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

Plain cigarette packaging leading newsagents to quit

As the day from which plain packaging kicks in for cigarettes draws closer, more newsagents are quitting selling tobacco products. It seems that this latest move was all they needed to get out of the challenged product category.

With cigarette consumption on the decline in Australia, many newsagents have taken the packaging change as a push ton asses the economic benefit of the product category.

Many newsagents I have spoken with say they have quit or will quit cigarette sales because of the declining financial return. Once they factored in the cost of stock, the value of prime space at the counter, labour and risk to do with age and display compliance requirements, the return was not there.

While I don’t have sufficient a dataset to say how many are quitting the category, I am prepared to guess that it’s somewhere between 15% and 20%. Whatever the number, it will decline with time.

FOOTNOTE.
I quit cigarettes in my newsagency in 1999 having calculated the return on investment we were achieving. I did this of my own free will. What is happening today is not of the free will of newsagents and other retailers. It is happening because of restructuring.

It is disappointing that while politicians of both sides support financial assistance for the auto industry and TV stations to help them fund restructuring, no money is on the table for small business for restructuring it faces.

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Newsagency management

Frustrating increase in supply of discount magazine bundle from ACP

The allocations process at ACP (Bauer) has decided that we should get more stock of the NW / Woman’s Day discount bundle.

There is no justification for then increase in our sales data. This is another recent example of unjustified supply increases by ACP.

Outside of the disappointing oversupply, there is the broader issue of the education of shoppers to not pay full cover price for magazines. These bundles are too available now. It’s a space I am not comfoirtable playing in as there is insufficient upside for us retailers.

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Bagged magazines

No room in magazine department for The Amazing Place

We early returned all copies we received the launch issue of The Amazing Place, a new travel magazine from Australian publisher Citrus Media. Our travel section is full so it was either cut a title to take on this new title or return this title. After considering sales and other factors we decided to not take this new title.

If only the magazine distributor has respected us and asked if we wanted to take on the new title and bankroll the publisher’s new venture. They will say they don’t have time. Well, they need to find time as newsagents are showing how they will respond to this – they will and do early return.

Publishers and distributors can’t just send new stock like this, not now, not with today’s competitive magazine world that they created. Back when publishers and distributors supported newsagents as the premier magazine channel we would have kept this title. Today, we have to run our magazine department on a more competitive basis.

This is the world magazine publishers and distributors created for us yet it is a world they refuse to accept. They treat us today as if we were still in the 1990s. This sees our competitors given unfair advantage over newsagents only leaving us with the mechanism of the early return to fight back.

Supermarkets are paid for space, they control what they get they don’t have to return unsold stock and I suspect they are protected if a title bombs. Newsagent get none of these advantages so we are left to wield the only weapon we have.

While I am against uneducated early returns, I do support the considered early return, as we have done with the launch issue of The Amazing Place.

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magazine distribution

Making the newsagency a destination for Christmas shopping

This is the front of one of my newsagencies from a couple of days ago, showing how it is now configured for Christmas shopping.

The mall-facing display was reconfigured to better connect with Christmas shopping opportunities.

We have some who visit this newsagency saying that it does not look like a newsagency from the front. Yes, it does not look like an old style newsagency.

Our view is that the world has changed. The changes in retail and print media are enough to cause us to change how we configure our businesses. I want people visiting my shops for reasons that are valuable in terms of margin and relevant to the future. This is what we have gifts and cards as our core pulling factors.

The traffic we attract is valuable for more traditional newsagency lines with magazines and stationery continuing to deliver good year on year growth.

Our strategy at this store is to be the go-to place for seasons and key brand-based opportunities. We engage with the strategy by going beyond what shoppers expect from a traditional newsagency. Our Christmas and One Direction commitments are the two recent examples of this.

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Newsagency management

Terrific looking recipes+

I love the cover of the latest issue of recipes+ magazine. It stands our from the covers in our food section. For us it stood out enough for us to move the title from a rear pocket to the front. We are always on the look out for covers that reach out from the shelves, away from other titles. We have it in a full cover prime pocket in food.

