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

Helping newsagents understand magazine overheads

Screen Shot 2015-06-18 at 11.39.45 amI have created a magazine overhead cost calculator for newsagents to use to easily calculate your cost per magazine pocket.

Enter four data points in the the unshaded cells and the calculator will reveal the monthly and weekly cost per magazine pocket in your newsagency.

I have settled on four three data points as a result of decades of work with newsagents on this issue. The three data points are:

  1. Your total lease cost including rent, outgoings, any landlord marketing levy – all costs associated with your retail space.
  2. Percentage of floorspace allocated to magazines.
  3. Your number of magazine pockets – include all pockets. For example a waterfall of six pockets for a title counts as six and not one.
  4. Your labour cost managing magazines: arrivals, returns, magazine specific management – plus time and or fright costs on returns. It is essential you include a market price cost for your time.

The purpose of the calculator is to make you informed for when you consider changes in your business. With rent increasing 5% annually and labour increasing between 2% and 4% annually and your magazine gross profit return in decline, as it is in most newsagencies, managing space is the best option you have to manage your situation.

My advice is get accurate figures into your calculator so you know your weekly and monthly cost. Next, start to look at titles. For example, a monthly magazine selling two copies a month and generating $3.975 in gross profit is loss making in the example I have used. The calculation does not factor in opportunity cost – the value of the best alternative use the space.

This calculator is particularly useful in assessing the value of long on-sale titles that are usually pushed to newsagencies with delayed billing.

To any publishers who say I am writing about this to turn newsagents against magazines I say the facts of the data speak for themselves. My goal here is for newsagents to be informed. Being informed is critical to any business person to make decisions appropriate to their business.

Completing the spreadsheet and assessing pocket allocation can help newsagents alter how the display magazines. For example, in my own case, I have several sections where I place six titles where previously there were two – thereby reducing the overheads associated with the titles while not reducing the range I carry. Indeed, this decision is the one I expect most newsagents would make on first go round with the spreadsheet.

Another use of the spreadsheet is to inform publishers of the overheads associated with magazines in our retail network. If could be that a stocking contribution is all that is needed for us to carry some titles that otherwise me might cut as a result of this analysis.

My understanding is that some magazine publishers pay stocking contributions or some similar pocket based fee to some other retailers – giving them a competitive advantage over our channel.

I’d be happy to talk and or work with any newsagent using the spreadsheet.

This spreadsheet is something practical the ANF could have done for newsagents. Instead, they took the lazy approach and agreed with the publishers to a supply trial that has not considered available data to better understand the current situation.

In the sample you can see the costs as calculated for one of my newsagencies.

17 likes
magazine distribution

Newsagents should not rely on transport ticket traffic

I understand that the state governments of Victoria, New South Wales and Queensland are not expanding their retail ticket outlet network. My understanding this is because of the growth in online sales and recharge.

A couple of people with knowledge in this space have told me governments will start to reduce the number of retail outlets selling top-ups.

Such a move would make sense if you think about it. The government keeps more revenue from an online top-up sale than a sale through a retailer. Outside of the paltry commission paid, the maintenance of a retail network is expensive in terms of equipment and labour costs.

My advice to newsagents is to not factor in traffic and revenue from top-up sales or if you do factor it into your budget, plan for a decline in traffic and revenue.

Even if the information I have heard is not accurate in substance or timing, from data I see, newsagents should be budgeting for a decline and making appropriate business planning decisions as a result.

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Newsagency management

The danger of the best prices guaranteed

If you advertise that you have the best prices guaranteed in your brochure you need to make sure that is what you have as it is easy show that your prices are not the best.

A newsagent showed me a brochure today from a competitor, another newsagent, with prices that are not the best yet to makes the best prices claim.

Customers who respond to the best prices claim are price conscious. Many will price check and the claim will soon be found to be what it is. The others who don;t price check and end up paying more will either keep being duped or soon enough realise their mistake.

The ACCC advises businesses to ensure that claims in advertising are accurate. The claim in the flyer I saw today could have been easily checked prior to printing. Such a check and consideration of the ACCC guidelines would have seen the flyer not printed in its present form.

