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

Newsagents scared to confront Tatts re small business capital investment demands

While comments on my post yesterday and other posts here about the demands rom Tatts Group re capital investment in a new fit out as well as a new in store digital marketing platform have been minimal, my phone has been running hot.

yesterday alone I received calls from six newsagents about this issue. One was in tears for what the additional cost will mean to their business.

Each caller said they are not responding publicly because of how threatened and vulnerable they feel.

In two cases there is a mental health impact from the pressure they are under that has no business case backing.

My core concerns are, as stated by me many times here:

  1. The tech requirement is, in my opinion, outside the re-fit provisions of the Tatts agreement.
  2. Tatts has provided no financial support or justification for the re-fit capital expenditure.
  3. Tatts has provided no financial justification for the new tech requirements imposed on businesses.
  4. From what I can tell, the main tatts pitch is one of threats to put Tatts into a local competitor business.
  5. Tatts appears to have double standards. One only has to look at what One The Run in Adelaide or the supermarket chains are permitted to do.
  6. Tatts is competing with retailers online in a way that disadvantages small business retailers and disrespects the capex demanded of small business retailers.

What should newsagents do? In my opinion, they should take their case to state based authorities: small business commissioner, small business advocate, VCAT / QCAT / CTTT or anything similar. They should do this without fear of Tatts as those forums exist to hear this type of dispute.

If you can’t afford to do what Tatts demands, tell them, in writing, prove it to them. 

If your mental health is impaired because of the manner in which Tatts and its representatives are dealing with you, write to Tatts about this, explain how it is affecting you personally.

The more informed the company is the better the record of how this massive public company is harming small businesses and those who own them. Your stories will / should ultimately matter.

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Ethics

Has Tatts justified the capital expense they demand you invest in your business?

I have heard from several newsagents this week about intensified pressure they are under to agree to capital expenditure beyond what they can afford and borrow in order to meet the new technology fitout requirements from Tatts.

When two of them asked their Tatts representative for financial justification for additional screens or other demands by the company, the Tatts representative refused to respond.

I understand the fit out obligation. What makes it different this time is the rolling into the fit out obligation the introduction of a new technology platform to market products and that the newsagents funding the platform have no control whatsoever over the content on the platform.

I see the screens requirements as outside the obligations of the agents, beyond the scope of what they signed up for.

At the very least, this should be tested by an independent umpire.

I would love newsagents to respond here about what Tatts has told them to justify the capital expenditure. I ask as I am unaware of any business case from Tatts for the tens of millions of dollars it is forcing small family run businesses to spend promoting the Tatts brand.

Is there any newsagent who has received a business case or a financial justification from Tatts supporting the company’s demands of their business?

The threat from Tatts to take the agency business to another shop in town appears to be the core leverage the company is using. If this is the case, shame on them.

It shocks me that no newsagent has taken Tatts on and forced the company to be held to account for the extraordinary expenditure it is placing on small businesses that can ill-afford capital expenditure that does not deliver a good return.

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Ethics

Great to see a retailer happy to serve customers who are on the phone

I was thrilled to see this sign in my local coffee shop on Monday this week. I am often on the phone when there ordering coffee. It works, I don’t disrespect them and they don’t disrespect me.

I think some retailers get too hung up on the mobile pone thing. As long as you can complete the transaction who cares if they are on the phone? Not me, I am happy there are there shopping with me.

What I love about this campaign is that its is positive and inviting. It turns what is often a negative situation in retail into a positive.

Good on the people who are behind it. My cafe owner got the sign from his local Snap Printing outlet so it may be a Snap thing.

Sure it can be frustrating if the conversation on the phone slows the sale. My experience is that it usually does not. The key is to look beyond the default position of being angry or frustrated that a shopper is on the phone. Suck it up, take their cash and appreciate having a customer to service. That’s good pragmatic customer service in my view.

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marketing tip

A direct benefit of meeting with brand owners

At the New York Toy Fair last week I met with the brand owner of a niche collectible brand available in Australia. They shared worldwide sales information that changed how I saw some items available in Australia. Data insights revealed not only top sellers but also helped demonstrate connections between items in the portfolio.

While local suppliers do their best, sometimes even they do not have insights that can be invaluable to driving greater success from licenced product. This where groups can play a role, by digging deeper and developing information-flow relationships with brand owners.

Thanks to the social media world of today, information is key in being able to pitch points of difference. While a product may be in multiple retailers, if you have information ahead of others yo can leverage it to pitch a point of difference.

Price is not the differentiator it was years ago. The most valuable shoppers to any retail business are those who care less about price and more about a licence, its collectibility and value-add insights you may have. It is our job as retailers to mine for these value-adds.

