Author: Mark Fletcher

My software company, Tower Systems, competes with POS Solutions. We are the two major newsagency channel IT players. In their newsletter to newsagents last week POS Solutions claimed:

“Recognized as a leader in magazine management POS Browser continues our commitment to saving time in handling ,magazines. Xchangeit, customer email putaway notifications, detailed bar-coding of titles and Automatic billing of customer and sub agent orders is just a few features built to provide better service and save time. Automatic early returns for over supply of magazines help your cash flow; report on slow selling magazines by distributor to adjust supplies.”

The POS Browser software does not meet current industry standards. It has not passed the XchangeIT magazine management standards agreed by the magazine distributors three years ago. POS Solutions has failed to deliver on these standards for the users of its DOS software – the majority of its customer base.

POS Browser and POS DOS could only make their claim of “leadership” if their software met industry standards as it is these standards which facilitate best practice in magazine management. Crucially, the standards provide for sales data to be passed back to suppliers so they can balance supply.

I doubt that the three magazine distributors consider POS Solutions to be a “leader in magazine management”. I suggest that this recognition is only in the minds of the POS Solutions marketing people.

My company is being let down by magazine suppliers and other stakeholders as they refuse to enforce the standards they established. Their inaction allows POS to claim leadership and get away with it. Outside my company and POS there are two other significant software suppliers to newsagents. As I understand it they also comply, leaving POS Solutions alone at the barrier of non-compliance.

Newsagents are only as energetic about compliance as their software provider. To this end, POS Solutions’ lack of attention to industry standards is holding the whole industry back as the newsagent channel is as weak as its weakest link.

When the Directors of POS Solutions read this they are likely to shoot off an email or two to me, call their lawyer and write to the ACCC. I’d welcome the issue of their inability and apparent reluctance to provide compliant software being debated in a more formal forum.

Newsagents need to carefully evaluate software and ensure it meets the various supplier compliance requirements. Compliant software companies have nothing to fear from such comparison. That the newsagency industry has standards which are not enforced provides POS Solutions a break they do not, in my view, deserve.

Disclosure. I am the Managing Director and sole shareholder in Tower Systems International (Aust.) Pty Ltd and have written this entry as fair comment. The Directors of POS Solutions are welcome to publish a response.

In June 2005 I blogged about Epic 2015, a brilliant flash movie by Robin Sloan and Matt Thompson. It was an update on their darker Epic 2014. I mention Epic today, more than a year after my original post since there are many more readers here now who may not know about Epic. Before you watch it, think for a moment about how much has changed online in the last year. Google alone has evolved dramatically – forward in its mission to index all information in the world.

Newsagents could be the dinosaurs of this changing world. To ensure they (we) do not become extinct, newsagents need to be aware of the changes happening around them and within the businesses of their suppliers. One way to understand the possibility of the extent of change is to watch Epic.

Tradition dogs just about every decision a newsagent makes from the layout of their shop through to how they process day to day transactions. Some of these traditions deny newsagents the growth they crave. Take the location of greeting cards in a newsagency, for example. Most have their card ‘aisle’ located toward the back, in an area away from the main store traffic. Some do this because they want to provide a quiet space for the reflective nature of the greeting card purchase. Others do it because of the demands of newspaper publishers and lottery companies to have the best space in the shop. Others do it because everyone else does.

Last year we moved greeting cards from a rear middle aisle to the front of the shop. The result is excellent sales growth and encouraging feedback from customers. Rather than treat cards as a poor cousin, we have moved them front and centre and the results speak for themselves.

Newsagents pursuing growth could achieve this by relocating their greeting cards to a higher traffic area. With the higher margin offered by cards the payback could be very rewarding.

The TV ads for the new build a model BMW part series are still running and issue 1 has sold out. The upside is that the TV campaign promotes this publication as only available in newsagents. The downside is that it has been launched nationally without any trial – meaning that supply quantities are based on guesswork, leaving many newsagents without stock. We have been out of stock since lunchtime on the first day with no hope of additional stock. I understand the Australian distributors are endeavoring to address the situation.

What makes this more interesting is that it is the first partwork publication in a while which appeals predominantly to males. They ask about it quietly, as if embarrassed to be buying a model car magazine. Their reaction when told it has sold out is memorable. Women when told their partwork (make-up, paper craft etc.) is sold out is practical. The blokes get all sooky.

