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News Limited responds on newspaper home delivery changes

News Limited head office responded (sort of) to Mediaweek and to Crikey about my blog post News Limited in crisis on newspaper home delivery yesterday.

It is curious that News Limited would respond to the two media outlets which published my blog post in full but not to me or here at the blog.  I guess that I understand why not – to do so would have legitimised this blog and that’s the last thing they would want to do.  News people have told me that they are not to engage here.  This in itself is interesting because News people have sought me out on this issue.

News corporately has sought me out to brief me previously so that at least one blog post was written with the knowledge of their position on a development.

What News does not understand is that a response here would have been respected by newsagents, especially a response form the states where most newsagent relationships have been managed for years.

Now to the response.  Here is the statement News Limited provided to Mediaweek:

News Limited has responded to comments made by Mark Fletcher on his Newsagency Blog earlier this week.
Mediaweek received this statement this morning:
Contrary to reports, there is not a crisis at News Limited on the future of home delivery of newspapers.
We have for some time been working on a plan to improve our distribution system which delivers our newspapers to retail and homes.
We have consulted newsagents and their associations throughout this process and welcomed feedback through meetings, focus groups and via a dedicated email address we set up. Using information newsagents have been helping us collect we are doing the hard task of understanding the pros and cons of the current system and how best to improve it.
We want to get this right and so are working methodically and diligently. Newsagents may feel frustrated that this is a long process, but it is difficult one. It is taking longer than anticipated but the project has not been put on hold.
We will be discussing our next steps with newsagents within the next month.

I stand by what I wrote yesterday – that there is significant disagreement within the News Limited organisation about how the company is handling and should handle the future of newspaper home deliveries.

What I see in the response from News is, with respect, spin. The company has been at this for more than two years and they want more meetings. They know that the numbers currently do not work because of the controls they have placed on then.

Newsagents need certainty. News can provide this by allowing newsagents to charge commercial fees for delivering newspapers and by encoding their relationship with distribution newsagents in a contract on which newsagents can rely for entering into leases and negotiating with their banks.

Nurses in Victoria are facing a similar situation on pay. They are acting. Other essential services in Victoria faced this over a year ago and they acted. When will newsagents go beyond their bleating and act? I think that News thinks newsagents will not act and this is one of the reasons the company has, after two years, not provided the certainty sought.

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newspaper home delivery

Melbourne Observer promotes newsagents

Check out the tweet a couple of days ago from the Melbourne Observer promoting newsagents as the go to place for the latest issue of the weekly newspaper. I love seeing our suppliers promoting our channel to their followers in this way. Every mention of our channel as a go to place for a product helps.

 

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newsagency marketing

Morrison Media opens 2012 newsagent survey

Morrison Media, the publisher of successful magazine titles like frankie, has announced the start of their 2012 newsagent survey. Click here to find out more.

Their pitch to newsagents is compelling:

We truly value your input. This is your platform to have your thoughts and opinions heard. Be part of something that truly shapes the relationships and future of publishers, distributors and newsagents.

I’d encourage newsagents to engage with this. You need to register by April 30, 2012.

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magazine distribution

Segueing from Valentine’s Day with Cooper from Hallmark

We had a great success with Cooper from Hallmark for Valentine’s Day and so we have segued from a Valentine’s Day display featuring Cooper – the large plush bear – to a display featuring Cooper, the interactive story book created around the Cooper character and other interactive story books from Hallmark. Sales this week have been excellent from this front of store display.

I have been fortunate to see sales data for these story books – they have been and continue to be an extraordinary sales success.  They are driving new traffic and guiding excellent impulse purchases from existing shopper traffic.

Cooper helps newsagents play outside greeting cards but with a brand which is the best known greeting card brand in Australia.  The interactive books provide us with perfect gifts for families with young children – a very popular gift target.

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Gifts

Promoting La La Land cards

We are promoting indie card company La La Land with this behind the counter display at one of me newsagencies.  We have had the cards for a few months and they are selling very well. They are  attracting a different card shopper to the business when we have them at the front of the newsagency. They are a very different looking card, very indie. I love what the team has done with the behind the counter display as it plays to the uniqueness of the cards. Very creative and very different for a behind the counter newsagency display.

