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

Author: Mark Fletcher

Dick Smith TECHLIVING magazine weak

techliving_magazine.JPGThe second issue of TECHLIVING, the Dick Smith house magazine went on sale yesterday.  While I am sure it serves a purpose for them, it sits in a crowded space in newsagencies and only serves the purpose of advertising Dick Smith in our stores.  It’s weaker than other house titles we carry in newsagencies.

I am inclined to include a flyer with the magazine promoting our ink and toner since this is the one category where we compete head to head with Dick Smith – their ink customers would save money shopping with us.

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magazines

Christmas mini cookbook packs

fhn_acp_cookbooks.JPGI like the mini cookbook Christmas gift packs supplied this morning by ACP Magazines.  The $9.95 price point is smart and the packaging good.  I also like the collateral provided.  We have put the books in a bin between our newspaper stand and our main counter – at the end of one of our diary tables.  Our thinking in taking this approach is that we needed to promote it like any other Christmas offer rather than through a more traditional magazine display.  the other benefit of using the bin is that we can move the display as needed.

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magazines

Another Trading Space replacement

tradingspace.JPGThis morning we received copies of TRADINGSPACE, a new title classifieds title trying to trade off the demise of the Trading Post.  They offer free classifieds.  I don’t recall receiving any pre launch announcement about the title.  Our challenge with the title is where to locate it since the Trading Post space is gone.  I’m sure other newsagents would have the same problem.  This classifieds space is getting busy.  It will be interesting to see how it plays out.

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Newspapers

November newsagency sales

We achieved good sales in November with sales up in key traffic departments as well as in key good margin departments.  The numbers are even better when you consider that some departments had a high base – calendars, diaries, cards and ink.  Here is a summary of performance* across my own newsagencies:

  • Books.  Up 11%.
  • Calendars.  Up 23%.
  • Cards. Flat.
  • Diaries. Up 20%.
  • Gifts. Up 84%.
  • Magazines. Down .7%.
  • Women’s Weeklies magazines. Up 7%.
  • Newspapers. Down 3%
  • Ink & Toner. Up 8%.
  • Stationery. Up 1%.
  • Prepaid Visa. Up 650%.
  • Lottery sales.  Up 11%.
  • Instant lottery tickets.  Up 6%.

Overall traffic is up 2%.

What is particularly appealing to me in the numbers is the adjustment to our mix.  We continue to build a more efficient business by balancing low margin high traffic products with high margin lower traffic products.  This is an on-going mission, one with which every newsagent ought to engage.

The growth is due to a combination of constant change in-store, a good retail experience, good external marketing and a strong commitment to a brand / price strategy.  We are known in several key departments for these points of difference.

People who ponder the future of the channel need to look at their numbers.  Every month we have an opportunity to gauge our progresson this long term mission.

* I have used revenue as the measure for all departments except for magazines and newspapers where I use unit sales as the measure.

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Newsagency management

Attracting customers to the newsagency

fhn_newsletter_dec09.jpgIn addition to mailing to homes and businesses around our centre, we have our December newsletter – IN STORE OFFERS – in a stand at the front of the shop.  We will also distribute this to businesses in the centre.

This newsletter promotes several of our Christmas offers from a range of departments.  It also connects with marketing distributed to thousands of homes around the centre in recent weeks. It respects core departments – magazines (suggesting a Christmas gift pack) and cards (the very successful Hallmark sound cards) – while promoting calendars (great margin and range point of difference), the new moon board game (competing with the big guys and winning!), Scotch gift wrap cutter (everyone needs one!) and our digital photo key rings (also competing with the big guys and winning!).

Regulars here will notice that we have evolved the newsletter considerably over the last four years.  This latest incarnation reflects our research on how shoppers engage with the newsletter.  Items are less wordy and more outcome focused.

The newsletter focuses on brands and value – we see these as a key point of difference for us.  The pitch is the same in our catalogue marketing as well as our advertising.

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newsagency marketing

Oz Lotto jackpots to $40 million

Oz Lotto jackpotting last night to $40 million is a nice assist as we get closer to Christmas.  While there are retailers who think that big jackpots draw sales from other products we sell, I don’t see that in my newsagency.  We will benefit from a traffic boost and add-on sales in non-lottery categories.

