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

The latest Toy sales results show the value of this category

Australian toy sales data collated confidentially for the Australian Toy Association, retailers and suppliers, provide valuable insights into performant and trends. The regular reports are a wonderful insight for people fortunate to have access to the data.

The toy category is strong and valuable to retailers engaged with it. 2018 is proving to be a terrific year in this category for retailers that manage the category to success. By this, I mean retailers who buy what sells and replenish with what sells.

This is on my mind today because of a conversation with a retailer over the weekend who did well with a toy range, replaced it with another toy range that did not work and therefore feels that toys are not tight for their business. Their mistake was that they did not replenish with what was successful.

Let’s look at the performance data in some detail. $1,200 worth of inventory at wholesale moved in six weeks. It was their first play in toys. They did not replace the licenced range from within that range. Instead, they went with a new range, but still in the toy space.

Ignoring the excellent good news from their first crack at toys, they decided to quit toys altogether based on the second experience.

Had the buyer in the business purchased inventory based on what was selling, by now they would be on their further or fifth order as the licence remains very popular.

Toys are strong. However, you need to buy well, buy to trends and replenish based on your success data.

But back to the latest ATA sales data, here are some takeaways at a headline level:

  1. Toys are strong.
  2. Challenges for some majors are helping independents.
  3. Average pricing is holding up.
  4. Building Sets/CONSTRUCTION trending upwards.
  5. Plush continues strong with terrific results.
  6. Harry Potter licence is strong and delivering growth.
  7. LOL Surprise continues growth.
  8. PAW PATROL licence continues build.

I’d also note that for newsagents, toys are a net new traffic driver. They work front of store, in their own department and at the counter for easy impulse purchase.

If I look at my own situation, in one of my stores toys account for over 30% of revenue with GP sitting at above 50%. Our buying is data driven and our out of store marketing is not newsagency related.

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newsagency of the future

2018: the year of poo

There is no slowdown to the sale of poo in the newsagency. What started as an emoji on digital platforms, is now in games, toys, plush, squishies, cards, books, candy, posters, badges, more…

Poo has broad demographic appeal and is represented in a mix of suppliers.

While we have poo products mixed in a range of categories in the business, there is enough product to bring it all together in its own category. Yes, I am serious.

What is interesting to me is that I thought the interest in poo products would have passed by now. We have seen products available for a few years. That it is part of Christmas 2018 and the extent to which products are available is unexpected. That said, we are working to make the most of the opportunity.

Retail today is all about being opportunistic, jumping on products and categories that have a social media play or connection and leveraging this for maximum benefit. Poo fits that.

Now, to round out the interest, we need a poo magazine or one-shot.

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Gifts

Frustration at advertising inserts in newspapers

While this related to a Uk newspaper, it is interesting seeing a newspaper customer taker to Twitter to complain about the bloating of the paper with ad inserts…

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Newspapers

Lottoland noise continues

Lottoland continues to pitch regularly on TV and by email. Their latest pitch is around the $2.2B prize. I know retailers who are frustrated that the legislation did not force an immediate shutdown of these pitches from Lottoland.

There appears to have been no slow down in their operation – based on TVC airings and emails being sent.

I suspect each Lottoland pitch gets more people signed up and that has to be the core goal of the company – account openings.

Their email on the weekend also pitched a syndicate offer with a discount. It that it targets growing their reach through a familiar type of product. Lottoland is not showing signs of leaving any time soon and while their ads no longer mock newsagents, their pitch makes playing lotteries online look appealing … and that is the biggest challenge to retailers.

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Ethics

Make sure your Better Homes and Gardens Christmas unit is well placed

There is proof that front of newsagency store placement of this terrific Better Homes and Gardens display unit from Pacific Magazines, which is out now, plays a key role in an engaged  newsagency, achieving a 30.2% better sales result than a non engaged newsagency business.

The display unit is part of Pacific’s nexus program.

I like the unit as it is strong, small format, easily moved and pitching a product through which we can differentiate out business.

