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

Amazon launches Kindle DX

kindle_dx.jpgAmazon launched the Kindle DX reader yesterday in the US.  This new device is being touted by some newspapers as a device which could help save newspaper publishing.    Amazon said that three newspapers, The New York Times, The Boston Globe and The Washington Post, will offer the Kindle DX from mid this year at a reduced price to subscribers who sign up for long-term subscriptions.

The New York Observer quotes Arthur Sulzberger, publisher of The New York Times:

Mr. Sulzberger called the Times Company’s embrace of the Kindle DX “an important milestone in the convergence of print and digital.”

“We at the New York Times company are delighted to make use of the Kindle DX,” Mr. Sulzberger continued. “We know that the e-reader can offer the same satisfying experience [as the print edition].”

The Kindle is not currently available here as it operates through a wireless network and the Australian marketplace reportedly presents some challenges in this regard.

Looking at the US situation, newsstands and other newspaper vendors play no role in the new distribution model.  In a Kindle relationship, the publisher offers the subscription through Amazon.  Production costs beyond the first copy are nil. No wonder publishers see the Kindle DX and other e-reader type devices as crucial to their future business plans.

I would expect publishers to say that customers accessing newspapers through the Kindle are different to those purchasing print.  Film, TV and music producers said that too many years ago.  The iPod changed that.  Only time will tell whether the Kindle is the iPod of print and changes distribution forever.

In the meantime, my view is that no newsagent should sign up for a shop fit which includes purpose built newspaper or magazine fixtures.  These parts of our shops need to be able to be changed without any capital expenditure.  we have a tremendous opportunity here compared to our counterparts in the US, an opportunity to lead change.

PaidContent has good coverage of the launch of the DX.

The photo is from the Amazon website.

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Media disruption

How are Tatts products performing for 7-eleven?

tatts_7eleven.JPGI first heard four weeks ago that sales of Tattersalls lottery products in 7-eleven convenience stores were not as good as expected.  Since then I have heard it from several more people, some of whom I would expect to have good market intelligence.  Maybe my concerns and those of others have not been realised by this marriage or, maybe, the new offer is taking longer to gain traction than anticipated.  Maybe what I have heard is not accurate.

I would be surprised if sales are not good. Advertising for the offer has been strong and this is supported by good in-store collateral.

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Lotteries

More than one Mother’s Day card

I have put in some counter time this week and have been surprised by the number of sales of Mother’s Day cards where two or more Mother’s Day cards are purchased.  Even guys were buying two or three cards.

This may be premature but Mother’s Day feels very strong this year.

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Greeting Cards

Is $32.50 too expensive for a magazine?

tuscan_style.JPGTuscan Style is a nice magazine but it is not worth $32.50.  I flicked through the pages looking for gold dust but found none.  Given the range of interior design and fashion titles in-store for under $10, I don’t expect Tuscan Style to sell.  That said, we’ll support it for a couple of weeks at least – but keep a careful eye on theft.  This is the kind of title I’d like to have available but not in stock.

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magazines

Hearst discounts magazines to $5 for a year

Hearst magazines has run a One Day Sale, offering a bunch of magazines for US $5 for a year-long subscription.  This is an amazing deal for titles like: Cosmopolitan (6 issues), Country Living, Esquire, Good Housekeeping, Harper’s BAZAAR, House Beautiful, Marie Claire, O, The Oprah Magazine (6 issues), Seventeen, SmartMoney and Town & Country.  Hearst has done this before so it must work.

hearst.jpg

This amazing discount by Hearst is odd because their chief marketing officer is on the record as saying that their products are undervalued.

“We’re realizing that the product is undervalued,” said Michael A. Clinton, the chief marketing officer of Hearst Magazines, which raised cover prices on more than half of its magazines last year and plans to raise subscription prices this year.

While magazine subscription deals here in Australia frustrate me from time to time, I am glad they are not as desperate as what Hearst runs in the US.

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magazine subscriptions

Better bugs for loyal customers

fhn_choosing_bugs.JPGPutaway customers get bigger and better bugs with their real Life Bugs magazines in our newsagencies.  When setting aside put away product, we choose the best looking bugs for our putaway customers.  Click on the image for a larger version and see for yourself.  The bug on the left is better, it is for a putaway customer, as the label shows.  We do this because customers compare bugs when buying this series.  Once we realised this, it was an obvious decision to make the selections when we do our early morning allocations.

