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Joe Hockey is wrong about newsagents
Newsagents and pharmacists are two forever-protected species as far as the coalition is concerned.
This is a quote attributed to Joe Hockey, the former Minister for Small Business in the Howard Government. It’s on Page 12 of the Perspective insert in the Australian Financial Review (Dec 30 – Jan 4).
Joe Hockey and his colleagues demonstrated their commitment to newsagents through their years in office by:
- Facilitating the elimination of exclusive newspaper and magazine distribution territories without compensation for taking away from newsagents this century-old right.
- Driving newsagents to enter into new contracts with publishers and permitting this to be done by newsagents negotiating on their own behalf and not using professional negotiators.
- Allowing poor leadership of newsagents at the time to wipe off more than $100 million dollars of value of newsagent businesses without compensation.
- Permitting a contract relationship for newspapers and magazines which deregulated one side of the transaction and left newsagents with an expensive and inefficient system which was designed for a regulated marketplace.
- Permitting the 865 Government owned Australia Post retail outlets to become more and more like newsagents, moving into areas traditionally serviced well by newsagents.
- Refusing to intervene in 2004 when Australia Post was engaged in what I’d consider grossly unconscionable practices when newsagents tried to establish an alternative bill payment network.
- Refusing to respond to newsagent representations in 2004 about an unfair magazine distribution system which operates at a loss for many newsagents.
Joe Hockey is wrong about newsagents. The Coalition has not demonstrated any concern for newsagents other than hollow words.
That said, we owe our poor handling of deregulation to the two or three newsagents who ran this project on behalf of newsagents. They were not up to the task. The cost of their failure will be felt for years to come.
Footnote: This blog post is not a call for regulation. We needed to move away from the protection of what we had until 1999. However, what we do need is complete deregulation – fair commercial terms around the distribution of newspapers and magazines.
Kansas newspaper to stop print edition
The Kansas City Kansan, the only newspaper exclusively devoted to covering Kansas City and Wyandotte County in the US will cease publishing a print edition from January 10, moving to a pure online model. Read their announcement here.
While this is a small town story from the US, the drivers of the decision by the publisher exist worldwide. Smart newsagents are prepared. They are doing this by balancing their business, not relying on one category as much as before and modifying their shop fit to facilitate change.
Assaulted by a customer
Jason, the Manager of our newsXpress Forest Hill store was bitten by a customer yesterday. The customer was trying to retrieve two credit cards he handed over for a transaction. Jason suspected, based on a call from our bank’s fraud department on Monday, that one of the cards was stolen. The customer became agitated and got behind the counter while Jason was on the phone to be bank. In the ensuing altercation, the customer bit Jason and escaped. The Police came can and gathered evidence of the assault.
This all started with a transaction on December 26 for which a customer used a stolen credit card to transfer money to a prepaid card. Since it went through the bank we did not know of a problem at the time. One the same day a similar transaction using the same card was done at our Frankston newsagency. The bank called us Monday and from then we were on alert.
Yesterday, when an identical transaction was presented at Forest Hill, Jason stepped in. His role as Manager of the business does not require him to be physically attacked by customers like this. The Doctor treated the wound and gave Jason a tetanus shot, it will be three months before he knows if the bite introduced any infection.
We have tightened prepaid Visa card loading transactions and now will only take money from another card if the customer has the PIN number. While the bank does not require this we feel it is an appropriate precaution.
Scooters and food
What do scooters and food have in common? Lots accouding to News Magazines, the publisher of Two Wheels Scooter magazine. The latest issue which came in today is bagged with Super Food Ideas – although, you have to turn the bag on the side to see what the free title is.
Scooter is one of those titles which needs to be browsed to sell – the bag stops that.
New Year’s Eve masthead cover-up
The Victorian State Government has paid to cover the masthead on The Age newspapoer today with an ad prepaid taxi fares.
Pity.
