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

The back to school price challenge of the 5 cent 48 page exercise book

I got out of doing back to school around ten years ago, because there was no evidence of it being profitable for my suburban Melbourne newsagency.

Sure, revenue was good. Margin was trimmed to the bone. People bought on price. They were not loyal through the year. So I got out of it.

I talked to people at GNS at the time and disagreed with them on the value of the season, that the traffic generated returns through the year. It’s like the theory of trickle down economics – nice to hear but not reflective of what really happens.

Screen Shot 2017-01-08 at 9.33.19 PMThe current Officeworks catalogue is reminder of the challenge of back to school in the open buy space – where you chase business from walk-in shoppers without a specific school endorsement. The page 1 hero product is the 48 page exercise book, priced at 5 cents. This is the cheapest price I can find by far for this. Further in the catalogue are more compelling deals newsagents in this space will be frustrated with.

I can understand parents being price conscious, especially when a comparable product from a local small business retailer is as much as five or ten times the price. The Officeworks advertising on price pays off especially at this time of the year.

But back to school is not lost for the newsagency channel.

I know of many newsagents who do well from back to school. They either have strong local school support, contracts with local schools based on booklists or are located in regional situations.

In capital city suburban situations, newsagents doing well from walk-in (as opposed to the more structured booklist) back to school business is rarer today than a few years ago – thanks to the loss leader pricing of Officeworks and the tremendous competition from K-Mart and similar.

In my own shopping centre based businesses this time of the year while we have stationery, we prefer to focus on other seasonal opportunities.  Calendars remain strong as are diaries.  Plus, we have another non-traditional season built around full margin product that works a treat in January.

GP is the key for me. We must maintain above a percentage goal for the numbers of the business to work. Gone are the days of years ago of thinking that selling cheap today will drive loyalty and pay for the discount with revenue volume over time.

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Competition

Sunday newsagency management tip: six reasons newsagency and other local retail business websites fail

Sorry that this is a negative post. However, it is important. there are newsagents and other small business retailers who have lured heaps of money into websites only to have them fail. By fail, I mean, not work, not deliver the additional revenue they sought.

I know a bit about this having run retail related websites for twenty years now – some successful, some not so successful.

Based on my experience and observations, here are the top six reasons small business retailer websites fail:

  1. The site design is poor: hard to navigate, hard to purchase from, not showing products in a good light, not up with current site design standards.
  2. The site is hard to find. Little or no thought has been given to what people search for, where and how, there is little or no promotion to get the site found through Google and other search engines.
  3. The site does not give off an impression of trust. If you want someone who has never been to your business before to buy from you the site is all they can gauge trust from.
  4. The site has no business goal and it is evident from the site this is the case.
  5. The site is out of date – in terms of content, prices and look nd feel.
  6. The site does not show what stock is available right now.

Business websites, especially e-commerce sites, are hungry beasts. They require considerable up-keep, daily attention. The data must be accurate. The site design needs to look fresh. Think of it as a shop but online. Just as you open your doors to your physical shop and keep it tidy, you need to do the same for your website.

As a rule of thumb, a retail business website needs a major look, feel and functionality overhaul at least every eighteen months. If you don;t do this you are felling behind in a highly competitive space.

Here is my newsagency management tip for today: if you have a business website, feed it, nurture it, keep it current … otherwise, take it down and save the embarrassment.

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Management tip

Sunday newsagency marketing tip: approach social media posts as conversations

The engagement from this post noting the passing of Carrie Fisher is a reminder of the importance of approaching social media posts thoughtfully. Consider a post a conversation or an entertainment, and not as an attempt to sell. Selling will lose you followers.

People want to be entertained. They want to feel good. They want you to add value to the few seconds they give you of their life.

Screen Shot 2017-01-07 at 4.19.07 PM

Not a cent was spent on this post.

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marketing

New Idea price increase

This announcement just in from Gotch:

Please be advised that the recommended retail price of New Idea magazine is increasing to RRP $4.50 from the January 16, 2017 issue.

Title Code: 12781/8320
On Sale Date: 9/1/17

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magazines

Is the Coles Was / Is pricing pitch for Inside Out magazine misleading?