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magazines

Moving newspapers further into the newsagency

Two weeks ago we relocated newspapers a further three metres into the store. They are now at the end of our diary wall. There has been no negative impact on sales as a result of the move, no complaints from customers.

We made the move now as we were able to do it as part of a Christmas reconfiguration of around half the floorspace of the newsagency.

Since we are not paid for space allocated to newspapers we need to manage their cost (labour and real estate) and leverage the traffic they generate. The decision to move took into account these factors.

If newspaper publishers offered promotional programs designed to drive over the counter sales then I’d most likely offer them more support in-store. Instead, newspaper publisher promotions are about shifting sales from retail, from us. Near to us, they have a history of happily give their product away.

I know I am not alone in moving newspapers deeper into the newsagency. More and more newsagents are deconstructing their traditional newspaper aisle end display units and using this space for better margin products and products that are more connected to the long-term future of their businesses.

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Newspapers

Refreshing the gamer magazine pitch

Our gamer magazines used to be in the lower section of the magazine display. They sold well from there, better in fact than the older style computer magazines.

So, over the weekend we switched gamer magazines in to the better location previously home to our traditional computer titles.

The review was part of our regular assessment on return on shelf space allocated to magazine categories. We move categories in pursuit of either stemming a decline or chasing above average growth.

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magazines

Disappointing exit for Australian Good Food

I am disappointed with the last issue of Australian Good Food from ACP (Bauer). The publisher has sent us two copies – the current issue and an old issue. They have also increased supply. So, we have a thicker product and more product. Like many newsagents, I don’t have the shelf space, especially at this time of the year.

I suspect newsagents will early return some stock since we are not compensated for shell space used – unlike our supermarket competitors. We are not, yet.

While publishers use free back issues as a gift to drive sales, with Australian Good Food now dead I can’t see the value of attracting new readers.

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magazine distribution

Newsagency marketing tip: the easy way to be found through Google

Newsagents can ensure their business is found via a Google search when they list the business through Google Places. It’s easy to setup, easy to maintain and free.  If you appropriately describe the business and the products and services it offers, people searching for these in your area on a computer, a phone or some other device will see your business listed.

I can’t imagine why any newsagent would not create a Google Places entry. yes, as I have written here before, there are other free listings you should use but Google Places is the first and most important currently.

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marketing tip

Newsagency management tip: treat your landlord like a customer

  1. Put your landlord on your customer list so they receive your regular customer communications.
  2. Always send seasonal catalogues and flyers to them.
  3. Ask them for business – copying, stationery and the like.
  4. Make special offers to them.
  5. Send them a Christmas card.
  6. Send them a birthday card.

All of this will show the landlord that you are a proactive retailer, someone working hard to attract shoppers to their property.

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Uncategorized

Targeting weekend shoppers

We are making sure that this Barbecue cookbook from CustomMade Media is getting extra eyeball attention on the weekends when more barbecue interested shoppers are likely to be out. We give it extra attention by prime pocket placement with food titles as well as with weeklies and newspapers at different times.

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magazines

Quick newsagent survey on magazine supply

I have created a four-question survey to harvest your views on the magazine distribution model and its impact on your newsagency.  Please click here to complete the survey. The survey software allows one response per computer.

While question four about stresses faced by newsagents is not directly about magazines, I am keen to see the responses.

I will leave this survey up to Monday night and plan to share the results here Tuesday.

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magazines

One Direction stationery flying out the door

The range of One Direction branded stationery we have in store are selling very well. Indeed, we will sell out.

On Wednesday we had one customer buy a bunch of items and call her friend telling them to come in right away to get her own set.  Talk about strong word of mouth.

Our continued engagement with the One Direction brand is generating excellent new traffic for well as driving a more efficient shopping basket. We are thrilled with this success story.

