Melbourne this week has not felt the same as the previous week. While we all know the AFL Grand Final is being replayed, there is not quite the same buzz. I will be interested to see how today pans out, whether the shopping precincts become ghost towns from lunchtime. Maybe that is it, the focus this week will be on the game and not the hype.
The speculation of Thursday was confirmed yesterday with an official announcement from News Magazines about the closure of Notebook.
The closure is disappointing but probably for the best. Now, if only some other publishers would take such a pragmatic view.
While a AFL Football Record has been produced for the AFL Grand Final replay tomorrow, this is not being distributed thorugh newsagents because a satisfactory arrangement has not been reached according to what I understand. This is disappointing. I am certain we would have sold more copies this week than we did for last week’s draw.
The Record is available direct from the publisher or at the MCG tomorrow.
Telstra has announced a cut of 20% to the commission earned by newsagents for mobile phone recharge sales. This must be part of their plan to reverse their poor financial performance.
Telstra has extraordinary market power and they have just showed that in relation to newsagents. We will not do anything about the 20% cut because we would not want to lose their business. They know that. I wonder if they cut anyone else.
Our margin ought to have increased given the increase in our overheads – rent, labour and other costs.
I would like to know the commission paid on Telstra products sold in supermarkets. On October 17, 2005, I wrote here that I had proof (in the form of an invoice) that a national supermarket chain was earning 16% commission from Vodafone recharge sales while newsagents were on 5%. Maybe the same difference exists for Telstra.
Fresh editions of The Sydney Morning Herald or The Age can land on your iPhone for $2.49 a month. No sign of their iPad app though. The Fairfax offer is okay but not a patch on the New Zealand Herald iPad app – this is the best I have seen for a newspaper app.
To be fair to Fairfax, the first offer is always going to be a learning experience. The real concern for newsagents needs to be the next generation of devices and the third of fourth incarnation of newspaper apps. These are not far off.
The Hallmark voice changers we have as part of the Halloween offer are selling like hot cakes. It has been perfect having them and the rest of Halloween out during the school holidays. We are seeing people of all ages buy the voice changers from grandparents down to kids spending pocket money. The add wonderfully to the soundscape of retail in the store.
What is also working is a deal we have where the voice changer can be bought for $9.95 if three cards are bought in the same purchase. the regular price is $14.95. This is a great way to build the basket.
The Australian is reporting that News Magazines may be about to close Notebook magazine. Such a move would not surprise me. It is drawing falling sales in a well crowded segment of the market.
Notebook started fading when they took flowers off the front cover. Seriously, sort of. This change represented other changes for the title and indicated, to my untrained eye, that they had lost their way.
If Notebook does close it will be one of the most significant closures in recent years. It would also put the spotlight on other titles in the 70,000 circulation region.
UPDATE (Oct. 1) The Australian is this morning reporting that an announcement is expected today.
In 2005 I knew I had to either expand my newspaper home delivery business or get out. I created a model which I grandly called Circulation Fulfillment Australia and sought to work with nearby newsagents to bring this to life. With no takers I subsequently sold my distribution business and shelved the idea.
I have recently been helping several newsagents on alternative newspaper distribution models and have had reason to revisit the CFA model. I publish my plan from 2005 here for any who want to read it and consider an alternative newsagent controlled distribution model.
I am not looking for any involvement – use the plan any way you wish.
Here in Australia we have some terrific locally produced gardening titles: Burke’s Backyard, Gardening Australia, Organic, Your Garden, Better Homes and Gardens to name just a few. Add to the local titles the imported titles – some successful and some not so successful – and you have a full, even overflowing, gardening section. The range is good. Year on year sales are okay, no significant growth.
I was surprised, therefore, when Good Gardening arrived with our magazines yesterday morning. It’s a new title, one for which we have no available space. It has a long on sale – three months.
Outside of the long on sale and the cash flow implications of a September billing and a January credit and that this makes a financial backer of the new title without the publisher asking us for a loan, there is a the space problem. If I want to carry this title and my gardening section is full, something has to give, it will force me to bump a title.
The folks at Universal Magazines, the publisher behind this title will think that I am out to get them with this blog post. They will probably send another threatening letter saying that I am harming their business writing about them in this way. Before they do this, they should consider the facts:
Magazine distributors and publishers need to understand that if they expect newsagents to pay their bills on time, they MUST provide us with accessible and fair business mechanisms through which we can exact business decisions which drive our level of indebtedness for magazine product. The release of Good Gardening is a good example of the lack of control newsagents have.
The title itself looks okay. I could not find anything which made it stand out from the other good titles in the segment. I am sure it will find some customers – but at what cost to newsagents. Retail real estate and labour to manage this is expensive. Every magazine title has an overhead every week which must be covered by sales. New titles have a higher cost than others unless they are an instant hit like MasterChef.
Newsagents not sure about the appeal of Halloween only need to look at local magazines which are supporting this season. Disney Adventures, out yesterday, comes with free Halloween stickers. There will be more titles connecting with Halloween. We will add these to our Halloween display – which is generating excellent sales by the way.
