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

The changing newsagency shopping basket

newsagent-gross-profit.jpgSpeaking at the QNF State Conference yesterday, I presented a comparison of the GP contribution by product categories in 2010 compared to 2005 – from a cross section of newsagencies in the benchmark pool I work with.

The two pie charts (click on the image for a larger version) show the shift in the products newsagents sell. Newspapers, magazines, lottery products and greeting cards are in fewer shopping baskets. Not necessarily because we sell less (we do in some categories but not all) but because newsagents have expanded the product range.

More newsagencies today offer gifts, books, calendars and ink than five years ago. This broader range is seeing a more efficient GP contribution. Indeed, deriving GP from more product categories brings welcome balance to our businesses. It also makes us more appealing to the older categories like newspaper and magazines.

This shift is not happening in all newsagencies however. There remain many who rely in newspapers, magazines, lotteries and cards for the majority of their revenue and in many of these newsagencies, these items are bought alone – i.e. without products from other categories. Such single category sales are inefficient and unhealthy for the future of the newsagency.

Balance is crucial to our collective and individual future.  Balance in traffic, revenue and profit contribution.

Is used the slide to encourage newsagents to transform their businesses from relying on a few categories and pursuing more, higher margin, categories.

I am building a half day workshop on this theme, digging deep into sales benchmark and basket data to build the case for change and to show how some newsagents are building more profitable businesses by embracing change. What I covered yesterday at the QNF Conference was part of that bigger presentation.

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Newsagency challenges

Newsagents selling The Guide to Ethical Supermarket Shopping

ethical-shopping.JPGI am glad we have the 2010 edition of The Guide to Ethical Supermarket Shopping. This title was very popular last year. We have it at the counter – the best place for it based on past experience. While some people will look for the title, most copies will be sold on impulse – hence the counter placement. I was impressed to discover that the publisher, the Ethical Consumer Group, has a list of stockists for the title on their website.  This very practical support for the retail channel shows a respect I like.

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magazines

The pitch at the core of every transaction

magclubcard.jpgWe see each sale as the most important opportunity to pitch our value proposition in an effort to bring the customer back to us. Whether we like it or not, today’s shopper expects something more than a warm smile or good customer service. In August 2004 we launched the first magazine loyalty program in Australia. Today, it remains a crucial point of difference for us. It was embraced by newsXpress in mid 2005 and has since been copied by others – I have happily shared details of the program.

The Magazine Club Card gives us structure through which we can make our pitch – from the card itself, the back office mechanics and pitch to our customers.

I’ll give you one of our Magazine Club Cards. We clip this for each magazine bought and your twelfth magazine is free up to $10.00.

This pitch is gratefully received. It is rare we get a knock back. Every day we see examples of how it drives changed shopper behavior.

We use a similar pitch in our Sophie Randall card and gift shops for a greeting card offer:

Here is one of our loyalty cards. Be sure to bring this back. Once you have bought seven greeting cards your eighth card is free.

Whether it is a loyalty card pitch or some other offer, it is vitally important that newsagencies have a structured process through which a unique pitch is made to drive return business. It is equally important that the performance of the process can be measured.

In my newsagencies we stand for value. This is why we obsess about handing out our loyalty card. Executing this with a smile supports our second key focus of friendly customer service.

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magazines

Bagging magazines 101

bagged-magazines.JPGHere are two examples of how to bag (or not) a magazine. On the left is the latest of Good Food from ACP Magazines. On the right is, Scrapbook Creations (I think) from Universal Magazines. Both are photographed as they appeared as pulled out of their respective bundles.

ACP paid for what I think is a better quality bag which held the magazine in place. They used extra space for promotional material above the magazine itself. Universal Magazines went for what I think is a cheaper bag which left the magazine floating – risking covering the masthead with the promotional printing on the outside of the bag.

While we can shake the Scrapbook Creations bag so that the masthead can be seen from the magazine pocket, this would leave the top of the plastic bag unfairly covering the title in the next pocket above.

It should not be left to noewsagents to do shake a title so it looks better and to have to go back and do it again and again during the shelf life of the product.  If a bag is necessary, a snug fitting bag is best as it presents the title in the best light and saves newsagents from having to spend more time on some titles over others.

To the folks at Universal Magazines, before you go off and complain that I am having a go – I want what you should want … well presented product which respects newsagents and other publishers.