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Greeting Cards

Promoting Cleo magazine

We have been promoting Cleo magazine this week with this aisle end display facing shoppers as they enter our magazine aisle.

We’re giving the magazine a shot here for a week as well as good positioning in-location. Personally, I think it’s the in-location display which works best as this is where shoppers are actually shopping for titles like Cleo.

 

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magazines

Bill Shorten is wrong to target newsagents on demarcation

Minister for Employment and Workplace Relations Bill Shorten on Q&A on ABC1 on Monday night made a passing remark about newsagencies – that they could learn something about demarcation, as if we are doing something wrong in this area.  He was talking about having done four workplace agreements at Alcoa and was lauding the flexibility of the Alcoa workforce demonstrated in the negotiation.  Then, immediately after the Alcoa example about resolving demarcation issues, direct to camera, with a tone laden with accusation, he said:

There’s something for the old newsagencies and pharmacies and doctors to think about.

Watch Shorten say this for yourself. Click here. Go 47 minutes in. Do not have anything which could damage your TV in your hand.

Shorten’s comment grossly misrepresents newsagents.  He joins News Limited columnist Mark Day to be in the running for the most ignorant comment about newsagency businesses this year.

Seriously Bill? Newsagents and protection and or demarcation?  How?  What evidence do you have? I am not aware of any at all. You need to apologise to newsagents. As a minister of the crown you should think before you speak and be certain of your facts.

Either Bill Shorten made an off the cuff comment without thinking, is misinformed or deliberately targeted us for some other reason.

Newsagents have been extremely flexible in agreeing terms and accepting change in their relationships with newspaper publishers, magazine distributors and government for many years.

John Howard used the ACCC to guide in complete deregulation of the newsagency channel in 1999. Bill should know that.  Maybe he does and maybe he made his comment because it suited part of his constituency.  I am not aware of any demarcation dispute. Maybe Bill could enlighten us.

Regardless of why Bill said what he said, he needs to be re-educated. One of us newsagents needs to kidnap Bill Shorten and hold him in one of our businesses for a month. Let him see what life is like on the inside. Let him live the life of a protected newsagent and see whether he can see demarcation disputes or issues in play.

I used to like Bill Shorten. I felt he was someone I could trust. After Q&A I see him as a politician who will say whatever he thinks he needs to say to get votes and or support.

Newsagency businesses in Australia are not protected whatsoever. Nor should we be.

Here are Bill’s contact details for newsagents who would like to educate him:

PO Box 6022
House of Representatives
Parliament House
Canberra ACT 2600

Tel: (02) 6277 7320
Fax: (02) 6273 4115

Twitter: @billshortenmp

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Newsagency challenges

How one newsagent used space reclaimed from magazines

A newsagent in country Victoria trimmed magazine space recently by 90 pockets following a review of magazine performance and the completion of a magazine relay.  They converted the traditional magazine tierage into shelves which are being used for gifts.  The photo shows the result of physical changes.  Here’s what they had to say about the process when I asked them what they did and why:

We reduced our pockets by 90 spots. The shelves are just veneered and edged 300mm strips of chipboard with timber that has been cut to size, beveled and attached to give a horizontal shelf. The beauty of them is that they can be moved anywhere amongst our magazine fixtures and cost bugger all to do. We initially put them at the front of the magazine rack to show off the new range but have now moved them to the other end closer to the cards display. Giftware sales are up about 95% on last year so it will be interesting to see the effect of this latest move on giftware & card sales (which are up about 10%).

Incidentally, the move came as part of a magazine relay last week which I used your guidelines for – magazine sales were tracking downwards at about 8% p.a. but we are now showing a 14% increase on same time last year and hopefully will see this increase again as the relay kicks in. We have received lots of favorable comment on the relay so I have my fingers crossed!

I am seeing newsagents use reclaimed magazine space for a range of complimentary products.  Overall, I am seeing newsagents approach the opportunity with care and in a way which is sensitive to them remaining a newsagency.

While some magazine publishers may be concerned at the moves, overall they should not be. There are plenty of titles at the bottom end of the market which are not selling and just take up valuable retail space.  Also, in some newsagencies, more magazines can be displayed in less space. The freed space is all about driving sales.

