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News Corp. changes to newspaper distribution remuneration should help drive value of newsagency businesses

News Corp. Australia has this morning released the long-awaited results of the national newsagent remuneration review.  I see the changes announced as a reinforcement of commitment to newsagents from News.  The headlines as I see them are:

Three year contract. This gives newsagents certainty, something they can sell. It will help newsagency sellers and buyers. But most important, the three year contract term will help banks better understand and price the value of a newsagency business. This should make borrowing to purchase a newsagency easier. The three year term also encourages newsagents to consider capital investment within the context of such a term.

Consistent fee structure. Under Kim Williams leadership News transitioned from a  state and regional business with many silos each with its own approach to management and each with its own newspaper delivery fee structure to a more centrally run company.  The new fee structure of essentially two fixed fee-per-copy fees – category 1 (20 cents a paper) and category 2 (25 cents a paper) – quits close to fifty fee structures.  Gone is a fee that reflects a percentage of cover price.  I see this as focusing attention on the distribution business as a freight business.

Fixed fee-per-copy replaces sliding scale delivery fee. Gone is the discount for second and third newspapers delivered to one address. The new approach treats each delivery as a delivery.  This move to a fixed fee-per-copy approach is sensible from what I can see. This change should increase the income earned by many newsagents.

They remuneration decision shows that News is committed to the newsagency channel. Beyond the increase in fees, the more valuable changes are contract tenure and the fixed fee-per-copy.  My understanding is that these moves will increase the income earned by distribution newsagents.

While newsagents will be frustrated that they have to wait for six months for the remuneration changes to take effect, the time is necessary for News deliver changes to its internal systems. The delivery pricing model is quite different to what some News systems have been used to.

I see the remuneration and contract changes as part of a broader process being undertaken at News.  The company has work to do with retail newsagents to drive single copy sales. As a retail only newsagent this issue is important to me if I’m to continue to sell newspapers.

News also is yet to fully address the issues of consolidation following the suspension of the T2020 project in Queensland earlier this year. That said, the FAQ document accompanying the announcement indicates the company is supportive of voluntary territory consolidation. I’d be keen to see it go beyond this and actively encourage newsagent-driven distribution territory consolidation.

News has a website with some details. All affected newsagents will start receiving letters from today.

While these are my views, what really matters is what other newsagents think. Over to you…

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Newsagency management

Sunday newsagency management tip: balance shopper traffic across product categories for a stronger future

Key to achieving the best possible gross profit for a newsagency is balancing the reasons shoppers visit your retail business, balancing the products that attract them.

By balancing I mean making sure you attract shoppers across a range of products and product categories and not relying on one or two. Relying on one or two such as magazines, transport tickets or lotteries means you suffer more if they suffer.

Also, the more shoppers visiting for low margin agency and circulation product lines the harder it will be to reach above the average gross profit range of 28% to 32%.

If, on the other hand, you can attract shopper traffic for higher margin lines like gifts, greeting cards, plush and stationery then you’re better positioned reach above the gross profit average. Attracting shoppers for more products and categories, too, balances your business and insulates you against a downturn in one category.

The question is how do you do this, how do you attract new shoppers for the destination items? It does not happen by putting some of these higher margin products on the shelves or a floor display unit. No, you need to make a statement, you need to show off your business as being a specialist in the area. This is achieved with range, in-window or front of store display and external marketing.

Reach outside your comfort zone with what you sell and out of your shop in promoting this – to reach new customers and thereby drive a better gross profit outcome for your business. Be guided by the gross profit you want to achieve. The current industry average of 28% to 32% is too low. Our entry point target should be 40% but with magazines at 25% and newspapers often at below 20%, we need traffic for gifts (55%+, plush 55%+, stationery 50% and cards 60%+ to get to the overall 40%.

While I see this as basic retail management, to some newsagents it will seem like hard work – getting the products, displaying them to attract new shoppers and promoting outside your four walls.

