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

Tyro makes it case on the EFTPOS interchange fee announcement

Jost Stollmann CEO of Tyro sent me an email today with an interesting perspective on the EFTPOS interchange fee announcement yesterday.  I share it here as it is relevant to newsagents who compete daily with Coles and Woolworths.  Here is what Jost had to say:

Now it is all in the open. The banks, Woolworths and Coles have agreed on a new EFTPOS fee regime. The two big retailers continue to get paid by the banks an interchange fee of 4 to 5 cents for EFTPOS transactions whereas all the other Australian retailers get slapped with an estimated average 11 cents fee increase per EFTPOS transactions. Instead of receiving also the 4 to 5 cents as up to now, they have to pay 5 cents for a standard EFTPOS transaction. EPAL also charges a new scheme fee of one cent to the issuer and one cent to the acquirer. The volume is big. The Australian EFTPOS system processes 2 billion transactions per year. The facts:

1. According to yesterday’s Australian Financial Review, Woolworths and Coles have confirmed that they are not impacted by the EFTPOS fee increase because they process EFTPOS transactions directly with the issuing banks on the basis of bilateral arrangements. So they will continue to receive a rebate for each EFTPOS transaction based on the 4 to 5 cents interchange rate that the card issuing banks pay to them.

2. The rest of the merchant world has to expect higher EFTPOS fees from 1 October 2011 on. EFTPOS Australia Payments Limited (EPAL) has reversed and increased the EFTPOS interchange fee by 9 to 10 cents. It has added 1 cent scheme fee charged to issuers and 1 cent to acquirers. When banks pass through the cost increases, merchants have to decide whether they absorb the cost increase, raise prices, surcharge EFTPOS transactions or limit ETPOS acceptance.

3. Banks as well as Woolworths and Coles are in the enviable position to receive up to 5 cents per transaction to fund the EFTPOS technology upgrade of their central systems and to support their bottom line.

4. 325,000 merchants with 700,000 terminals, from Harvey Norman to the corner store, will have to worry about and pay to upgrade their EFTPOS technology. Their terminals have to be upgraded and/or swapped out to accept EFTPOS EMV (chip) and contact-less cards. They will have to motivate and pay their software vendors to integrate new EFTPOS functionality into their point of sale software or web sites.

The payment space is complicated, but Tyro works tirelessly to create transparency for the media and advocate fairness for the merchant community. This fee regime is not aimed at making EFTPOS competitive and ensuring its long term survival as claimed.

This is what Woolworths general manager for financial services, Dhun Karai, had to say to the AFR: “The likely threat for other merchants is that to provide revenues to the banks, they will be slugged with higher merchant service fees on eftpos which will diminish the attractiveness of eftpos in comparison to scheme debit cards.” She said Woolworths and Coles directly processed transactions with the issuing banks, which meant they faced no impact from the change.

So, this new EPAL regime is all about raising bank fees with the dire consequence of making EFTPOS less attractive for merchants to invest into and to offer to their customers. Merchants now suffer a significant competitive disadvantage compared to Woolworths and Coles. Cardholders will ultimately pay with higher prices, less competition and availability.

Recent demands that banks absorb the interchange fee is beside the point and naive. It would mean that the big bank issuing side raises fees and big bank acquiring side absorbs the same fees. They could have resolved that with internal accounting. The interchange fee is the problem, because it is not exposed to competition. No retailer or association is able to negotiate the interchange fee with his bank. This bank fee increase has to go! It is unjustifiable and untimely.

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EFTPOS fees

Cheap copy paper ad covers newspaper masthead

smh-090311.JPGI was shocked at Sydney airport this morning to see this ad from Staples offering copy paper for $1.99 a ream covering the masthead of The Sydney Morning Herald newspaper.  The Fairfax advertising department have once again accepted payment for the trashing of what was a venerable brand.  I feel for the editorial people in Fairfax.

I have been banging on here about these masthead covering ads for a few years and generating little interest from newsagents.  Today, I have received more than 25 emails and text messages from newsagents about this Staples ad.  It has hit a nerve.