Be careful, do your homework, make sure your claims stack up.

6 likes
Ethics

Jigsaw puzzles respond to promotion in the newsagency

IMG_7628We have sold $3,000 worth of jigsaw puzzles in the four weeks. While this revenue number alone is terrific, that it has been achieved with a margin that is 25% above average for the range makes it even better.

Better still, many of our jigsaw sales have been to new customers for the newsagency. Our low cost Facebook advertising of jigsaw puzzles has attracted valuable new traffic.

Digging deeper into our data I saw that jigsaw customers also purchased other items, making the value of the June is Jigsaw Month promotion worth considerably more than the revenue achieved from jigsaw sales alone.

My point here is that through our buying, visual merchandising, marketing and shop floor management we can directly affect the financial performance of our business, we can grow our businesses.

Newsagents in businesses of any size can achieve excellent results by doing what we have done here – careful buying, tactical marketing and consistent in-store engagement. This is what retail is. It’s how newsagents are growing their businesses and how more can.

10 likes
Newsagency management

Helping GNS contact investor newsagents

Here is an important note for newsagents from GNS CEO Alex Stewart.

Good morning Mark,

I was hoping you could provide some details of this on the Blog and to NewXpress members.

We are about to send a letter out to a significant number of Newsagents based on the current details we have for them. These are Newsagents who have accrued Levies with GNS that have for whatever reason, not claimed these amounts when they sold their businesses and individually ceased trading with GNS. We would like to publish an open communication that includes names of Newsagents as in most instances the contact details we have on file are no longer current, or are the business contact details for the subsequent owners of the business.

The reason I am appealing here is that if we cannot locate the owners of these amounts we will need to lodge these funds with the Office of State Revenue and I fear they will never get returned to their rightful owners. I’d much rather send these funds to the original source. It may be possible that some current readers of your blog would know the whereabouts of past Newsagents. One of our directors was able to recognise at least half a dozen and has started to reach out and let them know they have funds available.

Regards
Alex

Alex Stewart | Chief Executive Officer
GNS Wholesale Stationers

If you know someone who may have an interest in this, please have them contact GNS.

15 likes
Newsagency management

Newsagents: we can do better than this

IMG_7725This photo is of a newsagency in a mid-size shopping mall. Instead of using the window to show shoppers inside the shop, they have it covered with a collage of magazine posters. While we can present our businesses any way we want, newsagents with a common shingle have a responsibility to each other.

Newsagents can do better than this. Surely we have come a long way from this type of window.

In the case of the business reflected in the photo, first time shoppers seeing this window will think the shop sells mainstream magazines. What they would miss ins the cards, gifts and special interest magazines in the shop.

To newsagents who must cover a wall or window at the front of the shop with magazine posters I suggest they use posters for special interest titles to pitch  point of difference compared to other retailers nearby with magazines.

5 likes
Newsagency management

Important fraud warning from Touch Networks

Touch issued this warning to merchants late today:

Fraudulent Paysafe calls
If you receive a call from anyone requesting you to perform a ‘test’ transaction or asking you to print a live voucher and then asking for the unique serial number or PIN please do not do this as it is a hoax.

More importantly you are issuing information that will cost you money!

Any information given to anyone that calls where you or your staff give them the PIN information means you are responsible for the activation of that PIN.

Call the Touch Service Desk
If you have received a call asking you to perfrom any of the above mentioned activities we ask that you call the Touch Service Desk to report this information on 1800 286 824.

If you have any questions regarding this information, please call Touch Service Desk on 1800 286 824.

Don’t be caught out by scams
Remember to treat Paysafe vouchers just as if they were cash. Never issue a Paysafe voucher or give out a Paysafe code over the telephone. Only ever issue the product once you have received payment for it. Paysafe and Touch will never ask you to print a test Paysafe voucher.

6 likes
Ethics

Facebook works for promoting special interest magazines

Screen Shot 2015-06-15 at 9.31.27 pmI urge newsagents to use Facebook to promote special interest magazines. Facebook posts are free and boosted geo-targeted posts are cheap – cheaper than local newspaper advertising.

