I heard from another newsagent last week complaining about losing magazine sales because of a Coles deal which discounted a small group of popular titles by around 30%. In the story recounted to me, the newsagent was confronted by a customer asking for a refund for magazines purchased from them a few minutes earlier. Who can blame the customer for the question if it saves them $3.00?
A newsagent caring about their regular customers will find it hard to refuse such a refund request from a regular. They will be left wondering if they have to offer similar discount bundles to match the offer from Coles.
Several years ago, we got caught up in the pre Christmas discounting of calendars. We started in response to another retailer in the centre. We soon realised that we were discounting sales we would get regardless of the price since we offered a point of difference around brand, range and service. It took two years of hard work to win back higher margin business. All we had done with the discounting was to train our customers to expect to pay less.
I am concerned that this is what Coles and others discounting magazines will do – educate consumers to not pay full price for the popular magazine titles. I’d hate for that to happen. Look at major grocery items and liquor. These products are on a merry-go-round of discounting between the major chains. Smart shoppers never pay full price.
I’d hate for newsagents to be subjected to herds of customers chasing price. We rely on regular traffic – the peaks and troughs steep discounting is likely to cause could harm other parts of our business.
Some reading this may say that I discount already with the Magazine Club Card I created in 2004 and which has been adopted by newsXpress and some others. The Magazine Club Card is different. It rewards loyalty to the business. To achieve a free magazine, the customer has to purchase more than the average number of titles in a defined period.
The package discounting at Coles and some other retail outlets is trying to achieve the sale of two titles when a customer may only be shopping for one. While there is nothing wrong with that, the steep discount devalues the titles in my view and risks training customers to expect this as the norm.
I expect that the newsagency channel would be divided on the issue of discounting magazines. I do know of some newsagents who like the idea. What do you think? Would you participate if it were available to you?
The snow globes and magnetic wooden Christmas ornaments are selling like hot cakes. Given their location only at the sales counter, they are purchased on impulse when finalising the sale. Adding between $1.95 and $5.95 to a sale is a terrific bonus in a newsagency. That said, in most cases we sell more than one in a sale. These items not only extend the value of the basket, they also improve overall sale margin thanks to good buying. Our margin is above 50%.
