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

Well done Fosters on fighting for independent retailers

Fairfax newspapers are today reporting that Fosters intervened to stop delivery of a range of their beers to Coles and Woolworths once the heard of plans for major discounting by the supermarket giants.

I am concerned that it may only be a matter of time before the supermarkets target magazines in an effort to attract shoppers.  Can you imaging how shoppers would ready to Woman’s Day and New Idea priced at, say, $2.95?  I hope that magazine publishers and distributors support their independent retail channel as Fosters did it its blocking action.

While loss leader pricing has been around for decades and is an important part of any retail business strategy, the current price drop craziness is designed to take business from independent retailers and this is where Australian consumers risk suffering.

Coles and Woolworths are not committed to low prices every day unless they squeeze product manufacturers, supply chain partners, employees and others to carry the financial cost so that their profits are not affected.  This is where there is a considerable community cost in their much hyped discounting campaigns.  I feel for the farmers and others who are carrying the cost of the milk campaign being run by Colesd and Woolworths.

These giants are trying to fundamentally change price perception forever as they know this is a game they can win – they have retail sewn up in this country.  Their negotiating power is extraordinary.

The community as well as independent retailers need more suppliers like Fosters who are prepared to step in and protect local jobs.

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magazine distribution

ANF supports newsagents in EFTPOS fee fight

The ANF yesterday issued a media release publicly joining the fight against the EFTPOS fee changes.  Click here to see a copy of the release. Thee release includes this quote from ANF CEO Alf Maccioni which goes to the heart of the matter:

This completely removes the previous level playing field for Australia’s thousands of small businesses including our community newsagents.  Consumers and small business are the ones who will pay for this, the big banks will get increased profits and Coles and Woolworths will continue to receive a rebate and get a further leg up to increase their market advantage over struggling small businesses many of whom are still recovering from recent natural disasters.

The release also makes these clear and excellent points:

The ANF opposes these new charges that EPAL state are to support investment in the EFTPOS network and disputes any claim that retailers just need to negotiate with their bank to absorb these new fees. “The investment will end up being on the retailer side in necessary upgrades to point of sale equipment to integrate the changes, adding further cost. The banks are on either side of the deal so they will not absorb any of the new fees and newsagents do not have the bargaining power of the major retailers to demand it.” Maccioni said.

The highlighted section gets to the heart of the matter and the excuses being made by the banks that retailers will not suffer.

It would be good if newsagents could use their contacts with local newspapers to get coverage for this release.  It is important for local retailers – a constituency which is important to local newspapers.

To see more covered on this blog about the EFTPOS fee issue, please click on the EFTPOS fees category on the right hand side.

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EFTPOS fees

Old magazines never die

whitedwarfbag.JPGOld copies of White Dwarf magazine which failed to sell when sent out the first time have been gathered up, bagged with three to a bag and sent to newsagents as a Value Pack prices at $10.00.  In the bag I checked were White Dwarf issues from October 2009, November 2009 and December 2009.  Maybe I am wrong and these old titles will sell.  If so, great.  If not, then I will be wondering why we have been lumped with old product like this.  At least fans can actually see what they would be purchasing.

So, old magazine never die, they live on on the endless loop between newsagencies and magazine distribution centres … emitting carbon along the way, soaking up our cash and taking space from a title which may have a better chance of selling.

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magazine distribution

Promoting Gardening Australia

mag-gardenaust.JPGWe are promoting the latest issue of Gardening Australia magazine and the free gardening gloves bagged with the issue with this aisle end display capping two busy magazine aisles.  The extra effort in selecting background colours for the display to compliment the cover of the magazine certainly pays off.

We are planning an additional display at the weekend at the counter – with the newspapers and showing off the free gardening gloves.

This is one example where bagging the magazine is necessary – it is the only way to deal efficiently with the gardening gloves.

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magazines

Puerile Today Tonight report on Retail Customer Service

Today Tonight on the Seven Network tonight ran a puerile report on customer service in retail.  It was like they wanted to show the customer service in retail is bad and only showed such experiences.

The report did not provide any information about how many stores they visited to get their examples. Also, they only showed the money shot in each instance – the poor service.  A fair report would have provided context.

These are important points since they said that poor customer service is the reason retail is in trouble in Australia – without providing any evidence to backup their claim.

Sure, customer service can improve in many retail businesses.  There are also many stores offering exceptional service.  I guess that does not make good television.