Special interest magazines are ideally promoted on Facebook as they are a point of difference and while for sure their supply is on what many would say are unfair terms, this should not stop us actively promoting the titles to those interested in these niche areas.

I used Facebook to promote woodwork titles and quickly got to 2,346 views. This post easily paid for itself in tangible and intangible terms.

I will often test a post for $2 or less and depending on the early results over 24 hours may invest more over a few days.

Why this post matters – there are some who say all I do is complain about magazines. This post and many hundreds like it offer good advice to newsagents on how to grow magazines, advice freely given based on what I have seen work. Unfortunately there are some who ignore that advice like this is published here as it suits them to label this site as having only one purpose.

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marketing

Instant asset write off legislation passes

The small business instant asset write off has passed both houses of parliament.

If your business turns over $2 million a year or less, you can write off an asset purchase up to the value of $20,000 in the financial year of the purchase. There is no limit on the number of these purchases in a year.

If your turnover is under $2 million and are considering purchasing a vehicle, fixtures and fittings, a copier, computer systems or even something simple as a sign out the front of your business, this legislation provides an opportunity worth considering.

5 likes
Newsagency management

A retail future trend for newsagents to use

IMG_7722For a couple of years now I have been seeing specialist retail businesses in the US and elsewhere using more fixtures in-store that are every day furniture items. In many situations these fixtures themselves are for sale in the businesses.

This trend of using every furniture for fixtures challenges the traditional model of purpose built retail fixtures. It brings a warmth to our business too that makes the retail space more appealing.

In businesses our size this trend is something we can leverage to offer an experiential point of different to larger corporate businesses where offering genuine home-style warmth is a challenge.

If you are considering changes to futures in your newsagency I urge you to research this trend of the use of everyday furniture and items for storing and displaying products in your shop.

I know of newsagents who have been playing in this space for over a year and their businesses are looking different, fresh, as a result.

The photo I have included with this post shows a shelf unit we sell in one of my newsagencies and on the shelves we have a plush selection we also sell. As they say: everything is for sale!

10 likes
Newsagency opportunities

Responding to the MPA on ACCC application on magazine supply

The MPA wrote to the ACCC on May 28 to say the ACCC should ignore the submissions from newsXpress and to note it does not wish to disclose raw data from the trial. Click here to see the letter.

newsXpress has responded today. Click here to see the response.

In my letter to the ACCC is this passage discussing the role of the ANF. I share it here as the MPA relies on the fact that the ANF supports the trial of proposed magazine supply rules.

At the pre-decision conference in April, the ANF claimed a membership of 2,300. The majority of these members are indirect, they are members of other associations affiliated with the ANF. VANA and NANA, for example, have their own members who become ANF members by default.

It could be instructive for the ANF to provide the ACCC with a through understanding of its membership base, so the ACCC can see how many newsagents the ANF directly represents.

However, membership of the ANF is not at real issue here. The core ANF related issue is their consultation, or lack thereof.

While it is true the ANF supports the application, there is no evidence of consultation with newsagents by the ANF. We have put this position several times to the ANF and the ANF has not offered any evidence to the contrary. We are concerned that the ANF endorsed the trial and the supply rules at the heart of the trial without consultation with newsagents, making their endorsement defective.

Had the ANF consulted with newsagents, we suspect they would not have endorsed the application. Indeed, we expect that wide consultation with newsagents would have led the ANF to seek support from the MPA, Publishers Australia, other publishers and all magazine distributors for a root and branch review of the magazine supply model with the goal of removing barriers to the competitiveness of newsagents.

It is unfortunate the MPA is focussed solely on its proposed trial. As many newsagents have indicated, there are other options for addressing what the MPA seeks to address. I wish the MPA would consult with the newsagents who have engaged on this issue already as they are the newsagents fighting for magazines.

It would be a mistake to form a view that the newsagents who have responded are against magazines as only the contrary is true.