Putaway customers are among the most efficient in a newsagency.  Our data shows they are 33% more likely to purchase other product than a regular magazine customer.

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magazines

Build efficiency from newspaper sales

fhn_recession_mags.JPGWe have recycled a display unit to host three recession related titles – Money, Australian Property Investor and Your Investment Property – and placed this next to The Age.  This will remain for a week, longer if sales justify.  Better Homes placed next to the unit will also draw attention.

What we build around our newspaper stand is all about chasing greater efficiency from a newspaper sale.  Around 70% of newspapers sold in newsagencies are sold alone!

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magazines

Promoting Health Smart magazine

fhn_health_smart.JPGWe are featuring Health Smart magazine at our counter, between our wto busiest registers.  The free shopping bag meets our criteria for this space – we promote titles with a valuable free gift.  In this case, the bag folds into a compact space. Our sales history shows that Health Smart achieves a good uplift early in the on-sale when a gift is on offer. Our only frustration is that we were not provided with any marketing collateral to support the promotion.

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magazines

Promoting the gift shop

sophie-newsletter-may-2009.jpgClick the thumbnail here to see the May customer newsletter we have produced in-house for our Sophie Randall card and gift shops.  We have evolved from the news style newsletter we have used for the last two years into something which is more shopper/shopping focused. These newsletters are placed in a stand in front of our shops.

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marketing

Will the new Kindle help US newspapers?

The prospect of Amazon releasing a larger screen version of its popular Kindle has media outlets abuzz.  A common thread of reporting is whether this device can save US newspapers.

In the context of newspaper distribution and retail businesses, the Kindle will not help.  However, the buzz this week is yet another reminder to Australian newsagents that distribution is what is changing most in the US right now.  Those changes will eventually come here.  This is one reason I questioned whether newsagents need contracts with newspaper publishers.

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Media disruption

Books and newspapers on your iPhone?

Apple who are set to launch a brand new touch screen, tablet type device in June that will be available with a 15″ screen, have been exploring the concept of delivering morning newspapers and books to the device in an easy to read format that eliminates the need to click through to separate pages on a web site.

Smart House has more on this story.  They say that Apple and Sony met with newspaper publishers in the US earlier this year to discuss this.

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Newsagency challenges

Is there a change in instant scratch ticket sales?

I have been working through business data for a newsagent and noticed a change in scratch ticket denominations sold over the last year. Customers are buying more of the lower value tickets in their store. That is, more $1 and $2 tickets and fewer $5 and $10 tickets. They are buying cheaper entertainment. This is not a Victorian shop so it has nothing to do with a change of lottery company.  I am curious as to whether other newsagents have noticed this in their businesses.

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Lotteries

Helping newsagents with IT compliance

Tower Systems tomorrow starts a national tour, meeting with many of the 1,600 newsagents using its software.  The sessions centre on the new XchangeIT standards and provide free training in how to leverage this to maximum advantage and ensure you pay the least possible for XchangeIT.  Any newsagent is welcome to attend.  It’s free.  Click here for details of the sessions.

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newsagent software

April numbers in newsagencies

We are reasonably happy with our April numbers:

  • Art: up 12%
  • Books: down 5% (off a great 2008)
  • Calendars: up 100%
  • Diaries: up 125%
  • Gifts: up 795% (off a low base)
  • Magazines: down 5%
  • Newspapers: down 6%
  • Ink: up 18%
  • Stationery: up 1%
  • Overall traffic: down 13%

It is good to see growth in categories with healthy margin.

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Newsagency opportunities

Woman Newsagent of the Year Award nominations open

woman_newsagent.jpgThe 2009 Women’s Health Woman Newsagent of the Year Award, sponsored by Pacific Magazines, is an important award open to women newsagents in Australia. Introduced last year and won by Nia Kugel from newsXpress Fernvale and Lowood, the award recognises the extraordinary efforts made by women who own or manage newsagencies in Australia. It also recognises the challenges required to maintain the balance between business, personal and community success. Click here for the entry form and other details for the 2009 Award.

The winner of the 2009 Women’s Health Woman Newsagent of the Year award will receive: $5000 cash, A holiday valued at $3000, Flights and accommodation to attend the ANF Awards Dinner in Sydney on June 30.

Two runners-up will receive a special gift and acknowledgment of their achievement.

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magazines

Who is Annabel Karmel and why do we need her cookbooks?

fhn_anabel.JPGI am surprised to see the Annabel Karmel cookbook in newsagencies in Australia.  Our food section is full.  Now we need space for Annabel.   While I respect Annabel’s work, I question the need for another British cookbook here – we have good Australian titles which struggle.  The price point is high as is the quantity we received.

