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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

Vogue Living sell out in Frankston

vogue_martin.JPGWe will probably sell out of the Catherine Martin guest edited edition of Vogue Living in our Frankston store.  Yes, Frankston!  The sell-out will occur because of the excellent collateral provided to support the title – as the photo shows.  I know of newsagencies where this issue will not sell out because the marketing support is not equal to that which we received in Frankston.  As comments on another post have shown here recently, newsagents would appreciate an opt-in situation for marketing collateral for magazines.  While there would be some work involved in making this happen, the resulting in-store effort by proactive newsagents is bound to drive sales … as we are seeing in Frankston for Vogue Living.

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magazines

Stationery sales down in the US

water_pens.jpgFurther to my post on Thursday, US stationery group Office Max overnight reported a 17% fall in sales – within one point of the fall experienced by Office Depot.

I suspect that the majors in Australia in stationery are experiencing similar falls, Officeworks, Corporate Express and others.   This is where newsagents can benefit.  While people will not go to Officeworks to do a $500 stationery shop, they will come to a newsagency for the incidental items and, hopefully, pick up other stationery items.  Whether they do, however, is entirely up to us.

We maximise the stationery opportunity by presenting professionally, adopting an enticing pricing policy, focusing on brands and backing all this will brilliant customer service.

Right now, our stationery sales ought to be growing.  I know from the recent benchmark study that they are growing in half the newsagencies.  It is the other half I am concerned about.

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Newsagency opportunities

Promoting Rainy Day activities

fhn_rainyday.JPGOn a rainy day last week, our team at Forest Hill setup this display near our photocopier. I like it because it guides customers to a purchase for a purpose, especially if it is raining outside. It also brings together products from several categories: kids magazines, craft products and activity books. In most cases, the items promoted are usually located further away from the main traffic area of the shop.  The only item I’d add if we carried them would be an umbrella.

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marketing

Finding space to promote Wheels magazine

frank_wheels_may09.JPGFinding space to promote Wheels magazine near where the guys browse at Frankston was a challenge.  By using the back of the ACP magazine basket builder stand the display in the photo was created and located adjacent to our men’s magazine section.  Sometimes this stand is placed against a wall and used from one side and other times it is used on both sides.

While I am biased, the Wheels display looks stunning.  It has been selling magazines too.

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magazines

Thief makes a second visit

Someone who stole several items from one of our shops last week visited us again on Tuesday. One of our staff members identified him from the photo we have from our security system. I am surprised that this chap would have the gall to come back in. He was clearly preparing to steal again. Our staff member approached him and he left. They followed policy and called centre management.  What bothered me was that this thief was shopping for specific items.  Talking with someone in centre security, they say that theft is on the increase based on their call-outs.

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theft

Money for Mum

money_for_mum.JPGThe marketing collateral from Intralot promoting scratch tickets as gifts for Mother’s Day looks enticing when placed with greeting cards.  While this is not how it was intended to be used, I saw it at our Frankston newsagency today – in with Mother’s Day cards.  Enterprising!  I’d love a camera trained on this and see how people react.

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Greeting Cards

Calendar relief for bushfire victims

Talking with customers at our Epping Sophie Randall store we discovered that bushfire victims were buying calendars to replace those which were lost in the fires. Through the relief centre at Kinglake, we have donated calendar stock we had left for distribution as they see a need. I am sure that newsagents with spare calendar stock would find welcome homes through the Kinglake or other relief centres.

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Uncategorized

Promoting Lovatts Mother’s Day crossword title

lovatts_mothers_day.JPGChristine’s BIG Crossword from Lovatts which went on-sale today is a special issue for Mother’s Day.  In addition to the usual location for BIG, we have it on display in the stand (as shown in the photo) next to our newspaper stand as well as part of our Mother’s day display in our card and gift department.  We know that promoting seasonally connected issues of magazines can achieve a lift in sales when the promotion is outside their usual location.

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crosswords

New Scientist Swine flu cover timely

fhn_new_scientist.JPGThe Swine flu cover story in New Scientist which went on-sale today is timely.  We have placed this issue above in a display unit The Age in our newspaper stand.  This location has a successful history in boosting sales of magazines which connect with the day’s news.  The Swine flu coverage is a great opportunity to bring New Scientist out into our mainstream customer traffic.

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magazines

News Ltd pitching online newspaper subscriptions

I was surprised to see the Adelaide Advertiser make noise the other day about their online subscription offer. Smart Edition, as it is called, costs $2 for a single copy – less per copy for a longer commitment.  News Ltd has offered this for some time for titles like the Herald Sun and The Australian. So, I am not sure what is new about this.

They are using the Newspaper Direct platform.  This is used by over 1,000 newspapers.

While I have doubts about the consumer interest in accessing newspapers in this way, newsagents ought to be across this pitch from News and the challenge it presents to our retail channel.