34 likes
magazine distribution

Sids and kids makes doing good easy

IMG_7702The folks at sids and kids understand retailers. They make it easy for us to support them – with with a good counter unit of products that are understood. Their brand is trusted. nextra and newsXpress are their partners in our channel. I think it is better that opportunities like these are organised through groups rather than associations or magazine distributors.

1 likes
Social responsibility

Sunday newsagency marketing tip: be who you are on social media

Being who you are on social media matters.

Your posts need to be what you believe in, they need to reflect who you are and what your business stands for.

For newsagents who claim the local business label, social media posts and comments need to be locally focussed where possible. Indeed, social media platforms like Facebook, Twitter and Instagram lend themselves for use by local businesses for making the local pitch.

If you use social media to say hey shop from us you will sound like any other business including big supermarkets and similar.

Social media is where your voice – your voice – should stand out, to reflect your business and what matters to you. For many newsagents this will be: we are local, just like you.

4 likes
marketing

Sunday newsagency management tip: manage yesterday’s news

Yesterday’s news sells, especially if your customers know they can buy yesterday’s newspapers today from your newsagency.

My advice is don’t rush to top or return newspapers, hold off for a couple of days. While this is not practical at weekly returns cut off time, it is practical through the week up to then.

Promote that you have newspapers from yesterday, and earlier. Have them on display if you have the room.

Offering access to old newspapers can attract new shoppers, it certainly demonstrates you as offering a service your main competitors would not offer. This is why you should promote the service.

Home buyers, people looking for work, those who like the TV guide and others with special interests will be your target for promoting one and two day old newspapers. There is a market for these. No one is actively playing in this space. Here is your opportunity to be a specialist.

Yesterday in my newsagency, a customer told us they shop with us because we do have newspapers from a day or two earlier. Their buying cycle is such that they often cannot purchase the day a paper is published.

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Management tip

Another example of why the MPA trial is flawed

IMG_7721The MPA trial of new magazine supply rules would not give the ability to block junk like this from Network Services. I satisfy consumer demand for products like these with items off of which I make 50%+. I choose the products to tell a story and reflect a difference.

Network should distribute these products without my express permission – which would not have been forthcoming. But they did, because they have done for years. This has to stop as it is this type of scale out that disadvantages us. It dilutes our ability to compete with other retailers of magazines.

When I saw the products out this morning I took them off for immediate return. Sure some might sell – but I will make more from the space location with smarter product placement.

The reality, however, is that the supply of these products is outside the scope of the MPA trial. They don’t want to address this type of supply, not really … which is disappointing because this type of supply drives newsagent behaviour and newsagent behaviour is what they want changed. But they don’t get that.

Note: I would not deny Network the right to distribute the product – only their ability to scale out without newsagents opting in.

12 likes
Ethics

Discounting copy paper is a mugs game for newsagents

I see no upside in discounting copy paper. Sure, you may get a volume bump but I suspect this will come from people who only shop on price – such is the mentality of the volume copy paper shopper. I know because it’s what we do in my own office. When it comes to copy paper, we will go where we can get the brand and quality we want at the best price.

Newsagents discounting copy paper to drive traffic ought to look carefully at shopper behaviour in their own business performance data to learn whether their deep discounting in mid year and other sales generated the repeat business they need for the discounting to be worth it.

It is easy to get caught out by a competitor. One newsagency group has Victory at $4.95 a ream right now. Australia Post outlets have Reflex at $4.99 for a 550 sheet ream.

I think this type of discounting in a small independent business is a mugs game. I resist it.

I’d rather drive value with a volume offer or very targeted discount voucher rewards for return business. The data over two and a half years indicate this is more valuable in bringing shoppers back.

12 likes
Newsagency challenges

Did you receive the consignment stock from Consolidated Product Holdings?

IMG_7632 (1)We received a car air purifier and a touch screen bullet this week from Consolidated Product Holdings on consignment.

The letter from CPH claims they have introduced the products in partnership with magazine distributor IPS.

