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

Author: Mark Fletcher

Magazine distributor profit drops 42%

In the Annual Report for PMP Limited which was released last week, the Gordon and Gotch magazine distribution business reported a decline in revenue of 4.6%, to $408.9 million, and a decline in profit of 42.4% to $7.5 million.

The report notes that PMP has undertaken some restructuring including redundancies.  Newsagents would have seen this in the last year.

My understanding is that more redundancies are on the way which will impact newsagents.

While some newsagents will take pleasure from the bad news for the Gotch operation, I am concerned for a number of reasons:

  1. To improve the situation Gotch will need to cut costs and increase margin – moves which would not be good for newsagents.
  2. They will probably look at how they can increase sales.  Every additional bundle of magazine they distribute improves their situation because the logistics overhead is there regardless.
  3. Would they consider extending distribution beyond the newsagency channel?  remember, they are paid based on volume distributed.
  4. I wonder if the Gotch situation is a tail reflecting what we have experienced or a warning of greater challenges to come in the magazine space.
  5. If they are unable to arrest the decline will they look at alternatives which are not palatable to newsagents?

A couple of years ago, publishers and distributors said that the magazine sales decline was temporary and impacted by external events.  It has been going on for too long and impacting too many levels in for this to be the case.  Publishers, distributors and retailers are all reporting declines.  It is the retailers who carry the largest cost since we have only one income source and that is highly speculative.

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magazine distribution

Promoting the outdoor room

theoutdoorroom.jpgTower Systems, the newsagency software company I own, has published a coupon promoting the outdoor room, the new magazine from Pacific Magazines, for printing on receipts using the Point of Sale software.  The coupon is available from the downloads section of the Tower website.  I’d be happy to send a copy to any newsagent wanting to use this with other software.

The coupon / ad can be printed on a receipt based on what the customer has purchased or just included on all receipts.  This type of receipt based marketing is proving successful at attracting customers to return andeven to get customers to make an additional purchase while in the newsagency.

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magazines

Promoting The Monthly

monthly-asange.JPGWe are promoting The Monthly above our newspapers.  The Julian Assange cover looks good and leverages his high media profile of late.

My only complaint is that the folks at The Monthly send out very little marketing collateral.  This month it is two cover run ons.  No poster, nothing else.  Hardly enough to create an impression.

We are relying on our placement with newspapers to drive sales for us.  It has worked well in this location before.

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magazines

Selling the Collingwood Grand Final souvenir

collingwood.JPGWe have placed the AFL premiers souvenir, A Cakewalk for Collingwood, in the only logical place for it today, between the Herald Sun and The Age newspapers.  Based on questions from customers yesterday about the Knight poster I’d expect the souvenir to sell very well over the next couple of days.

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magazines

ACP Magazines in a reality TV show

TV Tonight is reporting that ACP Magazines will feature in a 10 episode observational series set in the ACP offices of Cosmopolitan, Cleo, Madison, Dolly and Shop Till You Drop.

This should be good for us, bringing focus to the medium and showing what happens behind the scenes.  Maybe we could find a way to leverage the show.

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magazines

MPA focus shifts from publishing

On Friday, Magazine Publishers of America announced that it is changing its name to MPA. The new tagline for the body is The Association of Magazine Media.  The change reflects a shift of focus by the organisation away from print.

This is relevant to Australian newsagents as it is further evidence of a shift in focus by magazine publishers, albeit in the US this time, from print to other distribution channels.

Newsagents are lagging behind their suppliers in investing in new revenue streams.  While some are innovating, the channel is not.  Leadership is lacking on considering the future.

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Media disruption

Condé Nast launches new online offer

US magazine publisher Condé Nast continues to innovate in seeking revenue from digital publishing with the launch on Monday of Golf Digest on Demand, a golf-instruction video series that will sell for UA$9.99 per month, AdAge reports.

This move takes interaction between readers and Golf Digest to a new and more interactive level.  It represents the new paradigm of what we used to know as magazine publishing.

Newsagents who are concerned about magazines containing advertisements for subscriptions are likely to be equally concerned about magazines which advertise their iPad apps and other digital products such as Golf Digest on Demand.

