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

Management tip: look at the McDondald’s Canada move to sell ground coffee

McDonald’s Canada is set to sell bags of ground coffee in a further change to the model of the fast food business. read the excellent article on this published by the Canadian Financial Post – it goes into the background for the move.

Look back at McDonald’s and the moves they have made over the last ten years and you see a company that does not wait for disruption to impact their business. Okay there may be a couple of instances – but in the main McDonald’s has sought out change and played with their traditional business model. They have done this in various outpost locations, including Australia.

Other retailers are doing this too. Look at Cotton On, a well-established fashion retail brand in Australia and not they have Typo, it’s like Smiggle for grown-ups. They sought change to effectively disrupt their traditional business.

The management question every newsagent would benefit from asking themselves today is: what am I doing right now to disrupt my business model, to break from tradition and to pursue change in my newsagency?

The future of newsagencies in Australia depends more on this than any action by any supplier.

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Management tip

Newsagency of the Future workshop and video update

I continue to be asked about another round of the Newsagency of the Future workshop series. My plan at this stage is to host a completely new and considerably more action-oriented session early in 2013. This will have greater urgency and will reflect some significant shifts in retail.

A version of the existing workshop is available at YouTube:

It’s had 524 views and the series itself was seen live by more than 750 people including a couple of conferences this year so far.

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newsagency of the future

Supporting The Australian Women’s Weekly risky move

The current issue of The Australian Women’s Weekly is the first with a male on the cover in fifteen years. It will be interesting to see how much Hugh Jackman helps them move stock. We have been supporting the title with several locations including placement with newspapers. Sales are okay, no spike at this stage but it’s early in the on-sale.

Up through to the end of today we have AWW in four locations. That will be pulled back from tomorrow.

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magazines

Updated T2020 communication for newsagents from News Limited

Click here to see the updated FAQs from News Limited T2020 and here to see the letter sent earlier this week. I have spoken with Catrin Thomas this week and am assured that News is genuinely listening to and engaging with newsagents through this trial in Queensland.  I saw this happen first-hand earlier this week between a newsagent and News to address a concern over the recently announced delay.

Having been involved in this process since it began three years ago I’d note that the approach of News over the last six months is completely different – more engaged with newsagents, more flexible and more transparent – than in the two and a half years prior. It is good to see News working direct with newsagents. This is a project to be worked on operationally by the contracted parties and not through a third party.

I have a vested interest in T2020 with 1,700+ newsagents using my Tower Systems newsagency software, many of whom offer home deliveries. I have no deal with News.

I understand what they are doing and why. It is necessary structural change. Many newsagents saw it coming years ago and made appropriate business decisions. While this is not an I told you so, I’d note that I sold my newspaper home delivery run in late 2006. I explained here why I did it and what I thought would happen with runs.  Associations and brokers had this same information. Industry leaders had the information too. Yet many let newsagents steam ahead thinking it was business as usual for newspaper home delivery.

Newsagents are complaining about News Limited and what they are doing with T2020 should look back at themselves and the newsagent leaders over the years and ask why they did not act before.

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Newspaper distribution

News Ltd announces printing changes for Victoria

News Limited announced yesterday some upcoming changes for the printing of newspapers from its Port Melbourne site. Ultimately, they will move from six presses to four. Newsagents will naturally be nervous about this and the potential for impact on distribution times. The first changes will occur on Saturdays, from November 12.

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Newspapers

Taking on new magazine titles

We have arranged for supply of 15 magazine titles from IPS following a review of what they have available and the categories of magazines we see selling in-store.

I love the ease of doing this and the control I have. Gotch and network could learn from IPS.

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magazines

Terrific Better Homes and Gardens promotion

We were fortunate to receive a floor display unit for promoting Better Homes and Gardens and we are making the most of it. We have placed the unit near the counter, next to our busy photocopier.  After a week here we will place it at the front of the store, facing into the shopping mall.

We also have Better Homes and Gardens located with newspapers as well as in the usual location for the title. Sales are strong – we’re seeing excellent growth as has been the case for most of the year with this title for us.

