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

The toys opportunity for newsagents grows

Toys R Us Australia has been put into voluntary administration. This is on the back of the closure of the US business of the same name but different ownership structure.

What I wrote here on January 20 this year is truer than ever: the Toys opportunity for newsagents is excellent this year.

Toys set to be strong in 2018 for newsagents
The toy category is set to be a strong category for newsagents in 2018 with more newsagents taking it on and with more suppliers prepared to sell to our channel than in the past.

Toys today are broader in their appeal than ever before, especially bad games, which experienced double digit growth in 2017.

While a few years ago it seemed that games were in trouble because of digital disruption, they have come into their own thanks to clever invention of new products and recasting of the appeal of some traditional products, such as Monopoly.

Taking on a local toy shop competitor is possible for newsagents. It takes knowledge, focus and commitment. This is especially true if you focus on niche, special interest, opportunities.

As a guide, toy revenue could easily be equal to 50% of your greeting card revenue. I have determined this base benchmark based on data I have seen from more than fifty newsagency businesses.

If you are not in toys, consider it. The right toy product can attract new traffic across several valuable demos.

I know from my work with newsXpress that there are suppliers who do not usually deal with newsagents who are keen to engage with groups of stores. I expect people in other groups will tell you the same. I also know of newsagents who have given over more than half their floorspace to toys, and are enjoying excellent new traffic as a result.

This opportunity is real. For sure there are challenges and complexities. However, there are people who can help you follow the opportunity for success.

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Newsagency opportunities

Phil Taylor closing at the end of this month?

I have been told by two sources this afternoon that card and wrap supplier Phil Taylor is closing at the end of this month. Word has got out as staff have been advised. This is sad news for them, tough, too.

There were indications of challenges when Henderson Greetings picked up the local representation of products from Paper Rose, successful publisher of ranges such as Designers Guild, Avocado, The Art Group, Mozaic, Artisan, Daisy Patch plus more.

While this is sad news, if true, for those working for Phil Taylor, it is equally challenging for other card companies as well as card retailers. We must all recalibrate our businesses when changes occur, even changes in supplier businesses not core to our operation.

Card and wrap remains a strong category for our channel with newsagency businesses accounting for close to 30% of all retail sales.  I think we can grow this percentage by being more engaged ourselves in our own businesses rather than expecting our suppliers to do everything for us.

The current trend is flat to modest, 2% – 4% – year-on-year revenue same-store growth in this category in newsagencies. While some are enjoying double-digit growth, they are balanced baby others experiencing double-digit decline, and this brings the channel average down.

Keys to growth, in my view are shop floor engagement inside and outside the card department, out of store engagement and focus on adding value to the card shopper experience.

Too often, newsagents do not engage with the category in a meaningful way. Too often they expect their card supplier(s) to do all the work. While this was okay in the past, it is not okay today.

The newsagents I see enjoying double-digit growth are deeply engaged with the category, running a card offer equal to or better than the truly specialist card retailers. Any newsagent can do this. however, it takes change in everyday operation and engagement with cards to be a destination focus of the business.

Less choice in suppliers benefits big business. This is what we must push back against. we need more Australians thinking of newsagencies first as the place to buy cards. Once way we can do this is to grow the card buying population … however, that is a topic for another time.

In the meantime, we’re thinking of the Phil Taylor family.

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Competition

Strong royal wedding interest

The royal wedding is popular with many who received magazines today with wedding content having sold out. Those receiving top-up or initial supply of wedding issues Thursday (as not all newsagents received wedding issues today) will need to promote. We know from decay data that 60% – 75% of weeklies sell on a Monday. This week we need to change that and drive a bump Thursday. Achieving this requires us promoting outside the business, giving people a reason to return.

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magazines

How to attract new shoppers to your newsagency business

New shopper traffic is vital to every retail business for if all you see is the same shoppers then necessary growth will not be achieved and growth is necessary with rent, wages and overheads increasing every year.

The big question is how to attract new shoppers?

There is no easy answer. In fact, it is hard work. It is also work that is not unique to our channel. All retailers have to do this work, every day.

In my own  businesses, the question we ask every day is what are we doing today to attract new shoppers to our shop. This question is not posed to distract us from maintaining what we do and remaining also focussed on the valuable core of the business.