Staples is the old Corporate Express.  The US stationery giant purchased Corporate Express last year.  Staples is, in my view, the best stationery retailer I have ever seen.  I have been in more than 30 of their US stores and have been impressed almost every time.  Check out their website, it’s brilliant.  In fact, while Corporate Express still trades in Australia under that name, they are using the Staples name for their renewed onlne push – hence this ad.

Staples has excellent strategies for connecting with big businesses and small businesses.  It is in the small business space where they could do some damage to newsagent stationery sales.  Again, check out their website.

Newsagents – the stationery business you thought you had is not guaranteed … now more than ever. 

Copy paper for $1.99 is a shock and awe price.  Hopefully, newsagents will now take notice of Staples and of these insidious post-it type ads which are damaging newspaper brands.

I bet that newsagents are ripping the Staples ad off their newspapers.

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newspaper masthead desecration

Did your supply of Inked magazine quadruple this week?

inked.jpgA colleague newsagent has experienced a quadrupling of his supply of Inked magazine this week.  That’s right, supply from Network Services jumped from 4 to 15.  We cannot see any apparent reason for such an increase.  So, I am interested to know if any other newsagent experienced such an increase.  Click on the image for a screen shot from the Tower Systems software for the newsagency – you can see the supply and return data for the last six issues of Inked magazine for this newsagency.  There is no apparent reason for such an increase.

I know this happens often with both magazine distributors.  They say there is a reason – a promotion, a glitch or a mistake.  Yes, always a reason, always an excuse. Magazine distributor representatives need to understand that it is not their retail real estate, labour or cash put at risk by such ‘mistakes’.

If you received an increase in supply of Inked, please let me know.

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magazine distribution

Another not so Ultimate magazine from Media Factory

Newsagents, have you seen the Ultimate Guides to the iPhone and iPad?  I have not received these but have been told that if you look at the content you will see that it has been taken from other Ultimate Guides titles from Media Factory – making the content neither new or ultimate.

As I indicated yesterday, the line of recycled content being pumped out from Media Factory and pushed through to unsuspecting newsagents continues to grow.

This is a business which arose from the ashes of another publishing business which collapsed owing hundreds of thousands of dollars to Network Services.

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magazines

Promoting Cosmpolitan magazine

mag-cosmo-0311.JPGWe are promoting the latest issue of Cosmopolitan with this simple aisle end display which faces onto our dance floor.  The display is adjacent to our card department and our female cards in particular.  We think about adjacencies when creating displays, particularly between product categories.  For example, we are keen to get card customers purchasing magazines and vice versa.  While this happens naturally in newsagencies to a certain extent, we are always looking for opportunities to push this further.

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magazines

A trashed magazine from Media Factory

website-builder.JPGWhat a piece of trash Ultimate Website Builder is. This supposedly new title has done the rounds. Copies we received had two price stickers half ripped off. The product looks second hand. Click on the image to see a larger version and the ripped price stickers.

Inside the covers it does not get much better. The content is not new. It certainly is not ultimate in any way. Here is another title of sausage factory content from Australian publishing house Media Factory. The Jim Flynn company which takes cheap overseas content, probably sourced for next to nothing, and barely dressed up as fresh content.

Check the titles from media factory – one Editor.  This says something a out the content.

The Ultimate Website Builder title is, in my view, a sham, certainly not deserving of the title or the new moniker.

It galls me that Network Services requests a full copy return. What? … so Media Factory can send it out again. This is appalling. If the publisher wants full copy return they should fund this – our labour and the additional freight.

Newsagents are being a used with this title.  Maybe this is the title to test the suggestion by some that we have o obligation to return non ACP product as full copy returns.