Achieving above average gross product requires above average effort. It’s worth it.

Why does this matter? Traffic for low margin traditional newsagency lines is falling, what are you doing about it?

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Management tip

Sunday newsagency marketing tip: watch the heads of your shoppers as they enter and shop your shop

I love watching customers in a newsagency, from when they enter the shop to where they go and, more important where they look. I watch their heads to see what they notice, where they turn. I learn plenty from being a voyeur.

In one newsagency I was working with recently shoppers tended to enter and look down at the flat stack of magazines. This was a surprise to the owners since they focused their attention on the top pockets of their magazine fixture. Magazine sales were consistently below the industry average.  Changing their focus to building from the flat up drove an immediate sales lift – all because we followed where the customers were looking. While this is not the only reason for below average magazine sales, it was a factor, one to address.

Watching where your customers look and taking note of what draws their attention can be instructive. Major retailers can do with the technology tools. We in small business need to live with personal observation. And that’s my marketing tip today – watch your customers, learn what they notice. Do more of that.

How’s this a marketing tip? Tune your business more to what interests your existing customers and you will sell more.

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Management tip

Low-cost car charger a counter a newsagency hit

This in-car USB charger is another hit product we’re enjoying at the counter as we evolve further from candy ftp a broad roster of impulse purchase items priced between $3.50 and $9.99.

While not for everyone for us in a major shopping centre these products at the counter are a commercially valuable point of difference. Customer feedback is excellent too.

While we have been in this low-value high-margin impulse item space for most of this year we think it will take us another six months of so before we settle on rules for the types of products that work best for us.

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Gifts

News Life Media promoting magazine subscriptions

In a second ad promoting their own magazines News Corp’s. Courier Mail had this full page ad pitching subscriptions for several titles today. While I understand the role of subscriptions, it is frustrating to see the scale of discounts offered for customers that appear to be harder work to reach.

I’d prefer tio see more investment by News Life Media in their newsagent relationships.

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magazines

Missed opportunity to promote newsagents and Vogue Living

While I’m pleased to see the new look Vogue Living being promoted in the Courier mail today, I’m disappointed newsagents are not explicitly promoted. We are the biggest single magazine channel in the country after all. Plus we are more likely to promote this title beyond just putting it in the shelves as other retailers do.

A missed opportunity News Life Media.

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magazines

Double digit growth in ink sales

Factors driving our double-digit year-on-year growth in ink sales for us are the re-location of ink behind the counter and the promotion of ink with good signage that visually connects with the flyers we distribute to homes in our area.

15% of our ink customers now use discount vouchers when purchasing ink and this is driving shopper loyalty. As a regular purchase habit based product ink is important for newsagents to get right. It can easily generate new traffic and weld-on existing customers.

Getting ink right includes range, price, product location, in-store signage, customer service and loyal shopper rewards. These are all things that can be done with little retail experience thanks to the support of suppliers in our channel like Tonnex and Dynamic Supplies.

Key to growth is change – staying on top of the range, changing your marketing and updating product knowledge.

The terrific growth we’re achieving with ink is particularly pleasing since the landlord placed an Inkspot ink kiosk out the front of our newsagency shortly after we opened.

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newsagency marketing

Here’s how a partwork can make you real money

Thanks to the attention driven by the new Hello Kitty partwork we had a customer a couple of days ago spend $117.45 on Hello Kitty products, on impulse.

By ordering in Hello Kitty product to time with the launch of the part series was genius on the part of our team member responsible.

This is the type of action newsagents need to engage in – being proactive retailers based on trends they see in store. It’s action that can be taken within a budget, even a small budget. magazines and cards provide wus with excellent guidance as to brands and trends we can tap into to drive sales.

While some newsagents will prefer to be agents making a percentage from products and services controlled by others, I am certain there is more money to be made by us exerting more control ourselves. Every day I see examples – like this Hello Kitty one.