This is a magazine unit I place at the front of the shop as a traffic driver. Later in the season I move it to the counter. I also give it a run next to newspapers.

For no additional capital cost, this is an easy way to add margin dollars to a basket.

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magazines

Smart Aldi campaign on loyalty points reinforces newsagency loyalty pitch

I like the Aldi campaign on TV at the moment about loyalty programs and, specifically, points. I like it because it reflects my view, that points programs are often confusing and the points themselves, worthless. Here is the ad in case you have not seen it.


It is typical Aldi: fun and direct, unambiguous.

Regulars here will know more preference for discount vouchers, immediate rewards, real rewards, over points based loyalty. I switched from a magazine club card in my newsagency – buy 11 magazines and get your 12th for free (up to the value of $10) – in February 2013. It has been a ripper of a success.

While POS software and newsagency software from the software company I own offers a terrific points based loyalty program as well as integration with FlyBys and other third-party loyalty offers, it is discount vouchers that many of the 3,500+ small businesses using the software rave about.

Discount vouchers are not like pointless points based programs depicted and mocked in the Aldi TVC. A discount voucher is a real cash amount off your next purchase, off the usual purchase price. Given that the price of many items in newsagency businesses are standardised nationally, the discount is real, it is trusted.

The Aldi ad makes the point that genuinely better prices are more useful and valuable than pointless points. The experience in my own shops is testament to that. People like the ease of the program, the real discount, that there is no cumbersome process, that they understand it and that it is authentic.

Through lever settings in the software, retailers control the value of discount accrued, what it can be redeemed on and the shelf-life of the discount. This helps us ensure that the discount voucher operates as a genuine revenue driver, delivering considerably more benefit than cost. There is excellent reporting on shopper behaviour, which feeds into adjustments of the levers to maximise the benefit for the business.

This brings me bask to the new Aldi TV commercial. Their pitch is differentiating. While their main competitors, Cokes and Woolworths, each pitch points-based programs that are complex and offer little in real value, Aldi says it is every day price that matters. I think that is a message that will resonate. I say that based on shopper feedback for the discount vouchers, we have shoppers who say they have switched because of the value they get. That started in 2013 and we continue to hear it today.

I put our above average performance in core categories like cards and magazines down to discount vouchers. Data reflect this as I can see where voucher value is accused and where it is spent. magazines, in particular, benefit.

The more we differentiate our businesses from competitors the better.

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Management tip

High-value nativity set sales in the newsagency

We put this beautiful nativity set out today, in the window, priced at $279.99.

Within two hours we sold two. A couple of hours later, we sold a third. We have ordered more given that it is early in the Christmas season. We have been able to keep a set in the window until the new stock arrives in the next couple of days. This is important as it draws people to the shop.

I hear often from newsagents that they cannot sell gift and seasonal items priced at more than $20 to $30. This shop where we had this success today is in middle class Australia. Plenty of nursing homes, self funded retirees and families, where money is tight. The right product in the right location can help us see what is possible.

What we discovered is that a nativity scene purchase is an emotional purchase.l Emotional purchases are less about price.

$839.97 in revenue from this one product in a couple of hours is terrific. We have banked the margin dollars before the supplier invoice is due. The margin dollars made equal more than 1,200 newspapers or more than  370 top selling weekly magazines.

The shopper for the nativity also appreciates the rosary beard, religious cards and other religious themed Christmas and everyday gift items. The attraction from a simple window display discovers a new shopper who could shop all year round, someone who would not have thought of a newsagency for this purchase.

I appreciate a nativity set at $279.99 is not for everyone. My suggestion today is challenge yourself. At the very least, think about it. Be open to a product you would never usually stock showing you what could be, showing you how the right product in the right location could bring in new traffic.

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Newsagency management

Highly recommended: Press, BBC TV mini-series

Press is a six episode BBC mini-series about two rival newspapers and abut the challenges faced by publishers and, in particular, their print product. I have seen then just-aired series and highly recommend it to anyone interested in newspapers. The battle between the Post and the Herald has some resonates when thinking about News and Fairfax titles.

