplaces.

I know of one retailer who advertised at $30.00 an hour just to attract good candidates. Another offered a $10.00 a day meal allowance, while another offered a travel reimbursement of $100.00 a week even for local applicants. I know of another retailer looking for a junior full time, a role they have easily filled in the past, who has not given upon on that plan.

In my own case we are hiring for three shops and while we are attracting candidates, most are looking for their start in retail and still expect to be paid at Level 4 or Level 5. One good candidate took a role in logistics as they will make 50% more there since pay rates have grown along with the spike in what is being shipped.

In plenty of areas of need pay rates are growing fast. Other benefits are being offered, too, to attract employees. Awards are needed, but they are a baseline, a minimum, and in the city they are proving to not be enough.

Considering all this and stories in the news, it seems we are in for up to a year of challenges in finding staff, which makes holding on to existing staff very important.

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Newsagency management
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