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magazines

Good Food in prime position

fhn_good_food_apr2010.JPGGood Food magazine caps the stand at the entrance to our Women’s magazine aisle this week. The photo only tells part of the story however. We are using three sides of the stand to promote this issue of Good Food.   Our shoppers see the title as they enter and leave the women’s magazine aisle.  Given the location of the stand, they also see the title as they move from our newspaper stand to the counter.  They can buy the magazine directly off the front and back of the stand.

We also have Good Food in our usual food section and in the single column of food titles adjascent to our women’s weeklies titles.

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magazines

Green issue of Home Beautiful has broad appeal

home-beautiful-apr2010.JPGWe are promoting the latest issue of Home Beautiful magazine on the aisle end between our two busiest magazine aisles. This issue should have broad appeal, beyond the traditional customer, because of the green content – it contains 90 pages of green themed content. We will leave Home Beautiful in this location for the next week.

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magazines

Lighting lets newsagents down

I was walking around Brisbane at dusk today and the brightest looking shops I saw were the 7-Eleven convenience stores. The newsagencies I saw looked dark in comparison.  It’s not just Brisbane where you see this, the difference is obvious across the country in capital city and many high-street situations.

Newsagents who complain about the business nearby convenience stores are taking from them should compare their lighting (and the rest of their street-front offer) with that of their competitors.

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Newsagency challenges

How is a sewing machine related to postal services?

australia-post.JPGThe poster in the window of the government owned Australia Post shop opposite my newsXpress Forest Hill store offers a set of saucepans, a digital photo frame, a notebook computer and a sewing machine.  Yes all from our government-owned Australia Post.  I don’t think they actually sell them from the shop floor since the poster lists the price as DELIVERED and I can’t see stock on the floor for purchase.  Click on the image for a larger version of the poster.

These products being available at the Post Office mocks the Postal Corporation Act 1989.

Section 14 of the Act requires Australia Post to provide a postal service first and foremost:

The principal function of Australia Post is to supply postal services within Australia and between Australia and places outside Australia.

Section 15 talks about permitted subsidiary functions:

A subsidiary function of Australia Post is to carry on, outside Australia, any business or activity relating to postal services.

Section 16 talks about other permitted functions:

Functions incidental businesses and activities

(1) The functions of Australia Post include the carrying on, within or outside Australia, of any business or activity that is incidental to: (a) the supplying of postal services under section 14; or (b) the carrying on of any business or activity under section 15.
(2) Without limiting subsection (1), the functions of Australia Post include the carrying on, within or outside Australia, of any business or activity that is capable of being conveniently carried on: (a) by the use of resources that are not immediately required in carrying out Australia Post’s principal or subsidiary function; or (b) in the course of: (i) supplying postal services under section 14; or (ii) carrying on any business or activity under section 15.

The last federal government and the current one have permitted Australia Post to take millions of dollars in revenue from small business. The situation is getting worse.

The federal government deregulated newspaper and magazine distribution saying that newsagents needed to get into the competitive world.  It is a pity that they have not applied the same competition rules to the business they own.

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Australia Post

Sending the iPad back

Jeff Jarvis, respected blogger (BuzzMachine), journalist and commentator, is boxing up his iPad and returning it to Apple.  watch the video and find out why.

I am posting this to offer balance to the hype surrounding the iPad.  While I agree the device has a way to go to change mass behaviour, the hype indicates it is interesting plenty of people.

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Media disruption

How well do magazine displays perform?

I am curious as to whether newsagents track the success (or otherwise) of displays, especially magazine displays.  A check over the last week with a bunch of newsagents suggests that fewer than 5% of newsagents track the performance of displays.

A simple check of sales for a title on display once the display comes down and a comparison of performance for the week against the average of the same week for the last eight issues will quickly show if the display paid for itself.

I expect that newsagents will discover over a few months which titles respond well to displays and which do not.  This information can be used to guide choices regarding displays.

The core outcome newsagents must want from a retail display is sales in the newsagency, not in another store, but in your newsagency.  This is why careful tracking of the success of a display is crucial.

While an attractive display may win praise of prozes from a publisher, if it does not generate incremental sales in your newsagency then the labour and retail space investment is not worth it.

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magazines

That’s Life Reader Recipies sells well

thats-life-readers.JPGThat’s Life Reader Recipies has been a runaway success for us, selling 40 copies in a couple of weeks up to last night.  We have it placed with That’s Life and at the counter as shown in the photo.  It had worked very well as an impulse purchase because customers know the brand (clever of the publisher to use the That’s Life colours) and it is priced well.

Placement at the counter has been the best move.  I am sure that had we left this title in regular magazine fixturing it would not have sold as well.  Customers need to see the bright full cover.