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Media disruption

Halloween 2010 passing Halloween 2009

halloween-oct2010.JPGWe are only two weeks in and already Halloween 2010 is well on the way to passing Halloween 2009.  Yesterday, with the lull in trade thanks to the AFL Grand Final replay, our team took the opportunity to completely refresh our main Halloween display.  Click on the image for a larger version of the photo.

An average Halloween product sale for us is $25.00, making it a rewarding season for gift related items.

The new people attracted into the store by the Halloween window display are also buying other items – cards and magazines especially.  This is where a Halloween promotion pays off.  It gets shoppers seeing your store in a different light.  It especially attracts a younger shopper and this is vitally important to newsagents.  Some of these new shoppers will stick.

Getting people to not see us as a traditional newsagency is vitally important to us. Seeing the new traffic results reinforces my optimism.

We have been doing Halloween for five years.  We can see from our numbers that this year will be the best.  What is interesting is that most of our sales so far have been from new shoppers attracted by the display and not our existing customers.

In our new temporary location we are directly opposite The Reject Shop. They did Halloween last year and there was a 25% cross over in our ranges.  On every item they were considerably more expensive.  It will be interesting to see their pricing policy this year.

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Newsagency opportunities

Three ‘new’ magazines from Universal to clog newsagent shelves

bonuspacks.JPGWe received three new ‘titles’ from Universal Magazines yesterday.  I say ‘titles’ because they are actually packs of old titles bundled together to give them another go around.  If we are to keep this stock we have to find space for the new product.  If we do what Universal wants, we have to carry this stock for three months.

Had I been asked if I wanted my cash, retail real-estate and labour used in this way I would have said no thanks.   I am satisfied with the range I have of fresh backyard, scrapbooking and quilting titles.  I certainly do not need these packs which contain product which has failed to sell previously. I do not need more old bagged product acting as a barrier to a happy browsing experience.

Just how many times can a title be sent out before it is considered dead?  How is this recirculation accounted in reports to advertisers?  How is it handled in an audit situation?

It is an abuse of the newsagency channel that we are sent this stock without approval.  While Network Services and Universal Magazines will say that they have every reason to believe these products will sell, their justification will not take into account the costs newsagents incur in carrying the stock.  Their behaviour shows little belief in that.  If they did believe the titles would sell then they would have requested a top only return.  Instead, they require a full copy return – maybe so the titles can be sent out again.

Universal will complain that I am targeting them.  They set themselves up for this complaint by bundling old product and sending it out to newsagents expecting us to fund their decision and expecting us to fund the costs of carrying the stock.

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magazine distribution

Not so Grand Final Day

Melbourne this week has not felt the same as the previous week.  While we all know the AFL Grand Final is being replayed, there is not quite the same buzz.  I will be interested to see how today pans out, whether the shopping precincts become ghost towns from lunchtime.  Maybe that is it, the focus this week will be on the game and not the hype.

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Newsagency management

AFL Grand Final Record opportunity missed

While a AFL Football Record has been produced for the AFL Grand Final replay tomorrow, this is not being distributed thorugh newsagents because a satisfactory arrangement has not been reached according to what I understand.  This is disappointing.  I am certain we would have sold more copies this week than we did for last week’s draw.

The Record is available direct from the publisher or at the MCG tomorrow.

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magazines

Telstra cuts newsagent phone recharge margin by 20%

Telstra has announced a cut of 20% to the commission earned by newsagents for mobile phone recharge sales.  This must be part of their plan to reverse their poor financial performance.

Telstra has extraordinary market power and they have just showed that in relation to newsagents.  We will not do anything about the 20% cut because we would not want to lose their business.  They know that.  I wonder if they cut anyone else.

Our margin ought to have increased given the increase in our overheads – rent, labour and other costs.

I would like to know the commission paid on Telstra products sold in supermarkets.  On October 17, 2005, I wrote here that I had proof (in the form of an invoice) that a national supermarket chain was earning 16% commission from Vodafone recharge sales while newsagents were on 5%.  Maybe the same difference exists for Telstra.

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Ethics

SMH or The Age for $2.49 a month?