All of this is a preamble to one example of attracting new shoppers. This is what we are doing in one of my shops right now. This shop is in a big Westfield centre. we have a big Harry Potter display;ay with products from multiple suppliers.

We chose Harry Potter because we know that Australians do hundreds of thousands of Google searches every month for Harry Potter products, information and other reasons.

So, on the lease line, facing into the mall, we established this display. Right away it was a hit. People walking across, and shopping. Here is that display, from Saturday morning:

Video: May 19, 2018.

Now, for those who look for any reason to nit-pick: I am not saying this is a destination idea. Nor am I saying you must do this. Nor am I saying that this display is all you do. Nor am I saying this will work everywhere.

This Harry Potter display is an example of an approach, an approach that is working in my business and plenty ours, an approach whereby we leverage a popular brand to attract new shoppers.

Some brand, character and licence focussed ideas work better than others. The key is trying new things, every few weeks. Constant motion is a core message here. Acting based on real and current data about what people are looking for is also key.

I am fortunate to have access to search data thanks to a commercial service I pay to access.

Now, some will wonder – what does Harry Potter have to do with being a newsagency business. Nothing really, but that does not matter. The channel the business identifies with is not as relevant today to what we choose to sell compared to a new years ago.

The new traffic attracted is valuable as these shoppers browse the business and purchase in addition to the category that attracted them to the shop.

The model of acting to attract new shoppers is the key message here. In the newsagency channel especially I see it as mission critical.

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Newsagency management

A Twitter wedding

Twitter is leveraging the royal wedding to show off its platform not only for serving individual tweets but bringing together coverage for what is an international event. What they will be doing later today shows how far this platform has come and, through this, challenge the relevance of newspapers for reporting news, which is usually old news.

The image is in a pitch I received from Twitter by e mail as well as in my Twitter feed.

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Media disruption

A Theft Policy is key to reducing the impact of theft in any retail business

Issue this Theft Policy in your business, have all team members sign it and place it is a place where team members can see it every day. Doing this establishes your commitment on the issue as well as your policy and practices related to the issue. Following through on the policy is key for without discipline in this area the cost of theft in your business will be higher than it should be.

THEFT POLICY OF THIS BUSINESS

  1. Theft, any theft, is a crime against this business, its owners, employees and others who rely on us for their income.
  2. If you discover any evidence or have any suspicion of theft, please report it to the business owner or most senior manager possible immediately. Doing so could save a considerable cost to the business.
  3. We have a zero tolerance policy on theft. All claims will be reported to law enforcement authorities for their investigation.
  4. From time to time we have the business under surveillance in an effort to reduce theft. This may mean that you are photographed or recorded in some other way. By working here you accept this as a condition of employment.
  5. New employees may be asked to provide permission for a police check prior to commencement of employment. Undertaking the police check will be at our discretion.
  6. Cash is never to be left unattended outside the cash drawer or a safe within the business.
  7. Credit and banking card payments are not to be accepted unless the physical card is presented and all required processes are followed for processing these.
  8. Employees caught stealing with irrefutable evidence face immediate dismissal to the extent permitted by labour laws.
  9. Employees are not permitted to remove inventory, including unsold, topped, magazines, unsold cards or damaged stock from the store without permission.
  10. Employees are not permitted to provide a refund to a customer without appropriate management permission.
  11. Employees are not permitted to complete sales to themselves, family members or friends.
  12. Every dollar stolen from the business by customers and or employees can cost us up to four dollars to recover. This is why vigilance on theft is mission critical for our retail store.

PLEASE SIGN AND DATE YOUR ACKNOWLEDGEMENT:

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Ethics

UK newspaper circulation results reflect the challenge for the print medium for news

The latest UK newspaper circulation results released by the Audit Bureau and detailed by the Press Gazette reflect challenges for the news print medium we see in Australia. Over the counter sales continue to decline, as does newspaper shopper foot traffic.

Newsagents have to run their businesses to not rely on newspaper traffic. By all means sell papers and promote them when relevant, but do not rely on them at the core of your business. Those days are gone. Newspapers as not a viable, anticipated, daily purchase.

Regulars here will not read this as new information. Indeed, it has been the trend for more than ten years. Early adopters have businesses that have no reliance whatsoever on newspapers, as it should be.