Here is a brief trailer for the series:

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Media disruption

No surprise on Cosmopolitan closure

Bauer Media has announced that Cosmopolitan magazine will close. here is part of the story from Mediaweek today with more:

Bauer Media has announced the closure of Cosmopolitan Australia. The December issue will be its last.

The magazine has been published in Australia for over four decades and was a Hearst Magazines title published in Australia under licence to Bauer. Remaining Hearst titles in the Bauer stable are Harper’s Bazaar and Elle.

Cosmopolitan launched in Australia as part of what was then called Magazine Promotions, the Fairfax magazine arm. Later rebranded as Fairfax Magazines, the title moved along with most of the Fairfax’s other magazine brands to ACP Magazines.

Launch editor was Australian magazine legend Sylvia Rayner, who started the title in Australia in 1973, moving across from Woman’s Day where she was fashion editor.

Bauer Media CEO for ANZ Paul Dykzeul said this week: “It has not been an easy decision to make. However, the commercial viability of the magazine in Australia is no longer sustainable.

“Magazine closures are never easy, desirable or done without careful consideration for all of those involved. We have to ensure that we are continually reshaping and defining the business so that our readers of today, and those of tomorrow, remain engaged with the content we publish and the platforms upon which we deliver.

“We are incredibly proud of the brand and the people who have been involved and represented over the last 45 years. It has helped to launch the careers of media personalities, supported great brands and causes, and inspired millions of young women across the country.

“We would like to thank everyone who has contributed to the brand and its legacy over the years.”

Business is business. Newsagents checking their own sales data will know the titles facing similar challenges.

Cosmopolitan has been a good title. The challenge today is that this consumer is able to find satisfaction through other more visual, interactive and timely platforms. This sits at the core of challenges facing all publishers.

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magazines

Do you backup your computer system every day?

By backup, I mean do you take a copy of your business to an external drive, a USB stick or some other device for safe keeping? Or, do you have a cloud backup facility whereby a perpetual offsite backup us undertaken?

Attacks on computers are increasing. These can range from a attack that corrupts data through to an attack that denies you access to the computer until you pay a ransom.

Not backing up every day is stupid. The cost of cover from this could be thousands in terms of IT expert fees or even more if you are looking to sell your business in the next year and do not have current business performance data on which to set a price.

I heard of a newsagent who paid $5,000 to recover business data from two weeks prior to when they were attacked. That could have been avoided had they followed basic backup advice.

Oh, and if you are backing up every day, have it checked to make sure you are actually backing up.

Not backing up and not checking your backups is like leaving the front door of the shop unlocked and the light on.

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Newsagency management

Will US department store troubles happen in Australia?

Turmoil in mass retail in the US continues with the filing for chapter 11 bankruptcy protection by Sears overnight. Reports say Sears will close an additional 142 stores, on top of the 33 stores already announced to close, which included 13 Kmart stores.

While there does not appear to be an obvious Australian connection, this can take time to evolve. Look at Toys R Us.

What I find interesting is that occupancy and labour costs in Australia are significantly higher. I also heard somewhere, but cannot recall where, that we have more retail space per capita than the US. Combine this information and add the growing migration of purchases to online, it makes sense that department type stores, big and small, stores that are not overly specialist, stores that struggle with a USP, these stores are vulnerable.

In some way, I think newsagency closures in Australia, around 15% this year, is for reasons similar to US department store closures.

As for Australian department stores, I look at Myer, Myer, David Jones, Big W and Target and owner which of those will be first to significantly downsize or close. I don’t include Aussie Kmart yet because they are on a streak of success right now.

I think it would be a mistake to look at the US story and say it is a US story just as it would be a mistake to look at Aussie mass retailers waiting for them to fail or trip. The reality of retail today is that every day we have to fight, be our best, specialise and make today, and every day, our payday.

