As I wrote here in June, we had Ticketek taken off us when Westfield took over our centre – Westfield did a deal years back to take over Ticketek in their centres. Anyway, this past week we have seen a cost of losing Ticketek. Our sales of the AFL Grand Final Record are down by 75% – sicne we’re not selling AFL tickets. The GP loss is in excess of $300.
I’m sure there are other losses from add-on sales, not just the AFL Grand Final Record.
I have seen several situations recently where newsagents have been able to increase the price of popular products without any adverse effect on the volume sold.
In one case the newsagent increase the price of a range of plush from $7.95 to $9.95, in another they increased their cardboard price from $1.50 to $2.20 and in another they increased the price of a popular counter line from $4.40 to $4.95.
In the newsagency where they increased the selling price of cardboard they have added at least $3,640 to their bottom line in a full year as a result of their price move. No extra work, no lost sales – just extra profit.
My question for newsagents reading this is: what prices could you increase without impacting sales volume? If there are items then do it! The ideal items are those others cannot easily purchase elsewhere.
This is not something to procrastinate about. In fact, the timing right now is ideal with the lower exchange rate and rising labour and rent costs you have justification for increasing prices.
So, what prices could you increase without impacting sales volume?
Check out the terrific display created yesterday on the lease line facing into the shopping mall by one of the guys on our team.
While created to promote the licenced – Batman, Spiderman & Superman – money-boxes, I love that the display has been built including greeting cards, magazines and plush covering the same licences. Very smart.
I love the use of coloured paper to visually support the products on show.
This is an excellent display in the ideal location and at the best possible time (school holidays) for this product. The display is good example of how we can attract new traffic to our newsagencies.
If you click on the image you’ll see a bigger version of the photo.
I was in a newsagency yesterday and saw terrific AFL Grand Final engagement. They had several displays in-store, covering two entrances, with different balloon displays available for purchase.
I like that they had these packages ready to go and that they had them placed near their AFL licenced greeting cards, plush and calendars. Excellent opportunistic retail activity.
In addition to tactical placement – which is working well – we are promoting the 80th birthday issue of The Australian Women’s Weekly mid way through the store with some of the collateral from Bauer on show. It’s rare for us to promote a magazine in this way as we’re not a fan of what I’d call billboard displays. We’ve made an exception because the 80th birthday is pretty special.
We plan to keep this up for another week.
I have been asked to look at another contract offered by Hubbed to a newsagent considering the Connect Lite product. The contract I have seen is version 6. The last one I saw was version 3.
While the ANF, the national newsagent association, should provide independent assessment and commentary on the Hubbed offer, it is unable to do so given its 5% shareholding in the Hubbed business and other apparent commercial ties with Hubbed. VANA and NANA, the Victorian and NSW/ACT state newsagent associations respectively, do not currently recommend Hubbed to their members.
While the latest version of the Hubbed contract addresses some of the questions I have raised, questions do remain:
Now I’ll turn to the business case for Connect Lite. The Connect Lite services are listed in the contract (Schedule 3) as gift cards, parcels and bill payment. We have gift cards today and we can access parcels without cost. The only new service here is bill payment and from where I sit I see very little upside in Connect Lite from Hubbed – certainly not enough upside to set aside space in-store, relinquish control over key aspects of my business and commit $7 a day.
Schedule 3 lists parcel services but newsagents can access these today at no cost through the industry owned N Parcel and Parcel Point. Schedule 3 also lists advertising services. I can’t see any value in this for the newsagency business.
The decision faced by newsagents for Connect Lite is in excess of $7,500. This is how newsagents have to approach it – as a $7,500 decision. Will you make three or four times this back? Will you make more from the space and time allocation from this investment than you could by being a retailer and bringing in new products to drive more retail traffic to your business.
The folks at Hubbed and the ANF will probably say that I am against their offer and am talking down their plan to help newsagents. The Hubbed offer as being put to newsagents today is incomplete. There is insufficient information with which to make an informed decision about its appropriateness for a newsagency. The ANF conflict is profound. The Hubbed business model as currently pitched is flawed.
I remain concerned at the apparent lack of due diligence undertaken by the ANF and its Directors both into the Hubbed commercial offer to newsagents and the viability to the typical newsagency business of the Hubbed services and the underlying cost of offering these.
Newsagents could achieve a considerably better return by investing in their business as retailers and not as agents.
As I have noted previously, I’d like to see a public debate to test the business model and the newsagent contractual arrangements at the core of the model. If Hubbed is as good as the ANF Hubbed partnership says it is then it would emerge from the debate in a stronger position. I would appreciate an opportunity to be proven wrong on this.
The latest issue of The Australian Women’s Weekly looks stunning. The cover shot is ideal for the magazine. The purple theming on the cover and supporting collateral works too. Kudos to the people behind this.
