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

Author: Mark Fletcher

Maybe newsagents should stop full copy magazine returns

Newsagents are spending between 1% and 2% of magazine sales revenue to return stock which has failed to sell.

With around 90% of the returns freight cost relating to full copy returns, it would be appropriate for newsagents to research whether they are contractually obliged to return full product.

Take the Network Services / ACP relationship with newsagents.  The ACP contract outlines our returns obligations for ACP titles.   I am not aware of any such obligation for the return of non ACP product to Network Services.

It appears to me that newsagents could return non ACP product which has failed to sell as topped.  Such a move would dramatically cut the cost of returns freight.  For Network alone, some newsagents could save between $1,500 and $2,000 a year.

I am not advocating this.  Newsagents need to do their own research, make up their own minds.  Given that the cost of returns is such a contentious issue I would have thought that at least one of the newsagent associations would already have legal advice for newsagents on this.

The alternative is that newsagents are paid a fee for handling full copy returns.  A fair fee would be in the range of twenty cents to forty cents per copy.  Magazine distributors charge such a fee to publishers for full copy returns so why not newsagents?

As it is, we pay to return magazines which have failed to sell and sometimes find these same failed titles being sent to us again.  And again!

So, Gotch, Network and magazine publishers, what is it?

  1. Pay a fee to newsagents for full copy returns.
  2. Accept top only returns for product which has failed to sell.

It is time for those who control magazine allocations to take a fair share of the risk.

In the meantime, newsagents need to consider whether they check their contracts and act on the high cost of full copy returns.

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magazine distribution

Kudos for The Australian

A couple of days ago I was contacted by The Australian to discuss Christmas newspaper pricing plans.  They wanted to make sure that their plans fitted in with what newsagents could handle with their software.  Not all publishers think about the impact on newsagents of their pricing an supply decisions so kudos to the folks at The Australian for their initiative.

With advance knowledge, the team at my newsagency software company, Tower Systems, is better able to help newsagents who want assistance in dealing with the one-off changes.

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newspaper home delivery

Christmas party goods selling well

christmas-tableset.JPGThis stand of Christmas party goods is selling well.  We have it in several of my stores, placed near the entrance – leading to good impulse purchase business.

I like packages like this which provide access to a range of related products in a merchandise unit which makes floor display easy.  We have used them for several seasons with terrific success.

While we have more premium products elsewhere in the stores, this range is designed for the price conscious shopper buying at the last minute.

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Newsagency opportunities

Too much puzzle book stock

aww-puzzlebook.JPGACP has ignored our advice about the temporary downsizing some months ago of our Forest Hill store due to construction and increased supply of The Australian Women’s Weekly Puzzle Book.  The frustration is that their zero tolerance on late payment of monthly accounts is not reciprocated with zero tolerance of supply errors or over supply.  No amount of early warning or clear communication appears to be able to stop mistakes like this being made and costing newsagents. They need a better internal system for handling issues like this.

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magazines

Network IT problems impact newsagents

Network Services has sent the following communication out to newsagents:

As you are aware Network Services have experienced some issues with their server over the last few business days. This has resulted in a large backlog of files requiring processing and delays in clearing this backlog.

In the interest of clearing the backlog of files, we ask that all agents take the following actions:

1) Hold off from submitting returns information for the next 24-48hours.

2) Agents who are yet to receive confirmations for forms already submitted should not ship their returns yet, please wait until the confirmation has been received.

Thanking you for your cooperation.

This latest Network IT challenge has come at a very busy time for newsagents.

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magazine distribution

November newsagent sales benchmark study results

Sales were flat in newsagencies in November.

40% of stores reported slight growth, 60% reported a decline in revenue. Magazines continued to be the product category of most concern.

The latest newsagent performance data is from the Tower Systems Sales Benchmark Study. My newsagency software company Tower Systems undertakes these studies on behalf of newsagents. This one month study is based on sales data from 103 newsagencies, trading under four different banners plus independents, businesses in capital city regional and rural situations.