Footnote: the 15% is a figure key national suppliers agreed was how we were tracking in terms of closure in 2018. I was at a workshop for newsagency channel national suppliers where this was discussed. We shared data and the 15% number was agreed, unfortunately. However, we all know what we know, and we all see what we see. The 15% in real terms is 495 shops. That is the chilling number. It concerns me that too many are sitting and watching it happen here in our own channel, and not acting themselves.

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Newsagency challenges

Magazine specialist store in New York

It was terrific to get another close look at Casa Magazines in York. Here’s shot from the outside.

Here are two shots from inside.

Here is a plea to shoppers.

Here are their social contact details, on the outside window.

Here are the locked boxes to where magazines are delivered:

This is a rare business, even in a huge city like New York. With weeklies and major monthlies readily available in convenience and drug stores and supermarkets and subscriptions such a large part of the supply chain, the need for specialty stores this size is not big.

While Casa Magazines looks cramped, inside you feel like you are in a specialty magazine store the truly has something for everyone. I’ll leave you with a cover shot of this title…

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magazines

Small business marketing videos

If you are looking for unbranded shop local and small business supportive social media content, here are some I released to small businesses using software from my POS software company.


 

 

 
Short videos are popular on social media.

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newsagency marketing

A fresh approach to displaying diaries

We have changed our approach to displaying diaries, using bookshelves…

The reactions have been terrific in terms of comments and purchases.

We like the bookshelf placement as it addresses the floorspace challenge that is often the case with diaries as they are heavy and hard to shift around.

I like the layered use of the bookshelves, too, for calendars and plush, all themed.

We have to change how we display products people expect in our businesses, otherwise shoppers will assume we are like every other retailer with these same products.

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Stationery

Lotterywest: rewards for growth

I like the Rewards For Growth initiative from Lotterywest. It focuses retailers on the key goal: sales growth. The pitch in their latest retailer email is simple and to the point:

Next week you’ll find out if you’re one of 129 retailers sharing in over $75,000 for achieving your sales target for the first quarter this financial year.

You’ll also find out what your NMS% target is for this quarter.

Stay tuned for exciting news on how you can earn rewards for increasing your Scratch’n’Win sales in the weeks leading up to Christmas.

Focussing on sales targets at the supplier, retailer and store level employee level is more important than busy work that tatts focusses on through their stress inducing compliance program.

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Lotteries

The customer service challenge with parcel collection in newsagencies

If you offer a parcel pickup service in your newsagency I urge you to ensure you have the space, resources and business processes in place to provide a good customer experience.

Customers only visiting the newsagency to collect a parcel will expect quick, knowledgable service. If they do not get this they will most likely want to complain.

There is good anecdotal evidence that online shoppers embrace opportunities to complain. E-commerce sites and social media make complaining easy through feedback, ratings, reviews and in other ways.

A poor parcel pickup experience is something online shoppers will complain about. They are empowered because of the ease with which they can complain online – often not to those who could address their complaint.

I have been contacted by newsagents with parcel pickup services seeking advice on how to deal with complaints against them. I have been contacted through this blog by shoppers who want to tell their story of poor parcel pickup service fro newsagency businesses. I have been contacted by parcel service businesses asking how to get newsagents to provide better service.

The parcel collection customer they wants…

  1. Easy access to the pick-up business.
  2. Fast service once inside.
  3. Straightforward processes.
  4. Security for their parcels.

The most common complaint I have heard relates to speed of service in the business. While they are happy to wait, they want to be served in sequence. They do not want to be told to wait until other customers are served.

Here is an example of a complaint from a parcel collection customer, in their own words, about there experience:

The lady that works at the newsagent would not give me my parcel at the store she wanted to to serve the other two customers there and told me to wait even tho I was waiting first anyways after she kept serving the other customers I said are u gonna serve me now and then she went off her head yelling at me and even her husband told her to be quiet, I’m not happy at all with the service cos she wanted me to wait till she serves the whole store then I’ll get my stuff.

This is a common complaint.