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Lotteries

Newspaper contracts causing distress

I have heard from several newsagents this week who are distressed about the News Limited contracts.  It is the all or nothing approach which is causing the most stress.

In two situations put to me the newsagents would like to keep the retail business but discard the small loss making home delivery business.  They say that no amount of representation has been able to achieve an outcome which suits.  This means they either take everything and lose money or take nothing and hope to negotiate sub agent terms which would mean a break even situation on newspapers.

One understands that emotions are heightened when you consider that for many long term newsagents this is the most fundamental change they have faced in decades.  For the first time they are wondering whether to walk away from a core offer which for years has defined their business and their place in the town.

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Newsagency challenges

Books versus ‘magazines’

fhn_books_activity.JPGFurther to my blog post a few days ago about kids activity books from Network Services, the photo shows a couple of books we have in-store at the moment from which we achieve more than 50% margin.  Whereas the Network supplied books seek to leverage existing traffic, the book campaign I choose to participate in drives new traffic.

These books are more valuable to us than the Network books because of the margin and because they are part of a catalogue marketing campaign to thousands of homes around our newsagency.  The book campaign drives traffic – I can tell because customers come in with the books they want circled in the catalogue.

Few newsagents would benefit from Network using its magazine relationship with newsagents to send out books.  We need to negotiate rules with Network which would see this behaviour stop.

There was considerable discussion here on the weekend about the future of newsagencies and the need for a so called cure.  We will find our own future by making smart business decisions – such a choosing to engage in traffic generating campaigns, like books, and to carry better margin products, like books.

I have seen newsagencies take book sales from $10,000 a year of $75,000 a year (and even more) on the back of the kind of new traffic generating marketing campaign I have written about here.  Steps like this are crucial to each of us finding our own future.

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Book retailing

Promoting Top Gear to guys and girls

fhn_top_gear.JPGWe are promoting the latest issue of Top Gear Australia at the entrance men’s magazine aisle but within eyeline of those leaving our women’s magazine aisle.  December is a great month for achieving sales of magazines to shoppers who would not usually buy them.  Top Gear is one of the titles we target as a good Christmas gift and this has guided our placement for promotion of this issue.

We plan to use signage to guide shopping of magazines for Christmas gifts with some in-store marketing collateral – different to the poster we did last year.  This year, we are experimenting with bookmarks.

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magazines

Kindle e-reader has a record month

Amazon says that sales of its Kindle e-reader hit a record in November.  Information Week reports that Forrester Research predicts 3 million e-readers will be sold in the US this year.

We are yet to experience the e-reader phenomenon here and this is why some in Australia say it is a fad which will pass us by.  I doubt this.  Our uptake will be faster than the US because we enter the market with more advanced devices.

Newsagents need to watch this market and consider what is happening in the US in the context of what we will sell and deliver in years ahead.  We don’t sell e-readers nor do we sell account top-up services.

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Media disruption

Sunset for hardcore adult magazines?

I was interviewed by Sally Jackson last Friday about the sales of adult magazines in newsagencies for a story which appeared in The Australian yesterday.  It is good to see a newsagent perspective included in the analysis of what is happening with porn magazines.  The latest newsagent sales benchmark study included results for adult titles – showing a decline year on year in over the counter sales.

I’d note that when I quote sales numbers for magazines and newspapers I use unit sales.  Price changes impact revenue too much to be used as a measure.  Also, other factors such as promotional products can also skew the figures.  So, assessing unit sales year on year, porn magazines are down in newsagencies.

While I am happy to carry a selection of ‘regular’ adult product, I think the sunset is here for porn.  It’s not paying its way in my newsagencies.  It will be working for some but for most newsagents the space and cash saving can be put to better use.

On a side note, I am surprised at how far this story has travelled.  Thaindian News picked it up along with fifteen or so other sites.  I only realised when I received an email from someone overseas seeking information on other magazines categories in newsagencies.

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magazines

Making the most of the card and wrap sale

frans_cards_gifts_tape.JPGThe photo shows how our team at Frankston is making the most of card and wrap sales with the easy-to-shop-dispenser  from Scotch offering Christmas wrap tape.  This is a no-brainer upsell.  The majors do it but many newsagents do not.  We have used this and similar approaches for a few years with great success at Christmas time.