This is especially true of brands that are not usual for the business you run for anything you can do to leverage a brand that can attract new traffic has to be mission critical.

I appreciate I am not being explicit here. There is a reason for that. More core message is – mine for unique information that you can use to leverage fringe brands you carry and through this expect to discover en shoppers.

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Newsagency management

Sunday newsagency management tip: know what is different about your business

What is different about your newsagency compared to other newsagencies?

This is an important question as it defines your business compared to what people perceive to be the average newsagency out there.

Hopefully, you have a ready answer that is meaningful and reflected inside the business. Saying better customer service, for example, is not a good answer. Give people something more than that.

So, list what is different and ensure your business matches the claimed differences.

Once you have the list, use this to guide your out of business pitches for every time you promote your business through products others have you don;t pitch your point of difference, and what is the point of that?

Know your differences and promote them, urgently.

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Management tip

Politics gets in the way of policy on penalty rates

The instant analysis world we now have thanks in part to social media has seen the decision of the Fair Work Commission to cut Sunday penalty rates 12.5% turn into an ill-informed class battle for which the politicians are to blame.

The politicians created the independent umpire and left it to provide leadership on issues they consider too contentious for them to show leadership themselves.

Media reports and tweets reflect an ignorance about penalty rates.

For me, the question is: Is $39.82 an hour (plus super) for a 21 year old on a Sunday reasonable? Whether they are a retiree looking for extra money, a single mum or a uni student is not my concern. My concern as a retail business owner is – is $39.82 an hour fair pay?

I think $39.82 an hour is too much. I am happy with the 12.5% reduction. In fact, I think it could have been a bit more.

But this is where the politicians need to show leadership for you can’t have a conversation about cutting penalty rates in a climate where too many big companies are not paying a fair amount of tax, Centrelink is taking action against debts that often do not exist, politicians grant themselves above average pay rises every year, big business CEOs get millions for share price movement and large corporates are pitched a tax break.

Our politicians need to show leadership on the big picture here. If they did that, then genuine reform across multiple points of the economy might be possible.

As a business owner I am not responsible for the economic circumstances of my employees. I am responsible for paying the correct pay and meeting all other obligations. Circumstances outside the business are not my responsibility as that is what I pay payroll tax, company tax, GST, superannuation, PAYG, fuel excise and myriad other taxes for. The problem is, these many taxes are not used as well as they could be. Indeed, pigs on all sides of politics with their snouts in the taxpayer trough rort the system so much that is makes many of us look at issues like penalty rates as a what’s in it for me discussion.

Real leaders would step back and say: okay FWC, you have had your say. Now, lets look at the whole of the economy and make a series of moves in pursuit of fairness across classes on the basis that a healthy whole economy is more important that health for one class at the expense of another.

The debate that has been raging in Australia for the last two days since the FWC decision is a reflection of poor leadership on all sides in this country.

Please, can we pull this back from a debate? Can we have a conversation? And can we, for a moment, forget about pursuing headlines or a retweet?

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Ethics

Pitch your gift wrapping services

I love this pitch that I saw in the window of a card shop last week. We can wrap anything is simple, easily understood and perfect for people who need the service. I love that they have not over complicated the pitch – this helps with cut-through to passers-by.

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giftwrap

Combatting illegal tobacco in New York

Plenty of tobacco retailers in New York that I visited last week had signs up in their retail shops making it clear about illegal tobacco and that their business only deals in legitimate tobacco. Displaying signs like this is a good way to demonstrate authority in this contentious area.

This sign is good as it shows consumers hot to spot illegal tobacco products – it shows the tax stamp. Helping shoppers spot illegal product is the first step in any good education campaign. It is unfortunate the sign looks so disheveled. I’d rather it be pristine and in a frame, showing with pride.

Illegal tobacco is a big issue around the world and retailers are on the front line of this battle. Using space in-store to educate shoppers is an important role for retailers to play.

1 likes
Ethics

ABC radio promoting newsagents

It was terrific hearing an ad for Gardening Australia on local ABC radio yesterday in that it mentioned newsagents as the only retail outlets for the title. Sure they pitched ABC shops online, but our channel is the only high street retailer with the title.

This is a good reason for newsagents to actively promote the title, to appreciate the active support from the ABC for our businesses.

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magazines

Tatts online subscriptions service set to divert more in-store traffic to mobile and online

Everyone logging into their Tatts (The Lott) app or website is pitched their new subscription service through a series of screens.

Subscriptions makes it easy or a regular shopper to always have tickets in the games they want.

Think of your regulars, who always purchase a the same ticket in one or more games. Once they try this why would they come to your shop?