I want to mention the display unit – it’s physically strong. This is important especially in the Christmas season with traffic up and things getting knocked about.

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magazines

No slowdown in desk calendar refill sales

Sales of desk calendars are strong as ever. Indeed, I think we’ll end this season with nice growth. We have them in two locations – with diaries and here at the counter. It’s the counter location that works best for us as has always been the case we are topping up every day. It’s an easy and goof value basket filler.

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Stationery

Planning a new magazine cash flow study

Given the discussion here this week on the magazine distribution model, I have been re-reading my 2006 report – THE CASH-FLOW IMPACT OF MAGAZINES IN AUSTRALIAN NEWSAGENCIES.

I am considering doing this study again, probably in the December / January. I think it is time to update the data on this part of the magazine model.

It’s easy to get sell through data from any newsagency.This cash-flow study approach takes it is a deeper level. I harvest retail space and labour costs down to the title level. This enables me to assess the cash-flow impact at the title level.

Just because a title is cash-flow negative does not mean it should be cut. However, it does mean there must be another reason for the title being supported.

Given the nature of the study, I’ll need to pull the data from within the 1,800 or so newsagents using the Tower Systems newsagency software as this has a magazine cash flow data harvesting and reporting facility build in.

Once I have the data it takes a couple of months checking it and doing the analysis.

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magazine distribution

Halloween is our season to own

Halloween continues to grow for us. We are now well past our sales goal. In fact, we are more than double the sales growth goal we set for ourselves.

For years I have considered halloween a key season. It’s fun, ideal for high margin impulse purchases, available for us to own and a wonderful segue into Christmas.

I see Halloween shoppers of all ages and all walks of life. Schools, offices and homes host Halloween events. Kids love the season and grown-ups do too. It’s not uncommon to be invited to several Halloween parties.

Check out the article by Chip Davis published at The Huffington Post about Halloween – in the US it’s a $7 billion season.

In sales, All Hallow’s Eve is second only to Christmas. It’s also second only to New Year’s Eve in terms of numbers of parties thrown. Many analysts attribute this to baby boomers trying to recapture the nostalgia of their youth.

I am shocked when I hear a newsagent diss Halloween, shocked that they pass up an opportunity. A well stocked display in prime position with an element of theatre is sure to deliver a traffic and sales bump.

The photo is from the in-store display of our glitter pumpkin, our hero product. We sold out, ordered more and sold out. Brilliant! Sales this year have not been hurt by it being on a Wednesday.

Our only frustration was that stock we’d ordered from GNS was going to arrive too late – six days before October 31. We cancelled the order.

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marketing

Excellent SugarCraft sales

We received four copies of SugarCraft magazine a few days ago and have already sold three. The last issue sold out in two weeks. The success of this title is an indicator of interest in all things baking, something I doubt will decline for some time yet given the new cooking shows announced for Tv next year.

SugarCraft is a terrific title for people serious about cake decorating. I’m glad we have it as it reinforces our magazine specialist status in a category that is important to us.

So, amid all the hubbub from newsagents about margin and supply, here is a title off of which I am making a good financial return – both from its sales and from related business thanks to the cred the title provides the newsagency.

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magazines

One Direction continues to deliver

With the final part of the One Direction part series from Pacific Magazines now out we are making the most of the opportunity with promotion at the front of the shop on the lease line. This prime placement plus placement in three other locations in-store has been key for us in making the most of the 1D opportunity.

The buzz created by the Pacific marketing team is generating welcome destination shoppers. This also makes it easier for us to promote the titles as we are.

1D will have added more than $20K to our sales this year.

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magazines

Leveraging interest in portrait photography

We have noticed photography magazines with a feature of portraits selling well and are leveraging this knowledge withplacement of Digital Photography, featuring a cover story on portraits, next to The Essential Guide to Portraits – another in the magbook series.

Every magazine purchased on impulse is margin dollars in the bank.

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magazines

Who exclusive opportunity

Who out tomorrow has exclusive photos of the Justin Timberlake Jessica Biel wedding. It’s an opportunity to give the magazine special treatment, to leverage its point of difference.