Here are the headline numbers:

  • Magazines. 80% of newsagents reported a decline in magazine sales (numbers of magazines sold) with an average decline of 8%. While the decline is reported across the board, the women’s weeklies category has again suffered.
  • Greeting cards. 55% of newsagents reported a decline in greeting card revenue with the average decline 4.5% year on year. Of those reporting an increase, the average increase was just under 2%.
  • Stationery. 40% of newsagents reported a decline in stationery sales with the average decline 1%. Of the newsagencies reporting an increase in stationery sales, the average increase was 3%.
  • Gifts. 75% of the stores in the study have a gift department. 85% of these reported sales increase in gifts.
  • Calendars.  70% of stores reported growth in calendar revenue – the average was 2%.
  • Newspapers. 80% of participants reported newspaper sales of within .5% of last year’s numbers.
  • Overall sales. 60% of newsagencies reported a decline in sales for November 2010 over November 2009. Of those reporting an increase, the average increase was 2%.
  • Basket size. 37% of newsagents reported a decline in the number of items in the basket. This suggests that people are seeking out lower priced items.

Newsagents need to consider their space allocation for magazines. Giving the same space today to the department as, say, two years ago would be disadvantaging the business.

Suppliers and industry leaders who care about a healthy newsagency channel will engage on the issues reflected in these benchmark numbers.

The performance of the channel and the tough trading conditions many are experiencing ought to be the top priority topic at any conference, meeting or other newsagent channel gathering. The issues reflected in the numbers I have been looking at for the past week go to the heart of the future of the channel.

As previous studies have shown, newsagencies in rural and regional situations fared better than their city counterparts.

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Newsagency benchmark

What do you do if you are missing stock?

We missed a couple of bulks of a weekly title yesterday. We had enough stock to last an hour or so.  While we waited to find out when we would get replacement stock, we went to the local supermarket and bought enough stock to last a few hours.

While this approach will affect the accuracy of our XchangeIT data, it is more important to me to have stock on the shelves than to provide accurate sales data.

I would be interested to hear if other newsagents buy stock from supermarkets or elsewhere when deliveries go missing.

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magazine distribution

Promoting magazines as Christmas gifts

christmas-mags.JPGCheck out the terrific display promoting magazines as Christmas gifts created by the team at my newsXpress Knox store.  The sales counter display shows off one of our Christmas stockings and a range of titles which easily fit into the stocking.

I like the use of food related titles as the category is performing so well and they are a popular Christmas gift.

Newsagents can show off their difference to other retail channels selling magazines with displays like this. Publishers ought to take notice.

I didn’t ask for this display to be created.   I love the initiative!

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magazines

Beware of predatory pricing from banks

National Australia Bank is engaged in what I’d call predatory pricing for tap and go payment units.  The deal sounds real sweet.  For some it has less than half the cost of a current arrangement.  It reminds me of the deals banks put to try and get people to switch credit cards and other accounts.

Under the surface, the deal is not so good.  There are IT infrastructure costs which they neglect to tell you about. Also, they want you to use a platform which is cumbersome to establish and is, in my view, poorly supported.

There will be more tap and go options released next year which are more competitive and which do not have IT hurdles.

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Newsagency challenges

If newspaper publishers don’t care why should newsagents?

age_dec13.JPGNewspaper publishers require newsagents with direct accounts to place newspaper toward the front of the store, in a high traffic (high value) location.  This is how it has been for decades.  Included in their demand is that the full front page of the newspaper is on display.

The front page of The Age newspaper today gives newsagents another reason to ignore the demands of publishers.  Covering the lead news item of the day with a half page ad demonstrates that showing the front page of the newspaper is not that important.  Unless of course people will buy the newspaper to read the Deakin University ad.  I think not.

I guess that news is not regarded as not all that important in selling newspapers by the folks at Fairfax.

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newspaper masthead desecration

Freebies weigh down magazines

weight-mags.JPGThe latest issues of Better Homes and Gardens and The Australian Women’s Weekly are being weighed down by the free booklets stuck on the back cover.