While Today Tonight is not known for running balanced reporting, it is frustrating when they bag customer service in retail and ignore one of the largest independent retail channels in the country, newsagents.  There are many newsagencies serving up quality customer service experiences every day. The people at Seven should know because they own Pacific Magazines and Pacific has an excellent relationship with newsagents.

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Customer Service

When a landlord competes with a tenant

Shopping centre property giant Westfield is to compete with small business newsagents by opening Ticketek ticketing agencies at customer service desks in its shopping centres, in competition with many small business newsagents offering Ticketek in these sames centres.

Despite being open for longer hours than centre management customer service desks, Westfield prevailed upon Ticketek to permit the opening of these new businesses in competition with incumbent newsagents.

I wonder if Westfield is paying the usual fee for each new sales location which newsagents have to pay?

Landlords hold the permitted use clause in a tenancy lease to control what we can offer in our newsagencies.  You either buckle to their interpretation of what you can sell or face a raft of penalties to your business.  They say the permitted use clause is there to protect your business as they will fight for you if someone tries to compete with our when their lease does not permit it.

What do you do when the landlord is the competitor, as is to be the case in many of the 37 Westfield shopping centres?

I feel for the newsagents affected.  I especially feel for those who are part of a marketing group which is inactive on this issue.

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Ethics

Selling out of The Monthly magazine again

We are set to sell out of the latest issue of The Monthly magazine for the second time.  This would not have happened had we accepted the initial scale out and acted in an average way.  Instead, we chased more stock and setup a tactical display at one of our sales counters.  We are very proud of the sales result. Most have been impulse purchases = more margin dollars for each sale involved.

Further proof that while magazines are challenged, incremental business is there for the taking.

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magazines

Slow Cooker Cookbook – it keeps on selling

slowcookercookbook.JPGThis past weekend for a bit of fun I put a small supply of copies of the ACP Slow Cooker Cookbook at the counted, between the Herald Sun and The Age. Our sales were excellent all through last year and we moved the title back with the cookbooks expecting regular sales.  On the weekend we sold three copies at the counter in two days.  Each purchased on impulse.  Yes, a $1.10 Herald Sun customer adds a $12.95 cookbook to the shopping basket.  A nice margin dollars bonus.

Another example of pretty simple tactical thinking driving magazine sales.  Any newsagency has traffic for this.

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magazines

Justin Bieber proves that I am not the customer

biebercards.jpgAlmost a month ago I questioned the merit of the Justin Bieber cards we were sent through the magazine distribution channel.  While my disappointment with the 25% margin remains, the cards have sold very well.  Much better than I expected.  So much so that the team at one of my stores ordered extra stock and, yes, they are selling too.  Once again proving that I am not my customer.  We have them at the counter at the height which is friendly for girls ten to fifteen.

At the gift fairs I have attended this year in Australia and New Zealand, plenty of newsagents who trade in the gift space have shared stories of how they have learned the hard way they they, too, and not their customers.  Reminders like this are important as they drive us to create shops which appeal to our customers rather than ourselves.

This is where our team members can help.  In many cases, they are more likely to be our customers.  I see too many newsagents stifle their team member.  Saying no to their ideas could be denying your newsagency a terrific money making opportunity.

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magazine distribution

Promoting Famous magazine

mag-famous-210311.JPGWe are promoting the latest issue of Famous magazine with this display which can be seen  by customers as they enter the store.  Famous is a popular title with a good price point and a  audit result.  This means it is easier for us to leverage through impulse purchase displays like this one.  We will leave the display up until Wednesday when we are likely to have more demands on this ultra premium space.

Famous does not often get feature treatment and it still performs well.  I figured it would have to do even better if we give it a regular push – like with this display.

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magazines

Promoting Woman’s Day magazine

mag-wd-230111.JPGWe are promoting the latest issue of Woman’s Day and the free cookbook attached to the cover with this display at the front of our magazine department.  We are also promoting the title on an impulse stand on our lease line facing out into the shopping mall.  The reaction on day one of the on-sale has been good.  I am happy to do this as it is what is required.  As you will see in other psost today, however, I really appreciate the opportunity to promote titles and products which newsagents do not usually promote.  A point of difference is vitally important in retail.  hence the need for more tha  the usual number of feature and display locations in-store.