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Media disruption

LayBy a thing of the past in many newsagencies

AfterPay took fashion retail by storm a few years ago. Their initial focus was online and then moved to in-store. last year, they took over Touch, bringing them into the focus of newsagency businesses and others.

ZipPay and Oxipay have joined the fray and are providing terrific over the counter LayBy alternatives. I say terrific because the customer takes the goods immediately. This reduces storage costs, eliminates the possibility of in-store damage and frees capital for you. It also means you are not subject to tight LayBy refund regulations.

The risk is that the type of funding for these buy now pay later programs sits in a grey area, an area that I expect will eventually become regulated. For now, however, POS software integrated buy now pay later makes it easy for you to offer the service an pitch something that may be more commercially valuable to you than LayBy.

In one of the websites with which I am involved, we started offering Oxipay late last year. In a few short months it was accounting for 14% of revenue and led to a net increase in purchases, capturing sales that would have otherwise been lost as the purchasers did not have the available funds at that time.

Bringing this in-store, into a newsagency, has not been without its challenges given the mix of products available and the rules some financiers have in place for what they will fund. However, work has been done to serve the needs of the financiers and ensure retail businesses like newsagents lies have access to buy now pay later.

Retail is changing in the payments space. Reducing friction is the name of the game. Offering a service like Oxipay is key is reducing friction.

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Newsagency management

Specialty magazine retail challenged

I got back to Magnetix in Wellington today, the specialty magazine business I have written about here before. It is similar to MagNation, the magazine specialty business that started in Auckland and headed to Australia years ago. While Magnetix maintains an excellent range of magazine titles, it does not feel as broad as a year ago.

If my time there today is anything to go off, coffee is the main traffic driver, it inhabits the front third of the business and is primarily what you see from the street.

That we do not have more of these businesses indicates there is not a large enough demand. However, if more newsagencies close and supermarkets focus on the top 100 titles, I can see magazine range being a traffic driver – as long as it co-exists with a high margin category. This is where coffee is a good fit. In fact, beyond the excellent margin, it works with magazines in other ways too.

I say a higher margin category is key because off the continuing poor margin from magazines.

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magazines

Fun is key to royal wedding engagement in the newsagency

We are finding our shoppers love some irreverent engagement with the upcoming royal wedding.

We are doing this in several ways, including tactical product placement, which we then leverage on social media.

Across the business, we have multiple categories of products we are engaging with. This helps broaden the demographic appeal, which works with this particular wedding. In fact, the appeal of the wedding is broader than any I have seen in my years in the channel. This is terrific for us as it helps us connect way beyond the traditional.

It is wonderful seeing how others are connecting with the opportunity. I have seen one newsagency pitch a high tea, another a cocktail party, another a kids party. All these ideas are wonderful as they show each business engaging practically and in a fun way with the event. from what I have read about the event the couple are playing it less traditionally. This is what works best in store too.

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Newsagency management

It is time for Gotch to change its management of AFL and NRL

Newsagents this week received more AFL and NRL trading card stock when plenty of their initial allocation remains unsold in newsagency businesses.

Gotch has the sales data to know what remains unsold. Their allocations people and/ or processes appear to have ignored this evidence prior to proceeding to supply m0re stock.

I have heard from several newsagents who shared exampled of blatant oversupply. The costs of this oversupply include the costs of labour, space and freight – as the cards need to be returned, at the cost of the newsagent.

That we are having to raise this in 2018 is extraordinary. 

I suspect oversupply of AFL and NRL cards is not an issue for the retailers supplied by Gotch that compete with newsagents. If my suspicion is right, newsagents are commercially disadvantaged by the Gotch treatment. It makes them less competitive.

Gotch has the data to facilitate fair and accurate supply decisions. Any inventory drop after the initial supply should only be on the basis of sales. This is easy enough to do for any company that has an even half decent IT system in place.

Disadvantaging small business retailers like newsagents as happens with the current AFL / NRL card supply model needs to stop. Newsagents will stop it by quitting magazines, as some have already.

To be clear: I have seen data from newsagents showing there is no justification whatsoever in supply and sales data for AFL / NRL trading cards yet where Gotch has sent new, unneeded, stock. This is Gotch doing exactly what they have said countless times they will not do. I thin it is deliberate, wilful.