Newsagents love partwork publications. They are a vital traffic generator supply issues notwithstanding. The importer, their UK publishers and the Australian distributors need to sort out supply and stock management issues if partworks are to remain viable.

We have signed a contract for the sale of our home delivery business which has been part of the newsagency I own since it was created. By divorcing home delivery from retail we can focus on one part rather than two. A home delivery specialist is taking over the home delivery business and we are expanding our retail business. So, it’s a happy divorce. More and more newsagents are making this move.

Success can be painful as this story about Good Medicine shows.

Sales in our store for this title are soft at best no matter what we do. This month, Good Medicine comes with a free music CD. It is also the feature title in this week’s Connections promotions – Connections is an excellent ACP Magazines initiative providing marketing support to newsagents. Connections’ promotions boost sales. Thanks to the display we created with the Connections materials we sold out of Good Medicine in eight days. We called the ACP owned distributor, Network Services, and spent too long on the phone begging for extra stock. They wanted to know why we wanted the stock. To sell of course! They offered us two copies. Eventually a supervisor agreed to provide ten. ACP/Network control the supply of extra stock because of the need to keep returns to a minimum. I understand that. We would be happy to order firm sale but that’s a whole other story.

There is no doubt, based on any reasonable assessment, that our request for ten copies was justifiable and ought to have been quickly actioned. That we had to beg for stock is de-motivating.

Newsagent competitors would not care. If they sell out of Good Medicine they will fill the pocket with something else. That newsagents chase extra stock, while a frustration for Network, is something to respect as it reflects our desire to build our businesses and serve our customers.

Magazine publishers risk, with some business rules, making newsagents less interested in growing their businesses. Please don’t stifle the entrepreneurs … unless you don’t want us.

The free DVD with Tuesday’s Herald Sun and other News Ltd dailies was a huge hit with customers as was yesterday’s part 2 paid copy. I expect sales to be strong for the next five days as people collect the rest of the series. What is interesting is the difference in how the promotion is handled. In a regular newsagency the DVD is offered. At a supermarket and petrol outlet it might as well not exist. The DVD is on the counter and expected to promote itself. When it comes to offers like this there is no channel like newsagents.

Gordon and Gotch has advised newsagents they are unable to supply more stock of their popular AFL footy cards. This will disappoint tens of thousands of young fans keen to collect their cards. The frustration for newsagents is that they have plenty of stock of the footy card albums from Gotch and they are not due to be returned for some time yet. Given the trading card lack of supply the albums are dead stock.

Looking at magazine sales data for the last twelve weeks to July 15 for my newsagency compared to the same period last year, the gulf between successful categories and failig categories has widened compared to my last look three months ago. Here is unit sales growth or decline by major category:

Buying and Selling – down 19%
Computers – down 34%
Motoring – down 16%
Music – down 14%
Women’s Weeklies – up 26%
Women’s Interests – up 22%

Most others were up or down less than 10%.

These are extraordinary numbers. The falls are greater than I saw in the first three months of this year. Look at the Women’s titles. These are the titles where we compete with five other outlets in my centre yet we are achieving five and six times the industry average growth. That this extraordinary growth is not reflected in the other categories has me stumped. Our offering is excellent, the titles well displayed and our pitch is backed by a valuable loyalty (discount) program.

I wonder if this data reflects the end of the newsagent magazine range as we know it in Australia or is my store an aberration. I see enough data from other newsagencies to suggest this is not the case. The gap between successful categories and the others is a shock and everyone involved in the newsagent channel ought to take note.

Every newsagency is a reflection of the community it serves and while I would expect some variation in category performance, there is no doubt some magazine categories are in rapid steep decline.

I have met with hundreds of newsagents in a trip around the country over the last three weeks and the most common topic raised is magazine oversupply. Newsagents complain loud and long, saying they are being ripped off because of too much underperforming stock. When I respond with practical suggestions on how to cut dead titles based on sales data from their shop many complain that they have nothing to put in the floor space they would save. Some even say that oversupplied magazines save them having to make a decision on new lines. That shocked me. While they don’t like the cash drain, they are happy to NOT have to make business decisions about the use of the reclaimed space. Sometimes I don’t understand newsagents.

There are now three companies promoting in store TV and advertising solutions to newsagents. You have to wonder whether consumers will take notice in an already visually busy retail environment like a newsagency. Given the growth of online advertising it is surprising to see online in store TV advertising be of interest. The Age carried a story about in store TV on the weekend.