By siezing every possible opportunity to upsell we build a more efficient basket.  We improve our return on floorspace, customer visit and just about any other metric you want to look at.

While newsagents get caught up in the big issues like newspaper contracts and magazine supply challenges, we too often neglect small step opportunities like the tape upsell.

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Newsagency opportunities

Famous stands out from the pack

famous_nov30.JPGIn a departure from my usual blog posts here, I’d like to comment about the cover of Famous magazine this week. It is an excellent example of embracing a theme. This issue is sure to be of strong interest to Twilight fans given that it goes beyond a cover photo, it is as if the magazine has been embraced by the Twilight theme. I also like the cover because it stands out from the sea of colours in a busy magazine rack.

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magazines

Promoting Woman’s Day at the counter

fhn_womans_day_mchef.JPGWe are promoting Woman’s Day at our busiest lottery counter this week because of the preview of the Master Cheft cookbook which comes with the magazine.  A second reason this prime space promotion is their front page photo of Trishna and Krishna, two babies which have won the hearts of Victorians.  These factors make it is good issue for driving impulse purchases.

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magazines

Australia Post to offer gambling services

Tabcorp announced on Friday a new agreement with Australia Post to deliver over-the counter TAB betting account services. From early December, Tabcorp TAB account holders will be able to deposit, withdraw and obtain balances of their betting accounts at most Australia Post retail outlets. Read the Sydney Morning Herald piece from this morning on this.

I have a couple of issues with this: connecting the government owned brand with gambling (where will they stop?) and the further strengthening of Australia Post retail traffic.  Government should not own such a commercial business in a well-serviced and competitive marketplace.

Australia Post government stores are the toughest competitors for newsagents.  They get their traffic through government protected customer traffic.  They leverage this by competing directly with us on a growing range of fronts.  It is Government policy which has allowed their model to diversify over the last ten years.

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Australia Post

Bringing context to the newspaper contract debate

News Limited has been clear in its contract documentation that it is reviewing all aspects of newspaper distribution.  This must also include financial modelling on the future of the medium itself.

While publishers struggle with objective assessment of new digital delivery platforms of news – see this article at Pittsburgh live – other observers note that digital delivery of news is growing.

Publishers and others look at devices like the Amazon Kindle from the perspective of a newspaper.  This is like looking at an iPod from the perspective of a CD of music.  Today, people buy single songs.  In the future, we will buy individual articles by topic, by author or by category.

Technology will be the single biggest disruptive influence on the future of newspaper distribution in Australia.  Maybe not this year or next, but certainly in my lifetime.  This is what we must plan for.  This is why we must diversify.

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Media disruption

Finding room for crosswords

fhn_cross_nov2809.JPGWith the additional space requirements for Christmas crosswords, we moved them out of our women’s weeklies area a few weeks ago.  Late last week made room deeper into our women’s magazine area, between our British titles and women’s fashion.  In two days we sold four magazines from this display.  We will see how this space performs – we do this by regulating the number of copies we place in each pocket.

Newsagents who have crosswords online in a dedicated area, I’d encourage you to co-locate a selection of top selling titles in the women’s weeklies area.  Many who have tried this have experienced double digit growth for these titles.

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crosswords

Good Food sells out, again

We sold our second shipment of the latest issue of Good Food magazine, taking our November numbers to more than double usual.  Our most successful location for Good Food is proving to be next to our newspaper stand.  While we cannot place every magazine there, we have a small selection which perfrom particularly well.

Our success with this issue of Good Food is good on several fronts: many purchases were on impulse, we are gaining growth from a traditional category and we are seeing local sales tactics work – this is most encouraging.

We can’t accept average performance in retail.  This is why we have to work every opportunity, especially with traditional products like magazines.

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magazines

The Age covers only some mastheads

age_nov2909.JPGI bought The Age yesterday from a 7-Eleven out of necessity.  An ad for the ANZ bank was stuck on the masthead.  I checked other copies and they were the same.   Out at one of my newsagencies later in the day I noticed that none of the mastheads were covered by the ads.  Maybe advertisers are targeting some areas with these pesky stuck on ads.   I see the growth in use of these ads and other disruptors to the traditional newspaper experience as a commentary on the value of the medium.