Other magazine publishers should take note. If you see retail outlets pull out of magazines, it is because of behaviour such as I have outlined here. You will be impacted by oversupply situations like this. beyond cutting magazine space or getting out of magazines altogether, newsagents will also early return to mitigate cash flow challenges that flow from oversupply.

Magazine publishers should agitate Gotch on this issue. Their commercial relationship will be more influential with Gotch than newsagent agitation has been. Gotch needs to understand the financial impact on their business of oversupply to newsagents.

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Ethics

What I learned visiting the Amazon Go store in Seattle

I am grateful to have visited the ground-breaking Amazon Go store in Seattle twice this year. This is an extraordinary shop, built by an extraordinary business.

  • No sales counter.
  • No cash or credit cards processed in-store.
  • Choose what you want, and leave.

In this video I explain what I saw and try for context for small business retailers in our part of the world. While I shot this for customers of my POS software company, it is relevant to newsagents and their suppliers.

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Management tip

Newsagency management tip: What’s next?

Mother’s Day is a big day in the seasonal calendar for any newsagency business. There was a time you could get through this season and rest until mid year or even Father’s Day. Not any more.

It is vital you have a new traffic generating pitch up from tomorrow, Monday. It has to be something you promote inside and outside your store, to bring in new shoppers and have regulars returning sooner.

Valleys between seasons need to be smoothed with substantial change in the business, which is backed with extensive out of store activity.

If you are in a newsagency marketing group or a franchise group they should have already pitched ideas to you for post-Mother’s day activity. My suggestion is you follow their advice – hopefully, you have done that and are ready for tomorrow.

Resting between seasons is not an option in newsagency retail today. 

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Management tip

Meghan and Harry

Yes, these two on the cover of anything helps drive sales. It is an easy pitch, especially at the counter where I have seen it purchased on impulse. In one case yesterday, for Mother’s Day. We have a few weeks of mega-opportunity here. We need to all make the most of it with magazine titles and other gift opportunities.

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magazines

Pitching Autumn recipes

Here is how we are pitching the Better Homes & Gardens Autumn Family Feasts in the centre of the magazine department on the impulse unit you can see in the photo. we also have it with food titles. However, this location is designed to grab impulse purchases.

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magazines

Pitching the alternate newspaper distribution union model

Check out this as in the NT News, which I saw when I was in Darwin recently.

It is not a new pitch. I first saw something similar years ago. I am surprised, however, ad the full page pitch – and the price. It is high by overseas standards.

Here are the details of the offer.

With print ad revenue collapsing and print production and distribution costs, publishers will only support print for so long. Hence, the need to develop alternate distribution channels.

There is nothing new here. However, there will be newsagents who are shocked when their capital city daily newspaper ceases daily production. Plans for business success in that situation should be well advanced and reflect cited in the business model today.

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Media disruption

The competitive neutrality inquiry into the ABC and SBS is a small business fail for the government

For years, newsagents have called for an inquiry into the competitive neutrality of the government owned Australian Post retail businesses. I wrote about it here in 2005.

One argument is that Australia Post leverages its essential service status to gain access to advantageous tenancy arrangements that are not accessible to newsagents and other small businesses that compete with them. Another argument is that Australia Post leverages its protected monopoly status in leveraging supplier deals.

Australia Post, through its corporate stores directly competes with small business newsagents.

Successive governments have demonstrated no interest into an inquiry.

Fast forward to 2018. The ABC runs a report critical of government economic policy and is hassled by News Corp and wham! we have a competitive neutrality inquiry into the ABC.

The politicians and big business put themselves ahead of the needs of small business retailers like newsagents.

The Australia Post and ABC matters are related in that they are about competitive neutrality.

I say that Australia Post does more economic damage to small business newsagents and other retailers than the ABC digital strategy does to News Corp. and other media companies.

The politicians show their hand by moving quickly on the ABC inquiry and ignoring calls on the Australia Post matter. Big business is their friend. We are not – despite the nonsense they peddle at election time.

My view is underscored by the $30 million given to Foxtel recently without any business case being made and without any requirement on transparency re its use. Oh, and the elimination of TV broadcast licences because of the cost of digital transformation for TV networks. If only we had a government that cared about small business to the same extent.