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Brand retailing

Covering the magazine cover

Check out how two publishers handled covering the Christmas issues of the top two selling magazines with tip-ons is a lesson in merchandising. Whereas the production team for better Homes and Gardens team ensured that the cover of their bonus cookbook visually merged with the cover of the magazine, the production team at The Australian Women’s Weekly did not when handling the placement of their Christmas cookbook.

The other missed opportunity for The Australian Women’s Weekly is the placement of the cookbook on in such a way that the shopper can’t easily see that it’s Julie Goodman’s feast they are covering in the cookbook. If Julie Goodman has pulling power surely you’d place the cookbook so that you can leverage her name.

While I am no magazine publisher I would have thought that these issues were publishing 101. What is it that attracts a shopper to the title? How important is the cover shot versus the free gift stuck over the cover?

On the gifts themselves, they do not lend themselves to browsing. We have sock damaged by shoppers shoving the magazines back in to the racks.

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magazines

Check out the best gift bag for Christmas

This is the best gift bag for Christmas. It’s from Hallmark. Customers love it. We have ordered more stock and are now chasing even more. We will sell every unit we can get our hands on.

The success driver for us has been to have the bag out of its packaging and on show, so shoppers can understand how terrific it looks when properly setup. It’s a centrepiece in our Christmas display.

Left in the packaging this bag looks like other Christmas bag. The sales success is a good example of a picture being worth 1000 words.

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Gifts

Should retail newsagents join or create a retail-specific industry association

Given the clear split of distribution from retail being driven by a range of changes including News Limited’s T2020 project, we are approaching a time where distribution and retail newsagents could be better served by different associations.

With more retail newsagents being the customers of distribution newsagents it would be inappropriate for an association to serve both parties.  Further, the needs distribution and retail newsagents have of their association are different.

These are issues the associations themselves ought to have been considering.

My own experience is that need of retail newsagents are better served through a more retail focused association.

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Newsagent representation

Tower Systems community expands with acquisition of another newsagency software company

I am pleased to share this announcement about the acquisition of the respected MrNews software business serving Western Australian newspaper distribution newsagents by my Tower Systems company.

Tower Systems purchases MrNews newsagency software, reaffirms confidence in newspaper distribution businesses

Newsagency software company Tower Systems has agreed acquisition terms with the owners of the MrNews newsagency software business.

MrNews serves in excess of one hundred home delivery newsagents in Western Australia.

Tower Systems will assume full responsibility for the MrNews software and customer service from early next month.

“We will maintain the MrNews software, price model and support. MrNews users will not be pressured to switch” commented Tower Systems Managing Director Mark Fletcher. “Our development and help desk teams will be trained in MrNews so that we can provide easy access to quality support.”

“We are thrilled to have found a place where MrNews users can be confident of access to good software and service” commented Arno Staub and Graham Kilmurray, the owners of MrNews. “We are looking forward to working with Tower, training their people and introducing them to our happy customers.”

The Tower development team has been working with West Australian Newspapers to be ready to support changes to their home delivery management and account payment model.

The acquisition, the second of a newsagency software company this year by Tower Systems extends its newsagent customer numbers to more than 1,900. The next largest newsagency software company is POS Solutions with an estimated 600 newsagents as customers.

“Newsagents concerns about T2020 and other challenges facing home delivery should see this investment by us as a show of faith in the newsagency marketplace and home delivery in particular.” Commented Mark Fletcher

The Tower software serves newsagents in newspaper distribution, sub agent management, retail management, stock control, theft management and supplier integration.

With consolidation of newsagency businesses and newsagent suppliers very much in play, this acquisition is not expected to be the last in the newsagency software space.

Newsagents using the MrNews software are welcome to contact MrNews or Tower Systems for more information. Once the hand over has been completed Tower Systems will email and mail help desk contact details to all MrNews customers.

I mean it when I say that this acquisition is an indication of my confidence in the distribution side of the channel. The opening of a new shopping centre newsagency (without lotteries) this week in which I have a 50% share is evidence of the confidence I have in the retail side of the channel.