Now if only we could get partworks supply sorted out.

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Gifts

Fun election campaign from Snickers

I like the poster promoting Snickers bars created to time with the election campaign. Clever, non partisan and true to the Snickers brand.

It’s been good to see national brands through to independent retailers connecting with the election in these ways.  It makes an otherwise dull and fake campaign more enjoyable. Indeed, it’s sad that the ads do that.

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Social responsibility

Gotch and Network fail publishers and newsagents on partworks allocation

There is no better illustration of the diversity in the newsagency channel than partworks. Some newsagents hate partworks with a passion. Some newsagents love partworks with a passion.

The newsagents who hate partworks tend to display them poorly if at all and early return – angered at the freight cost. Newsagents who love partworks often sell out and vent anger at the delay in getting more stock to sell.

A smart magazine distributor would give newsagents control over their partworks allocation. I suspect that if they did this the channel would sell more partworks. Newsagents would be happier and publishers would be happier.

Why is it so hard to implement smart partworks allocation?

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magazine distribution

What a waste of an election campaign

I feel completely let down by the election campaign. There has been little in the way of passionate debate about nation building policy. Little discussion of what is important economically for the whole country, as opposed to select special interests. Little to boost consumer confidence from any of the major parties. Little in the way of a vision for the future of the country. And, little in terms of encouragement for small business beyond some tweaks at the endges.

We lack strong political leaders in Australia, conviction politicians who even though you may not like their politics you do admire their leadership.

Right now we are in the middle on considerable structural change in Australia in terms of our business mix and natural resources revenue. We are also in the midst of tremendous structural change world-wide, in retail as well as more broadly in economies – just look at some of the European countries. These challenges need real leadership for the good of the country, beyond partisan politics.

I’m disappointed that this election is not presenting me with the quality of leadership I’d prefer.

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Ethics

Impulse items driving basket depth and traffic

This display unit of stress balls was full when placed out on Friday in one of my newsagencies. All it took was five days to sell most of the stock. Every purchase was on impulse, adding value to a visit to our business by a shopper. We’re having tremendous success in our shopping-centre based newsagencies with carefully selected impulse items from Modern Brands and Independence Studios. Even if you’re not in a group with off-invoice discounts the pricing is excellent, enabling good GP.

While this is something else we need to keep on top of, the financial return is significant if you get the product selection right for your shoppers.

I’d also note that good impulse lines promoted at the front of the store can drive new traffic, shoppers who may not usually shop a newsagency.

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Impulse lines

Newsagent engages with the election

Check out how newsXpress Eli Waters has been engaging with the election – by offering leader candidate themed syndicates.  I’d be happy to put up pictures showin how others are engaging with the election opportunity. This type of promotion shows shopper engagement while promoting a product at the same time.  Nice!

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newsagency marketing

Promoting 30 best loved recipes partwork

We’re promoting 30 best loved recipes book collection partwork with our food titles as well as at the front of the newsagency. This partwork is an easy sell for our older customers whereas many recent partworks have appealed to a younger shopper.

We put partworks at the front of the shop on the lease line as well as in-store where it’s appropriate for the subject. For a bit of work and space we get an excellent return. Our focus is make the most of issue 1 and 2 and then manage time and space accordingly.

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magazines

Another crazy magazine day for newsagents

It’s ironic to me that a couple of weeks after PMP announces in its FY13 results a decline in Gotch distributed magazine volume of 10.9% that newsagents experience newsagents are hit with what feels like a considerable volume increase in magazine supply.

The most insidious increases are those by one or two copies where we’ve not sold out of recent issues. There is no justification for such increases.

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magazine distribution

What’s the value of digital advertising screen for a newsagency?

I see no upside for the digital advertising screens in a newsagency unless they are a call to action for products available in-store.

My preferred digital screen use in-store is small screens placed near or with product, to encourage purchase.