Fresh editions of The Sydney Morning Herald or The Age can land on your iPhone for $2.49 a month.  No sign of their iPad app though.  The Fairfax offer is okay but not a patch on the New Zealand Herald iPad app – this is the best I have seen for a newspaper app.

To be fair to Fairfax, the first offer is always going to be a learning experience.  The real concern for newsagents needs to be the next generation of devices and the third of fourth incarnation of newspaper apps.  These are not far off.

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Media disruption

Hallmark voice changers working for Halloween

halloween-voice-changer.JPGThe Hallmark voice changers we have as part of the Halloween offer are selling like hot cakes.  It has been perfect having them and the rest of Halloween out during the school holidays.  We are seeing people of all ages buy the voice changers from grandparents down to kids spending pocket money.  The add wonderfully to the soundscape of retail in the store.

What is also working is a deal we have where the voice changer can be bought for $9.95 if three cards are bought in the same purchase.  the regular price is $14.95.  This is a great way to build the basket.

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Newsagency opportunities

Is Notebook magazine set to close?

notebook-sep2010.jpgThe Australian is reporting that News Magazines may be about to close Notebook magazine.  Such a move would not surprise me.  It is drawing falling sales in a well crowded segment of the market.

Notebook started fading when they took flowers off the front cover.  Seriously, sort of.  This change represented other changes for the title and indicated, to my untrained eye, that they had lost their way.

If Notebook does close it will be one of the most significant closures in recent years.  It would also put the spotlight on other titles in the 70,000 circulation region.

UPDATE (Oct. 1) The Australian is this morning reporting that an announcement is expected today.

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magazines

Alternative circulation model for newsagents

In 2005 I knew I had to either expand my newspaper home delivery business or get out.  I created a model which I grandly called Circulation Fulfillment Australia and sought to work with nearby newsagents to bring this to life.  With no takers I subsequently sold my distribution business and shelved the idea.

I have recently been helping several newsagents on alternative newspaper distribution models and have had reason to revisit the CFA model.  I publish my plan from 2005 here for any who want to read it and consider an alternative newsagent controlled distribution model.

I am not looking for any involvement – use the plan any way you wish.

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newspaper home delivery

Do we really need another local gardening magazine?

good-gardening-sep2010.jpgHere in Australia we have some terrific locally produced gardening titles: Burke’s Backyard, Gardening Australia, Organic, Your Garden, Better Homes and Gardens to name just a few.  Add to the local titles the imported titles – some successful and some not so successful – and you have a full, even overflowing, gardening section. The range is good.  Year on year sales are okay, no significant growth.

I was surprised, therefore, when Good Gardening arrived with our magazines yesterday morning. It’s a new title, one for which we have no available space. It has a long on sale – three months.

Outside of the long on sale and the cash flow implications of a September billing and a January credit and that this makes a financial backer of the new title without the publisher asking us for a loan,  there is a the space problem.  If I want to carry this title and my gardening section is full, something has to give, it will force me to bump a title.

The folks at Universal Magazines, the publisher behind this title will think that I am out to get them with this blog post.  They will probably send another threatening letter saying that I am harming their business writing about them in this way.  Before they do this, they should consider the facts:

  1. Newsagents were not given the opportunity to say no to receiving Good Gardening.
  2. We had no control over the quantity.
  3. We were billed on the second last day of the month from what I understand.
  4. The title is to be returned in the second last week of the year.
  5. In the majority of newsagencies the title will be cash-flow negative.
  6. We have been given no data to indicate the commercial prospects of the title in an already crowded segment.
  7. We will get a credit for unsold stock in January 2011.

Magazine distributors and publishers need to understand that if they expect newsagents to pay their bills on time, they MUST provide us with accessible and fair business mechanisms through which we can exact business decisions which drive our level of indebtedness for magazine product.  The release of Good Gardening is a good example of the lack of control newsagents have.

The title itself looks okay.  I could not find anything which made it stand out from the other good titles in the segment.  I am sure it will find some customers – but at what cost to newsagents.  Retail real estate and labour to manage this is expensive.  Every magazine title has an overhead every week which must be covered by sales.  New titles have a higher cost than others unless they are an instant hit like MasterChef.