IMG_2560I am not happy that Coles supermarkets continue to pitch that Inside Out magazine from News Corp Australia was $8.20 and now is $6.00. Beyond making other retailers look expensive for this magazine compared to Coles, there are other issues here that concern me, issues that I think the authorities like the ACCC need to consider.

At $6.00, Inside Out is sold at Coles supermarkets at below the established cost price for the magazine title.

The ACCC website has something to say about selling items at below cost including this:

While selling goods at a below-cost price is usually okay, it may be illegal if it is done for the purpose of eliminating or substantially damaging a competitor. This is known as predatory pricing.

Coles has been offering Inside Out magazine at $6.00, discounted from $8.20, at least since June 2014 when I first wrote about it on this blog.

The ACCC has something to say about two-price comparison advertising including this:

Statements such as ‘Was $150/Now $100’ or ‘$150 Now $100’ are likely to be misleading if products have not been sold at the specified ‘before’ or ‘strike through’ prices in a reasonable period immediately before the sale commences.

Such statements are also likely to be misleading if only a limited proportion of a product’s sales were at the higher price in the period immediately before the sale commences. The volume or proportion of sales that may result in such statements being misleading will depend on the circumstances of each case.

The length of the period will depend on factors such as:

  • the type of product or market involved
  • the usual frequency of price changes.

If a business has a policy or practice of discounting goods when not on sale and uses two-price advertising in relation to sale periods, there is a significant risk that the use of two-price advertising will involve conduct that is misleading. The business would be representing to consumers that they will make a particular saving if they purchase the item during the sale period, when this is not necessarily the case.

While I am no lawyer, I think it is possible that the Coles Inside Out magazine pitch is what the ACCC would consider to be misleading conduct based on its position on two-price advertising.

I have written to the ACCC this week seeking their consideration of evidence Coles has been running this campaign for two an half years.

The Coles pitch does make other retailers of the title, including newsagents, appear more expensive. I suspect this is what Coles wants.

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Competition

The online lottery sales challenge small business retailers are yet to confront

While newsagents and other high street lottery retailers have the $55 million Powerball jackpot posters out and those with the screens have digital posters showing, it is on phone and online where purchases are being snared, in seconds.

We know from countless studies every year how much online advertising is growing as is online purchases. Such studies often offer comfort to high street retailers saying online searches play a role in in-store purchases.  Not so with lottery purchases.

It is so easy. You can have the ticket purchased seconds after seeing the ad.

This is where Tatts and others are winning online sales – as I would hope from them if I was a shareholder.

Two years ago here I said online was the biggest threat confronting newsagents. I think this week we can see how that is playing out.

Yesterday, while reading Huffington Post on my phone, this ad came up:

IMG_2557

I clicked on the ad and it took me here:

IMG_2556

And here is a post that came up in my Facebook feed last night, a sponsored ad from Tatts:

IMG_2559

And here is the OZLotteries online pitch from Facebook:

Screen Shot 2017-01-05 at 1.42.48 PMA couple of seconds later with a few clicks from the ads I could have had a ticket in the $55 million Powerball jackpot on my phone.

In my opinion, online is the biggest threat to in-store purchases as from a consumer perspective it is easy, easy to purchase, faster to purchase, more easily managed than paper tickets and more relevantly engaging with the lottery ticket customer.

Newsagents can’t stop the growth of online purchases.

It is not just Tatts in play online, there is OzLotteries, a Tatts agent, Lottoland and other betting products including lottery products.

And when I talk about online I am really talking about mobile given that some research from Australia last year indicated that more than half of online purchases were made from mobile devices.

If a lottery purchase is an impulse purchase then online wins that game for the reasons outlined above.

I think there are two lines of action newsagents could / should consider:

  1. Having the right to pursue online sales.
  2. Achieving a more reasonable cost basis for in-store representation.

Being able to sell online will most likely not happen for contractual, management and other reasons so the focus of newsagents and those who represent them should be on the in-store corporate image cost.