We are promoting the latest issue of the Australian Women’s Weekly (out yesterday) on the lease line facing into the mall because of the free copy of the Australia Pink Magazine which comes with the title.
Only the top tier of ACP Connections members get this special issue of AWW so it is natural we would want to leverage that as a point of difference.
We will also use this specil issue of AWW as a centrepiece of a promotion supporting the work of various organisations on breast cancer.
Peter Couper, the former Chief Financial Officer of the company and OnQ, is facing criminal charges according to a report in The Age this morning. The report indicates that others will be charged as well.
While there is still no solid news for newsagents in relation to the Bill Express equipment, my (non lawyer) opinion is that the equipment has been abandoned and can therefore be used how and where I like.
The only other closure I would like is into the behaviour of the ANF Board leading up and immediately after the decision to endorse Bill Express. The due diligence the ANF claimed to have done was not done and no one has been held accountable for letting so many newsagents down.
Magazine fans, lovers of the magazine medium and lovers of special interest topics covered in the magazine medium, are vitally important to newsagents and our future.
Unfortunately, we get so caught up in supporting top selling titles that we sometimes forget the need to focus on the titles and services which separate us from the other magazine channels: petrol, convenience, supermarket and mass merchant.
By investing time in developing employee knowledge of the magazines we sell, displaying them in a logical and professional way, offering value added services – such as putaways and partworks and rewarding loyalty we can demonstrate that the magazine department as essential to the health of our businesses.
Today, our magazine range is the key differentiator for most newsagencies.
While we would like to think it is customer service or our connection to the community, the reality is that it is our magazine range, our 1,200+ titles, which and the shopping experience associated with them which separates us.
While I see challenges for the medium, smart newsagents have the capacity to grow magazine sales. The key is to run your business in a way which appeals to magazine fans. We need to make the services which support magazines as unique as our range.
Seems simple, I know. The reality is that it is not. It is hard work. Many of us would have to lift out game, and we can.
We need to make managing magazines an owner or senior manager responsibility. We need to educate our team. We need to ensure we have a professional and shopper friendly layout. We need to show our magazine fan customers that we appreciate their business.
The best point of difference for many of us today is in the magazine department. It is up to us to genuinely leverage the opportunity for our profit. We do this by acting as magazine specialists – no matter how frustrating the magazine distribution system is sometimes.
Further to my post ten days ago about the opportunity for newsagents near a Kenny’s Cardiology store, the ASX yesterday announced the suspension of Allied Brands, the parent company, because of a pending announcement regarding The Cookie Man franchise.
If you own a newsagency near a Kenny’s store, do some research on the opportunity.
The folks at the Herald Sun do an excellent job keeping newsagents informed about events which can drive newspaper sales. Take the AFL Grand Final replay – yesterday they communicated details about four Grand Final related opportunities for newsagents. The advance notice helps with planning the required space and labour investment. It also helps put this activity into perspective of what else is going on in the business.
I wish more suppliers would be as proactive at forecasting activity a couple of weeks out.
The West Australian today has an ad for MBF stuck on top of the headline on page one of the newspaper. While I understand the need for publishers to make a buck where they can, I have to ask – what is the value of a headline in driving sales if it is partially covered up by an ad? I like The West Australian, it is a newspaper for its marketplace. I’d say it is currently the best newspaper out of single newspaper capital cities. I don’t like the ad because it detracts from what the newspaper is about.
An objective analysis of stock performance in many newsagencies will reveal serious problems.
Outside of magazines and cards which are effectively managed for us – yes with mixed degrees of success but outside out direct control nevertheless – newsagents have stock which is grossly underperforming.
In stationery, for example, an average newsagency will have around 33% of stock losing money for the business. Similar numbers can be found in other departments over which the business has direct control.
Newsagents can easily identify this under-performing stock and make the tough decisions which the performance data demands.
So why is this not done?
That is the million dollar question. Literally.
Imagine a newsagency with $30,000 invested in stationery. It is likely that $10,000 of the investment is non-performing. If you had $10,000 in a bank which was not paying interest you would move it, chasing income. Why is it that newsagents do not take the same approach when managing stock in their businesses?
Identifying and cutting dead stock is easy. In any good newsagency software package there are reports which identify underperforming stock, stock turn, Return on Investment, an analysis of supplier performance and detailed sales analysis.
Any and all of these reporting options can identify dead stock, the thousands of dollars in underperforming capital waiting to be freed and put to better use.
Newsagents don’t need help to do this, they just need to start using their software and making business decisions based on the information in the reports produced by the software.
Newsagents can avoid repeating bad buying decisions by ordering only what sells, unless it is an entirely new line. Just switching to this responsive approach to ordering will reduce dead stock and put more money in the bank account of the business.
But again, why is this not done?
I suspect it has to do with many newsagents getting used to suppliers like magazine companies, card companies and many stationery companies doing this work for us.
If you can stop a rep from a supplier creating an order for you, do so. Take control, buy what is selling and get rid of dead stock from your business.