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Gifts

Brilliant display for new Build Lord Nelson’s Victory partwork

Check out the front-of-store display created by Renee at one of my newsagencies. Facing out into the mall, passers-by can’t miss this promotion for the new partwork Build Lord Nelson’s Victory. It’s a dramatic display in keeping with the ship which participants would build from the part series.  The display has been seized by Renee as an opportunity to tap into the marketing around the launch of the part series and present a fresh look for the business for the next week or two. Okay so the dollar margin on issue one is not great, who knows the total value of a new customer this new display might attract … if they are new to the business and sick they could be tremendously valuable.

 

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magazines

Promoting Real Living magazine

Sales of home and living titles are on the rise for us following our magazine relay five months ago. We are seeing well into double-digit growth. Real Living is a popular title and it benefits from time in the spotlight. That’s what we are doing with this display on the aisle end for our women’s magazine aisle.

We also use Real Living on our magazine shelves to denote the start of the home and living section as part of our beacon branding strategy.

 

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magazines

Promoting UFC magazine

We are promoting the latest issue of UFC magazine with this display down in our men’s reading area. The cover for the magazine and accompanying poster work well with the contrasting background colour used by the creative team in-store. In addition to this aisle-end display for UFC, we have the title in prime position in with our sports and fitness titles.

While sales are not massive for us, UFC is a regularly browsed title.  I think there is potential for growth.

 

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magazines

News Limited in crisis on newspaper home delivery

There is a crisis gripping News Limited on the future of newspaper home delivery in Australia.  My understanding is that there is disagreement between circulation executives in some News Limited state offices and their bosses at Holt Street in Sydney on the future model of newspaper home delivery and whether newsagents are part of the model.

The crisis in had its genesis in 2009 when somewhere between 100 and 300 newsagents handed their newspaper home delivery businesses back to News, claiming that they were not financially viable.

The company responded by saying that it would undertake a major review of newspaper home delivery. At around the same time they implemented what was called the migration project in South Australia whereby they took control of newspaper account payments by home delivery customers, even those directly won by newsagents.  This cut customer traffic to some newsagencies as accounts could be paid through News rather than the shop.  News also took delivery of newspapers to key hotels and some hospitals away from newsagents, they pushed their newspapers into alternative retail outlets such as coffee shops, did deals where newspapers were included in fast food meal deals and began a campaign of engaging with advertisers resulting in massive numbers of newspapers being given away at sporting venues, fitness centres and cinemas.

In short, News Limited responded to newsagents quitting newspaper home delivery by doing everything except working with newsagents on an alternative model.  News executives will say that I am wrong and that they did engage with newsagents on an alternative model. I know what they did and would not call it engaging with newsagents.  It was as if the company had a plan and they needed to ‘engage’ so they could tick a box and say they had engaged if asked.

My understanding is that today there are several News Limited executives in some parts of Australia in strong disagreement with the direction being taken by the company out of Holt Street Sydney.  Some of those executives remain silent for fear of their jobs.

Whereas for decades News Limited left its state based newspaper silos (Herald & Weekly Times, Advertiser Newspapers, Queensland Newspapers etc) to control the management of newspaper home delivery, now all decisions around newspaper home delivery come out of Holt Street.  The decisions are delivered by the state silos but they are decisions out of Sydney.

Some in News want home delivery management to revert to the states where managing relationships was easier and, usually, more successful for the newsagent, News an the customer.  Others in News want the company to break free from newsagents and move to a fresh model.  My understanding is that News has financial models of an alternative indicating that it is not financially viable, that they could not engage contractors prepared to deliver newspapers by early morning for a few cents remuneration each.

Just over two years ago News Limited told newsagents that they were undertaking a review of newspaper home delivery and that newsagents should expect changes. News executives told newsagents that they had three options: do nothing, consolidate or specialise. Newsagents were told that to do nothing was not an option.

Last week, News limited told newsagents that they were going to do nothing. I am told that this has shocked some in News Limited state offices.

One school of though is that the plan the company had is not financially viable and now they need to find a way to appease newsagents without letting newsagents increase the fee for delivering newspapers to rise to anything close to what would be necessary for it to cover newsagent costs.

This is the crisis in the company. One group wants to deal with newsagents equitably and continue the newsagent managed home delivery model. Others want to cut newsagents loose and strike contracts outside of the traditional newsagency model. I’m told that the dollars don’t support the latter.