Tatts should be reasonable about location in-store, space allocation, the actual fit required and the fees for the digital platform. The cost should drop 50% or more and the digital feed should be free. It should also be more flexible as to what newsagents can pitch with lottery products as that will make being in lotteries more sustainable for small business retailers.

Tatts can’t have it both ways. It can’t be a competitor that blocks other competitors online while forcing the physical store competitor to have a cost base that is not relevant to the changing circumstances of 2017. Online will be a beneficiary of the branding investment by newsagents. Time will tell the extent of the benefit.

Newsagents yet to invest in the new fit need to understand the cost to their business. They should determine how long it will take to earn the cost back. They need to be aware of the challenges of promoting a brand that is clearly migrating to an online model. These are things to contemplate before you spend a cent.

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Competition

Are newsagents with Tatts using the extra time they have been given?

The delay announced by Tatts just before Christmas to their enforcing the corporate image and DigiPOS changes are an opportunity for newsagents to consider the required capital investment and challenge claims made by Tatts.

My understanding is that Tatts is justifying the capex on the basis of expected growth. If my business was a Tatts outlet I’d want evidence before I spent $25K – $40K on these changes.

The extra time right now gives newsagents opportunity to leverage local authorities and federal authorities to have them look at what must be a channel wide capex of more than $60M by some of the smallest retail businesses in Australia. It will take $1B in tatts ticket sales just to recoup the capex.

I hope people are running the numbers and looking for avenues through which to have the claims reviewed and the costs reconsidered.

Any challenge to the demands from Tatts are best placed by individual newsagents through their state based bodies such as Small Business Commissioners, VCAT, QCAT and the like. Making such complaints is straight forward. These are a good place to start.

The challenge is newsagents will complain about the requirements but usually not act on them. This is where people in the channel let themselves down. Too often they expect someone else to make their case for them.

This delay is an opportunity of time newsagents should use.

If everything checks out then all is good.

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Lotteries

The post Christmas sale is invaluable for shopping centre based newsagencies

IMG_2539We have had terrific success with our post Christmas sale, achieving excellent revenue and terrific GP thanks to buying for the event. We have been open for business every day except for Christmas Day.

Being in a major shopping centre with 250 stores, we benefit from the traffic spike of sales shoppers trawling for deals. Take Monday and Tuesday this week, while many suburban newsagencies were closed, we were open and did terrific business. It was well worth it.

the sale traffic is a benefit of being in a centre. However, it is competitive. Anything less than half price and people walk on by. A bookshop near us pitched their sale as 25% off and the shop was empty each time I checked.

Starting today we are pulling the sale back as we have new seasons for 2017 to kick in. That and the fact that we have little sale stock left.

The big category for us as been boxed Christmas cards. We have done well over $10,000 in the last week. At a terrific GP. It grows each year and never hurst boxed Christmas card sales in the next year.

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marketing

New newsagency sales benchmark study announced

On January 1 I emailed newsagents with details on participation for the latest benchmark study. I am thrilled to already have data from fifty businesses. Here is what I emailed out:

Q4 2016 NEWSAGENCY SALES BENCHMARK STUDY.
I am preparing a fresh benchmark study for the newsagency channel to look at the latest sales trends overall and in key product categories for the last quarter of 2016. This quarterly newsagency sales performance study will help newsagents see the future based on the data trends. It will also reveal the difference between emerging newsagency model changes. Click here for my last report.

How to participate.

  1. Please run a Monthly Sales Comparison Report for 01/10/2016 – 31/12/2016 compared to 01/10/2015 – 31/12/2015.
  2. Tick the category box. IMPORTANT.
  3. Tick to exclude home delivery and sub agent data.
  4. DO NOT tick the supplier box.
  5. Preview the report on the screen. Save as a PDF and email this to me at mark@towersystems.com.au.
  6. Read the report yourself and see what it shows you about your business.

I will email the results to all participating newsagents and publish the results on theAustralian Newsagency Blog as a service for all newsagents.

My work with this channel goes back to 1981 when I wrote newsagency software to manage newspaper home deliveries. That software evolved into Point of Sale software. It has been rewritten from scratch six times as software technology has changed. 

I own and run two newsagencies. Over the years I have had three others.