The booklet in each case is printed on light paper and looks damaged once the magazine has been lifted out of the magazine and put back a few times.  The glue line attaching the booklet to the back cover is set in from the spine of the booklet, this enables it to bend forward – the result is more easily seen with Better Homes and Gardens in the photo although it is happening with both titles.

The production process with these booklets, for a range of titles and not just the two I list aboce, leads to easily damaged stock.

While I am no printer, the problems could possibly be solved by attaching booklets which run down to the bottom of the magazine (rather than starting a couple of centimetres from the bottom) and which are glued closer to the spine of the booklet.

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magazines

Customers prefer charity boxed Christmas cards

Boxed Christmas card which support a charity are easily outselling boxed Christmas cards which do not support a charity based on what I am seeing in my stores this Christmas.  You know you are on a winner if a customer asks for a specific item and only wants that item.  This is what we are finding with charity Christmas cards.

I was with a couple of customers yesterday who wanted to buy eight boxes of cards. We did not have enough stock supporting a charity so they will be back in today or tomorrow once our next shipment arrives.  They passed up the opportunity to buy and excellent range of boxed cards we had on display, not even looking at the designs. They were adamant that they would only buy Christmas cards which support a charity.  They came to us because of our history of carrying a good range of charity Christmas cards.

While I have no research to back this, it feels to me as if Social Conscience Shopping is on the increase.

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Greeting Cards

Customers helping customers – the Christmas spirit in a newsagency

A customer asked for help in choosing a car magazine as a gift in my newsXpress Forest Hill store last week.  She didn’t know much about cars and wanted to make sure she purchased a gift which would be liked.

Another customer offered to help as he was a car magazine enthusiast.

The two customers talked for ten minutes about cars and the car magazines we had on offer.  They worked together to make the selection for the Christmas gift.  They were a delight to watch.

We were most appreciative of the knowledgable assistance given by the customer who stepped into help.  He was glad to have the opportunity.

This true story is not unique. I bet it happens many times each day across the newsagency channel.  People come to newsagencies for magazines because we are the specialists – like the lady looking for a gift. People with special interests come to newsagencies because of our range, our browser friendly attitude and because the environment is personal.

This difference – range, customer comfort and personal service – is vital to our entire channel.  We owe it to each other to do our best in these areas as they reflect our point of difference.

We rely on the two customers in my story – the lady looking for a magazine as a gift and the guy who shops in newsagencies because of the range and the browser friendliness.  We need to do more to attract and keep them.

The Christmas spirit is on show in many newsagencies right across Australia.

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Customer Service

Using the lottery counter for impulse purchases

counter-opp.jpgI saw this in another newsagency this week and share it here for others – placing roll wrap and giftwrap tape just below the lottery serving counter.  Click on the image to see a larger version of the photo.  While doing this is probably against lottery company rules, I’d expect many of their representatives to turn a blind eye for Christmas – especially if you are promoting their lottery products outside the usual area in a reciprocal move.

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giftwrap

Talking about magazines

I recorded a podcast for mediaweek magazine late yesterday, looking back at magazine performance from this year, the impact of the iPad and some other issues of interest to newsagents from 2010.

Click here to access the podcast – it’s free.

Brenden Wood (moderator), James Manning (Editor of mediaweek magazine) and I had a good conversation.  It was an other opportunity to talk about the difference between the newsagency channel and other channels when it comes to selling and supporting magazines.

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magazines

Not happy to sell this book

fat-book.JPGNetwork Services sent out this book, Losing the last 5kg by Susie Burrell, to newsagents yesterday.  It’s a book!  With a magazine margin!  With display challenges!  Unlike my previous blog post, I an NOT HAPPY to sell this book.  It has no local community, no newspaper or magazine connection.  There is no reason for it to be sent to us other than for Network Services to make money.   We rely in magazine distributors to be fair in their dealings with newsagents.  The distribution of this book is, in my view, grossly unfair.  It is an abuse of the trust newsagents place in Network Services.