Now, think about the capital expenditure Tatts wants you to spend on their corporate fit out promoting their brand. I am shocked newsagents are not challenging this.

Check out the Tatts subscription pitch:

Newsagents need to factor into their business plan what their business could look like without Tatts traffic and revenue.

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Competition

Clueless News Corp Retail Sales and Marketing team disrespect newsagents, again

The News Corp Retail Sales and Marketing in NSW has sent out a notice to newsagents about a complex promotion without first talking with the newsagency software companies about the practicalities of running the promotion.

This is another failure by the marketing ‘experts’ at News Corp’s Holt Street office – failing newsagents and the newsagency software companies.

Shame on them.

Click here to see the newsagent letter. It reveals a messy promotion in my opinion.

By not bringing stake holders in on this early, News Corp has generated a ton of calls to the software companies, passing on costs that News Corp itself should have to carry is this is their promotion. But they never see it that way. Like I said, shame on them.

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Ethics

How to prepare your retail newsagency business for sale

Selling a retail business, like a newsagency, is like selling a house, you need to prepare it so that it looks appealing to prospective purchasers.

The process of preparing a business for sale can take time, depending on the state of the business.

Here is an overview of what you need to do.

  1. Maximise profit. What anyone will pay will depend on the profitability of the business. While you should be on this every day, if it is a new project for you, start six months prior to putting the business on the market.
  2. Eliminate dead stock. It looks bad on the shelves and looks bad on the books. Purchasers should not pay full wholesale for inventory more than six months old as your poor buying or management is not their obligation.
  3. Streamline operations. Make the business look easy to run by ensuring it is easy to run for you. The easier it looks to run the more interesting to people who don’t understand the business.
  4. Make the business look appealing. Ensure displays are stunning, the shelves full and every pitch the very best you can make. You want them to want your business because they like it.
  5. Be happy. Owners who talk their business down will find it harder to sell the business. If you are complainer, keep it to yourself or in the family.
  6. Keep your social media presence up to date. Today, many people check out a business online prior to looking at it in-store. Maintain up to date Facebook and other
  7. Get your paperwork in order. Early on, get business documents together and check:
    1. Premises lease.
    2. Equipment lease documents.
    3. Franchise document.
    4. Supplier agreements.
    5. Details of any forward orders.
    6. Any other documents relating to the operation of the business including manuals for any equipment items.
  8. Choose your broker carefully.

Success at selling your business depends in part on the work you do to prepare it for sale. Extra focus now can help you get timely price satisfaction.

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Newsagency management

Newsagency of the Future workshops kick off next week

At this free workshop open to all newsagents I will outline a path forward for newsagents, a path that relies less on print media traffic, a path that could insulate the business against the inevitable migration of lottery purchases online. Please click on the link to book for the date that suits:

Each session will run for around two hours with time for Q&A. I am confident you will leave the session with practical things to do in your business in pursuit of a more successful 2017.

I started the Newsagency of the Future workshop series in 2004. This year’s session is the most important yet I think. At the session I will explain why.

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newsagency of the future

The latest Tatts Group analysis from Credit Suisse

Click here to access the latest research on the performance of Tatts Grup by the respected Credit Suisse group. The core lotteries information is:

Lotteries: exceeded previous TTS guidance, issued mid-December with a slightly better run-of-jackpots as TTS closed the period. Overall, the business was managed well, against some very bad-luck and the lowest jackpot run in about five years. The outlook appears more favourable and challenging comps should diminish as 2H17 progresses. We expect 8% EBIT growth in FY18, restoring lottery earnings above the previous FY16 base.

2017 will be an interesting year for Tatts and its retailers in this space with tough than ever competition from competitors. This is especially true for the online / mobile competitors.

Newsagents are especially at risk from the latest moves as their lottery revenue depends on over the counter whereas tatts and OzLotteries are established online.

These are reasons newsagents need to think carefully before making any capital investment supporting lotteries sales.

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Lotteries

Tatts a step closer to vending machine sales

The email sent Friday by tatts announcing a limited location trial whereby customers will be able to purchase tickets on a self-serve screen and pick up from a terminal is, in my opinion, the next step to complete self service in-store, in multiple locations not part of the network today.

Self service is the model for lotteries in many overseas countries so why not Australia? However, self serve overseas is real self serve and not this clunky approach by Tatts.

The main game for lottery sales in town is online. That will eventually dominate lottery purchases in my view. Technology demands it. Consumer convenience demands it. While there are fights about shoplifts and Tatts dedicates space, online is where the biggest battle is taking place and you can’t see it in-store.

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Lotteries