I am a 50% shareholder in and Managing Director of newsXpress, the newsagency marketing group.

Tower Systems serves 1,750+ newsagents with best practice newsagency software. Overall, Tower Systems serves in excess of 3,500 small business retailers.

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Newsagency benchmark

Are we seeing a shift in shopper loyalty program engagement?

Fairfax newspapers today run a piece by Brian Robins questioning the future of the shopper docket in the wake of the sale of Woolworths fuel outlets to BP.

I am glad to see the value of the supermarket shopper docket questioned as it is, in my opinion, of dubious value, offering little or no genuine discount to shoppers.

Regulars here would know that since 2013 I have been using discount vouchers in my newsagency for a whole of business easily understood loyalty offering. The vouchers continue to have a measurable and beneficial impact on the business as they drive shopper engagement during a visit and encourage return visits.

I have countless stories from shoppers telling me that the discount vouchers have changed where they shop, often winning business from the supermarket a few metres from our front entrance.

Shoppers today want real value, value they understand. They wan to be able to access this easily. People are tired of having to sign up for a program, especially if this is their only likely visit to your shop ever or for a while.

In my newsagency, a third of all shoppers are first-time or irregular. This is where discount vouchers work well – they pitch a loyalty offer for greater engagement on the spot. And plenty of then do engage. Just yesterday I saw a $9.99 purchase grow into a total visit spend of $45.00 thanks to a discount voucher. That is $35.00 of good margin business I would not have won had the voucher not been offered.

What the supermarkets and other big business retailers have done is to damage loyalty programs in the minds of shoppers. They have trashed the value of a point. But I am happy with that as I choose to not use points.

I know of hundreds of small business retailers using discount vouchers to differentiate their businesses. Like me, they cite ease of use and ease of understanding as key benefits. With the right settings, the vouchers easily pay for themselves, delivering measurable bottom line benefit.

The best loyalty program a small local retail business can offer is one that promotes that small local retail business. Keep it inside your business rather than inviting purchases outside.

The software from my software company does offer points based loyalty, FlyBys integration. Vii Accumulate integration as well as the discount vouchers offering $$ off the next purchase. So, from a software perspective, I’m flexible. But as a retailer I want the program that works best for me in my situation … and that is discount vouchers. Hence my interest in the Fairfax report today.

FYI, here is an infographic video produced in-house at my software company that simply explains the value of discount vouchers:

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Newsagency management

2017 and the small business newsagency in Australia

I sat down yesterday to write a post about what 2017 holds in store for Australian newsagents and their businesses and the resolutions we should contemplate. I have decided that would be a waste of time.

Everyone in the channel knows what will happen. But here is a list of what I think will happen in Australia anyway:

  1. Magazine sales will continue to decline. Some magazines will close.
  2. Newspaper sales will continue to decline. Some daily newspapers will cease to publish daily.
  3. Tobacco product sales will continue to decline.
  4. Stationery sales in newsagencies will decline.
  5. Greeting card sales in newsagencies will decline.
  6. Over the counter lottery sales will decline.
  7. At least 400 retail newsagencies will close.

The situation will be worse than it need be because too many suppliers ignore the specialist nature of our channel and too many newsagents do not run competitively engaged businesses. These are suppliers who chase mass, thinking that is the answer (when it is not).T hese are the retailers who think opening their door in the morning is the only marketing activity in which they need to engage, the retailers who only buy from traditional suppliers, the retailers who are more comfortable as agents than entrepreneurial retailers, retailers who see the ownership of a business as their pension rather than a career.

The resolutions for 2017 ought be: chase change is if your life depends on it, do less agency revenue and more 50% GP and more revenue. Chase having people asking if they are in a newsagency when they are in your shop.

Challenging their perception of your business ought be mission critical in 2017.

Selfishly, though, here is what I’d like to say – if you are not going to seriously change your business and would prefer instead to coast on the tracks of steady decline in traffic, revenue and profitability, shut up shop now and get out of the way. A decaying retail newsagency harms the many others who are transitioning their businesses. A decaying newsagency is taking some revenue the rest who are here for the long term could benefit from for a brighter future.