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Ethics

Report on Auckland Gift Fair

I was fortunate to spend two days at the Auckland Gift Fair earlier this week. It was a big event, over six large halls at the ASB Showgrounds. While there was some crossover between the Australian Gift Fairs and the Auckland event, I was surprised to see greater diversity of product in Auckland. First up, they had more locally made products. Here in Australia similar items tend to be treated as tourist items. In NZ, they are more mainstream. The other difference was the mix of homewares in the gift space. It seems that more gift stores carry a selection of homewares products.

The hot product categories from what I could see, based on floor representation, are: scarves, candles – all sorts, homewares, glassware including innovative local glassware and children’s products.

The mood of the business owners was upbeat, the well known Kiwi can do attitude was evident on the trade show floor, particularly around conversations regarding the impact of the Christchurch earthquake.

It was terrific stepping outside the usual Australian Gift Fair mix for a fresh perspective on the channel.

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Gifts

Promoting Good Foor and House & Garden together

mag-foodhouse.JPGWe are promoting House & Garden and Good Food both on an impulse purchase display facing customers as they approach our sales counter. Space is tight and this was the best location available for the display. We will probably flip the titles at the weekend so that Good Food is in the better top position. While we have stock of the titles in their usual location, this co-location tactic is all about incremental business. Sometimes you just need to show customers what to buy.

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magazines

2011 AFL Tipping Competition now open

afl-tipping.jpgRegistration is now open for the 2011 Tower Systems AFL Footy Tipping Competition. Entry is free to ALL newsagents and suppliers.

This year we have changed the scoring system to introduce a Margin Game. If you correctly tip the winning margin in a margin game you will receive 3 points. 1 Point for the correct tip and 2 bonus points for guessing the margin! This means that there is a possible 10 points per round up for grabs! Click  to get started.

Prizes for the competition: First $250.00; Second $100.00; Third $50.00.

To join, please follow these instructions:

  1. Go to the Tower Systems web page www.towersystems.com.au.
  2. Click on the AFL footy tipping logo at the bottom.
  3. The footy tipping page will then load
  4. Click on Join, at the top of the menu on the left hand side of the screen.
  5. You will then be asked for a password to join, which is ‘retailer’
  6. Click on OK
  7. Enter in your Name, Email and Company Name and click on Submit Details. (Note you only need to enter information on the fields highlighted with an *)
  8. Make sure you note down your alias and passwords so you can log in again later, and enter your tips!

Each week, go to the Tower Systems’ web site – www.towersystems.com.au – click on the AFL button, enter your username and password and tip away.

Rules:

  1. Tips must be in by 5:30pm EST on the evening before the first game of the round, either Friday’s or Thursday’s. (No late tips will be accepted this year, no exceptions, none, nada, nope, no way, your late – you’re out for the week)
  2. Failure to enter your tips will see you get the Average score for the round.
  3. To play you need join before the start of the season
  4. A bonus 2 points will be awarded for a correctly tipped margin in the designated margin game. (This is generally the first game of the round)
  5. Have fun.

Tower Systems serves in excess of 1,700 newsagents around Australia with retail management and home delivery management software.

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Social responsibility

Recommending magazines to shoppers

whs3.JPGIn the international departure area of Melbourne Airport, beyond customers, is a WH Smith store.  At the front of the store is this stand with magazines they recommend.

The display is capped with a sign: WH Smith recommends Our No. 1 Magazines.   I like this, especially in a transit situation like the airport.

Newsagents considering a display like this should ensure that they own the fixture.  Do not get a fixture from a publisher for the display for it is only with your own fixture that you have control of the titles you promote in this way.  Since such a display is about your recommendations you need to ensure that you control what is placed there.

The WH Smith display shows top selling titles from Pacific Magazines and ACP Magazines on the top row.  An aware consumer is more likely to trust than if the top row contained titles from one publisher.

The only thing I would change about the display, for what it’s worth, is the placement of Frankie.  Given that this title is reporting the fastest circulation growth over the last two audits, it should be higher on the stand.

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magazines

Promoting tattoo magazine titles

mag-tatts.JPGWe have been chasing a broader range of tattoo magazines in one of my newsagencies  – to get us beyond the one title.  From what we sell elsewhere, growth is possible in this segment.  So, now that we have ore stock, we are promoting the more popular titles with this in-location display.