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magazines

Cover-up makes a magazine pack look cheap

quilting-mag.JPGWe received this bagged pack, Quick & Easy Quilting, on Friday through Network Services from Universal Magazines like many newsagents I am sure. The dark grey band across the plastic bag covers the title of the magazines inside the bag. It looks ridiculous. What were the production people at Universal thinking? Didn’t quality control at Network Services pick this up?  The product is sub standard in my view.

Why are they hiding the title – this is what customers will want to see. Are they trying to hide the title from newsagents so we think this is a new product? Do they want to hide it from customers? Who knows?

The folks at Universal Magazines, and probably Network Services, will say here he goes complaining unfairly about Universal again. They decided to cover the titles of the magazines in the bag.  They decided to send us a product which is of poor quality compared to other product on our shelves. They set themselves up for attention here.

Anyone who spends time watching magazine browsers in a newsagency will know that they do not like bagged magazines.  Especially special interest titles such as quilting titles.  Shoppers want to know if they have the patterns.  How can they tell unless they can browse the title.  I guess the discounted price counts for something.  But, then, the publisher and distributor do not get the customer complaints.  Nor do they have to pick up the trash when bags are opened.

While there is a title printed above the grey bar, you are left wondering what is really inside when you can faintly see a title different to the that which is printed on the outside of the bag.

I will leave the issue of bagged magazines for now – my views are well known.

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magazine distribution

Good SMH report of EFTPOS issue

Michael West had an excellent report in The Sydney Morning Herald on Saturday about the EFTPOS fee issue raised by the recent EPAL announcement.  If you are not up to speed with this issue, please read my blog posts here and here.

Jewellers, too, are taking up the issue – see the report in Jeweller Magazine.  The report includes this straightforward explanation:

Under the new system, there will be a new 5 cents interchange fee for standard point-of-sale transactions of $15 or more. For transactions below $15, there will be no fee and retailers will get 15 cents for each cash-out transaction they perform.

The new system replaces the old one where retailers and their banks received a rebate of approximately 5 cents per EFTPOS transaction.

Newsagents need to act if they want their voice to be heard about the new EFTPOS fee regime.  Not acting could mean that the changes proceed and this would mean that Coles and Woolworths would have another competitive advantage over us.  Imagine what a consumer would decide if wanting to purchase more than $15 worth of magazines, stationery or greeting cards.  Do the go to the newsagent where there is likely to be a surcharge or do the go to one of the big two where there is no surcharge.

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EFTPOS fees

The amazing magazine display

ballaratcakebook.JPGClick on the image for a better look at the stunning display creates at newsXpress Ballarat in Victoria to promote the classic Children’s Birthday Cake Book.  As I mentioned last week, this cookbook is selling extremely well.  I know of stores where more than 50 copies have been sold.  This display at Ballarat is designed to leverage off the already proven success.  Customers see it as they enter the store.  Since most purchases are on impulse, the additional margin dollars per sale are tremendously valuable. I’d urge newsagents to copy the idea.

Check out other recent magazine promotion successes I blogged about earlier in the week.

Just a note on the birthday cake book.  The newsXpress newsagency marketing group identified this as a sales opportunity prior to its release last month. It provided its members with tactics for driving sales success.  The result is above average sales and extra margin dollars banked.  The group had the same success with the Slow Cooker cookbook last year with ACP air freighting in additional stock to keep up with newsXpress demand.

I’d be glad to receive photos from any newsagency of stunning displays which are driving exceptional sales.  The more we can share and motivate the better.

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magazines

The perpetual magazine relay

mag-relay.JPGWe are engaged in what I would call a perpetual magazine relay in one of my newsagencies.  Not a week goes by without is moving categories and rearranging titles.  This work is done based on analysis of sales data and considering customer flow.  We chase growth first up and then consider how we can support falling titles and categories.  Our attention to layout keeps the magazine offer fresh.  This is good in a shopping centre situation where some days up to half your customers may not be regulars.

While our perpetual relay may seem extreme, think about the other extreme – newsagencies where the location of magazines is not reviewed.

My experience is that a major magazine relay needs to be undertaken at least once a year.  If this is not done, newsagency employees and customers become store blind and the shop can feel like it is not moving with the times.  While some older customers will complain after a relay, the sales lift will make those few complaints worthwhile.

A relay in a newsagency with around 1,200 magazine pockets will take two people around half a day to complete as long as good planning has been undertaken in advance.

In our newsagency where we are engaged in a perpetual relay, we spend less than a hour a week.

If you want to do a magazine relay but are not sure where to start, call or email me and I’d be glad to help out.