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Book retailing

Happy to sell this book

tyler.JPGWhile the margin is awfully slim, I am happy to promote this book, Tyler, from the Herald Sun.  It tells the story of Tyler Fishlock, a story which has grabbed the hearts of Victorians thanks to coverage in the Herald Sun newspaper and on radio 3AW.  Just having the book on the shelves near the newspaper reinforces the difference between a newsagency (with a heart) selling newspapers and the coffee shops, supermarkets, petrol and convenience outlets which will not have this book in a prominent (expensive) position.

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Newsagency opportunities

Donna Hay sales lift

donna-hay-xm.JPGThe latest issue of Donna Hay magazine is selling better than the previous issue in my stores.  While the previous issue had a better looking cover, in my view, this issue is easier to purchase – it is not sealed in a plastic bag.  Yes, the oven mitt gift with the last issue was a premium gift and well targeted to the Donna Hay customer.  However, people like to browse food titles.  The delicious looking dishes lead to aspirational purchases.  While some of the sale s kick I am seeing with the current issue relates to Christmas purchases, I do think that the browser friendliness of the issue is a key factor.

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magazines

Price stuff up with Sportsman

sportsman.jpgThe latest issue of Sportsman out today has two prices on the cover: $7.00 and $5.50.  Customers are expecting the $5.50 price.  Some newsagents have not been told by their distribution newsagent about the price increase.  It makes me wonder what communication was provided by the publisher.

My view is that this issue as to be sold for $5.50 and that distribution and retail newsagents need to be compensated by the publisher.

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Newspapers

Delivery delays frustrate Herald Sun iPad app experience

hs-ipad-dec10.JPGI have given up using the Herald Sun iPad app. It is too slow. I want immediate access. Waiting more than a minute to download is too long, especially when I can get the New Zealand Herald, the benchmark newspaper iPad app in my view, in a fraction of the time it takes do download the Herald Sun. The New Zealand Herald has more content yet access is much faster.

On the Herald Sun iPad app itself, it is no groundbreaker. The experience is out of touch with modern apps. They say they wanted to keep it simple. If I want a simple access to news I would buy a newspaper. I have an iPad. Give me an iPad experience. That’s one reason I have this device, the experience.

Given what I can access on the website for the Herald Sun, the iPad app, in my view, does not deliver value.

The app for The Australian was better than that for the Herald Sun when I last subscribed. But it too needed work. News Limited needs to truly innovate if they want to capture the hearts, minds and wallets of iPad and other tablet users.

I don’t plan to renew my Herald Sun iPad subscription.

What I would really like to see is APN release a new iPad only newspaper app in Australia based on their New Zealand Herald app platform. That would be a game changer for newspaper apps in Australia.

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Media disruption

Christmas gifts selling out!

merry-giftmas.jpgWe still have fourteen days to go and Christmas gifts in our catalogue are selling out.  What a terrific season!

The app magnets, m-cups, Hallmark recordable storybooks, bears with speakers in their feet (seriously), dolls and the doggy bank have all been hits.  The flyers distributed to homes have driven new traffic.  The gifts themselves have driven excellent impulse business in-store.

Margin on some items is excellent while on others it is good.  No matter, banking the margin is the key issue, as I noted in a blog post a few weeks back.

While I do bang on here about magazines more than any other product category, Christmas is a season which separates newsagents.  It tests us as buyers, visual merchandisers and retailers.  It is when we can leverage our good magazine, newspaper and greeting card traffic into other business.

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marketing

Strong bonbon sales

frank-bonbons.jpgWe are seeing excellent bonbon sales this Christmas. Well up on last year. We are well into double digit growth. Indeed, our bonbon sales are another reason we are enjoying what we thought would be a flat Christmas. This has probably been helped by our sourcing of a broader range of bonbons than in previous years. It has been useful to buy outside traditional newsagency channels. This is the only change to our bonbon approach – we are displaying them in the same way as we always have.

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Newsagency opportunities
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