7-Eleven aggressively pitches Tattersalls products
From the front window to the sales counter, there is no missing the promotion of Tattersalls products at 7-eleven stores in Victoria. The pitch is aggressive, multi-faceted and co-branded. It demonstrates the importance 7-Eleven and Tattersalls place on their new relationship.
At the front of 7-Eleven stores are generic as well as game based window posters. In store, there are promotional flyers above the counter and a counter mat pitching the various ticket offers for each game. All co-branded Tattersalls and 7-Eleven.
You cannot shop in a 7-Eleven store and miss the Tattersalls pitch – even where there is a full-service Tattersalls outlet next door.
When Tattersalls told us they were making this move they said it would not impact existing outlets because 7-Eleven stores attract a different market. 7-Eleven is using the arrival of Tattersalls product to lure new customers, newsagency customers. Newsagents next to 7-Eleven outlets would often remain open late on a Saturday to service Tattersalls customers. If the 7-Eleven pitch works they will lose customers and money and probably end up closing earlier.
Tattersalls co-branding with 7-Eleven rubs salt into the wound of existing outlets given that Tattersalls refused to permit co-branding with newsagent marketing groups in the past.
While I am all for competition, it must be fair. The relationship Tattersalls has agreed with 7-Eleven is unfair to newsagents and other existing Tattersalls outlets. From what I saw yesterday, it provides 7-Eleven with an unfair competitive advantage. It does this while Tattersalls continues to hold us back and shackle us with loss generating overheads such as the scratch ticket bays.
We are threatened with losing Tattersalls products if we put non Tattersalls products in these scratch ticket bays. This prime counter space sits idle, losing revenue while Tattersalls bends the rules for 7-Eleven. Tattersalls some months ago represented that they expected to win the right to sell instant scratch tickets again and that this is why the scratch ticket bay real estate ought to be preserved. They did not win yet the prime real-estate sits idle, not earning what it could for us. And in the meantime Tattersalls is energetically developing a new retail network.
Of course, through all of this, the Victorian Government remains silent. They created this problem and have refused to accept any responsibility for the cost of their poor policy decision to hundreds of Victorian family businesses. They will say they have asked Tattersalls to treat their retailers fairly in terms of the scratch ticket bays but have not gone beyond asking.
November a tough month for cards
Our November newsagent sales benchmark Study shows that conditions are tough for newsagents. Greeting card unit sales fell, on average, 9%. It also shows that some newsagents are doing well in this environment. Rather than focus on reporting falling sales for cards, magazines and newspapers, the report highlights growth opportunities. The keys appear to be that newsagents assert more control over their business and embrace change. The benchmark data set shows newsagents having success in doing these things.
Strong diary sales
We are seeing excellent diary sales this year compared to last, from the beginning of the diary season, almost two months ago, we have been ahead in sales on last year. We have kept promotion of diaries on the move, most recently promoting the category in the window which was home to our Christmas display. While this year’s success builds on previous years of growth, the numbers we are seeing already make it a stand-out. This has a lot to do with good in-store management of the range, display and customer service.
Diaries are a category in which newsagents can excel as they permit us to demonstrate our commitment to customer service compared to Officeworks, Big W and others playing in this space. They muck it up by offering house brands and poor customer service. House brands don;t work in the diary space – not for the majority of customers.
People who rely on getting the right diary are more likely to be let down by these bigger competitors.
Yellow Pages earns more from print
Sensis has reported that Yellow Pages’ print revenue was up 5.3% in the financail year to June 30 2008. The Australian yesterday had a good story which compares this to declines in print directories elsewhere in the world. It is appropriate I mention Sensis’ success given othere posts I publish on the shift from print to online.
Lottery sales decline in the US
Lottery sales in the US declined 2% in the third quarter of 2008 on a same store year on year comparison according to La Fleur’s magazine, which tracks the lottery business. This is significant because historically lottery sales in the US have been recession-proof.
