We have Underbelly A Tale of Two Cities on our shelves for $17.95. We have priced the book to be within reach of the Coles price.
While we would prefer a higher margin, we are happy to see it sell and for our business to be seen as being a reasonably comeptitive on price for such a popular product.
Today’s issue of Greek newspaper Neos Kosmos illustrates the community connection a good foreign language newspaper can have with the local community. The Victorian bushfire story dominates. Il Globo also provides excellent coverage of the story for the Italian community. In our newsagency these titles are as important in terms of sales and customer loyalty as The Australian and the Australian Financial Review.
As I write here often, niche newspapers, like foreign language newspapers, an important segment of the newspaper category in newsagencies. Their sales returns are bucking the trend of capital city dailies.
Nicholas Carlson writing at Silicon Alley Insider asks whether the New York Times would be better off giving all subscribers an Amazon Kindle to receive the newspaper electronically rather than a print edition. Fast Company picked up the story and summarised the numbers:
And then there’s the math: From the NYT’s financial report, production costs in terms of raw materials and wages/benefits tally around $844 million a year. Carlson has info suggesting the newsroom costs total around $200 million a year, meaning it costs some $644 million to print and distribute the physical newspaper.
The Times reportedly has 830,000 subscribers. A Kindle costs $359. Thus distributing a free Kindle to each subscriber would cost about $298 million.
This example illustrates the perfect storm scenario for Australian newsagents who handle newspaper home delivery. Not that a publisher would give away the Kindle (it does not work here in Australia anyway) but rather that the numbers for a completely different distribution channel are so compelling.
It is good to see Tattersalls try different marketing tools – they have sent pads of post-it type notes promoting the Valentine’s Day $14 million draw. While we are putting these to good use, I’d like a way included to draws customers back here.
Judging by the radio ads playing in Melbourne over the weekend the Harvey Norman OFIS outlet here will be closed in weeks rather than the months originally indicated. If I had a store located nearby I’d be promoting around the store with some outdoor advertising – letting customers know that my business can continue to supply them.
The 5 WAYS TO KICK START YOUR NEWSAGENCY workshop starts on Monday. I’ll be hitting six cities in five days and meeting with between 250 and 300 newsagents. This weekend I am working on the content to ensure it is fresh, relevant and genuinely useful. The location details are:
I’d be thrilled to catch up with newsagents who wish to drop by who have not booked – it’s free. Even though we have excellent numbers in each city I am sure we can make room for more.
I served a customer yesterday who had been told by a friend to come to our newsagency for a calendar for her favourite dog breed. This customer drove past two major shopping centres in 46 degree heat to get the calendar – for her dog. She bought another calendar, a magazine and a card. When talking with her about why she would go out in such extreme heat she said she’d do anything for her dog. She told me she would be back.
We built our calendar range around special interests. This started three years ago and we have got better with time. Word of mouth driving new customers to us like I witnessed yesterday is what we have chased.
The 500 or so 2009 calendars we have on sale now for $5.00 are delivering a healthy margin, more than double what we achieve for magazines. We will sell out and end the calendar season well up – in January we were 13% up on January 2008.
Crains reports that 525 US magazines went out of business last year and that so far in 2009 40 magazine titles have closed.
The terrain is not as harsh for magazine publishers here in Australia because of the newsagent network. In the US, most sales come through subscriptions whereas here in Australia, retail, newsagents especially, provide a cost-effective channel to market. I suspect, however, that the economic climate we are currently experiencing will see many Australian newsagents finally act on underperforming magaiznes.
I missed that The Australian published an update on the On Q / Bill Express mess January 16. The report catalogues what we knew – bad business practices, dodgey loans and lame excuses.
It surprises me that in the collapse and subsequent winding up of Bill Express and OnQ that newsagents have received no communication regarding the equipment sitting in boxes in the back of newsagencies. I have asked several interested partiesand no one has an answer.
