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

When 2020 began

When 2020 began, we were in the dark about what was coming for us, for all of us. We had our resolutions, plans and hopes. We had our cherished dreams.

We were unprepared for how 2020 would play out.

The hopes and dreams we started the year with were soon forgotten as the pandemic took over the news, our businesses, our home life and our focus.

2020 sure has been a year.

Looking back, we see heartbreaking human loss and economic challenges, which, sadly for too many, continue today.

Looking back, we also see many wonderful achievements.

There are the big pieces like the 1,000s of scientists working together to create vaccines in record time, people and businesses fundamentally changing how they work and politicians, for a moment, setting aside traditional differences to actually do good.

There is the good news of whole communities working together to ensure people remain safe and to get the numbers down.

In small business, where we spend much of our time, we have seen wonderful acts of kindness, extraordinary local shopper support, greater resilience and deeper community connections. It has been a joy to hear stories of locals consciously shopping locally and genuinely being interested in product sourcing.

We have all learnt so much about ourselves this year, what we can do, the differences we can make, new friends we can serve.

As the sun sets on 2020, we are grateful for this year, for the opportunity to be part of it and to be here, at the end, stronger and grateful for what 2021 will offer.

Happy New Year. May your 2021 be healthy, happy and filled with gratitude.

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Social responsibility

Tip: don’t discount calendars

Calendar Club has done its best to teach Australians that calendars need to be discount to sell. While their business has been successful, grabbing plenty of calendar revenue in shopping centres, they have not ‘educated’ everyone that the only way to sell calendars is to discount them.

We don’t discount calendars and can get full price through to early in the second half of the year.

The key is to purchase so that you sell out before then. Also, the more niche the title, the less price pressure.

So, we are not discounting calendars and so far this year we are up more than 50% on last year’s good base.

Calendars remain a strong category, nicely complimentary to diaries, which are strong, too.

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Calendars

Excellent newspaper sales in December in the newsagency

In our high street newsagency we are tracking excellent year on year results for newspapers with dailies up 12% and foreign language newspapers up 25% – based on unit sales.

I’d be interested to hear how newspapers have gone for others through December.

I expect high street, regional and rural businesses will have similar results to the above. I think the Covid bump will be here for some time, hopefully long term. And, by bump, I mean – more people shopping any from malls and more people buying papers, especially foreign language papers.

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Newspapers

A very different Boxing Day

If the small dataset I have seen plays out nationally, Boxing Day 2020 will be down on 2019 in over the counter purchases while online will be well up, resulting is numbers close to last year.

Of course, the results vary by location. In Victoria, for example, shopping centre traffic was down Boxing Day 2020.

The strength of online on Boxing Day, even for sites without deals, speaks to a strong future for trading online.

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Newsagency management

Commercial tenancy relief scheme for Victorian small business retailers

The Victorian Government is facilitating more proactive help for Covid impacted small business retailers through its Commercial Tenancy Relief Scheme.

Critically, small business retailers can apply for free mediation with the Victorian Small Business Commissioner to resolve a rent dispute. This could be a good way to bring forward the resolution of any dispute re rent relief arrangements.

I know of several retailers who could benefit from this.

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Newsagency management

All set for Boxing Day

It’s all set to start, the annual Boxing Day Sale. In our shopping centre locations, this is a key sale event for the year. It will be interesting to see how it plays out this year.

We have old stock to move and plenty off stock brought in for the event. Christmas has been taken down and the shop reset for a sale feel.

If you are running a Boxing Day Sale this year, happy trading!

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Newsagency management

Magazine sales good in newsagencies for Christmas

Magazines are selling well in newsagencies in recent weeks. Home and living, crossword, crafts, special interest and food magazines are all doing well.

Comparing 2020 to 2019 and then 2019 to 2018 for the category for a few newsagencies, in this dataset, 2020 is performing very well. The average unit sales growth I am seeing is 7%.

Of course, the growth could be at the cost of other retail outlets, such as those in shopping centres, or even outside the newsagency channel. The growth could actually be net growth for magazines overall, which would be appreciated by retailers and publishers.

Talking with some retailers, there is anecdotal evidence of magazines being bought as Christmas gifts. While this is not unusual, it does feel, to some, that it is more the case this year than in the past.

I hope that what I am seeing from the small dataset is a trend for the channel more widely. It would be encouraging to see magazines end 2020 on a high note after the wild ride that 2020 has been.