The Wall Street Journal has the original story but you need a password to access that so go to Recent Poker for a report you can access without a password.
Magazine publishers miss an opportunity
Magazine sales are strong for many newsagents this time of year with new customers in town for the holidays. It surpriuses me therefore that publishers do not sieze this opportunity. Instead, they shutdown and stop providing marketing collateral with which we could more easily promote titles which could appeal to holiday makers. Smart publishers would promote right now because no one else is. Instead, we are left to create our own promotions. While this is okay, it would be easier if we were provided good collateral with which to work.
Charity Christmas cards matter in post-Christmas sales
Even in the post Christmas sales, a charity connection matters when it comes to selling boxed Christmas cards.
I saw one customer today purchase three boxes from us because we had cards which raised funds for the Peter Mac Cancer Centre. This customer came in to buy a newspaper and struck up a conversation when waiting to meet a friend at the front of the shop. The charity connection drove the purchase.
We are actively promoting the charity connection with our Boxed Christmas Cards through the current sale.
Digital versus print newspapers
A digital version of the USA Today newspaper has just been launched for the Amazon Kindle reading device. For US$11.99 a month you can get the latest US Today on your Kindle in the US – the Kindle reader is not avaiolable in Australia. A monthly home delivery subscription of the print version of USA Today costs US$16.00.
A digital version of the New York Times is available for the Kindle Reader for US$13.99 a month. A home delivery subscription of the print version of the New York Times costs US$21.20 for the same period.
The truth about Santa Claus
A customer complained at one of our stores yesterday that because of us, their son now knows that Santa Clause is not real. Their son saw a Letter From Santa at our counter and when they got home he asked them about it. The customer returned to the store and complained face to face and then asked for the number of the store manager to take the complaint to a higher level.
When I heard the story I initially thought it was a joke. For a child to see and read the Letter from Santa on our counter he or she would have to be at least six or seven. Further, there are many indicators in many retail businesses, on TV and online that Santa is not real.
I would be shocked if ours was the only store where this boy’s belief in santa was challenged. If there was a risk of this why take him shopping at all? But this is not a conversation to have with the mother, she is too angry at us.
I did some research online this morning and there are mixed views about when to let your children know that Santa is not real. The consensus appears to be between seven and nine – certainly before they hear about it from other children … and shops, maybe.
The stories one hears across the counter some days are truly amazing.
Christmas is over
Our team at Forest Hill removed all of our Christmas decorations before closing Christmas Eve. With such a long lead up to Christmas and the focus now on sales, there is no place for Christmas decorations. The focus right now is on deals.
Calendar recommendation
For newsagents wanting to break into calendars, I can recomment Bartel. Their range of Australian calendars sells well in each of my newsagencies. We go out early (September) and achieve good sales from people sending calendars as gifts overseas. I especailly like that they offer regional calendars – Mornington Peninsular for example for our Frankston newsagency. Newsagents can deal direct with bartel. They offer end of season deals to their regular customers.
In my own experience, the Bartel range has performed better than Steve Parish.
The time to plan for calendars is February and no later than March.
Jam from Better Homes and Gardens
The gift of jam from the folks at Better Homes and Gardens is a nice treat in our kitchen. Small things like this count in a channel flooded with products. It also gives our team another reference point to the title – this is important because it is easy to suggest products to people who are browsing.
Gift cards need to be thought through
Gift cards branded to other retailers need to be considered carefully by newsagents. On the plus side is the thought that making a commission off a sale we would not have got. On the downside is the promotion of other retailers in our businesses and thereby pulling focus from items we may have which could satisfy the gift occasion.
While my newsagencies sell the Visa prepaid products (Canvas, V Card and Just 4), I am yet to commit to the retail branded store-specific gift cards. If someone has asked for a store specific gift card, we have pitched the Visa product – saying it can be used anywhere.