We in small business need politicians who are as focussed and energised for us and those we serve as those in Canberra who do the bidding of big business. No, actually, we need politicians who serve the whole country rather than so many we have today who serve their mates ahead of the vast majority of Australians. Shame on us, we get those we vote for.

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Competition

Tatts pitching the $12M Powerball for online purchase

This came up on my phone just now. Clicking on it takes me to an App purchase. There is no pitch about in-store.

In the App, here are three update screens, each with information of interest to retailers:

The migration of over the counter lottery purchases to mobile and online is the largest single threat to lottery shopper traffic to lottery retail businesses. Nothing can stop this migration. What retailers can do is work on attracting shoppers for other product categories, while, at the same time, pushing back on capital expenditure demanded by their lottery supplier for in-store changes of doubtful commercial value.

The migration of lottery purchases to online and mobile does not need to mean the end of a business.

In shining as  light on this I am not criticising g Tatts as this is what I waked do if I were them. It is the best move for their shareholders.

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Competition

Lotto betting closer to being banned in Australia

See this release just now from ALNA:

Lotto betting to be prohibited in Australia

Australia’s national industry body for newsagents welcomes the unanimous passing of the Interactive Gambling Amendment (Lottery Betting) Bill through the lower house, to protect consumers

FOR IMMEDIATE RELEASE

Australia, 9 May 2018: Australia’s national industry body for newsagents and lottery agents, the Australian Lottery and Newsagents Association, is pleased that parliament has unanimously supported an amendment to the Interactive Gambling Bill that will bring important new consumer protections by closing the loophole that lotto betting sites have been operating out of.

Adam Joy, CEO of the Australian Lottery and Newsagents Association said, “Today the lotto betting amendment to the Interactive Gambling Bill passed with unanimous support from the House of Representatives, and without even a division. This will protect Australia from synthetic lotteries.

“We are encouraged by the clear intent of the parliament today to rebuke online betting on lottery outcomes in Australia. This is a win for Australians and an endorsement of the Australian Parliament, and we look forward to the amendment passing in the senate in due course.

“The Federal Interactive Gambling Act already made it illegal to sell a scratchy online and play a poker machine online, and the federal government moved last year to further strengthen the act with an amendment to ban online in-play betting on sports and banning credit betting, as well as making it illegal for unlicensed operators to offer online poker. And today, we welcome the passing of an amendment that closes a further loophole in the Act by banning online betting on all lottery outcomes.

“Given the misleading and divisive campaign run to try and prevent the passing of this Bill, we would like to see this Bill sent to the Senate quickly. In the meantime, the Australian Lottery and Newsagents Association will continue to provide strong advocacy for our members, including to help newsagents receive better deals on the products that they are legally permitted to sell, making sure that they aren’t excluded from access to the digital economy, and providing support to assist them in accessing the opportunities from the Federal Budget.

“These include the instant asset tax write-off extension, an extension of unfair contract terms protections, and the new funding provided to the Australian Financial Complaints Authority to give our small business owners access to free, fast and binding dispute resolution.”

The Australian Lottery and Newsagents Association is the only national association representing newsagents and lottery agents in every state and territory of Australia, and are the only newsagents’ association with a national ACCC collective bargaining authorisation. As such, it is the only association that is negotiating nationally with Tatts for further improvements.

ALNA represents over 2,000 small businesses, many of them family-owned, who rely on the sale of official government regulated lottery products. There are over 4,000 lottery retailers in Australia.

On behalf of those businesses and their staff, the ALNA thanks the government for its efforts to bring forward this important reform to protect Australian consumers. In particular, we thank Minister Fifield for his strong leadership, and Michelle Rowland for her bi-partisan support and stakeholder engagement, and also the Minor Parties and Independents. It is evidence that Australian political representatives, no matter what party they are from, understand what is important to fight for.

This is not stopping Lottoland. Here is an ad in the SMH newsfeed just now:

Maybe now VANA and NANA will get behind a single national voice for the good of the whole channel.

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Ethics

It is time for a Royal Commission into retail shopping centre development and retail tenancies in Australia

We, Australians, small business retailers, suppliers to small business retailers, local towns, all of us need a Royal commission into retail shopping centre development in Australia and the behaviour of shopping centre landlords.