Given the success of the title we are using it to sell other titles – like the calorie counter shown in the photo.  However, when placing this and other titles at the counter, we are careful to not clutter the space and confuse the message.  Newsagency counters are often too cluttered.  Less is more as they say.

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Uncategorized

Next gen ad tools will make mobile devices

The iAd platform announced by Apple this week gets closer to delivering to publishers and would-be publishers (and other App builders) the commercial opportunity they want to develop content models on mobile platforms such as the iPhone and the iPad. The Marketbeat blog from the Wall Street Journal  has an excellent round-up of opinions about the iAd platform.

A smart iAd ad could be signficantly superior to a print ad.  It could be interactive, more tailored to the reader and enable immediate action.  And that’s what these devices are all about.

Previously, you’d go on a holiday, take phones, come back, have them developed and catch up with friends to show the photos off.  Using the iPhone, photos of your holiday are easily published immediately you take them using your iPhone.  It and other devices have changed behaviour around photo sharing.  iAd can do the same for interacting with ads.

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Media disruption

Promoting the AWW / Good Health double pack

aww-bulk-pack.JPGWe are promoting the Australian Women’s Weekly / Good Health double pack in a dump bin near the entrance to our women’s magazine aisle.  We chose the location because we had no space next to or near either of the titles in the pack – thanks to an extraordinarily heavy week of magazine supply.  Disappointingly, the publisher did not provide any marketing collateral.  So, we went with the dump bin idea in a high traffic area.  Shoppers know that dump bins contain value based offers so the location makes sense.

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magazines

Promoting Donna Hay 50th anniversary

fhn_donna_hay_apr2010.JPGWe are promoting the 50th anniversary edition of Donna Hay magazine this weekend out the front of our newsagency.

The stunning cover on the magazine and the high quality poster material (better quality than usual for magazine posters) makes for an attractive display. I have high hopes for a good sales bump as a result.

We plan to leave the display in place until Wednesday.  We also have a pocket of Donna Hay in with our column of food titles next to our weeklies as well as a flat stack display in with our regular food section.

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magazines

Magazine supply initiative helps newsagents

magazine-supply.jpgMy post last month on the Gotch magazine supply adjustment initiative has generated plenty of interest and questions. Click on the image to see the computer screen through which newsagents can easily and directly adjust Gordon and Gotch supply quantities from the Point of Sale screen. Recent supply and return data is there to help guide the right decision. Once a new supply quantity is entered, an email is sent to a special email address setup at Gotch for this purpose.

I know of newsagents using this facility to increase as well as decrease magazine supply. A confirmation email is sent by Gotch.

While we would all prefer no over or under supply, problems will occur. The real test is how these are resolved.

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magazine distribution

Newspaper publisher gives and then (by stealth) takes

Coinciding with the recent newspaper home delivery fee changes announced by the Herald and Weekly Times is an adjustment to what constitutes late delivery of newspapers to distribution newsagents.

This adjustment means, I am told, that newsagents are now less likely to be compensated for late newspapers, that newsagents will have to carry more cost themselves for late newspapers. The costs can run at over $100 an hour depending on the size of the business. This is a considerable sum for a small business with slim (newspaper publisher controlled) margins.

If what I have heard is accurate, newsagents will be frustrated at being given a boost with one hand while the other hand takes money off the table. The new terms for the late payment fee means it will be paid less than previously.

Publishers need to be commercially responsible for late delivery of newspapers. Given their zero tolerance approach to services provided by newsagents it is only fair that newsagents have a zero tolerance flowing the other way.

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newspaper home delivery

Newsagents suffer from small creeps in magazine supply

All it takes is a couple of extra copies of a magazine to each newsagent and a publisher significantly increases the size of their scale out and, depending on the return cycle and their distributor agreement, significantly improves cash-flow. Magazine distributors are happy since they get paid per item then shift.

I saw several example of small supply increases on Wednesday this week which are not supported by net sales.

hot-rod-apr2010.JPGHot Rod is the first title – we sell a couple of copies. Our sales and return data does not support any increase yet the magazine distributor’s system thinks we can carry extra stock. I am sure there will be some reason.  A reasonable response will be that it’s only one or two extra copies. Well, if they are not going to sell, why send them?

mindfood-april2010.JPGMindfood is another example of an unjustified supply increase. In this case, I suspect that the increase is publisher driven – that’s just a hunch though. Beyond getting a couple of extra copies we will not sell, we have more stock than a single pocket can hold. This takes extra space and increases our costs.

foreign-affairs.JPGForeign Affairs is the third title for which we have received what we consider to be an unjustified increase in supply. I have gone back through our supply and return data and cannot see any reason for this move by the distributor.  More cash being drained.