We are planning promotion at the counter for impulse purchases as well as additional facings with the weekly magazines.

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Uncategorized

Rupert Murdoch labels Australian newspaper delivery “not a good system”

Check out the Twitter conversation between Rupert Murdoch and others today including a comment about News changes to newspaper delivery.

Rupert Murdoch appears to agree that delivering The Australian on the front garden is not acceptable and that changing this is in their plans.

I am not aware of anything in T2020 which addresses exactly where the newspaper is delivered.

I wish Rupert Murdoch had embraced the opportunity to support newsagents and show that words from News Limited about partnership with newsagents are more than just words.

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Newspapers

Newsagents embarrassed and hurt by Partworks supply failure

One of the most common magazine supply complaints I hear from newsagents relates to partworks supply and the difficulty in getting backorders to help partworks collectors complete their collection.  Here is an email I received from a colleague newsagent that outlines a current concern:

I have had a few issues with missing parts for partworks recently and feel that all the responsibility falls onto the newsagent.

When an item is back ordered and it takes time to arrive they go outside of their return dates and become firm sale.

So we have to take it on firm sale because the distributor/supplier did not have enough parts, and in doing the right thing for the customer we have to take the risk.

I have a current instance where I have a back order for number 68 of the James Bond DB5 model.  The customer has spend in excess of $1300 and has been waiting more than 10 weeks for a part.

They are now hesitant to pick up parts as they feel it may not arrive (and NDC does not impart a great deal of confidence that it will).

This has also happened with other partworks, and customers drop off because parts have to be back ordered, so we do the legwork early and then due to short deliveries we miss out on the sales further down the track.

Anyway, this one case has been a bone of contention (and to make it that little bit harder this particular customer is profoundly deaf so all communications is on a sheet of paper!).  Thought it might make a good blog post.

The issue outlined here is often experienced by newsagents. Magazine distributors and partworks publishers need to find a better solution for newsagents and partworks collectors.

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partworks

Grabbing impulse diary purchases

We have placed the beautiful LIFE IS A GARDEN 2013 DIARY between our two daily newspapers. This is in addition to with our diaries and garden magazines.

This is a wonderful diary, a perfect gift for a gardener. I went for placement with newspapers as this will get the diary seen by more shoppers and now is the time diaries like this sell.

Universal magazines are to be congratulated for giving us a quality product at good margin and with control over supply.

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Diaries

Timely Take 5 promotion

The lottery ticket promotion with the current issue of Take 5 magazine is timely with lottery jackpots in the news even in newsagencies where lottery tickets are not sold. We are promoting the opportunity in several locations including in the home location for the title. This is the type of promotion no other retail channel gets behind unless the publisher pays them to.

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magazines

Woolworths using Halloween for marketing

Woolworths sent out an email to customers yesterday using Halloween to promote candy and alcohol. I mention this as it’s an example of the reach of the season for marketing beyond halloween products like spider webs, masks and make-up.

Retailers in the US use the season to boost sales with terrific success.

We are contemplating a Halloween one-day sale on October 31.

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marketing

Newsagency businesses perform well in latest sales benchmark study

I’ve completed the analysis of the latest newsagency sales benchmark data covering the July – September quarter compared to the same period last year.  The pool of data was from 123 newsagency businesses around Australia and covering a good selection of circumstance.

Here are the newsagency sales benchmark highlights:

Trading remained steady for newsagents in the July – September quarter of 2012 compared to the same period in 2011. Year on year results almost mirrored those of the previous quarter. This is good news.

  1. Traffic. Customer traffic was up slightly with 61% recording an average increase of 2.1% of transactions.
  2. Basket depth. 43% recorded an increase in the number of items in a transaction and the average increase was 4%.
  3. City versus country. City based newsagencies delivered the better results.
  4. City vs. country. Regional & rural newsagencies are the best performers.