By promoting three titles we are demonstrating diversity within the tattoo segment in our newsagency.  This is important given that our nearest magazine competitors for this store are two supermarkets and a Borders store.  Tattoo titles do not feature in any.

If we get the sales lift we expect, we will add tattoo titles to our regular roster of segments which we promote in this way.

Some newsagents question why I support displays like this for low margin product like magazines.  I think all newsagents should do this if we see ourselves as magazine specialists.  If we only do the average, wich supermarkets and others do, then we cannot be considered specialists.  Range of itself does not demonstrate specialists status.

Of course, it all comes down to sales. I only make money out of magazines when they sell.  Hence our testing of the opportunity for growth with tattoo magazines.

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magazines

Promoting the new look Prevention magazine

mag-prevention0311.JPGWe are promoting the new look Prevention magazine with this high traffic location display facing onto our dance floor.  We also have the title available from its usual location.

I love the switch to A4 as this better fits with the various fixturing we and other newsagents have.  This issue of Prevention should sell well due to the new look and the anti-ageing serum gift.

The launch of Prevention was a hit.  I am hoping that the attention the new look will get over the next few weeks will deliver a good sales boost.

Pacific Magazines is investing $1 million in promoting the new look Prevention.  Some of this is being spent with fresh collateral for in-store displays as well as on cash prizes for newsagents.

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magazines

Promoting Zoo and the DVD

mag-zoo0311.JPGWe are promoting the latest issue of Zoo magazine with the free strip search DVD with this in-location display.  It’s the only display of its type in this aisle.  This title is not my cup of tea by a long shot but then I keep reminding myself that I am not always going to be my own customer.

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magazines

Connecting two threads on magazine distribution

Last week I published two blog posts about different topics which, in fact, relate to each other.  First there was my call to for newsagents to take more care with early returns.  then there was my post about the extraordinary volume of bagged titles dished out of Friday.

It is because of products such as bagged, undated and dubious value product that newsagents sometimes make quick decisions to early return product.  They strike out since returning product early is the only mechanism of control or attack which they feel they have.

Magazine publishers who are frustrated with early returns need to look at this.  Don’t expect newsagents to change their behaviour, even though they do often cut themselves out of revenue.  Put pressure on other publishers and the magazine distributors who are party to junk getting into the system and sucking up cash in for form of retail real estate, labour and payment for stock from newsagents.

Publishers, distributors and newsagents who want a viable magazine distribution channel need to resolve these issues … and quickly.

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magazine distribution

Missed opportunity with The Monthly

monthly-mar20111.JPGThe latest issue of The Monthly has a terrific cover, as I have come to expect from the title.  Given the news coverage of WikiLeaks and Julian Assange, the subject of the cover on The Monthly, I’d expect this issue to sell very well.  I was surprised therefore that there was no supply bump.

This latest issue of The Monthly is one time I would have been happy to receive extra stock.  It is what Pacific and ACP do when they have a cover which they know will work well for their target audience.

We are sold out and are now spending time chasing stock.  If you do have stock, this is an issue to promote at the counter and with newspapers.  I’d expect you to see excellent incremental business as a result of more attention.

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magazines

Trading card sleeves

sleeves.JPGDid anyone else get these trading card sleeves last week?  We expected to receive these at the same time trading cards but none arrived.  Actually we didn’t expect to receive them since local products are available with a better margin.  Not so sure how these sleeves connect with magazine distribution.

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magazine distribution

Promoting Men’s Style magazine

mag-menstl.JPGWe have been promoting the latest issue of Men’s Style magazine with this simple in-location display in our men’s magazine aisle.  We are using the popularity of the new UFC magazine to draw attention to Men’s Style – you can just see it on the left side of the display.  While not a high seller, Men’s Style is a title we are keen to promote as it reflects a range point of difference our competitors in the magazine space are less likely to offer.