Newsagents need the opportunity to say no to new titles and know that their decision is respected.

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magazines

Free camera for mum

hallmark_camera.JPGThe pink camera we have as our Hallmark Mother’s Day Giveaway is a great promotion. I like that it is a local prize – one of our customers will definitely win. This is important given that we are pitching local shopping at every opportunity. A national prize does not have the same local appeal.The camera connects back to the Hallmark Card for Cure campaign.  Hallmark has been recognised for their contribution to the workd of National Breast Cancer Foundation.

Often prizes for competitions are impractical.  The Sony camera is practical, just about anyone will have a good use for it.

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Greeting Cards

Intralot signs as sponsor of Melbourne Victory

victory_intralot.JPGI was at the announcement at Crown Casino today where Intralot was announced as a sponsor of Melbourne Victory.  This sponsorship will raise the Intralot profile.  Leo Watling, head of Intralot in Australia, drew a good analogy between the Victory’s launch in AFL crazy Melbourne and Intralot’s launch eight months ago in the face of very tough competition.  The launch was well attended including good media representation.

The one controversial comment at the announcement was when Victory Chairman Geoff Lord answered a question about the AFL and their planned move to Western Sydney.  He said the AFL would never get off the ground in Western Sydney.  He then corrected himself and made it clear it was his personal opinion.

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Lotteries

Quitting Crayola products

fhn_crayola.JPGAfter careful consideration, we have decided to quit the Crayola range after two years of trying to make what we need to justify the capital and labour investment.  The decision is in part due to challenges the company presents to newsagents who want to carry a broad Crayola range.

If I could buy direct and on competitive terms I’d reconsider since I could then more effectively compete with the majors.

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retail

Newspapers no longer essential – Buffett

I have heard Warren Buffett referred to by newspaper publishers as supporting of the print medium.  In at least two presentations over the last few years I have heard that Buffett and his business partner, Charlie Munger, read five newspapers a day.  This was presented as support for the future of newspapers. Newspaper publishers are unlikely to refer to Buffett again thanks to comments he made a few days ago at the annual shareholders meeting of his Berkshire Hathaway business where he told his shareholders that US newspapers face “unending losses” and that they are no longer “essential”.

What does this mean for us here in Australia?  Publishers will tell us it is business as usual.  They would want us to ignore what is happening in the US.  Some newsagents will believe that.  My view is that the crash of US newspapers we are witnessing this year is an early warning of what will happen here in the future.  Our excellent home delivery system is delaying the impact because small business newsagents carry the more of the high cost of distribution than delivery contractors in the US.  We are also insulated because debt levels of publishers are different here – although Fairfax does appear to be more challenged in this area than News.

Rather than focusing on the gloomy news, we need to embrace the opportunity.

Newsagents need to make business decisions with the full knowledge of what is happening to newspapers in the US.  We cannot rely on newspaper generated traffic to our businesses forever, not even for five years.  We need to build new traffic urgently.  In-store, we need to be flexible in our offer, expand our range and focus on categories which generate their own traffic and do not rely on newspaper traffic to drive sales.

While it is sad to see US newspapers crash, we have a once in a lifetime opportunity to reengineer our businesses before we loose newspaper traffic here.  We need to focus on that opportunity and embrace it for our own future.

UPDATE: Fox Business has the full quotes re newspapers.

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Newsagency challenges

Promoting the local florist

florist_marketing.JPGA florist in Frankston gives us a nice flower arrangement in the lead up to Mother’s Day to promote their business and provide one lucky customer with a fresh arrangement for their mum.  I like that this promotion supports a business in our centre, gives our customers a winning opportunity and brightens the shop for a couple of weeks.

I’d note that this is not our initiative, it started long before we bought the business.  We’re happy to maintain the tradition.

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marketing

Your Garden selling well

your_garden.JPGYour Garden magazine is selling well in my newsagencies.  The latest issue has achieved a 95% sell-through.  We achieve good sales in the first month through placement at the top of a column of gardening titles, next to Burke’s Backyard or Gardening Australia – our two top-selling gardening monthlies.

We move Your Garden a couple of times through the on-sale (as we do many magazines) to combat store-blind customers shopping the category.  We try and do this with our top selling longer on-sale titles.

We sell more copies of Your Garden than the other two titles.

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magazines
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