News Limited controls the key levers which determine how much a newsagent delivering newspapers makes – they set the gross margin from the delivered product, the delivery fee charges, what can and can;t be delivered with the newspaper, the frequency of payment and how the newspaper is to be packaged for delivery.

By any measure, many newsagents are the working poor, often making just a few dollars an hour for work which often starts at three or four in the morning and runs through until six at night – following a model created and controlled by News Limited. While News is not responsible for this complete picture, it has been a key player for decades and in that time has resisted many moves for fair and equitable remuneration for newsagents.

News Limited should engage in a mutually respectful business discussion with newsagents on the future of newspapers and newspaper home delivery. This should be a serious discussion pursuing a mutually beneficial outcome. News executives need to trust newsagents when they say that they will not lose customers if the fee for the home delivery of a newspaper increases. Newspaper readers are prepared to pay closer to the real cost of the service.  Addressing this price anomaly will create a mechanism through which the medium term future of newspaper home delivery by newsagents can be assured.

Newsagents with a newspaper home delivery component to their business need to engage on this issue. They need to sort out what they want and go for it. Doing nothing is not an option.

For background reading, check out:

  1. News Ltd newspaper home delivery fee increase is socially irresponsible.
  2. News Limited cost cutting leaks.
  3. Proof of a sick newspaper home delivery model in Australia.
  4. At 920g is the Sunday Telegraph unsafe to deliver?
  5. Newspaper contracts causing distress.

I am in Sydney today meeting with newsagents on other matters. I am sure this issue will be raised. I understand the anger and frustration of newsagents. The only way to address this is through a unified and committed approach.

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Ethics

Selling charms and magazines

We are displaying at one of our counters a new range of cute charms along with magazines which relate to the charms product line.  While the charms are targeted at young girls, we have taken the opportunity to pitch a beading and a jewellery title.  We will play with these titles through the week to see what works best.

Introducing a new line, the charms, like this at the counter works as it ensures that a broader cross-section of our shoppers gets to see that we have the product in-store.

When selecting new products we look for items which connect with products from a different category which we carry already. The charms fit because of the magazines we carry and the agree group to which they appeal.

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Gifts

Connecting with iPad users

We are promoting The Essential Guide to iPad with the full cover of the magazine on show thanks to our ideal front pocket placement. We wanted to make the most of the opportunity of the free iPad cover which comes with this issue. We have been able to place the title so that the promo header does not cover the title behind too much.

Newsagents are struggling to connect commercially with the iPad user. This title and other iPad titles provide us with an opportunity of some sort of connection at least. I think this is the type of title we need to promote.

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magazines

Promoting New Idea and shampoo

We are promoting the latest issue of New Idea magazine which is packaged with free Pantene shampoo and conditioner in several places in-store including this prime counter position.  While the package is a challenge to display, we have made it work to leverage the opportunity for maximum sales … and sell it has!  This counter location works the best because of the sep shelving we have in this position.

Unlike supermarkets where magazines are whacked into a pocket, we have thought about how to treat not only New Idea but other titles with gifts so that we can maximise sales and respect the product.

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magazines

Google on retail?

Peter Switzer on Sky last week interviewed Ross McDonald from Google about retail. It frustrates me when media outlets get one ‘expert’ who pushes the line which suits the business they represent. A Google representative was always going to talk about retail from a Google perspective.

While there is no doubt that retail is tough, plenty of retailers I speak with are enjoying success in their businesses, attracting new customers and driving more efficient baskets. Independent retailers are more nimble and therefore more responsive to today’s challenges than big retailers who tend to catch media attention.

The Switzer interview is worth watching if only to get a perspective on the structural change impacting the sector. This is real. But so is the positive response from many newsagents to the challenges of structural change.

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retail

The Australian reports on a price drop for ACP Magazines

The media section in The Australian today leads with a report claiming that the private equity business which owns Nine Entertainment, and through this ACP, would accept a price of $300 million for the business, a considerable drop in what was reported as the sale price.  The report says that analysts feel that CVC might get a better return by selling the parts of ACP rather than the whole business.  This will be an interesting story to watch given the direct connection with our businesses.  Check out page 34 of The Australian today.