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magazines

A reflection on killing print

A guy called Ed Dale has published a reflective blog post about, among other things, Australian newsagencies, print, the demise of Borders bookstores.  he talks lovingly about a newsagency in Beechworth (now newsXpress Beechworth).  I encourage newsagents to read this as it speaks to the role we have played and often play in people’s lives today.

The Australian newsagency is important to the fabric of our country.  This is more obvious in rural and regional situations.  It is also true in suburban situations. We do not embrace and promote this importance as we should.  I tried to connect with this when I wrote the newsagent TV commercial in 2008.

There are plenty of stories like Ed’s yet we do not collect and uphold these.  We should.

Thanks to Paul Wallbank for pointing me to this blog post.

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newsagency of the future

Challenges for magazines on the iPad and other devices

The Next Web has published an interesting article which outlines challenges for magazines on the iPad and other tablet devices.  There has also been plenty written in the last couple of weeks about the disputes between Apple and publishers on their 30% margin on trail sales.  Similar stories came out during the battles over music distribution six and more years ago.  The dinosaurs in the music industry pointed to the stories to suggest that the new channel would not survive.  It did.

There is too much at stake for all stakeholders for these challenges to not be overcome.

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Media disruption

Promoting Melbourne Home Design + Living

mag-melbournehome.JPGWe are promoting the latest issue of Melbourne Home Design + Living at the counter.  This is a stand out title with original content.  We got onto it when a customer pointed it out as being better than others in the home and living category.

While we have the title on display in the usual location, we wanted to give the current issue a lift with this prime location space commitment.  We are using a simple display between our two busiest serving positions.

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magazines

Was yesterday bagged magazine day in your newsagency?

A colleague let me know that he received the following bagged magazines yesterday:

  • Stunning Bags 9.95 plus 2 other issues total 3 mags
  • Bagged Mini trucking 9.95 plus 2 other issues total 3 mags
  • Performance Imports 9.95 plus 1 other issue total 2 mags
  • 50 fabulous Rooms 8.95 plus 2 other issues total 3 mags
  • Extreme 9.95 plus 2 other issues total 3 mags
  • Heavy Duty Hot Rods 9.95 plus 2 other issues total 3 mags
  • Holden’s 9.95 plus 2 other issues total 3 mags
  • Let’s Get Beading 9.95 plus 2 other issues total 3 mags
  • Let’s Get Knitting 9.95 plus 1 other issues total 2 mags
  • Aust Fine art & Dec 9.95 plus 2 other issues total 3 mags
  • Delightful Scrap Quilts 9.95 plus 2 other issues total 3 mags
  • Embroidery & Cross Stitch 9.95 plus 2 other issues total 3 mags
  • Dressmaking with Stitches 9.95 plus 2 other issues total 3 mags
  • Country Decorating Ideas 8.95 plus 2 other issues total 3 mags
  • Easy Organic Gardening 7.95 plus 2 other issues total 3 mags
  • Innovative Kitchens & Bathrooms 9.95 plus 2 other issues total 3 mags
  • Zoom 9.95 plus 2 other issues total 3 mags
  • 4WD Accessory Guide 9.95 plus 2 other issues total 3 mags

I received some of these in a couple of my newsagencies but not all.  I’d be interested in the experiences of other newsagents.

Bagged magazines, especially undated bagged magazines, are problematic on several fronts:

  1. They take up more space than regular magazines.
  2. They are of dubious value with the ‘bonus’ content too often being very old and or damaged.
  3. They often have a longer than 30 days shelf life.
  4. Despite what publishers say, customers don’t like that they cannot browse the content.
  5. In some categories they do not sell well at all.

So fellow newsagents, did you receive any of these titles?  If so, what do you think?

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magazines

recipes+ sales spike

mag-recipes.JPGWe are seeing sales of the latest issue of recipes+ magazine spike.  We are not doing anything special to promote the title other than ensuring tat the full cover can be easily seen by shoppers.  We have not co-located the title either so we are pretty chuffed to see the sales lift.  We are chasing more stock so we can do something extra with the title.