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magazine distribution

Magazines promoting Halloween

disney-adventures-hall.jpgNewsagents not sure about the appeal of Halloween only need to look at local magazines which are supporting this season.  Disney Adventures, out yesterday, comes with free Halloween stickers.  There will be more titles connecting with Halloween.  We will add these to our Halloween display – which is generating excellent sales by the way.

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magazines

Promoting Women’s Weekly and Pink magazines

aww-oct2010.jpgWe are promoting the latest issue of the Australian Women’s Weekly (out yesterday) on the lease line facing into the mall because of the free copy of the Australia Pink Magazine which comes with the title.

Only the top tier of ACP Connections members get this special issue of AWW so it is natural we would want to leverage that as a point of difference.

We will also use this specil issue of AWW as a centrepiece of a promotion supporting the work of various organisations on breast cancer.

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magazines

Former Bill Express executive charged

Peter Couper, the former Chief Financial Officer of the company and OnQ, is facing criminal charges according to a report in The Age this morning.  The report indicates that others will be charged as well.

While there is still no solid news for newsagents in relation to the Bill Express equipment, my (non lawyer) opinion is that the equipment has been abandoned and can therefore be used how and where I like.

The only other closure I would like is into the behaviour of the ANF Board leading up and immediately after the decision to endorse Bill Express.  The due diligence the ANF claimed to have done was not done and no one has been held accountable for letting so many newsagents down.

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Bill Express

Attracting magazine fans for our future

magazinedisplay.JPGMagazine fans, lovers of the magazine medium and lovers of special interest topics covered in the magazine medium, are vitally important to newsagents and our future.

Unfortunately, we get so caught up in supporting top selling titles that we sometimes forget the need to focus on the titles and services which separate us from the other magazine channels: petrol, convenience, supermarket and mass merchant.

By investing time in developing employee knowledge of the magazines we sell, displaying them in a logical and professional way, offering value added services – such as putaways and partworks and rewarding loyalty we can demonstrate that the magazine department as essential to the health of our businesses.

Today, our magazine range is the key differentiator for most newsagencies.

While we would like to think it is customer service or our connection to the community, the reality is that it is our magazine range, our 1,200+ titles, which and the shopping experience associated with them which separates us.

While I see challenges for the medium, smart newsagents have the capacity to grow magazine sales.  The key is to run your business in a way which appeals to magazine fans.  We need to make the services which support magazines as unique as our range.

Seems simple, I know.  The reality is that it is not.  It is hard work.  Many of us would have to lift out game, and we can.

We need to make managing magazines an owner or senior manager responsibility.  We need to educate our team.  We need to ensure we have a professional and shopper friendly layout.  We need to show our magazine fan customers that we appreciate their business.

The best point of difference for many of us today is in the magazine department.  It is up to us to genuinely leverage the opportunity for our profit.  We do this by acting as magazine specialists – no matter how frustrating the magazine distribution system is sometimes.

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magazines

Kenny’s Cardiology watch

Further to my post ten days ago about the opportunity for newsagents near a Kenny’s Cardiology store, the ASX yesterday announced the suspension of Allied Brands, the parent company, because of a pending announcement regarding The Cookie Man franchise.

If you own a newsagency near a Kenny’s store, do some research on the opportunity.

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Newsagency opportunities

Kudos to the Herald Sun on AFL premiership planning

The folks at the Herald Sun do an excellent job keeping newsagents informed about events which can drive newspaper sales. Take the AFL Grand Final replay –  yesterday they communicated details about four Grand Final related opportunities for newsagents. The advance notice helps with planning the required space and labour investment. It also helps put this activity into perspective of what else is going on in the business.

I wish more suppliers would be as proactive at forecasting activity a couple of weeks out.

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Newspapers

Covering the page 1 newspaper headline

west-australian.jpgThe West Australian today has an ad for MBF stuck on top of the headline on page one of the newspaper.  While I understand the need for publishers to make a buck where they can, I have to ask – what is the value of a headline in driving sales if it is partially covered up by an ad? I like The West Australian, it is a newspaper for its marketplace.  I’d say it is currently the best newspaper out of single newspaper capital cities.  I don’t like the ad because it detracts from what the newspaper is about.

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newspaper masthead desecration
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