This is on my mind today because of several digital advertising screen services currently being promoted to newsagents. I don’t see them generating the revenue needed to justify the space they take. I also see their attention-grabbing to be at the cost of attention for products I sell.

The average Australian newsagency is already visually noisy with plenty of products and services we offer competing for attention. I don’t see the value in distracting shoppers from what we offer. Also, I am skeptical of the return on investment available to newsagents from advertising.

One model I saw recently encouraged the newsagent to sell airtime to local businesses. Newsagents would benefit more from working on their business, making it a destination for hero products and or services rather than selling advertising to distract existing customers.  Another model has the supplier controlling all contact and it would include products not sold in a newsagency. I don’t see the sense in that.

I could be wrong on this. Please comment and share your thoughts…

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Newsagency management

Newsagent cash-flow workshop very popular

At the newsXpress newsagency marketing group national conference earlier this week on the Gold Coast the newsagency business cash-flow planning workshop proved popular. Over the two sessions more than 60 newsagents participated with more interested but space not available.

The CPA (with newsagency cash-flow planning experience) running the event was surprised at the lack of cash-flow planning undertaken by newsagents. He shared advice and a template for undertaking this to better inform business decisions.

He also provided time saving tips for getting daily business data into your accounting system – sharing insights from the businesses he does the accounts for.

Other popular workshops included lease negotiations, high-GP product supplier insights and success stories form other newsagents.

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Newsagency management

New-look Wellbeing selling!

I’ve heard that the latest issue of Wellbeing magazine is selling well, ahead on recent sales for the title. Seasonally this is a good time for the title – we’re out of winter and for those of us in colder states out of hibernation. The redesigned cover is another reason to give the title time in the spotlight.

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magazines

Smart engagement promoting Smith Journal to newsagents

I like the material sent by Morrison Media to newsagents promoting the latest issue of Smith Journal. The information explaining the title and the ideal placements in-store is useful for us. I’d urge newsagents to make sure they read it and get the person responsible for magazines to read it – and action the suggestions. Smith appeals to an important shopper for newsagencies. As for the cover of the latest issue, I love it!

Click on the image for a larger version.

 

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magazines

Cool Boost Juice election-themed marketing

I like the campaign being promoted by Boost Juice in the lead up to the election this weekend.  They’re driving sales of their protein balls on the back of a survey where you nominate your preference of Tony Abbott or Kevin Rudd. It’s a simple and topical campaign with a commercial outcome focus. If you’re not a protein ball lover you can’t vote.

 

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Social Media

ANF responds on Hubbed contract

The ANF sent a notice to members yesterday apparently in response to some of the questions I have raised. Their repsonse included:

Yesterday ANF CEO Alf Maccioni sat with David McLean from Hubbed to once again go through the CONNECT contract which is going out to newsagents. He asked a number of questions and suggested changes to the contract. The main cause of concern was a clause which made it seem like this was an exclusive agreement and that the newsagent had to ask permission from Hubbed to allow competing services. This clause has now been removed from the updated contract.

The ANF membership has a 5% stake in CONNECT to ensure the interests of newsagents are paramount and Hubbed will continually work with members to ensure that their questions are being answered. There is an extensive list of Q&As on the ANF website.

ANF CEO Alf Maccioni said he believed that the CONNECT suite of products will add a new dimension to the newsagency channel and will ultimately attract younger customers.

As previously stated, the ANF strongly recommends that all agents should also get independent legal advice on the CONNECT contract and any other contract in relation to their current business and personal circumstances. If for any reason you feel uncomfortable about signing or you are not sure if this system would work in your store then don’t sign.

I heard about this from an ANF member. The ANF, as with Hubbed, is welcome to respond here to the questions I have raised.

If the ANF thinks newsagents will believe that their 5% stake is to ensure the interests of newsagents are paramount and Hubbed will continually work with members to ensure that their questions are being answered then they must think we’re stupid.

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Hubbed
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