Do something though – don’t be an old school newsagent with the same magazine layout year in year out.

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magazines

What are you doing about the EFTPOS fee hike?

Further to my blog post yesterday about the small business EFTPOS fee hike, what are newsagents reading this doing about it?  I hope that you have written, emailed and called your local member of parliament, your local chamber of commerce, your local senators and your bank.

Here we have a new fee structure which EPAL decided under direction from from the Payment System Board which is part of the Reserve Bank. This all had its genesis in 2006 when there were reforms were made to EFTPOS.

Coles and Woolworths have cleverly positioned themselves to have a seat at the EPAL table.  How the RBA has allowed this and the evident lack of representation for independent and small retailers is a question which must be asked.

The latest EFTPOS changes are supposed to increase competition.  This is true if you see Coles and Woolworths being given a valuable financial free kick to compete with independent and small businesses as being fair competition.

So, what are you doing about this?  Yesterday I posted a letter drafted and provided by the ANF.  I urge all newsagents to engage in this campaign. This is important people.

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EFTPOS fees

Challenges for retailers in New Zealand

I have been in New Zealand twice in the last two weeks – returning yesterday from the latest trip. On each occasion I have had the opportunity to speak with a range of retailers. They are doing it tough, tougher than in Australia. The New Zealand economy was struggling before the Christchurch earthquake. Since this awful event shoppers have pulled back and this is impacting retail across the board.

The good news is that entrepreneurial retailers are employing new ways of attracting customers. The best I have seen is the local connection. This made me think of newsagents.

Pitching for local business in support of the local community is a strong message for New Zealanders who are working together to lift the country from the considerable economic and emotional cost of the Christchurch earthquake.

This same message works for Australian newsagents. It is our point of difference over other local outlets selling newspapers, magazines, greeting cards and stationery. Most newsagents can say: we live locally, we shop locally, we employ locally and we support local community groups and charities.

Making the local connection can be powerful for a business. It can be a way to rebuild in tough times as some New Zealand businesses I have seen this week show.

The key is to move forward. Too often I meet people, newsagents and other retailers, who wallow in self pity about economic conditions or personal circumstances. If that energy was directed into taking small steps forward they would find their situation improve. This is what I have seen earthquake affected retailers doing in New Zealand in the last week.

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Newsagency management

Promoting Precious Rocks and Gems at the counter

rocksgems.JPGWe are promoting the first issue of the Precious Rocks and Gems part series behind the counter at one of my newsagencies.  The display looks stunning (better than indicated by the photo) and it is driving good sales.  With most purchases on impulse I’m happy with that.

We are helped by having a rear counter wall built and lit for this type of feature display.

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partworks

How you can help fight on the EFTPOS issue

The ANF has generously provided a letter for newsagents to use to lobby parliamentarians of the EFTPOS issue. Click here for a copy of the letter which you can personalise and send.  I urge newsagent to engage with this. If the forecast changes proceed, we will face higher bank fees per EFTPOS transaction than major Coles and Woolworths. This will further erode consumer perception of newsagents and other smaller and independent retailers who compete with these two retail giants.

The ANF is lobbying from their end.  Tyro, the Broadband EFTPOS company is lobbying from their end.  Please engage in this campaign. The more newsagents who write the better.

Here is further background on this issue:

Eftpos Payments Australia Limited, EPAL, has been given the authority to set a multilateral fee only limited to the cap of 12 cents.

EPAL members are:

  • Australia and New Zealand Banking Group Limited
  • Australian Settlements Limited
  • Bank of Queensland Limited
  • Bendigo and Adelaide Bank Limited
  • Cashcard Limited
  • Citigroup Pty Limited
  • Commonwealth Bank of Australia
  • Coles Group Limited
  • Cuscal Limited
  • Indue Limited
  • National Australia Bank Limited
  • Suncorp Metway Limited
  • Westpac Banking Corporation
  • Woolworths Limited

On 27 November 2009, the RBA varied the EFTPOS Standard, based on the advice of the PSB. The purpose of the variation is to promote competition and efficiency in the Australia payments system by making the regulation of multilateral interchange fees in the EFTPOS system more consistent with that of the scheme debit system. The varied EFTPOS Standard imposes a cap on the weighted average of multilateral interchange fees set by the newly established EFTPOS scheme (EPAL) of 12 cents paid to the issuer – the same as for scheme debit interchange fees. The variation of the EFTPOS Standard is expected to enhance the ability of the EFTPOS system to compete with the international debt card schemes. The varied EFTPOS standard does not change the way in which bilateral interchange fees are regulated. Bilateral interchange fees on purchase transaction will remain regulated between 4 and 5 cents paid to the acquirer.