We have AWW in the usual location as well as featured with weeklies for the first week of the on-sale. In a couple of my newsagencies we are promoting it at the counter as the magazine of the week.
Note in the photo the placement of the AWW puzzle title above AWW. This always works for us.
We’re promoting the latest Girlfriend magazine and One Direction products from Pacific Magazines with this aisle end display facing the dance floor. We also have the titles being promoted in the usual location for Girlfriend. While some say the 1D train has left the station, their current concert tour is getting plenty of media coverage. I’m happy to give these products a crack.
The promotion of Hallmark AFL licenced greeting cards, Beanie Kids and the Grand Final Record at the front of the business on the lease line has been working for us in terms of sales and being a talking point in the lead up to Saturday’s game. I like being able to offer commonly licenced product from several suppliers. The Grand Final puts giving AFL themed products as gifts on the radar.
Two people have told me that Coles staff received as little as a couple of hours training in the sale of Tatts lottery tickets. If true, this makes a mockery of the training requirements imposed on newsagents by Tatts.
Less training coupled with lower corporate image branding requirements and, I suspect, no up front payment provides Coles outlets with a lower barrier to entry than faced by newsagents when taking on Tatts products. Indeed, the costs of establishing a new Tatts outlet in a Coles location based on the trial model illustrate a considerable financial disadvantage for newsagents.
I’d expect the difference in the obligations of Coles taking on Tatts compared to a newsagency to be something taken up with the new federal government given their declared interest in the market power of Coles and Woolworths. I would also not be surprised to see one or two newsagents take the matter up with state based small business forums where a complaint could be easily prosecuted.
The photo shows a lottery ticket sold by one of the new Coles outlets selling Tatts products in Victoria. It’s now like the 7-Eleven tickets. This Coles ticket appears to be printed on the regular Tatts printer. A newsagent got the ticket when a customer wanted it checked.
I’ve been helping out a newsagent recently and have been surprised at the volume of imported crossword titles they receive. Indeed the space taken by the UK titles limits what the business can do to properly display other titles. The imported titles don’t sell that well yet the distributor continues to supply – taking up space and labour – reducing the opportunity for the newsagent to better manage the business.
I’m pretty sure the folks at Lovatts will respond to this as they have in the past been frustrated at the impact imported titles have on the ability of newsagents to professional display their Australian product.
I wasn’t surprised to see the newsagent ripping off the home delivery stickers from the masthead of The Australian newspaper yesterday. As a retail-only newsagency the business makes nothing from migrating a customer from over the counter to home delivery so why promote it on product they sell? While there could be an argument that they are only an agent, a smarter approach from the publisher would be to commercial engage with the retail-only business.
The cover of the latest issue of Australian Country includes a nice shot of a vintage caravan. While I prefer the stylings of Vintage Caravan Magazine – it’s the world’s first such specialist magazine – this issue of Australian Country is a good addition to in-store vintage promotions.
Newsagents will have access to the paysafecard, a new product launched by Touch Networks for sale to shoppers wanting to shop online safely. While the margin is slim, 2.5%, there is no stock carrying cost. here are some details from the product announcement sent today:
paysafecard is a prepaid voucher that lets you pay safely online. Prepaid means that you purchase paysafecard from sales outlets worldwide and you will receive a 16-digit PIN. Online payments are made by entering this paysafecard PIN on websites where paysafecard is accepted. paysafecard is safer than other payment methods because you don’t have to enter any personal information or your bank or credit card details when paying online.
Any newsagent can access Touch through their computer system.
I am told that a reason for the increase in supply of Bauer magazine titles to newsagents beyond what is justifiable in the sales data has its roots in a change in how allocations are managed for these titles.
ACP Magazines used to do their own allocations for ACP titles and had done so for many years – closely aligning supply to net sales. Undersupply was a common complaint by newsagents for ACP titles.
Since the Bauer takeover of ACP, I am told there has been a structural change affecting supply allocation. They have split circulation management into two areas, separating the circulation manager from those analysing sales data. Circulation reports to finance. This change sees less focus on sales data and it is this that is resulting in newsagents receiving a significant increase in supply of Bauer magazine titles.
If my information is right and these changes have occurred at Bauer and they are feeding the consequences we are experiencing in our newsagencies then we as a channel need to consider a plan of action. Oversupply at the current level is commercially unfair to newsagents.
Newsagents who are not in the elite Connections Emerald group have to return full copies of unsold stock most of the time. This acts as a penalty on oversupply, taking cash from businesses as a result of an action over which they have no control.
With the staffing changes at Bauer it is no wonder people from inside and recently departed from the company are talking.