Now for the results by key departments:

  1. Magazines. 44% of newsagents in the study reported unit sales growth with an average growth of 3.5%.  Of the newsagents reporting a decline, the average decline was 5%.  60% reported a sales decline for women’s weeklies – average 6%.
  2. Greeting cards. 69% of newsagents reported an average 3% revenue growth.
  3. Stationery. 49% of newsagents reported an average growth of 5%.
  4. Ink. 55% of stores participating in the study separate ink sales data allowing further analysis.  67% of stores reported ink an average of 5% growth.
  5. Gifts. 61% reported an average of 6% growth.
  6. Newspapers. 61% of newsagents reported a decline of 3% in newspaper sales.
  7. Tobacco. Sales declined. 65% of store with the product reported 11% decline.
  8. Confectionery. 54% of store reported an average decline of 3%.

That said, there is no doubt that shopping centre newsagencies remain vulnerable.  This speaks to the fickle nature of shopping centre traffic performance.  While am no economist it could be that they are the first to experience trends.

Newsagencies continue to be good businesses to own. They respond to attention.  Retail is not as tough as some keep saying.

For what it’s worth, the best type of newsagency to own today is one where you have the most control over what you sell. This can be in a shopping centre but is more likely to be in a high street and / or regional situation.  Ideally, it would be a business where you can ultimately own the building.

We create our own luck, now more than ever.

I appreciate the time given by the newsagents using the Tower Systems newsagency software who shared the sales data that is the basis for this study.

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Newsagency benchmark

Oversupply of Grazia

We usually sell two or three copies of Grazia from ACP Magazines. We actively support each issue of Grazia with co-location in high traffic locations without success. Somehow, ACP or their allocations system has decided we need to go to eleven copies. I can’t see anything in this issue of Grazia or in our sales history to justify the supply increase.

While it may be put down as an error by the publisher, the reality is it’s an error the newsagent has to endure and it happens all too often.

This is the type of oversupply newsagents complain about. It is the type of oversupply that causes newsagents to strike out when early returning titles out of anger.

Magazine distributors demand and bully newsagents to pay their accounts on time. They hold us responsible. Yet they do not give us reasonable levers with which to control our level of indebtedness. This is unfair. It has been unfair for decades.

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magazine distribution

Promoting the Better Homes and Gardens Christmas cookbook

We are promoting the Better Homes and Gardens Christmas cookbook with this prime position display facing shoppers as they enter the store and head to the magazine department.

I am thrilled with the margin (book margin as opposed to magazine margin) and I am thrilled that I got to order what I wanted. These are two things newsagents have talked a lot about here in comments on this blog over the last week. Here is a publisher giving us what we want. I wonder how many newsagents embraced the opportunity from Pacific Magazines.

We have high hopes for the title. It’s beautifully produced and keenly priced. If it’s like last year’s title it will sell very well for us.

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magazines

Back to School survey results

50.8% of those responding to the Back to School engagement survey over the last three days indicated that Back to School is not an important season in their newsagency.

24% of respondents said that their Back to School commitment is increasing for 2013, 33.1% say there will be less commitment and 43.0% say their commitment will remain unchanged.

While the 122 survey responses represent a small sample size, I think the results do represent the sentiment of the channel more broadly. I say this based on discussion of this topic with many newsagents right around the country.

While Back to School is an important season, more newsagents are opting out having, I think, become disillusioned with the season.

With more schools and school groups chasing price deals and margins shrinking to unsustainable levels, newsagents are left to take on the season in the hope of attracting shoppers who may stick around through the year.

Competing with Big W, Officeworks and school booklist specialists is purely a margin game. Customer service is rarely considered. Supporting local jobs is also rarely considered. How slim are we prepared to go to win a Back to School customer? For the average newsagency business this is a significant challenge.

I pulled out of Back to School in one of my newsagencies a few years ago when a financial review showed I’d need 300% increase in sales just to break even in the face of high shopping centre costs.

I know of some newsagents who are tremendously successful with Back to School. The most successful tend to fall into two camps – managing school contracts in a warehouse operation run outside the newsagency and a long-term and well-known shopping centre based outpost.

I decided to run the survey to provide newsagents with an opportunity to register their view. I also wanted to give suppliers an opportunity to hear what the channel thinks.

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Newsagency management
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