Anytime someone approaches me about a parcel collection service issue I suggest they deal with the retailer as they are likely to have more leverage. I also suggest they contact the parcel service business connected with the newsagency business as they, too, are likely to have more leverage.

Parcel collection can be challenging for retailers. You should only take it on if you are prepared for the challenges and prepared to provide the level of service customers expect.

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Newsagency management

Newspaper publishers shed more staff

Mumbrella has reported more jobs lost at News Corp in Marketing. This is on the back of job cuts at Fairfax a few weeks ago.

A spokesperson for News Corp told Mumbrella today: “A number of changes to the state marketing teams were announced this week. It follows the restructure of the group marketing function a month ago. The changes at a state level are designed to align roles and responsibilities to those at a group level. Unfortunately this has resulted in a small number of roles being made redundant.”

This sounds like marketing will be more national than state based.

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Media disruption

When an employee steals from your retail business

I was going through some old photos at the weekend and found one from twenty years ago of an employee who stole more than $15,000 from my newsagency.

The photo, taken at a work Christmas party, reminded me of the theft, which I had long forgotten. It was my first experience at substantial employee theft.

The theft was discovered when were chasing an anomaly in end of shift balancing following an unexpected roster change. A pattern of behaviour was discovered. This caused a question to be asked. Within twenty four hours there was an admission of theft over the previous year of $15,000. This was settled with a bank cheque, funded by their parents, and agreement of immediate termination of employment for then agreement that their partner was not advised.

Knowing what I know now, the amount stolen was sure to be considerably more than the advised $15,000. However, the lesson from the situation was far more valuable in that I learnt exactly what they were doing. This resulted in a tightening of the processes as wells changes to the software to make discovering such theft easier in the future.

We’d bee too busy worrying about big theft to notice small theft, $50 or $50 a day.

Back then, in 1997, cancelling sales in POS software was not frowned upon. There were valid reasons you might cancel a sale. Discovery of the theft revealed that it was a common way to steal small amounts from a business that might not be detected in a P&L analysis.

The software was changed and the business management processes I required changed for my shops. It is now much easier to detect theft and businesses that want to block cancel sales can – although, I recommend against this as it continues to be an excellent indicator of employee theft. In fact, the software changes have been on-going in that this first theft experience established my interest in the area and commitment to help independent retailers reduce the cost of theft.

Being stolen from by someone you trust, someone you count as a friend, is gut-wrenching. It can also be a defining moment from which you learn and act, to ensure it does not happen again. That is how it played out for me in retail as well as in POS software development. For that experience I am certainly grateful.

I kept the photo as it is a useful reminder of what a thief can look like.

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Ethics

Calendars help newsagents find new customers

Calendars have been strong in our channel for a long time. However, not enough newsagents leverage calendars as a new traffic opportunity.

By calendars, I mean the ones we choose for ourselves and from which we make 50% and more, not the magazine distributor calendars over which we have no control.

The opportunity starts with buying early in the year, usually no later than March. Selecting titles through which you can promote your business outside what people expect from you or promoting segments and categories around which you build a broader offer in the business.

Once the stock is in, I like to go through the range, selecting the titles I will promote and scheduling these into social media and elsewhere.

Sometime I’ll promote only the calendar, or several that are related, which other times I’ll promote a calendar with a range of related items that work well together.

In every instance I am looking for calendars titles that play outside what we are known for, titles that are more likely to bring a fringe-sweller in or, better still, someone who have never shopped with us before.

There is where choosing the calendar title is key as you want to tap into passion. People are happy to drive for passion, if they feel they will be satisfied.

We go out with calendars in September, with Father’s Day.  Through the season they have three or four locations in-store to tap into existing traffic. however, it is the out of store pitch that interests me to most as it is the opportunity for new traffic that I see as vital for our businesses, key for our engagement right now given the continuing decline in footfall for core categories in newsagencies.

Stocking a good range of calendars is not enough, not any more. You will only reach the potential if you actively promote outside the business, to people not in your community, to people who do not shop with you. This is absolutely critical.