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Newsagency management

No details from PMP re magazine distribution

The Chairman’s presentation to the Annual Meeting of PMP (Gordon and Gotch parent co) yesterday doesn’t have much of interest for newsagents or publishers when it comes to magazine distribution. The chairman records that magazine distribution is challenged because of flat retail sales and the migration to digital. He talks about transforming the business but there is nothing significant transforming about that part of the business.

I am curious about one thing – I know of plenty of newsagents not experiencing a decline in magazine supply by Gotch so I am not sure how it plays out that the company says revenue is down.  I’d love to see a report showing year on year billings by newsagency.

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magazine distribution

Leveraging The Hobbit brand

With the release of The Hobbit movie getting plenty of media attention we are pleased to have a range of toys and other Hobbit branded products on the shelves in time for Christmas buying.

Marketing people tell me that the movie will be huge for retailers so we decided to ensure we got known for being in this space.

Connecting with mega brands is as important as our focus on major seasons.  A good brand can give excellent results. We saw this with the first Twilight movie also The Smurfs movie and several others.

Being known as a go to retailer for these movie franchise brands as well as seasons is good for business as we transition from attracting shoppers for more traditional (and somewhat challenged) items.

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Gifts

Women’s Health magazine delivering above average growth

We are featuring the latest issue of Women’s Health magazine in a couple of terrific locations since it is doing so well for us. Our sales are up, jumping our national and state rankings. I put the considerably above channel average sales growth down to the magazine itself and the attention we give it.  It responds to this.

We think about where Women’s Health will work best for us given the shoppers we have in-store.

Newsagents can achieve magazine sales growth. Yes, it’s hard work – the reward is more of the shoppers you target visiting.  The challenge is a broken magazine distribution model that preys on this good work we do.

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magazines

Beware the Director’s Guarantee

Late last year I and two others formed a business to open a newsagency. We negotiated a lease and signed agreements with several newsagency suppliers. In Mid January the structure of the business changed with an amicable split. One director happily continued with the business and two of us happily left. We resigned as directors and our shares were assigned to the remaining director.

The remaining director operated the business and set about opening a second newsagency business, completing new account paperwork for all suppliers.

Eight months later, both newsagencies closed following the appointment of liquidators.

While the landlord and a long list of newsagent suppliers who were engaged back when the first business had three directors dealt with the only director of the company and the liquidator appointed, Gordon and Gotch approached me and the other original director regarding the director’s guarantee we had signed.

While Gotch had a new account application from the sole director of the business, they did not consider this as rescinding the original director’s guarantees.

I sought legal advice and was pointed to a precedent supporting my view that I was not responsible for the debts of another party, debts I had no control over. Gotch rejected my lawyer’s position on this.

In the meantime, yesterday, I opened another newsagency and the other director has opened one newsagency and is about to open another. Gotch approved new accounts for each of us but has refused to start trading until the debt from the business over which we each had no control is paid. This is odd since they have permitted two of my other newsagencies to continue to receive stock from them.

While I can fight Gotch through the courts it would cost more than the debt of the business over which I had no control and take well into next year. If we want magazines in our respective newsagencies we will have to pay Gotch.  They know this. So that is what we have done.

This whole saga has had me look carefully at the Gotch contract and the director’s guarantee. The advice I have is that the contract is problematic for Gotch. However, I don’t have the time to challenge it right now and Gotch knows this. I feel like I have been blackmailed.

I have a couple of takeaways – Gotch does not follow usual practice when it comes to director’s guarantees. If you exit a business you need to ensure that any obligation you took on is resolved and or absolved otherwise you could find yourself settling the debts of others.

The Gotch contract needs an overhaul. It has not changed in close to fifteen years.  I’ll write more soon about the Gotch Magazine Ranging and Supply Policy, a policy the company regularly breaches.

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Newsagency management
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