I’m told that there is a post-it ad stuck on the front cover of the Illawarra Mercury today promoting a home delivery offer. Pay $4.00 a week for six days of the newspaper. The usual price for six days is $7.50 plus a delivery fee. On top of the massive discount, which the newsagents is forced to partially fund, the publisher is giving away a $50 Coles / Myer Gift Card and a bunch of other freebies.
It is appalling that a newspaper publisher forces newsagents to pay for a campaign such as this when the newsagent has no capacity to balance the cost with other revenue in their business. It is an abuse of the newsagent / publisher relationship. If I were affected by this I’d be asking the ACCC what the Trade Practices Act says about such an arrangement – despite that a contract between publisher and newsagent may speak to this type of deal.
The publisher is prepared to discount because they will win through protecting advertising rates by staving off circulation falls. The newsagent gets no cut from advertising.
I went to the Mercury website to check out the details. I clicked on the ad and it took me nowhere. So I clicked on subscriptions and was given the email address and phone number for the circulation manager. I clicked on promotions and found nothing about this. Someone in marketing stuffed up.
Richard Webb, former managing director of Trinity Mirror’s UK nationals division, writes at The Guardian about newspapers in the UK in the face of another decline in newspaper circulation:
It is said that that cockroaches can survive a nuclear holocaust. While newspapers are facing the worst financial crisis in living memory, they too, are survivors and I wouldn’t be surprised if many find ways to survive this trial.
Yes, their circulation revenues are under the cosh from declining sales and now advertising is suffering too. As profits plummet, the outlook is not good. Logic suggests we will soon be seeing multiple closures.
Wirting at Fox News, Dan Gainor, Vice President Business & Media Institute weighs in on the future of newspapers:
Once newspapers were the answer to the riddle: “What is black and white and read all over?” They’re no longer just black and white, but they are red all over. Red ink spills off nearly every page onto balance sheets across America.
The newspaper business is bleeding to death.
For another perspective, read what Walter Isaacson, former managing editor of TIME and president and CEO of the Aspen Institute, has to say in the current issue of TIME under the headline of How to save your newspaper.
Newspapers are in trouble around the world, as further evidenced yesterday with the latest earnings results from News Corporation. No amount of effort from newsagents can address the national or global trend. What we can an must do is manage our financial, real-estate and labour investment appropriately in the loght of these challenges. While we risk speeding to an outcome, it is time newsagents put their businesees first in the face of such a considerable and obvious shift in how people are accessing news and information.
Imagining A City Without Its Daily Newspaper by David Folkenflik and published at npr.org invites us imagine what such a city would be like. Folkenflik documents cities around the USA where the local newspaper is in trouble and contemplates how the void left by the closure of a newspaper may be filled.
A question newsagents could ask is what would a newsagency look like without newspapers? I am not advocating this, just asking the question.
Newspapers have strict in-store location rules for many newsagents, they have expensive to manage add-ons and giveaways which are made more challenging by often (but not always) poor execution and they have a cover price (and therefore retailer margin) which has fallen considerably in real terms over the last ten years – a paper which was $1.00 in 1998 is $1.10 today. That 10% increase in cover price is eaten by a 71% increase in rent, a 56% increase in wages and a 30% in other operating costs over the same period – real numbers in one of my newsagencies which I have owned since 1996.
The one benefit of newspapers for a newsagency is traffic. This is falling as the newsagency channel experiences leakage to supermarkets and petrol and convenience outlets and because of newspaper sales falls overall.
So the question is worth contemplating. What would your newsagency look like without newspapers? It may be that through contemplating this question you can see opportunities worth pursuing.
Publishers could contemplate – what would your newspaper look like without newsagents? Not that flash I’d suspect. This is why it surprises me that publishers continue to starve newsagents of fair return on effort.
A customer has asked to buy one of the Valentine’s Day posters we created for our Sophie Randall businesses.