Now, if you are thinking that calendars are redundant. I don’t think they are, especially not the ones that appeal to interests people hold dear to their heart. Sales tell us interest is strong.

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Calendars

Why suppliers sell to other shops in town: understanding the cost of wholesaler reps

Small business retailers, including newsagents, get understandably upset when they see products they ordered from a rep who visited in another shop near to theirs. Their preference is that suppliers do not do this.

It makes sense in a small town for there to be product differentiation between local retailers.

Today, however, I want to unpack the supplier rep cost base so you can think about why it might happen.

A rep on the road has a cost to the business of around $100,000 made up of salary, maintained vehicle, on-costs such as work cover, insurance and related as well as any incentive for performance.

A rep is on the road, on average, forty weeks of the year allowing for annual leave, other leave, training, meetings and times when retailers don’t want to see any reps. While the 40 is a generous number, let’s go with it.

Forty weeks is 200 working days, or 1,400 working hours after allowing for breaks.

A rep needs to earn at least $71.42 in gross profit per work hour to cover their costs to the business let alone other business costs.

However, reps and suppliers tell me that rep travel time accounts for around 30% of work hours. This takes the work hours in a year to 980. At 980 work hours a year, a rep needs to earn $102.05 in GP to cover just their cost to the business.

The reality is, given business overheads, the cost of a warehouse, marketing and other costs, a rep would need to earn between three and five times this in GP to cover the business costs.

What I have written above is based on discussions with wholesalers in a range of retail channels including one wholesale business owner who took their ten full-time reps off the road and went to a purely online model of service after doing a deep dive into the costs their business model.

Given the slim margins in wholesale, usually considerably less than in retail, I can see a rep needing to write between $2,500 and $5,000 a day in wholesale business to cover their costs and the business costs.

The objective of this post today is to have you consider these numbers next time you see a rep in your shop. Consider what they have to make and how they might go about making that.

While it does not justify them selling to a nearby competitor, it may explain why it happens.

With more wholesalers moving to an online only model, there is an opportunity to purchase from this type of business, one less livelily to walk a few steps up or down the street to sell to a competitor what they just sold to you. It is not the answer, but it could be one answer.

Next time you get angry about a supplier selling to a competitor, think about their business and what you think they could do differently to benefit your business and their business without causing the anger it has caused. Talk to them. That conversation could benefit both businesses.

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Newsagency management

Postal franchisee campaign ramps up

This tweet from yesterday reflects the core message of a campaign for fair compensation for postal franchisees:

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Australia Post

newsXpress businesses pitched in TV campaign

newsXpress this morning launches another national TV campaign promoting new Beanie Boos, a new ow price for beanie Boos and two exclusive Boo related products.

The TVC is integrated with in-store displays featuring professional collateral that visually  connects with images in the TVC, in-store events, social media marketing and more.

Planning for a TVC began months ago, with the agreement on exclusive Beanie Boos products and the creation of a 1340 page 2018 Boo Collectors yearbook. This book was published last week after a three month in-house design process.

The TVC has been timed for now to be ahead of the Christmas ad curve and to leverage school holidays.

This is the TVC, which will run in high rotation for two weeks.

Out of store marketing is critical for us to replace foot traffic leaving our channel and moving to other retailers and online. While TV as a medium has challenges, there is evidence that it continues to play an important role in brand  building and that is certainly one of the objectives of this campaign.

Now, for those working on a comment to put this campaign down as can happen here with any newsXpress related post I write … Boos sit in the top of the top 10 toys currently sold in Australia, newsXpress is the third most successful retailer of Boos – behind Coles and Woolworths, Boos are a net new traffic driver for newsXpress businesses, Boos shoppers are valuable in that they purchase other products, Boos are fun.

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newsagency marketing

Promoting BHG Christmas

We are promoting the Better Homes and Gardens All I Want For Christmas special in a few locations in the business to maximise the opportunity. We’ve done this for years and found it works a treat. It’s easily purchased on impulse.

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magazines
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