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magazines

The easy counter impulse line – Racing Babies

Racing Babies is a simple product, fun and almost disposable … a perfect impulse line at the counter. Purchased easily by people of all ages, this is an example of an easy, fad-like, product with which to drive basket value.

Racing Babies has worked for us this Christmas – yet another non-traditional product line working in a newsagency.

These counter lines change every few weeks. Get in, sell through, replace with something fresh.

Here’s a video from the maker, which has helped attract shoppers for the product.

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Fun

Retail sales in Australia up 7% in November

The ABS yesterday released preliminary results for retail sales in Australia for November.

The seasonally adjusted estimate rose 7.0% ($2,071.6m) from October 2020 to November 2020.

In seasonally adjusted terms, Australian turnover rose 13.2% in November 2020 compared with November 2019.

As I have noted in this place already, plenty of newsagency businesses for which I am fortunate to have seen data delivered even better results, 20% and more growth in November 2020 compared to November 2019.

I’ve talked to other retailers too, jewellers, toy shops, bike shops, garden centres and more, almost all were up in November. Those doing best are those playing beyond what has been traditional for their channels.

That said, I am not in the retail is back camp. No, my view is that retail has fundamentally changed. It will not go back to where it was. The future is the future and not a re-visit to the past.

What we sell, how we sell, when we sell and to whom we sell has changed and will change further. Covid has sped-up changes that were occurring already.

This is all good stuff for retailers who embrace change.

The ABS preliminary figures are good for the whole economy as the growth they report encourage optimism for 2021.

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Newsagency management

The easy $145.00 Christmas gift for guys

While it is cliché, plenty of guys love car racing, they love Supercars. This $145.00 set from the Royal Australian Mint has been a terrific hit for Christmas in the newsagency. Better still, people buying this are buying other coin sets, too, driving excellent basked value. Plus, they usually buy a gift bag and a card or two.

The coins are an easy social media pitch and that’s key to helping to bring shoppers in who might otherwise not have shopped with us. People don’t know what they don’t know. Hence the importance of social media posts like this.

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newsagency marketing

Legacy newsagency suppliers are wrong: traffic from one successful product category does not always drive success for another product category

Looking deeper at data from a bunch of regional newsagencies for November / December this year compared to last year, it is obvious that traffic from low-margin legacy products is not key to the health of a business.

In each case, local newspapers closed, slicing hundreds of transactions from each business each week. There was no negative financial impact. Transaction count was down, but not revenue.

Even though I have commented here for many years about the inefficiency of newspapers for retail newsagencies, plenty of newsagents are discovering it for themselves. The newspaper shopper is likely to purchase a newspaper and nothing else around 80% of the time – less so in regional Australia, far more so in capital city shopping centre newsagencies.

Plenty of local newspaper closures are not adversely affecting the performance of newsagencies.

For decades, newspaper publishers, and other low-margin legacy suppliers, said yes our products are low margin but they drive traffic and you make money from that.

No, most low-margin legacy products are inefficient for newsagents. They may sell in volume. however, rarely does that shopper purchase higher margin items. No, the new higher margin items newsagents source often drive net new traffic.

While the closure of local newspapers is disappointing for the reach of local news, retail newsagents can have a bright future regardless.

I get that retailers like foot traffic. The key, however, is that foot traffic has to be commercially valuable. Single item purchase of low margin product is not as commercially valuable as it once was.

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newsagency of the future

Are you changing your January plans from the traditional?

January will not be normal.
January has traditionally played out in different ways for small business retailers in different parts of Australia.

In some parts of the country, retail is usually so slow that many shops close for several weeks. In other parts of the country, towns swell with tourists and trading hours are extended.

What has been consistent about January for small business retail in Australia is that it has been prdictable.

I don’t think January 2021 will play out in a predictable way.

People are not travelling overseas. But, they are motivated to travel, to shake off 2020 and to start 2021 with new memories, from more local travel.

With plenty of annual leave not taken in 2020, I suspect more will start 2021 taking leave.

Businesses will start 2021 earlier than usual, working on new approaches to business, including on-going working from home for some, which will open opportunities locally.

Places that have not seen many tourists over the years are likely to see some. Tourist destinations will fill early, encouraging people to look elsewhere.

In short, the usual January slowdown we have been used to in small business retail in most parts of Australia is less likely in 2021, in my view.