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Media disruption

Selling mince recipes with a lottery ticket

fhn_mince_tatts.JPGWe are using the empty space below one of our Tattersalls screens to promote the new Mince cookbook from ACP this week.  I picked up the idea from one of the comments made by another newsagent here a week back – they sold out.  The greater value we extract from high traffic areas like Tattersalls counters the better for us and all of our suppliers.  We will change the offer weekly – essential given the frequency of visits by regulars.

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Lotteries

Where is the stimulus package newspaper offer?

With most Australians $900 better off this month thanks to the hand out from the Federal Government, I am surprised that newspaper publishers have not pitched a stimulus bonus subscription offer. They could have easily and cheaply promoted an offer which chased some of the $900. A well pitched offer would have helped their businesses as well as thousands of small business newsagencies. Perfect use of the stimulus payment I’d say.

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Newspapers

Do newsagents have the guts to fight for their future?

The treatment of newsagents by News magazines over Alpha magazine is, in my view appalling. We built this title on a promise of partnership with a significant financial carrot as our return.  News magazines has taken that carrot away and handed the title to NDD, a magazine distributor with a less than clean track record for equitable supply of magazines and with a history of refusing to cut titles – that it my experience at least.

So, here we are, shafted.  My question for newsagents is what are we doing about this in our businesses?  Are newsagents writing to NDD to cancel the title and copying the correspondence to News Magazines? Are we complaining here and in other places but putting Alpha on the shelves as usual and thereby saying to suppliers that it is okay to whack us again and again?  Or, are we doing nothing?  Traditionally, newsagents have done nothing when suppliers have changed commercial arrangements to the detriment of newsagents.

One day, newsagents will stand up for themselves.  I wonder if that day is now.

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magazines

Mother’s Day in newsagencies

fhn_mothersday.JPGMother’s Day is the second biggest season for greeting cards on the newsagent seasonal calendar.  It is beaten only by Christmas and is around 50% ahead of Valentine’s Day. While card sales equal only 20% of Christmas, is a very important season, generating considerable additional traffic in newsagencies.

Like most newsagents, we are pursuing every opportunity to maximise sales. We have had our Mother’s Day gifts in display for several weeks. The photo shows only part of our range. Going out early with key seasons like Mother’s Day, Valentine’s Day, Father’s Day is an important strategy. It shows off our range to browsers and provides a selling opportunity for those who like to get in early.

We grew Mother’s Day card sales by 22% in 2008 over 2007. We are chasing double digit growth this year.

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Greeting Cards

Chasing early Women’s Weekly sales

fhn_aww_may09.JPGRather than wait for marketing collateral, we went out early yesterday with an Australian Women’s Weekly display in the mall in front of our shop. Given that our competitors are Coles, Safeway and Big W, it makes sense that we go hard early in the on-sale for this title. AWW is achieving good success this year and we expect that to continue with this issue. I just wish we received a good range of collateral material with the magazine.

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magazines

Optimism in the gloom

There is plenty of gloomy news out of the US overnight which relates to categories important to Australian newsagencies.

US stationery retailer Office Depot reported a sales drop of 18% last quarter.  The Wall Street Journal says this is due, in part, to newcomers in the stationery field.  Most newsagents reported a drop in stationery sales in the last quarter based on my sales benchmark study.  Those achieving growth produced excellent numbers.  Newsagents ought to be growing in stationery in the marketplace as consumers pull back on their visits to the bigger outlets where they know they will buy more.  The WSJ article is interesting in this regard.

American Greetings (owner of John Sands) reported a 14% fall in sales for the quarter.  The tough US conditions are making people think twice about card purchases according to a Forbes.   Cards are another tough category.  Some newsagents do very well with cards while others are experiencing poor results.  The key appears to be direct engagement.  Newsagent who ‘own’ their card department are more likely to produce better results based on the data I am seeing.  Our small businesses are more able to respond to conditions than the nationals.

Time Warner has reported a sharper decline in magazine advertising revenue than forecast.  We are seeing this here.  There was mention in the Australian Financial Review yesterday of this impacting PMP results.  If advertising revenue continues to fall through the year we will feel an impact in newsagencies on several fronts.

While these reports read like bad news.  They ought to encourage us to exert more control over our businesses, to be more versatile and be on the move. I am meeting more newsagents bucking the trend and producing good results be refusing to let stuff happen around them.  They are cutting their own path, taking risks and, often, enjoying good success.  For example, one newsagent cut 30% of magazine space and increased overall magazine sales.  Another went from three card companies to one and increased sales.  Another got on his bike and chased stationery business outside his four walls and trebled stationery sales in six months.

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Newsagency challenges

Watching the sunset

perth_april29.JPGI am in Perth tonight and was fortunate to witness a glorious sunset.  The sky rolled through grey, pink, red, orange and, finally, black.

Sunsets for me are like smelling roses can be for others.  Outside our four walls, life goes on.

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Uncategorized

Alpha off to a rocky start with NDD

Alpha allocation by NDD for my Forest Hill and Frankston newsagencies today was good.  I have received calls from several newsagents advising that NDD has increased allocation by between 25% and 50% on the back of a previous sell through of 50% or less.  This is what newsagents feared from NDD.

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magazine distribution
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