I didn’t order the products and have not entered into any agreement in relation to these products. Therefore, I don’t consider myself or my business responsible for these items supposedly on consignment as any consignment relationship would need my agreement for there to be an agreement. I have not agreed.

What a waste of time.

I have excellent tech products off of which I make significantly more margin. I do not need this low margin no-name brand product in my newsagency.

It galls be that CPH has sent this to newsagents as, unfortunately, some will do what CPH says and, I suspect, pay a price for it.

While I am no lawyer, I doubt I have an obligation to do anything with the unrequested products they sent.

If IPS is involved with this, why? This does not make sense to me.

I’d love to hear from other newsagents on this.

7 likes
Ethics

Promoting the 3D printer partwork in the newsagency

IMG_7669We have shifted our promotion of the Build Your Own 3D Printer partwork to behind the counter. Here’s the terrific – you can;t miss it – display by our creative team. This behind the counter space can work well for us. That is what we are chasing here. We will know how it works by the end of the weekend.

2 likes
magazines

More correspondence on the ANF handling of the MPA trial

Yesterday, I received an email from the ANF CEO despite the ANF Chairman saying ANF staff had been directed to not respond.  Here is that email:

Mark

I am writing directly to you as I feel that I need to respond to your comments, in relation to what I have supposedly done.

Firstly I have not and do not talk behind people backs. Those who know me know that I am very direct and do not hide from confrontation; unlike you where you have apparently personally attacked me on your blog.

I responded to an email from a member. In this email I did not disparage you in any way. I have not gone around the country telling newsagents not to be part of Newsxpress once again unlike you.

I am happy to work and discuss issues with whoever but will not engage in a debate with someone who sole intent is to bring the ANF down.

In regards to the MPA trial, have you spoken with the whole MPA committee re your issues rather than just publish them on the blog? Have you requested to sit with them and express your views?

I am happy to see a trial taking place because at least we can use this to help newsagent’s get a better supply of magazines. Get the product they want and the quantities they need. Until now no publisher or distributor was willing even to discuss this, and now it is on the table, with not just one but all of them leading to the ACCCs involvement in the first place.

Mark I will not keep corresponding on this issue with you as you have made it clear that this is just an opportunity for you to attack the ANF, and to attack those newsagents who have put their hand up to help the channel. If you truly want to work on bettering the MPA trial then why not try to work with them rather than throw stones at everyone who does not agree with you views.

Alf

Here is my response:

Alf,

Thank you for your email.

You are wrong. This is not just an issue for me to attack the ANF. I would rather not have grounds to say you have not served newsagents well.

It is not my sole intent to bring the ANF down. I have told newsagents they should quit as it is a good way for you to understand that you don;t have their support. Stuart in his letter said you have grown in members as a result of the MPA issue. I am waiting for evidence of this.

If you go back and read the correspondence, I have documented to you and now to your Chairman concerns about reports of what Ann Nugent said about me recently in Queensland. Usually I would not worry about this but several newsagents coming to be with serious concerns encouraged me to bring it to Ann first and then you. I note that neither you nor Ann have responded on what she is reported to have said despite several emails on this. Either the newsagents have misrepresented Ann or Ann has attacked my character.

In your email to Yackandandah you were not as accurate in your responses as you could have been – but I understand you have to protect your turf.

In terms of correspondence with the ANF, I am concerned about the ANF handling of the MPA matter. It is flawed for the reasons I have explained: you have not consulted, you have not sought to have documented rule changes that you say will apply yet are not in the documentation submitted to the ACCC and you have not sought to thoroughly inform yourself about whether the trial is actually trialling real life situations as I understand it is not.

The MPA has been aware for almost two years concerns I have had about the trial. They were aware of this prior to their approach to the ACCC when I advised I would not be part of the trial given the rules it has been established to test.

Alf, this trial is not testing new supply rules that will make newsagents more competitive with magazines. Indeed, it is a trial of rules that continue to treat newsagents as we were treated prior to deregulation and that is, at its core, unfair and commercially disadvantaging. This is what the ANF ought to fight.

The final issue for the ANF is one of communication. Your email says it all. I don’t agree with you so you therefore refuse to discuss this with me. That does hot make sense.