This is the second time we have encountered this in the last few months at Sophie. Apparently, the customer loves the image of the girl kissing the frog and they want it for their bedroom.
The requests which pass across the counter some days are odd – maybe we should be in the poster business?
For those interested, we went with the traditional looking poster as it more accurately reflects the Sophie experience we try and create – calm, subtle and emotional.
We are actively promoting the $40 million OzLotto jackpot deep into our newsagency, considerably beyond the lottery counter. At the main newspaper stand and atop the headers in our busiest magazine aisle we are ensuring our customers are aware of this jackpot opportunity. OzLotto jackpots are good to promote because of the likelihood of one winner winning the first division prize – this rarely happens with the Saturday game. The size of the prize to a single winner is important given the marketing around dreams.
The Complete Aussie Guide to Camping did not sell in our newsagency. We received eight copies at the end of November and returned all eight this week, three weeks earlier than requested by the distributor. By the time we are credited for the unsold stock our cash will have been taken for two months for this title. The distributor has access to our cash and maybe the publisher. This is an excellent example of how small business newsagents are used as banks. When we try and mitigate our losses, some distributors step in and deny us the right to reduce supply or cut titles altogether.
We need an arrangement where fringe titles such as this camping guide are paid only on a scanned sales basis. This means newsagents are not used as banks, do not have to fund theft and have more time and resources to act as retailers.
Our key asset for magazine publishers is our retail network. If only we controlled this as an asset and priced access accordingly.
The dispute between magazine publishers and wholesalers in the US is hotting up. Billboard.com has a good summary of the story as it stands today including these two paragraphs:
Source argues in the letter that while the magazine publishers characterize the brouhaha as a dispute over seven cents, the whole situation is actually a part of bigger picture negotiations to “secure necessary financial adjustments to outdated distribution agreements.”
According to a story on businesstn.com, retailers like Wal-Mart are increasingly turning to scanned-based-trading (SBT), which means they pay for magazines when the products are scanned at the check out counter, rather than purchasing them in bulk from wholesalers like Anderson and Source Interlink on the front-end. This new business model impacts cashflow and squeezes liquidity for wholesalers and inflates inventory on their balance sheet.
I have called for scanned based trading (SBT) on this blog for Australian newsagents for years. See my Nov. 21, 2005 post. It is the fairest way for our resources to be used to sell and distribute magazines. The technology exists. It it were used, newsagents would be more motivated than ever before to transact their business is a compliane way. Magazine distributors will not implement SBT here because the could no longer use newsagents to financially prop up their distribution model inefficiencies.
Until newsagents take firm action the opportunity and benefits of SBT will remain locked away and in the banks for magazine distributors.
Mediaweek also covers the mess in the US including speculation that two magazine wholesalers were set to close and therefore put the distribution of many magazines at risk.
Foreign language newspapers accounted for 15% of all newspaper sales at our newsXpress Forest Hill store in January. Their sales rose 7% in January while sales of dailies fell by 9% in the same period. While I write here more about our promotion of magazines, we feature the top selling daily newspaper in two locations – one near our busiest lottery counter. Foreign newspapers have, on average, a 48% higher cover price, making each sale more rewarding.
Now, before News Ltd or Fairfax folk think about emailing me, I am glad to have daily newspapers. While I wish you would focus more on loyal retail customers, reward retail newsagents for professional business support and set a commercially fair retail price, I like the product and the traffic it continues to drive. My point about foreign titles is that niches are important and prifitable. The growth in this category of newspapers is most welcome.
With daily newspapers available in a variety of retail outlets, it is the range of foreign language newspapers which define my newsagency and thousands of others as the news specialist.
I was disappointed to see Kochie’s 101 Ways to Survive 2009 on the shelf of one of my newsagencies. Kochie what are you thinking? I can get this information online for free. You’ve sent it to newsagents with a thirteen week on-sale period. We will lose money on this unless it sells out in the first couple of weeks. That’s not small business friendly Kochie. The publisher will say the distributor controls supply quantity. The distributor will say they have a contract to distribute what the publisher prints. That is how these discussions always go. In the meantime, newsagents have the stock on their shelves and they fund the title.