Sure you will have more shelf space in your business, that is a good thing as it presents opportunities. Not taking action because you are concerned about empty shelves suggest you are probably not a profit motivated newsagent.
If you are a newsagent and have got this far in reading this post, find out how to report in dead stock using your computer system. Run the report(s) and take a cold hard look at the performance of your stock investment. Make the tough decisions. Chase a better return on your stock investment.
Remember, it is your money.
Based on sales of the AFL Football Record as well as sales of streamers, balloons and crepe paper, the AFL Grand Final replay this Saturday could be worth over $1,000 in sales to proactive Melbourne based newsagencies. I say this based on what some stores achieved last week. Played right, this week should be even better.
While only from a small pool of stores, I have heard that the outdoor room had a good day yesterday. Selling out in one newsagency and good sales in others.
We are finding some space for promoting featured magazines in our temproarily downsized newsagency.
While not quite what Connections would want, we are using a display unit next to Top Gear to promote the current issue. We are co-locating Top Gear in toward the front of the store passed by all customers.
This promotion of Top Gear is also selfish in that it clearly signposts the car section of our magazine department.
Ron Geyer was an institution among newsagents and suppliers in Victoria. As the owner of Sunbury Newsagency, Ron presided over many changes to the business, often leading into areas new for newsagents. His passing is a loss for his personal family and the wider newsagent family.
There is a tribute page at heraldsun.com.au.
the outdoor room, launched today by Pacific Magazines, is a good looking magazine supported with some excellent marketing collateral. We received a terrific stand. Pacific sent out collateral based on expected sales volume.
We plan to try the stand in several locations.
We have the the outdoor room also located with our gardening and backyard titles. We will also give it ia shot with Real Living and Notebook as I think it will appeal to people considering these tiles.
The AFL this morning announced that a new Grand Final Football Record would be published this week for the replay on satruday. There is even less reason to hang on to any stock left over from last week’s game.
We are 13 days into our new temporary location so I figured it is time to provide an update on the downsizing experience so far.
To recap, we have gone from a 330 sq metre shop on level two of Forest Hill Chase, located near a busy entrance, to a 97 sq metre shop on level one, toward the middle of the centre. This move has been brought about because of major construction to level three which is impacting on the tenancy we were in on level two.
We have cut range in some key departments: magazines (range cut by 33%), stationery (80%), party supplies (50%), social stationery (65%), books (50%) and cards (25%).
Looking carefully at the sales data from the last 13 days, numbers for key departments are as follows:
We have had Halloween out for a week and my feeling is that we will do better in this new location than we would have done upstairs. I expect the same for calendars and diaries.
The card number will increase further as the range settles. As part of the move we have had around 10% empty pockets. That is fixed tomorrow. The biggest change with cards was the balance between everyday and lifestyle. We have cut lifestyle by more than 50%.
I expect magazines to increase as well as we finesse the layout and improve the shopper experience.
Our occupancy cost has temporarily been but by 68%. Our labour cost has been cut by 15% and that is expected to fall further as the roster settles.
As regulars to the centre find us (yes we have signs at our old locations as well as elsewhere in the centre) I am confident that magazines will climb back to within 10% of our regular numbers, newspapers back to 100% and lotteries very close to 100%.
One challenge this past week has been the more than 160 boxes of deliveries – diaries, calendars and more Halloween stock. We have had to offload some of this to other stores and get even more creating in how we display stock in our own store.
I like the smaller format store a lot. Sure we are short of space and cannot present as a truly full service newsagency. We have been able to surgically cut stock without killing off the core of the business. The department which has taken the biggest hit is stationery but maybe it needed that given what we are achieving from just 20% of the range.
The smaller store has more of a vibe to it. Yes it is cramped but everyone is enjoying this with good humour. The biggest space problem from a customer perspective is shopping trolleys. We don’t have room to accommodate them and this is costing some business. I am not a fan given that they block the store, even in the old location.
Best of all, considering the revenue changes, the smaller format has a considerably lower occupancy cost. This has to be the goal of every newsagency in a shopping centre.
With shopping centre rent per square metre being so high and increasing between 5% and 7% a year regardless of CPI, in future I will prefer newsagencies of 130 sq metres or less. A smaller store in a better location is more valuable. The exception of course would be a newsagency in the perfect high-traffic location in a AAA class shopping centre.
I love Halloween for the retail theatre opportunities as much as the sales. We have had the season up for a week and a half and have already booked more than hundreds of dollars in sales.
One of the best theatre opportunities we have found this year is the spooky mirror. It senses when people walk past and a ghost appears (see photo) with some haunting works. Customers of all ages love it.
We have even had people bring friends in to show them the mirror which is great because the mirror is half way into the store.
While national retailers like Coles and the Reject Shop offer Halloween products, we are in the season longer, offer better value (while retaining an excellent margin) and earn good repeat business.
This is our fifth year doing Halloween and each year has been bigger and more fun than the last. Halloween is an excellent seasonal opportunity for newsagents. GNS is offering products this year.