These are just three examples. Indeed, there were plenty on Wednesday this week – sucking cash out of newsagencies. Every extra copy sent must be justified. This is not done, leaving us poorer in cash-flow terms.

Magazine distributors need to understand the damage these small creeps in supply is doing to the newsagency channel.  I am seeing magazine bills increase while sales are flat or falling.  This is unsustainable.

One way newsagents respond is early returning – and not necessarily of the new title. This is all about managing cash. Smart newsagents look for other titles from distributors causing the problem which can be returned to balance cash flow and space.  The problem is that since we have to pay to return stock we still have a cost which hits us.

To distributors reading this:

Look at your systems and consider carefully the impact on newsagencies of every extra stock item you send. Look at this as if it was your money and your business.  Would you put up with this?

Would you accept a supplier sending you something which all sales data indicates you will not sell and then expect you to pay for this on time and under the threat of not receiving other stock, very popular stock, if you do not pay the account on time? What is the size of your magazine bills to newsagents today as a ratio of overall magazine sales?  Are your bills declining in line with sales?

Newsagents are keen for dialogue on this.  Not the one way statements of the past.  Genuine dialogue.   Every copy of a magazine which you send and which is not supported by sales data as likely to sell has a considerable cost to the retail network on which you rely to stay in business.

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magazine distribution

Making the most of the Easter window

window-frame.JPGThe team at our newsXpress Forest Hill store cleverly displayed the entrants in our Easter colouring competition around a display of products designed to appeal to those looking at the entries. This was a smart way of showing off the talent of the entrants (attracting eyeballs) and subtly (or not) driving a commercial opportunity for us. I was impressed when I saw what they had done – we are a business after all.

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marketing

Rupert Murdoch: iPad could save newspapers

If you have less newspapers and more of these [iPads] … it may well be the saving of the newspaper industry.

That is Rupert Murdoch quoted in plenty of news outlets this morning including Fast Company. He called the iPad a glimpse of the future.  Murdoch was speaking at the National Press Club in Washington. The Australian also runs this story today – read it here.  Their report also reports that Murdoch expects 8 or 9 competitors to the iPad within a year.

This is a very strong endorsement of iPad type technology as an alternative channel to print by Rupert Murdoch, an endorsement which newsagents need to read and understand.

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Media disruption

When magazine switch distributors

vogue-switch.JPGNewsagents can experience unexpected costs when magazine publishers switch distributors. Take Vogue, the latest issue is from through Gotch while the old issue is through NDD. Our NDD returns for the month have been processed so we now have to hold the unsold stock for a month. The alternative is to do a supplementary return but the labour and delivery cost of this is not worth the amount.

This is another frustration with the magazine distribution model which adds to our operating costs.  Publishers should think of this before they switch distributors and allow for the costs we face.

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magazine distribution

Schapelle Corby sells magazines

womans-day-schapelle.JPGSchapelle Corby continues to sell magazines as this week’s Woman’s Day shows.  We have the title in its usual locations and sales are ahead.  Customers mention her when they buy the magazine.  Regardless of their view of her guilt or innocence it is that they have a firm view which, I think, drives sales of magazines with her on the cover.  We don’t have many Australians who can consistently generate a sales kick like Schapelle.

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magazines

Promoting Money magazine with business titles

fhn-money-apr2010.JPGWe are promoting Money magazine in our business area with a new style display (for us). We have adjusted titles near Money and given it double pocket space and sacrificed several pockets for the poster above the two columns of stock.

This display can be seen by people walking from our newspaper stand to the counter.  It also draws attention to Money from this aisle and the next magazine aisle, our busiest. It also draws attention to other business and finance magazine titles nearby.

Money magazine is not a strong enough title to be given the best location at the front of the store for a week. However, it should support the additional space we have allocated to the display in the business section.

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magazines

Promoting Marie Claire in with women’s magazines!

fhn_marie-claire-apr2010.JPGWe are promoting Marie Claire magazine in the middle of our busy women’s magazine aisle this week. That’s right, not at the front of the newsagency or on a power end.

We wanted to change things up and find new ways (for us) to promote magazines in-store to drive better sales outcomes.

The Marie Claire display is in the centre of the aisle, high above a double commitment for the title. It stands out not only in this aisle but in the entire magazine department and even beyond, toward the front of the store.

While space was tight, we found a way to make it work. We will monitor results closely and compare sales with what we achieved for Marie Claire when we promoted it out the front of the newsagency.

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magazines
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