Locals staying local will be looking to embrace optimism about 2021. Local retailers can lean into this, nurture optimism and offer opportunities for engagement with the local community. In our shops we can make January fun and feed into the desire for a good start to the year.

Be ready. Make sure the shop is fresh, that you have new product and that ou provide an entertaining retail experience. Think about your hours. Find ways to leverage the changed situation.

I mention this today so you can plan. January will be different. How it plays for you depends on you.

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Uncategorized

Dynamic Supplies takes a stand on behalf of its customers as HP asks for access to end customer data

This email from Dynamic Supplies from earlier this week indicates that HP, a key supplier of ink and toner through them to newsagents, is seeking access to end customer data. This would concern any retailer of these products.

The letter from Dynamic is worth reading. Their approach puts the needs of their retail partners ahead of the demands of HP, which is terrific to see.

Dear Valued Dynamic Supplies Customer,

As you may be aware, HP recently introduced changes to their distribution “partners” agreements by introducing a new Global Partner program called Amplify. This new program effective 1 November 2020 immediately impacted the HP print consumables and hardware categories and as a result we advised the retraction of all HP discounts and rebate programs.

One of the conditions of the new Amplify program is the compulsory reporting to HP of extremely detailed private data including confidential customer and inventory related information. We are very concerned that HP want this information which includes your end user drop ship information including customer names and addresses and purchase data, in addition to sell through data on compatible versus HP original supplies.

I write to you today to advise that Dynamic Supplies will not comply with this data collection program and will not at any stage provide your private customer data without your express consent. It conflicts with the core values of our organisation and we believe this sets a dangerous precedent within the print distribution channel. Whilst the request for information from HP may or may not be illegal, we regard this as a highly unethical program. HP is offering significant incentives and rebates for this data and we regard this as little more than a bribe. Dynamic Supplies have opted out of this program and are referring this matter to the ACCC.

Dynamic Supplies has always operated with the best interests of our resellers at heart. We are communicating this information so that you are aware that if you purchase HP products from an authorised HP partner, those partners will be providing this data to HP as part of the Amplify program requirements.

17 years ago Dynamic Supplies fought a similar battle with HP to protect the best interests of our Reseller customers. This included the refusal to collect and supply end user data and support predatory pricing behaviours. It is familiar territory for us and we will again defend the interests of our channel.

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Ethics

Covid safe retail advice for NSW newsagents

With the Covid surges in NSW causing concern, here is a modified version of advice I shared with Victorian retailers in June:
  1. Have hand sanitiser at the entrance to the shop and at the counter.
  2. Have all customer facing staff in masks.
  3. Acrylic screens at the counter are a big help.
  4. If you can trade outdoors at all, do so we know outside is safer.
  5. Check your in-store communication re social distancing.
  6. Maintain good cleaning practices using anti-bacterial wipes.
  7. Remind everyone working in the shop about hand washing.
  8. If you serve in an area where English is not a dominant first language, consider using the resources at this SBS for Covid information in many different languages are excellent.
  9. Consider this social media post: With Covid challenging again, it is important that we maintain a safe and healthy distance, wash our hands regularly, use hand sanitiser and stay home if we feel unwell or have any Covid symptom. here at the shop, we offer hand sanitiser, clean regularly and enforce social distancing. Let’s squash this thing, again.

Retail businesses like newsagencies are front line businesses. The safer you make it for your shoppers and the calmer your messaging the better you will trade through this.

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Social responsibility

Evidence of real transition by a newsagency business

This data is from one regional newsagency in Australia. It reflects a comparison of 2 weeks in December this year to the same 2 weeks last year. On top of the more than 50% in revenue growth and and excellent growth in overall business gross profit percentage, there is this:

Here we see, on the left, data for 14 days in December this year, next, data for the same 14 days in December 2019, and, finally, the difference.

The transaction count is down because several regional newspapers closed. It is the compounding value of average sales value, average item value and average items per sale that fuel an excellent result.

If you have been able to gently drive higher prices as well as bring in new product categories from which you can achieve higher than your average gross profit, focussing on basket depth can deliver the valuable compounded result. This is about guiding a shopper to purchase more in a list than they might have otherwise.

Achieving a higher average items per sale result comes from an ideal shop floor layout, good product placement, leveraging hotspots, having awesome shop floor staff and having a counter configured for easy impulse purchase decisions.