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magazines

Promoting Unique Cars magazine

mag-uniquecars-mar2011.JPGWe are promoting Unique Cars with this display at the edge of the dance floor, capping the entrance to our men’s magazine aisle.  It is an eye-catching display created by our team.  This is a weekend display seeking to connect with our male browsers – a great opportunity in newsagencies.  I am always surprised at the difference in the weekend shopper mix compared to weekday.

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magazines

News Limited puts case for $1 cover price for Daily Telegraph

The Sunday Telegraph recently lifted its cover price to $2, but Miller told Mediaweek that there are no plans to lift the Daily Telegraph above $1. “We do look at it, but we think about the impact on the audience. With interest rate rises, fuel increases and the cost of other utilities, we wouldn’t want to put that to the reader at the moment. $1 seems to make sense.”

Michael Miller is Managing Director of Nationwide News, the NSW arm of News Limited.  He was speaking with James Manning for a feature in Mediaweek last week- page 6.

I would like Michael Miller to plot for newsagents classified and display advertising prices for the entire period that the Daily Telegraph has been priced at $1.   This information would be useful for two key reasons:

  1. It would enable newsagents to see whether News Limited has protected itself with revenue rises while blocking access to revenue rises for newsagents.  I suspect that it has.
  2. It would test Millar’s argument that a cover price rise would not be fair on punters.  Punters eventually pay for increased advertising costs.  Advertisers pass these on.  We could similarly plot the price of everyday items advertised in the pages of the Daily telegraph for the period over which the cover price has been $1.

The publisher argument will be that newsagents can rely on newspaper traffic to drive sales in other parts of the business.

The most recent newsagent shopping basket data indicates that newspapers continue to be sold alone in newsagencies around 70% of the time.  That is, 70% of the time people purchase a newspaper in a newsagency, they purchase nothing else.  This is facilitated by newspaper publisher mandated displays which stop other products being easily promoted to the newspaper customer.

Further, in the time that the Daily Telegraph has been $1, News has overseen the placement of the product into more retail and other outlets, reducing traffic to newsagents for the title.

I have even heard some publishers say that newspapers help newsagents get higher margin sales.

Newsagencies typically do not sell high margin products except for greeting cards.  Lottery products have a margin of around 7%, transport tickets 2%, magazines 25%, confectionery 20%-30%.  No, the margin story in a newsagency is not what some suppliers and landlords think.

Over the last eleven years, rent for most newsagents has increased by at least 71%.  This assumes the usual annual 5% increase.  I know of some newsagents who have had to deal with rent increases of more than 100% over the last eleven years.

Over the last eleven years, labour costs for newsagents have increased around 60%, significantly more for penalty rate situations.

So, newsagent costs have increased, newspaper publishers have extended competition yet newsagent compensation has not changed.

Michael Miller says he would not want to put a cover price rise to readers on the back of higher fuel prices and the cost of other utilities yet he is happy to leave newsagents to deal with these and other higher prices without any mechanism for covering these higher operating costs. Newsagencies are family businesses. These families are financially stretched due to the lack of access to mechanisms with which to commercially respond to higher operating costs.

I’d like to see a debate between newsagents and newspaper publishers on cover price and newsagent compensation.  Maybe such a debate would better educate both sides.  Hopefully, it would lead to a more equitable situation for newsagents. We need it since newspapers have lost the gloss of ten or fifteen years ago. No longer can publishers argue that they generate valuable traffic.

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Newsagency challenges

Charlie Sheen creates his own channel

In less than 24 hours, Charlie Sheen attracted more than 1 million followers on Twitter earlier this week.  A few years ago punters would have had to wait for magazines to provide access to the latest tidbits about Charlie.  Today, in 2011, you can be plugged in and reading his tweets live. Regardless of what you think about Charlie his achievement this week is extraordinarily and demonstrates the interest in the social media channels.

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Media disruption
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