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magazines

Staff cuts at Gordon and Gotch?

For more than two weeks now I have been hearing about another round of staff cuts (voluntary redundancies?) at magazine distributor Gordon and Gotch. I am not that surprised given the profit downgrade recently announced by the Gotch parent company PMP.  With the share price at 38 cents, down from over seventy cents fur months ago, cutting costs has to be on the agenda. Click on the image to see the share price chart from the ASX website.

The challenge for Gotch, if they are indeed cutting staff, is that customer service often suffers from such a move. They are already under performing rival magazine distributor Network Services on the customer service front and fewer staff would have to make that situation worse.

To fix the situation, Gotch needs to get serious about working with newsagents, supplying magazines at a volume more closely aligned with sales, implementing real sales based replenishment and working more closely with publishers on providing timely sales data.  Some system changes and a better customer service attitude from the top of the company could help build faith, sales and the financial return.

What ails Gotch needs top be addressed from the top down. While cutting staff may reduce costs and this may provide some relief around the share price, it is not a plan on which the  business can rely to build the business.

Sort of related … What surprises me is that I have not seen a response from IPS, the Fairfax owned new magazine distribution business, to the Gotch challenges. IPS has a model which could see it pick up some of the Gotch titles and thereby lift its relevance to newsagents and further leverage its seven day a week delivery service. With logistics being such a high cost in magazine distribution I would have thought that IPS could offer a model of reduced costs for publishers.

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magazine distribution

When a free gift hurts a magazine

I was in a Woolworths supermarket yesterday and a Coles this morning and could not see the Whitney Houston Woman’s Day tribute issue which came out Friday.  After some searching I found it (in each store), leaning forward in such a way as to completely obscure the cover.  This issue comes with a free gift of a make up stick of some sort.  The gift made the top of the magazine more than twice the thickness of the lower part. When the title has been placed in the pocket no one had thought to do it in such a way as to allow the cover to be seen.  While I will never know, I suspect that this will hurt sales – in this supermarket at least.

Supermarkets don’t like to have to manage magazines. They want to be able to put out all the stock they receive and leave it there for the on-sale.  In our newsagency if we received this stock we would put less in the pockets and ensure that the full cover could be seen. We would then top up the pocket as the week goes. I suspect that this is what m oct newsagents would do.

In the supermarket they see a magazine as a SKU. They expect the supplier to care about merchandising and replenishment of the shelves. This is where our channel is different. I wish that all of our suppliers would take more note of this. Newsagents would have derived more value from this gift than the supermarket I visited yesterday.

As for the gift itself, I don’t begrudge ACP placing it on supermarket product and not ours. Newsagents get gifts with Woman’s Day when supermarkets do not.

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magazines

Moshie Monster opportunity for newsagents

With the latest Moshi Monsters magazine out now we have an opportunity to promote not only the Moshi Monsters Magazine but access to the popular kids online game. We sell the Moshi Monster access thanks to Incomm launching this and other products to newsagents through the Touch platform. As you can see in the photo, we are promoting the online game vouchers with the magazines … this has worked a treat for us. Anything to extend the basket and get products from more than one category in there.

As well as the bonus sale from the Moshi Minsters card, we are reminding shoppers that we have this and hopefully they will think of us first next time they need a top up.

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magazines

Promoting Healthy Food and weight loss

We are giving the latest copy of Australian Healthy Food Guide some time in the sunshine with this prime positioning in among our food titles.  Being a low volume and physically small title it is easy to overlook. I wanted to get it out front to show our food title shoppers that we cater to healthy eating as well as more indulgent eating.  This is one of those titles which could easily fit in two sections of the magazine department: food and health & fitness. We give it a shot in both even though they are located in the same aisle. I am hopeful that this issue of Australian Healthy Food Guide will work particularly well because of the words weight loss on the cover. They can be magic for sales.

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magazines

Promoting Men’s Health magazine

We are promoting the latest issue of Men’s Health magazine from Pacific Magazines with this high profile display in among our sports titles. We are also giving the magazine a run next to newspapers this week to attract impulse purchases as it is the type of title which is easily picked up and purchased off location.  This type of additional promotion an be done right through the on-sale as Men’s Health, for us at least, sells right through.

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magazines
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