Building this level of success is like building a jigsaw, without having a clear picture of what the end result will look like. But … it does involve placing many pieces. It’s trial and error, daily work, small steps work.

Any newsagent can do it. Capital is not a barrier. Location is not a barrier.

Focussing on smaller datapoint is a good start as small wins from small steps can be motivating.

Our success is up to us.

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Newsagency management

News Ltd. throws QLD newsagents under the bus on newspaper home delivery

After decades of loyal, low cost, accurate newspaper home delivery service, News Ltd. is planning to send letters to subscribers in which they throw newsagents under the bus, inferring their service has sub-standard.

News Ltd. has send impacted Queensland distribution newsagents newsagents a package, including letters to be sent to subscription customers. This paragraph is from the second letter:

This is appalling wording. Improved customer experience? To do that, News Ltd. will need to:

  1. Be contactable 24/7. That is, human contact, not a recording or a computer system.
  2. Have people dealing with queries who understand local situations.
  3. Get the papers out on time – this relates to many complaints.
  4. Be a good listener as many customer complaints relate to matters under control of News Ltd.

Back to the paragraph from the letter, it suggests that News Ltd. has been delivering the paper, when it has not. Sure, there is a nod to the accuracy of newsagents – but News Ltd. claims this is their achievement, when it is not.

For a company in the communication business, this letter is appalling.

I feel for Queensland newsagents and what they, and their customers, are about to endure.

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Newspaper distribution

Journalists need to do better when writing about newsagency closures

The story by the ABC about the closure of Vizes City News in Rockhampton reports on the closure of a long-established newsagency. While the story offers balance in reporting on success at newsXpress Mount Morgan it fails in needed detail in some areas.

  1. The story says the business has adapted. I have been to the shops several times, as recently as late last year. yet, they adapted primarily into one new category. It was not enough. It was sort of a separate business, too. The newsagency core needed adaptation.
  2. The story says that newspaper closures are the reason for the closure of the business. I can’t see this as they were anticipated. I’ve certainly been writing about the need for newsagents to manage for the decline of newspaper and magazine traffic for 15+ years.
  3. The story talks down the value of newsagencies. Recent sales and the spike in interest in buying a newsagency suggest otherwise.

I get that people leaving or who have left the channel prefer a narrative that suites them, the evidence does not support them.

Newsagency closures reasons are complex. Newsagents often have had opportunities to avoid them, if they wanted to.

I have seen data today for a newsagency an hour or so away from this business in Rockhampton that is closing. Revenue is up 64% off a good base. New product categories are helping to drive revenue growth of some traditional newsagency categories like magazines and card. In this business, newspapers are down 24%, with no bottom line impact. The BIG news is that GP% is way up, based on the new product mix introduced over the last year.

We all make our own success.

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Newsagency challenges

Murdochs up gambling stake

In a move that shows them thinking about future revenue streams, there Murdochs have increased their investment non gambling.

This, from Crikey, last week.

Toxic betting industry no barrier to the Murdochs as they up gambling stake

STEPHEN MAYNE

The Murdoch family has profited big time from the gambling industry over the years and they are doing it again with Dublin-based Flutter Entertainment, which last week bought an additional 37% stake in US fantasy sports outfit FanDuel for a whopping US$4.2 billion.

The deal was partly funded by a $1.8 billion Flutter share placement which the Murdoch-controlled Fox Corp was happy to back once again.

The Flutter announcement included this 16-page presentation, plus this approving quote from Fox Corp CEO Lachlan Murdoch:

“ We are delighted to participate in this capital raising. Maintaining our ownership stake in Flutter signifies our long-term commitment to Flutter, and ongoing confidence in management’s ability to execute against the fast growing US [sports gambling] opportunity. FOX’s audiences have proven to be highly engaged with free to play and wagering content, and we are excited to offer them access to products from Flutter’s market leading stable of US brands.

Flutter is fast becoming a global behemoth. Through its NT-licensed Sportsbet brand, it is now Australia’s biggest online gambling company with an estimated market share of 52% after including the recently merged BetEasy business. It is forecast to extract around $2 billion of the $25 billion that Australian gamblers are expected to lose in 2020-21 and has been making a fortune during COVID-19, particularly because the racing industry was nationally exempt for the shutdowns.

These two fantasy sports businesses are now seen as the fastest way to access gamblers as deregulation sweeps across America and cash-strapped states look for new revenue streams after their budgets were ravaged by COVID-19 shutdowns.