Check out this link.

The bilateral interchange fee clause allows Coles and Woolworths to avoid the fee increase. The next step is for the banks to terminate bilateral agreements and move to the multilateral agreement. Then the acquiring side of the banks has to decide on whether it will pass through the interchange fee increase from the issuing side to the merchants. It would be strange to expect that the banks raise the fee to then absorb it  And then the merchants have to decide on whether they pass through the increased costs to consumers via price increase, surcharge EFTPOS, reduce or eliminate EFTPOS acceptance or absorb the cost increase in their margins.

The lobbying by newsagents and other independent retailers has to mobilise media, politicians and associations so as to move the EPAL board members to revise their fee increase decision. It is untimely and unjustifiable to raise EFTPOS fees. The merchants carry most of the burden involved in upgrading the EFTPOS network for EMV (chip) and contactless. They should continue to benefit from the negative interchange fee.

In my view it is grossly unfair that small retailers like newsagents are slugged with the fee to fund EFTPOS, when Woolworths and Coles are not.

Please engage in this campaign.

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EFTPOS fees

How much is a Woolworths or a Coles tenancy worth compared to a newsagency?

I have been sent tenancy data for a regional shopping centre which shows that one of the two largest supermarkets in Australia pays $292 per square metre while an independent newsagent is expected to pay three times that in rent.

The situation is even worse once you factor in that the major supermarket makes no contribution to outgoings – these are all covered in the small independent retailers.

The major supermarket has generous rent review provisions which small business retailers are all on anything from CPI + 1% through to a flat 5% annually.

The final kick in the guts to independent retailers at this regional shopping centre is in the area of lease term.  The major supermarket has a 20 year lease with two ten year options.  Independent retailers are given a five year lease and no option.

While I appreciate that there is a considerable difference between Coles and Woolworths and an independently owned newsagency, it is clear to me that we independents are funding the supermarkets.

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Newsagency challenges

Coles and Woolworths – our biggest competitors

Coles and Woolworths continue to focus on taking business from newsagents with considerable investment in revamped magazine, greeting card and stationery offers within their supermarkets.  Coles is continuing to tweak its newsagency within a supermarket concept.

Newsagents need to be aware of this direct attack while they read my other two blog posts today.  These giants are moving on us on a range of fronts.  the questions is – are we prepared to fight?

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Newsagency challenges

Comparing magazine distributor performance

magazine-performance.jpgThe 1,700 newsagents using the Tower Systems newsagency software can very easily compare the performance of magazine distributors (or any supplier for that matter) across trading periods.  Using the Monthly Sales Comparison report in one newsagency earlier this week, I was interested in magazine performance for the first two weeks of March 2011 compared to 2010.

Click on the tiny image to see what I am talking about.  I have clipped out three lines from the the page report to illustrate the value of comparing magazine distributors.

In the newsagency for which I ran the report, magazine unit sales overall are down 8% comparing the two week periods from different years.  As the small sample of the report shows in the image, for women’s weeklies, unit sales are down 16% for Network Services titles and 6% for Gordon & Gotch titles. Indeed, for most of the report in this newsagency for this trading period Gotch titles perform better than Network titles.

I think it is important that newsagents have this information.

It would be even better if newsagents could take this a step further and report easily by publisher.  Sadly, the data provided with electronic invoices does not identify publisher so the onlyto achieve such a comparison would be with manual work and this would be too time consuming for newsagents.

Magazine distributors and publishers committed to transparency would provide newsagents with a publisher code for each title.  As things currently stand, we can only easily report on the data at the distributor level.   (I should note that in some reports we do strip our Pacific Magazines titles from Gotch and ACP titles from Network – this is done with manual work separating these.)

Outside of magazines, in various departments this easy supplier level performance comparison can be useful for newsagents: greeting cards, tobacco and stationery.

From a magazine perspective, the supplier breakdown by category enables newsagents to assess distributor performance and to use this when considering space allocation and current supply action.

Now, a note about the sample size.  I do not recommend that newsagents compare trading periods for two weeks as I have done for this example.  Comparisons should be at least a month.  Ideally, three months – comparing to the same three months a year earlier.

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magazine distribution