Before newsagents jump into these gift card offers careful thought is needed about the impact on existing and future sales, the revenue opportunity from the cards, floorspace requirements and how the offer reinforces your point of difference … given that Australia Post has these in their corporate stores.
That said, I know of newsagents who are thrilled to have the store branded cards for companies like Sportsgirl, JB HiFi and others available.
Boxing Day Sale
We put a lot of thought into our Boxing Day Sale strategy this year. We bought product especially, dressed the stores boldly and staffed so we could achieve. The day went well for us. We achieved excellent sales of boxed cards, calendars, Christmas items and diaries. Some other departments (magazines, counter cards) benefited from the increased traffic. Our plan is to run the sale for two weeks. We are prepared for further discounting late in the last week to give any remaining product a push.
With Back To School needing space along with Velentine’s Day we need to be firm on when this post Christmas sale ends.
More people getting news online
Dan Farber, writing at Cnet.com, says print is fading thanks to competition to online. He quotes the latest Pew study which shows that 40% of people in the United States surveyed get their news online compared to 24% a year earlier.
Michelle Meyers, also writing at Cnet.com, writes about the Pew study and includes data showing that the Internet has taken over newspapers as the primary news source.
Now take a look at ten way Edward Roussel suggests newspaper organisations make the transition to digital. I like point ten – Experiment. This applies equally to newsagents.
Smart newsagents will experiment individually and through marketing groups.
Behind the counter
I spent five hours behind the counter working in one of my shops this afternoon. While I am in my shops regularly and invariably serve customers, I rarely put in more than a hour at the coounter in any one stint. The experience today reminded me…
- Good customer service is appreciated. I saw customers spend mroe as a result.
- Good customer service is hard work. In the face of a relentless stream of customers and challenging questions, every enounter takes focus and hard work.
- Care by staff in providing good customer services is a gift. Employees who do this are tremendously valuable in retail yet often undervalubed by employers – I am guilty of that.
- Customers can become store-blind to greeting cards sometimes. By moving one range of Christmas cards, priced at $7.95 each, I was able to make them more visible and thereby drive sales of 26 units of this small range in the last four hours of today.
- The environment really does matter. Customers love a good shopping environment and experience. Being told many times today how much they enjoyed our shop made us feel good.
- Products are important in leveraging a point of difference. If you sell a commodity item you are price compared. If your products and or services are unique, price comparison is challenging and sales easier. This brings me back to customer service, it is the most crucial point of differerence we have.
I would love our suppliers to spend time behind the counter on a day like today. They would learn why we get frustrated at out of date practices they force us to use, the supply of product on uncompetitive terms and lack of control in our businesses thanks to restrictions they impose. But those are points for another time.
Beyond working with a couple of exceptional team members today and learning from the joy they showed in serving customers, is the happiness of our customers themselves – Christmas kicked in for me thanks to them.
Ready for Boxing day
In between handling a busy Christmas Eve our newsagencies have been preparing for our Boxing Day sales. We have two posters prepared – the one on the photo and another pitching details of our specials. We have purchased product (cards, calendars, journals and some gift lines) for this two-week event to supplement existing prduct we want to quit. Tonight, before we close, we will dress the stores ready for an easly start on Boxing Day.
Brain Trainer cash drainer
The Puzzler Brain Trainer is a drain on newsagent cash. The new issue came out today and is to be returned week five next year – the same time as the issue this new issue replaced. We do not need two issues on the shelf at the same time. Most newsagents would not have the space. All this delayed return achieves is a delay in refunding newsagents for unsold stock. Grabbing cash from small business newsagents like this is unfair.
It is actions like this which make newsagents want to pull back on magazines. One day, magazine distributors will wonder what they did to cause newsagents to focus more attention on other product catgeories.
Fin sell out
We sold out of the Australian Financial Review bumper edition yesterday. Frustrating. That they have only one issue to cover a week is also frustration – I say that as a Fin reader.