There is enough evidence to indicate that an appropriately skilled and resourced Royal Commission could uncover behaviour that is illegal and harmful to our economy and small businesses and families that rely on the small businesses.

I appreciate that the areas I think the suggested Royal Commission cover are broad and could be better served as two investigations. However, the two issues feed into each other. I think they are best considered together.

WHAT IS A SHOPPING CENTRE?

For the purposes of my proposal, I suggest that a shopping centre is a retail development with fifteen or more shops of any size.

While I am sure there is misbehaviour to consider in smaller centres, for management and focus, a threshold of fifteen tenancies, or similar, is needed. Otherwise, any Royal Commission would run too long and cost too much.

RETAIL SHOPPING CENTRE DEVELOPMENT.

This is the beginning of the issue. Whereas in the US and other countries growth in retail tenancy space is flat or declining, in Australia it continues to grow. Some say we already have far more shops that the population can support.

In regional and rural locations the challenge is that a new centre is usually located outside town and its development can gut the centre of town, diluting or killing off the heart of a small town.

In some cases, mid-size centre development tis driven by competition by the two major supermarkets and aided and abetted by several other anchor tenants and supported by Tatts keen to be in all new centres.

  1. Do we need more shopping centre space?
  2. Should there be controls on approving this?
  3. What is the economic impact of the current growth in retail space in Australia?
  4. What is the social impact of the current growth in retail space in Australia?
  5. What is the impact, specifically on small business retailers of the growth in retail space?

LANDLORD BEHAVIOUR.

Talk to any small business tenant in a shopping centre and they will have at least one landlord story that causes them stress.

There is the landlord who did a handshake deal with a party that was negotiating to buy a business. the landlord squeezed and the family business closed. The new tenant moved in without paying goodwill.

There is the landlord that took too long on centre re-develoopmnent, making decisions that saw a 50% drop in shopper traffic, and refused any compensation for retailers.

There is the landlord that permits one sore to be on a % deal where they pay 9% of turnovers in rent with a shop next door not able to have such a deal and managing and occupancy cost of 32%.

There is the landlord that strong-arms retailers verbally, never in writing, never in a way that can be used against them.

There is the landlord that takes a marketing levy every month and spends this on activities that offer no benefit whatsoever to retailers.

There are hundreds of stories.

The Royal Commission needs to listen to stories, all stories. Tenants need to be able to do this confidentially as the fear of reprisal by landlords is real.

  1. Do landlords act unlawfully?
  2. Do landlords treat retailers differently?
  3. Do landlords act in secret knowingly harming small business retailers?
  4. Do landlords abuse funds they collect from retailers for marketing?
  5. Are landlords fulfilling their obligations in terms of bringing traffic to shops in their centres?
  6. How are the various roles of employees paid in landlord businesses? What are their incentives?

There are many other questions to answer. My goal here is to kick off the discussion.

WHY?

Too many families are losing their businesses, homes and other assets. Too many small business operators are having their personal situations, including health, negatively impacted. Too many small business operators are losing their life. Yes, this issue is that serious.

Small business retailers feel helpless. They want their business. It has been their life’s work. They fear without it they will have nothing. This can see them agree to a lease that is at its very foundation doomed inappropriate for their business.

Landlords have the upper hand. They are in control. Too many people in landlord businesses are bullies and aware of how to bully without being caught.

The best way to resolve this is to shine a light. Only a Royal Commission c an have the authority and power to do this.

I get that Royal Commissions are popular right now. This suggestion, however, is important given that those most impacted are also those most vulnerable – small businesses, run by families. Were are told small business is the business backbone of our country. However, there is evidence to suggest that small business retailers are disadvantaged in terms of shopping centre development and retail teensy negotiation.

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Newsagency challenges

Learnings from Magento Imagine 2018 for small business retailers

I am grateful for the opportunity to participate in the Magento Imagine 2018 conference in Las Vegas ten days ago. Magento Commerce is the world’s leading e-commerce platform. My POS software company is a partner and has its POS software integrated with Magento.

At the conference, with several thousand other tech and retail people, there was plenty to learn, including from execs from an Aussie retail business I found myself sitting next to.

Here is a video I shot in the office last week for Tower customers. I share it here as some insights may help folks here think about their own web strategy.

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Newsagency management