Author: Mark Fletcher

Vodafone has written to newsagents this week advising, formally, of the 37.5% commission cut on retail sales from 11% to 5%. In part, this letter says:

“Vodafone has an on going commitment to providing great value to its pre-pay customers through its value bundles and cap plans. This commitment has seen massive growth in the prepay category, including the sales of Vodafone electronic recharge vouchers.

Due to the cost of providing this value to customers, Vodafone hereby gives notice of a reduction to the retailer margins on the sale of electronic recharge vouchers.”

It is nonsense for Vodafone to make out that newsagents need to help cover the costs of providing value to customers. From what I understand they have not asked Coles and other majors to share the burden. If I am right on this, the Vodafone letter to newsagents cold have been something like:

Vodafone is in a battle for market share. It’s a tough fight. To compete we have had to cut prices and we want you to carry that cut for us. We can’t ask Coles to carry the cost of the price cut because, well, they are Coles. They would refuse to carry our product if we don’t give them 16% commission so we hope you understand. It was you or them so we went with you. Thanks for being a sport and accepting this 37.5% commission cut. Maybe you could pass it on by cutting employee wages or asking your landlord for a reduction in rent. Anyway, thanks for copping it on the chin.

Vodafone’s treatment of its small business retail channel is appalling on this issue.

MediaPost is reporting that the US CBS network is developing content for delivery over mobile phones. These three to five minute episode programs represent another major media company going outside its traditional supply chain in pursuit of consumer connect. Last week it was News Corp. and its video on demand launch (at the same time as DVD release). Now CBS creating content which is mobile specific.

Newsagencies are a supply chain created specifically for the delivery and retail of physical news and information product. Publishers who supply us will (more and more) play in the online and mobile spaces. Our 4,600 stores need to be pursuing strategies (which we control) today which provide us with relevance in this world.

A good article from the Miami Herald about podcasting. The example used illustrates the risk to newsagents and our range of special interest publications. As more podcasts are published readers of special interest titles will switch to listening rather than reading. Maybe not in all categories but some. Australian newsagents aren’t part of the podcast supply chain so we need to be playing elsewhere to ensure relevance.

Historically the appeal of newsagencies in Australia has been broadly based. Our 4,600 stores are well located so we’re convenient. We have had an excellent and exclusive range so we have been a destination. As a result of more competition, the impact of technology and changes in consumer buying habits, newsagencies are losing (in my view) their destination appeal. Whereas previously our destination appeal was due to lack of choice, today it’s what we make of it.

Newsagencies are laid out and designed for the convenience shopper. The counter best illustrates my point. We all too often surround our counters with candy and other impulse items which customers can buy elsewhere. They are items under margin pressure. If we were more destination focused we would surround our counters with items more unique to our businesses and which are under less margin pressure.

Newsagents ought to stop listening to reps who knock on their door every day pushing product to the counter and make decisions for themselves as to the message they want at their counter for the good of their business. While some newsagencies in transit traffic locations will want convenience items at the counter, others in shopping malls and high street situations could be better served making their own choices.

If we make our stores look like a convenience stores they will think of us that way when considering stationery and other items whereas if we ‘own’ categories such as art supplies, greeting cards, stationery, specialty papers and stationery related gift lines they will think of us when they need these.

This has been on my mind these past few days because of a discussion I am having with someone entering the newsagency space in Brisbane. They want to push the newsagency they are buying into the convenience space even though there is a national brand convenience stores a minute from their front door. If they make the mve they;re no longer a newsagency and the channel loses one more outlet. nice stores they will think of us that way when considering stationery and other items whereas if we ‘own’ categories such as art supplies, greeting cards, stationery, specialty papers and stationery related gift lines they will think of us when they need these.

Variety is reporting that News Corp will release new titles through video on demand at the same time as releasing through the DVD retail channel. Talk about fast tracking the death of the retail channel.

The rumor put to me late last year about Australia Post publishing or at least partnering in publishing a magazine has resurfaced. This time it’s pitched to me as something Post would deliver and retail. It would be a weekly and aimed at women. While the rumor seems implausible, as a lever to get other magazine and newspaper product into their corporate stores or as a lever to get more subscription delivery business it’s interesting. I’m posting it here, even though it is a rumor, to see if the posting draws out other comments.

With Shop Til You Drop this month you get a free pair of thongs (for those outside Australia you wear them on your feet). This very nice giveaway is having unintended consequences in store. Customers see the magazine, pick it up, notice the thongs in the bag, drop the magazine to the floor, slip a show off and check their feet against the size of the thongs. If it’s not a fit some go through the stock looking for a fit, others put the magazine back on the shelf for the next customer to come along and rub their skin against the bag looking for a fit.

I’ve personally witnessed this four times in my own shop over the last week. We have Shop Til You Drop displayed in two places and it’s right at our main counter that I have seen customers do this most often. No shame. No worrying about what’s been rubbed on the cover. No concern for getting the retail product dirty. It least it’s tactile retailing.

The things you see…

From the Spain Herald:

Fallout from anti-smoking law begins
Though health minister Elena Salgado said that the new anti-smoking law had been accepted “with complete normality,” Spain’s newsagents have announced a strike on January 30, along with a petition drive, to permit them to sell cigarettes. They feel discriminated against because bars and restaurants are still permitted to sell tobacco, but they are not. According to the president of the newsagents’ association, Juan Viciosa, the prohibition on cigarette sales may reduce their revenues by as much as 30%, putting many news dealers out of business. Viciosa said the new law has favored other sectors by giving bars and restaurants eight months to comply and the motor racing industry three years. “They’ve taken away all our rights with the stroke of a pen and probably one of every three newsstands will end up closing,” he said. There are some 35,000 newsstands in Spain.

It’s tough in small business all over the world. They seem to have a point. For many newsagents in Australia tobacco provides important foot traffic and revenue. It’s a legal product so restrictions on where it can be purchased ought to be challenged.

Eyes are on Las Vegas this week and the annual Consumer Electronics Show. There are plenty of news reports and blog entries about all the new gizmos and corporate announcements. Two trends are fascinating – developments in portable video players and the probability that movie studios will release through Video on Demand on the same day as they release DVD product. Surely DVD has a limited life. With VOD the supply chain is dramatically shorter, costs less and the product therefore able to be less. There is no need for the retail network. It also provides the consumer with access flexibility.

It started with music. Movies are next – this year.

And with these sexy portable video devices looms the prospect of more magazine type content being made available for that medium than the printed medium. All the more reason for Australian newsagencies to start delivering this year on a long overdue reinvention of purpose.

Okay so everyone cut the retail price of their calendars by 50% on Boxing day. Now, barely a few days later, consumers are already asking when they will be 75% off. They know it will happen because we have educated them. Talk about ruining a marketplace for yourself. In my own retail store we were discounting by 75% this time last year. In fact, from January 1. Over the last four days we have sold 80% of last year’s volume but at double the margin. I’ll stick with this for a few more days and enjoy the margin. If more calendar retailers did this we might be able to drag more margin back into the calendar space.