The thing is – I don’t want you to close or decline. I want every newsagent to be in the group of transformers. I want every newsagent to be experiencing seriously growing overall GP percentage. I want every newsagent to make more money fro their business in 2017 than they did is 2016. But achieving these things requires a change in mindset, renewed energy and guts to stop being an agent.

Imagine the power we would unleash is the 3,000 newsagency businesses in Australia today all turned 90 degrees or more away from their current path. We can take on supermarkets, gift shops, toy shops and other retail channels if we play outside what has been traditional for our channel. I am optimistic that enough are doing this and more will join them. For those there can be good times ahead.

I guess that brings me to the simplest resolution: nice as traditional is, for newsagents there is no future in being traditional so stop it, ditch it and go make your own business based in what you want to stand for in your local community.

In 2017, let your business whatever that is and not a business defined by an out of date shingle.

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Newsagency challenges

How much is the Herald Sun today?

While I have not seen it for myself, several newsagents tell me the Herald Sun has the wrong price printed today – $2.20 instead of $2.40. One newsagent says they have been told they will be compensated the 20 cent difference for each copy sold.

Update:

IMG_2541

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Newspapers

2016: a year of transition for small business newsagents and their suppliers

I created this forecast in 2009 anticipating revenue by category for a blended average retail newsagency to cover the 2010 to 2020 period.

I have shared it several times here as well at newsagency conferences and Newsagency of the Future workshops over the years.

With 2016 drawing to a close, except for lotteries (shown as commission and not takings) in some locations and stationery overall, the projection continues to prove to be accurate.

I am not happy about it being accurate. I’d rather magazine, newspaper and some other revenue categories to be growing, not declining.

Screen Shot 2016-12-30 at 2.10.38 PM

Looking at the projected 2016 column now, some categories reflected my hope in 2009 for transition by 2016. Additional traffic from gifts, toys, plush and new lines was key to achieving the projected GP and GP as a percentage of revenue.

We can look at the changes happening in and around our businesses as if a bystander watching a parade or we can jump in and influence how things go in our businesses. I prefer to jump in. Indeed, I prefer to be ahead of changes where possible.

I hope newsagents resolve 2017 to be the year then bring on change in their businesses, big change, whole of business change.

Doing what you have been doing will ensure you see a continuation of the results you have been achieving.

I have shared the table above as encouragement for newsagents to reflect on 2016 compared to previous yearend to contemplate what can be achieved in 2017. The forecast has guide all of my own business decisions as they relate to the newsagency channel. It has stood me in good stead.

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Newsagency challenges

Lottoland attracting customers with double jackpots

Check out the Lottoland TVC that has been airing this month:

OzLotteries has been busy this week promoting the $35M Powerball jackpot. This was on twitter yesterday:

Screen Shot 2016-12-29 at 5.52.27 PM

Online is where it is at with lotteries in Australia. This is why I have said for ages now that supermarkets getting lotteries is not the biggest threat to newsagencies. Online is the threat.

It is vital you run your business to be less reliant on lottery commission than ever. While this may feel like an impossible task, it is possible. The sooner you start seriously pursuing this the better.

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Competition

News Corp. gives Woolworths a competitive advantage over retail newsagents

News Corp has announced that Woolworths, like Coles, will no longer be required to process the returns of newspapers.

If News Corp. was genuinely supporting of small businesses it would implement this change for all retail outlets that comply with scanned based trading requirements and not just its big mates / advertisers.

The less friction for retailers in handling newspapers the longer they are likely to support the sale of newspapers.

Scanned based trading is key to this implementation. This is something smart newsagents have been able to offer News Corp for years.

Here is what News Corp. has announced:

Changes to the Supply of Newspapers in Woolworths Stores.

What is happening?
The physical returns of newspapers is being removed from Woolworth’s stores. Agents/distributors will no longer be required to collect and process returns for any Woolworths Supermarkets

This includes not processing the figures into iServices.

This process will be similar to Coles – whereby no returns are collected or processed by agents.

When is this happening?
This change is effective from Monday , 16th January 2017.

The week ending January 15th, 2017 will be the last week agents/distributors will be required to process returns on behalf of Woolworths Supermarkets.