Rupert Murdoch used to be against gambling, partly on the grounds that it took dollars away from consumers who might buy his media products.

But then he saw the profit potential of linking gambling with sports broadcasting and in 2005 successfully lobbied Tony Blair to deregulate gambling rules in the UK.

As Crikey has noted before, the Murdochs then built up Sky Betting & Gaming which ended up delivering clear profits of about $2 billion to the broader Murdoch interests (via Sky PLC) when that business was sold to Canada’s The Stars Group for US$4.7 billion in 2018.

Having tasted success in the UK, Fox Corp subsequently created the 50-50 Fox Bet joint venture in the US with The Stars Group once the US Supreme Court legalised sports gambling in May 2018.

Fox Corp took a 5% stake in Stars for US$236 million as part of the Fox Bet joint venture which then became a 2.6% stake in Flutter once those two businesses merged earlier this year. The original 3.23 million Flutter shares which Fox Corp inherited through the merger are now worth around US$650 million but Fox Corp has subsequently supported two further placements by Flutter this year as it dives further into the gambling business.

Like denying climate change, backing Trump and tolerating industrial-scale phone hacking, there are few ethical barriers which stand in the way of the Murdoch modus operandi. They seem to have no problems whatsoever profiting from the toxic gambling industry.

I have two points here:

  1. This story is a reminder to newsagents to work on new traffic revenue, it’s critical to any business.
  2. This is not a story that would be covered in this detail in mass media in Australia, given the concentration of ownership.
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Newspapers

Crikey: tax minimisation in the Murdoch businesses

This article by Bernard Keane at Crikey should anger any everyday taxpayer in Australia.

Tax dodging News Corp continues to rip Australia off — and is subsidised by taxpayers to do so

News Corp retains its crown as a champion tax rorter, yet again paying next to nothing in tax despite billions in revenue.

Next time you see a News Corp employee or contributor, or a News Corp editorial, opining about fiscal policy in Australia, or how tax revenue should be spent, or how the economy should be run, there’s a simple question to bear in mind.

How much tax has the foreign-owned Coalition propaganda arm paid in tax in Australia in the five years to 2018-19? During that time News Australia Holdings has earned more than $360 million in profits from nearly $13.1 billion in revenue.

The answer, of course, is zero. It hasn’t paid a single cent in tax.

It’s a different story for News Australia Investments. In 2017-18 it reported $291 million in taxable income, on which it paid … $201,000 in tax. And no, there isn’t a zero missing.

Admittedly News Pay TV Financing — the vehicle for News Corp’s takeover of Foxtel and Premier Media Group nearly a decade ago — reported a $27 million profit way back in 2015-16. It paid tax on that that year: $8.2 million.

So, including everything, in five years News Corp has paid $8.5 million in tax on more than $680 million in profits and $13 billion in revenue.

In that time the Coalition has handed $40 million to it in untied grants, swamping even the miserable $8 million. The net position is that off revenues of more than $13 billion, taxpayers have actually paid the Murdochs more than $30 million.

All this is because News Corp is one of the worst tax rorters and dodgers in the country. That’s why, in 2015, the ATO deemed it the highest tax risk in the country.

The recently released ATO corporate tax data for 2018-19 — well before the pandemic — shows that the US-owned News Corp earned $2.1 billion in revenue, down from $2.4 billion the previous year, but claims to have made no profit at all — in contrast to previous years when profits where sneaked away offshore.

The numbers illustrate the extent to which News Corp has nothing to do with Australia and Australians. It is foreign-owned, Rupert Murdoch is a foreigner, and the company pays no tax in Australia.

Of course, that doesn’t prevent the company’s outlets from lecturing real Australians who live here and pay tax here about what they should do, how they should live and vote, and what fiscal and economic policies we should follow.

Read the rest of the article online.

I get that some may say it is smart to take steps to minimise tax. News Corp. is different. It openly meddles in democracy, plays with the truth to serve its needs, tells us how to live our lives. Yet, it pays no tax. This alone should strip of what it seeks to do.

I think what News Corp. does re tax is un-Australian, wrong and purely selfish.

All companies have a social responsibility to the countries in which they operate. In my opinion, News Corp. is not demonstrating social responsibility in its tax arrangements in Australia.

Shame on all politicians who pass the rules that allow News Corp and so many other companies to pay fair tax.

12 likes
Ethics
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