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newspaper masthead desecration

Empowering the poor with village made products

fhn_empowering.JPGWe found ourselves with space at our prime counter display for a few days so our team at Forest Hill created a display of the excellent socially responsible range from the Noah’s Ark group in Northern India.  Rather than go with the usual product focused display, our team put together  details on the back story – why this product is important.  Knowing this is as important as the items themselves.  Indeed, the back story can drive the sale.  Click on the photo for a larger version of the display.

The items are selling well.  They make great Christmas gifts.  Their work in local villages has been checked out and endorsed by Oxfam and Tear Fund.  The credibility of this encouraged us to take on the product.  I am thrilled the team at Forest Hill is supportig the product.

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Gifts

UK Newsagents miss out on newspaper cover price discount

Mediaweek in the UK reports that newsagents are set to lose millions of pounds in revenue a year thanks to a decision by News International to revise its base cover price.

Rupert Murdoch’s News International is to hit retailers’ tills to the tune of more than £12m a year as it looks to clamp down on the cover-price margin of its market-leading brand, The Sun.

The cover price used to be 35p.  It was lowered to 30p in a promotion but newsagents and other independent retailers were compensated at the base rate of 35p.  This is about to change, making newsagents and other independent retailers a partner to the discounting by the publisher.

This means multiple and independent retailers’ margins will be hit by an extra 1.16p for every copy of the paper, which has a circulation of around three million, sold in England, Wales and Northern Ireland.

Since July 2008, retailers have received a retail margin of 8.12p on The Sun’s cover price of 35p, after News International introduced a price promotion on its cover price from 35p to 30p.

Steve denham, UK newsagent and blogger writes about this.  he makes a lot of sense.

Newsagents are not isolated from the effects of the storm that is blowing through the newspaper industry. Shouting and screaming about how this is damaging our businesses will not effect the outcome.

I expect we will see plenty of moves in the future by publishers as they try and rein in costs related to print product.  Yes, in Australia too.  Advertising is not back to where it once was, circulation is flat – some growth, but flat in terms of single copy sales from what I see.

We can engage in skirmishes as these changes play out or we can invest our energy in focusing on our own future.  This is what smart newsagents are doing – investing on new traffic and new money.  It is one reason we are realigning space in my own newsagencies to maintain good newspaper and magazine sales while freeing space for higher margin better point of difference product.

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Newsagency opportunities

More magazine moves for the iPhone

The three biggest magazine publishers in the US, Hearst, Time Inc and Conde Nast, are reportedly investing in a separate company which some say will be iTunes for magazines.  It will be interesting to see how they plan to monetise content which is currently freely available online.

As I have written here previously, my view is that it will not be magazines which make serious money online but stories.  Set the stories free from their mastheads and make them available, individually, for micro payments and you turn the model on its ear.  Leave the print product as the aggregated model and the online model is story / celebrity / issue based.

Britney Spears or Michael Jackson fans may pay a few cents to buy a story which has a fresh angle whereas they may not want to pay over $1.00 for a ‘magazine’ of which content they want is a small part.

While there will be some impact on print sales with these and other digital moves, I expect them to be minimal in most magazine categories for some years yet.  Indeed, as we have seen this year, there are some segments delivering good growth.

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magazines

SA newsagents in the news

The Independent Weekly has a report this morning of the moves by South Australian newsagents in relation to the new contracts fron News Limited and the migration program.  The migration program is about moving management of customer accounst from newsagents to News.

It is interesting to read of the ANF involvement since the ANF was approached by News before they started the migration program and game the program a green light.  This is what encouraged News to move forard as I understand it.

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Newsagency challenges

Borders aint Borders

The owners of Borders in Australia are making it clear that they are not part of Borders in the UK which called in the administrators this week.  Redgroup retail owns Borders Australia.  They also own Angus and Robertson, Supanews and Whitcoulls in New Zealand.

Regardless of the lack of association between the businesses, the UK move is unfortunate timing if the talk of Redgroup floating here is accurate.

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retail
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