Why is the change being put in place?
The returns process adds complexity and cost in a low cost retail environment. It adds cost to both Woolworths and delivering agents and distributors.

This step in the process is being removed to reduce that cost and complexity for both Woolworths and you.

Will the distributing agent’s commission change?
The commission rate for distributing agents will remain unchanged.

What happens to unsold papers?
All unsold papers should be placed in Woolworths recycling (paper and cardboard).

How will returns be calculated?
Woolworths are providing News Corp scan sales by store, by day and by title. This scan data will be used to derive a return figure – or”un solds” – by deducting the actual scan from the allocated amount. This data will be used to calculate agents/distributors commissions.

Is scan sales now accepted by audit
AMAA will accept scan sales as audit compliant.

News Corp. in its papers calls out what it considers to be the unfair practices of politicians and businesses. But they will not publish about this unfairness. This move is another reason for retail newsagents to get out of newspapers. Maybe that is what News Corp. wants.

13 likes
Competition

Who cuts the dick off this funny card and why?

IMG_2377Every so often someone cuts the balloon ‘penis’ off this card. We don’t check the security system as life is too short to worry about the petty criminal actions of the censor. But it bothers me someone would enter the shop and censor what we sell. They can behave how they like in their own homes but in my shop they should respect my property.

If I did catch them I’d report them to the police as this damaging of property is wilful, malicious. If they don;t like what we stock they don’t have to come into the shop.

Ugh.

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Ugh!

Will you store Christmas 2016 stock for next year?

Each season we quit everything that has not sold so the next time the season comes around we start afresh. Space is a factor – storage space is expensive in shopping centre space. But outside of the space issue, it is good business practice.

I’d love to hear from others as to what they do.

Do you store what did not sell in a season for the next time that season comes around? Or, do you quit everything and start afresh?

Our competitors quit everything. They like to start each season fresh. If we want to compete with them it is what we must do.

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Newsagency management

Boxing Day is important for major shopping centre based newsagents

Yesterday in many major shopping centres in Australia it was a battle between retailers large and small for shopper attention and money at the Boxing Day sales kicked off.

Shoppers were out for a bargain and if you did not have bargains on the lease line people quickly passed you by.

We had stock sourced specifically for the opportunity as well as products we are quitting for 2017. Boxed cards were the hero in one store with $4,000 worth sold for terrific GP in the day.

Given how serious shoppers move between centres and how the Boxing Day Sale in Melbourne is a season, we have gone out today with a new offer.

I’m grateful for the opportunity of this end of year clear out.

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Newsagency management

Is there no TV guide from News Corp. for this week?

Screen Shot 2016-12-26 at 1.33.51 PMNewsagents in NSW tell me there is no TV guide from News Corp. covering TV this week. I checked online at the Daily Telegraph website and can only find last week’s guide – as you can see in the image.

Hearing from newsagents in other states, News Corp. clearly managed this at the state level. Unless NSW newsagents I have heard from missed the memo, it’s a fail for this week.

It is an opportunity to sell TV Week. That is the best offer newsagents can make. The alternative is to push people online to any of the online scheduled including that from Freeview.

While some customers are grumpy about the situation, be ready with a fun response to neuter their grumpiness. It is not enough to say it is not your problem.

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Newspapers

How far customers travel for what they want

We had a customer Christmas Eve driving across Melbourne, for an hour and a half, to purchase in-store a $180.00 product they discovered we have in stock. They have never been to our shop. They found us and that we have the item through a website.

This experience reinforces the in-store value of being accessible online. The shopper was shopping by brand, certain of what they wanted to purchase. They found us through the brand search and in a couple of clicks were able to see what we had in stock. One call and we had the item set aside for them.

This is an example of what retail experts call omnichannel – shoppers using multiple channels to a purchase. In this case, online and in-store.

We all was more people coming through the front door. This year more than any in the past the evidence is there as to the ability for to to attract more people through the front door through smart online engagement, online engagement that is closely linked with our in-store technology, to provide visibility on stock on hand.

Retailers not promoting the purchase of product online are missing out for sure.

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newsagency of the future
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