OzLotteries, the online lottery agent, is set to experience even more growth as they actively promote selling the winning ticket in the winning Powerball ticket in last week’s $30 million jackpot. Their email to their customer database is appropriately happy. That you can buy a ticket in the next draw in a couple of clicks direct from the email reinforces the ease with which one can purchase lottery tickets online.
As any newsagent selling a lottery ticket winning millions will know, it can dramatically increase sales. This $30 million connected with OzLotteries will boost their sales – especially with their excellent marketing.
Elle, the new title launched by Bauer this week is off to a slow start based on the twelve newsagencies I have spoken with. each is promoting the title in two locations including one feature position. Three reported sales and nine none. I suspect the launch media campaign is yet to kick in. Also, we received very little in the way of collateral with which to promote the title or place it on the shop floor – like the stands leading to the checkout that I saw in a Woolworths in Sydney Monday night.
Proving once again I am not my customer, these back scratchers are selling very well. We’ve had this box out for less than two weeks. While managing impulse lines is hard detailed work, the reward is excellent with good products selling out well in advance of when the bill falls due. This, a 50%+ gross profit and that the range attracts its own traffic makes the work worthwhile.
Magazine distributors IPS and Speedimpex have today announced they have formed an alliance that will see IPS manage distribution of titles from both companies. This move adds 1,000 titles to the IPS stable.
Newsagents will have access to Speedimpex titles at the IPS commission of 27% plus they will have online control over supply.
This is a welcome move.
I am often asked for my thoughts on stock turn benchmarks for a newsagency. The list below is what I use as a guide when assessing a business. While there are some differences between city and country as well as between high street and shopping centre, these numbers are a good guide as to the minimum turn.
Stock turn (or inventory turnover as it is known in some places) is a good measure in retail. I find it useful when assessing a business restructure. It guides space and stock investment allocation targeting an overall business goal. It’s a measure that an draw attention to an inefficient department or category of inventory.
The faster you turn stock the better.
It is easy to blame your supplier of under-performing stock or the stock itself. Retailers need to take responsibility in my view and work stock hard with ideal placement, appropriate product adjacencies, good staff training and excellent in-store and external promotion.
Most newsagency businesses I see that are not performing well have a low stock turn. One of the best ways to address this is to order stock using your computer system, based on accurate sales data. Too many newsagents complain that this is too hard. While hard work may be involved initially, this will cost the business less than the poor decisions of not ordering based in reliable business data.
Dead stock costs more than the money spent on the stock. There are space, labour and opportunity costs to consider.
Newsagents can compare their performance through reporting in their newsagency software or they can do a rough manual calculation.
I early returned our supply of 2014 Phantom diaries because of poor margin, poor payment terms, high cover price (high cost to us of theft), that Phantom sales are low for us and our diary offer is full with high margin product we selected for ourselves.
We should have been invited to order what we wanted.
We did not top the product as we could have – we sent back full copies.
We’ve been promoting the Great Bakes partwork on the lease line, facing into the mall and it’s been selling very well. Given the mess that is partworks supply in Australia we go out hard with the first issue – using the dump bin approach in the photo. This works, delivering a good return on the space allocated for the launch and deeper in the shop for subsequent issues.
We’re promoting the AFL Grand Final Record at the front of the newsagency next to our Hallmark AFL cards and our AFL licenced beanie Kids. This front of store placement is to attract traffic from the mall. The placement of the record next to newspapers is to attract impulse purchases from our newspaper customers. Early indications are good.
Until the Reject Shop next to us put in the same range of low-cost Bartel calendars as us we were selling them at the suggested price. As soon as they got their calendars, we had no choice but to price match. We discovered the considerable price difference between our price and the Reject Shop’s price when a customer pointed it out.
Had we known that Bartel was going to supply the reject Shop we would not have taken on this range.
Suppliers need to be transparent with us – otherwise we are not able to make fully informed decisions.
Once bitten twice shy as they say.
We have been grossly oversupplied with Wheels magazine this month, an increase of 30% on the back of a low sell-thorugh. I noticed it Saturday and was going to call them today. But talking with newsagents yesterday at the ANCOL trade show in Adelaide many complained about gross oversupply of Bauer titles – Motor, Top Gear, AWW and Gourmet Traveller.
Different newsagents reported oversupply of different Bauer titles. Five or six newsagents expressed concern. Their experiences coupled with my own make me wonder if there has been a change made in the Bauer allocations process. Something is broken and newsagents appear to be carrying the cost of this.
Given that Bauer owned Network Services takes a zero tolerance approach to returns credits and given that their accounts office acts quickly to cut supply to newsagents even though the company may have a security deposit, it does not apply the same discipline to its own dealing with newsagents when it comes to oversupply.
The sooner individual newsagents test this in a forum of authority the better.