I don’t know what you would be like in a public forum on this topic yet I have suggested we talk about it in front of newsagents. My view on any issue such as this – an issue at the very heart of newsagency management – is that each of us with an opinion ought to agree to have the opinion tested as much for us as for those we serve. That you will not do this ensures you remain less than open to the possibility that your approach on this issue of magazine supply is wrong.

I want to close with a comment abut newsXpress. newsXpress petitioning the ACCC led to the conference. This conference was an excellent first-time event for our channel. You do not even have the grace to say publicly that this is a good thing. That, to me, reflects a bias in your opinion and communication that I see elsewhere in your handling of this matter. The vie appears to be if you disagree with the ANF you are not relevant to the organisation.

Mark Fletcher

I have published this here as I think everyday newsagents are too often kept in the dark by people engaged on matters affecting them. There is nothing in the correspondence that is sensitive. I hope readers here find it helpful as they consider the issues discussed.

27 likes
Newsagent representation

Minions finding new customers for the newsagency

IMG_7626 (1)The Minions movie is not even out and licenced product connected is flying off the shelves. We are using the range to attract new shoppers and its working – in-store and through social media. As some of the major retailers nearby are out of stock of key Minions lines, we have been able to attract people who otherwise might not have considered us.

Sometimes, crumbs sales can be valuable. Having supplier relationships to ensure product access is vital.

Small businesses can be more nimble in this space than, say, a Big W or Coles. Their buying goes through processes whereas we can call a supplier one day and have stock the next. Minions is that type of product- where having it on the shop floor at the right time is key to maximising what you can make.

What we are seeing with Minions in the newsagency is another example of how we can grow our businesses.

To traditional newsagency suppliers who think this is a step away what serves your purposes I’d note that Minions shoppers tend to shop the shop and this is where you benefit.

5 likes
Newsagency management

A newsagency saves $28,000+ a year

Working with a newsagency on their roster and allocation of day to day management tasks, the business is set to cut labour costs by $28,000 over a year. Weeks in, this annual figure looks set to be achieved. An additional, yet to be measured, benefit is renewed involvement by an owner leading to better business decisions.

Over the years, the owner had migrated to the back room and had little to do with the retail business including inventory management. The business had become bloated with plenty of stock not moving. The extent of the problem was evident in the P&L, sales reports, inventory movement reports and other data points.

By bringing someone external to the business in, the owner was able to reduce the involvement of a family friend, cut employee hours and refused their attention themselves on their newsagency business – the single most important financial asset in their lives.

I expect that better management, labour cost savings and other benefits will result on a profit boost of more than $50,000 for this business in a full year. The only down side is the owner is spending more time in the shop – not so much on counter selling but on work they were doing in the back room.

In a small business like a locally owned newsagency, my experience is that some better business decisions are made if they are made on the shop floor.

10 likes
Newsagency management

Great growth story from a regional newsagency

I have been fortunate to see sales data for a regional newsagency run by the same owners for more than fifteen years. In the twelve months to the end of May 2015, this business increased revenue by 13% over the previous twelve months. This is an excellent result.

Better still, the business increased gross profit by six percentage points – making the value of the revenue increase even greater.

This is an excellent news story, showing that a traditional newsagency can grow by making some simple changes that do not require any shoplift or other structural changes.

Here are more results from this uplifting story:

  1. Cards up 10%.
  2. Gifts up 200%.
  3. Magazines down only 1%.
  4. Stationery up 26%.
  5. Toys – a new department with excellent results.
  6. Plush – a new department now accounting for close to 2% of revenue.

Thanks to expanding the range of products sold and using free marketing initiatives, the store increased shopper transactions by 10%. Add to this growth in basket depth and average item value and you have compounding good news.

To provide context, the business has overall non agency revenue of half a million dollars a year.

I mention this success story here to show newsagents that there are opportunities for sustainable growth of revenue and, better still, overall gross profit percentage.

This is another example of why a newsagency is a good business to buy.

5 likes
buying a newsagency
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