This publication is a book, not a magazine – we should be on book margin. Given the long on-sale period we should not be billed until the last week. Like the John Tickell book, Kochie’s 101 Ways to Survive 2009 unfairly relies on newsagent financial support.
Three daily newspapers in Ohio are axing their Tuesday editions. Editor & Publisher has more on this.
I have started collating data from the newsagent sales benchmark study for January. The results are interesting. It is not too late to submit business data for this. Tower Newsagents participate by sending a Monthly Sales Comparison report: tick the box to exclude home deliveries, and tick the box for a category breakdown. Set your first date range (on the left) to January 1, 2009 to January 31, 2009 and the date range of the right to one year earlier. Once the report is on the screen, click the PDF button to save this as a PDF, go into your email software and send a copy of the PDF to me at mark@towersystems.com.au.
We are now promoting Good Health and Medicine magazine at our main sales counter position following the success of our Wiggles magazine promotion in the same position earlier between Monday and Wednesday this week.
We selected Good Health because of the stunning cover and the free tube of Carmex Lip Balm which comes with this issue of the magazine. The display was helped by excellent collateral delivered with the title.
While this display is not the power end display ACP Magazines may like, I am confident that it will drive more sales than a more attractive display and that’s what I care about as a retailer.
This space at the counter has become the most valuable magazine promotion space for us in terms of return on space and return on time investment.
Click here to see a copy of our February customer newsletter. This is available to customers as they walk past our shop. You’ll see that we are promoting the Valentine’s day collateral we are also using in-store. We will update this after Valentine’s Day.
Newsagents on the Central Coast of New South Wales are reporting that freight company 1st Fleet Express has issued accounts which apply an increase in their fees for collecting unsold magazines, returns, by 66% and applying this increase retrospectively.
NANA, the state association representing newsagents in NSW is right on to this issue and has advised newsagents:
We strongly suggest that Agents effected by this increase contact 1st Fleet Express (Mr Paul Rowe Executive General Manager Ph 133040), and advise him, in the absence of any prior advice indicating any increase to rates, their invoice will be paid at the rate of $3-00 per carton up to and including the date of the account received.
The retrospective billing goes back months from what I am told. If true this is appalling behaviour. Newsagents need to follow the NANA advice.
The Monthly hit the shelves in newsagencies perfectly timed yesterday given the coverage of the Federal Government second stimulus package.The Prime Minister is on the cover as The Monthly publishes his essay about the global financial crisis. The production is exceptional, making the magazine stand out even more than for the content itself.
We have The Monthly displayed at the counter, above our newspapers as well as with current affairs titles – overkill maybe but our view is that with the stimulus announcement top of mind we have a window of opportunity for around a week to promote The Monthly.
We need to be opportunistic in our magazine promotions, allowing a great cover to guide our choices. I have seen countless examples of such opportunistic choices achieve incremental sales. We don’t always promote the mainstream titles or titles from the biggest publishers. Our approach with The Monthly this month is a good example of this – capitalising on the big news of the week.
The new issue of Donna Hay magazine arrived in newsagencies yesterday but the old issue is not due to come off the shelves for another month. While the publisher will say that it may sell, they don’t pay the retail rent or the labour to manage the additional stock. Delaying the return a month is a cash grab from which I suspect the publisher and distributor benefit. The process of managing a new issue of a magazine ought to be straightforward – the new issue goes out and the old issue is returned. To require newsagents to hold an old issue for a month after a new issue arrives is an unfair financial impost on small business newsagents.
If a publisher believes that having an old issue on the shelf next to a current issue will generate sales then they should back their judgement and not bill newsagents until the old unsold stock is due to come off the shelf. In other words, they should take the risk with their money and not rely on newsagents to be their bank.