We have created a small display of Hallmark wedding product – cards, bags, trinkets – and next to that a spinner with twelve wedding magazine titles. Many newsagents do similar displays of the cards and bags at least this time of the year.
Each time we display cards and magazines together, in context, it works well. The magazine stand is 11 years old and still serving us well.
Reader’s Digest this month comes with a free CD. In some stores at least. At one of our stores we received some stock with the free Cd and other stock without. The packaging says the CD is them saying thanks.
While I respect their right to do what they like with the title, the inconsistency is frustrating, especially where we receive two versions of the stock.
I participated in a meeting organised by the Administrators of Bill Express this morning. Newsagents who have registered as creditors should receive a report from the Administrators in the mail next week. This will detail progress to date. Confidentiality precludes me from publishing anything discussed at the meeting.
We are promoting the Australia’s Open Gardens guide at the counter this weekend. While there is no freebie and technically this does not meet our criteria for this counter space, we know the title will speak to our demographic.
Last year’s issue was a sell out within ten days of the on-sale thanks to a feature display we created. I’d expect this display to deliver strong sales over the next three days and thereby justify using the premium space.
All week I have been hearing ads on the radio for the launch today of Australian Business Solutions. The ads were promoting that this new magazine would be available at newsagents. Their support of the channel has been fantastic. It is rare that a magazine supports newsagents exclusively as this new title has in its radio advertisements. We have placed ABS in our newspaper stand above The Age as well as with business magazines.
Further to my earlier post about the lack of Olympics themed magazines, I have found Beijing – the complete guide to the 2008 Beijing games at our Frankston newsagency. I am surprised that this title was not more widely distributed. It has enough general appeal to to warrant wide distribution.
The magazine supply model continues to confound.
Roy Greenslade points to an interesting Scottish survey which found that newspapers are the biggest seller for small shops. Newspapers are always in the top five selling items in Australian newsagencies. I know from my basket research which involved data from more than 100 newsagencies in 2007 and 2006 that in shopping centres, 70% of newspaper sales are single product sales, in high street newsagencies this falls to around 65% and in rural / regional areas this falls to around 45%.
When I met with a senior executive of News Limited in early 2005 we discussed newsagent margin and the static cover price. Her response was that newsagents love newspapers because of the traffic. When I explained that the traffic was inefficient she blamed newsagents. When I explained that publishers often made it difficult to promote other products with newspapers she changed the subject.
There is no doubt that newspapers are important to newsagencies. They generate considerable traffic and keep us top of mind. However, my sense is that some of this traffic is so habit based that the customers do not know they are visiting a newsagency. It’s the paper shop. While it would be easy to say the newsagent is at fault for not changing that perception, we can really only do this if we are unshackeld by suppliers so we can be retailers. For an unregulated channel we sure have a lot of regulations.
Newsagents are not blameless in this. Many in our channel do not pursue add-on sales with enough vigor and sales suffer as a result.
In our case we look carefully at the newspaper purchase from outside the shop to the newspaper display to the counter. We build offers along the way, at the display and at the counter. We change these offers at least weekly. The result is considerably above average newspaper basket efficiency for us.
We are copying an idea we have seen from another agent and running a syndicate around the Intralot Lucky Bingo product. Given the variable jackpot, we have created a laminated sign to promote the offer.
Four days in on our first week and this new syndicate product is selling well. It will take a few weeks to establish traction with our syndicate customers before we run multiple syndicates around the game but we are confident.
The Australian Newsagents’ Federation today did a u-turn in advising newsagents to suspend direct debit authorities for the Bill Express equipment. They also said that their goal is the dissolution of the equipment rental agreements and that the present ANF Board had been placed in a complicated situation.
Today’s communication matches what I put to the Chairman and Deputy Chairman when I met with them, at their request, at the VANA offices on Tuesday this week. I explained the flaw in their approach to then of trying to negotiate a deal with Mobius on a discount on the equipment rental agreement. I was pleased to see the ANF u-turn. However, I suspect that my advice to them on Tuesday was not the first time this advice had been given to them.
It is important the ANF now disclose what they are doing to seek the dissolution of the Bill Express equipment agreements given that up to Tuesday, nothing was being done or had been done on this. Until then, their focus had been on negotiating a discount on the amount newsagents owe.
The ANF today also said:
We are also deeply concerned that there is third party commentary and we see this as serving no ones interests. This continues to fragment our industry.
Given the performance of the ANF, third party commentary such as my posts here and the comments of others serves newsagents well. If newsagents had relied only on the ANF then many would have paid one or two months of direct debit payments and the ANF probably would not have changed its position as announced today. Sure I am critical of the ANF from time to time. They could take this as an indication that I think the organisation has an opportunity to be relevant.
Debate is healthy. It does not fragment the newsagency industry.
Click here to download a copy of the proof of debt form newsagent can complete to register as a creditor of OnQ. OnQ is the company which committed to paying a monthly rebate to newsagents. I have lodged a form for rebates not paid this year. Once you have completed the form, keep a copy and post the original to Worrells, GPO Box 1834, Melbourne 3000.
While there is no money in OnQ and therefore no apparent chance of getting the rebates repaid, newsagents shold still register as a creditor. I have claimed $1,050 for each of my newsagencies – rebates payable as per contract.
Based on ANF advice to newsagents, the organisation appears to be collectively bargaining on behalf of newsagents with Allco and Mobius in pursuit of a discounted settlement over newsagent’s Bill Express equipment rental agreement.
I cannot find authorisation from the ACCC on their Collective bargaining notifications register for the ANF to act on behalf of newsagents on this Mobius issue. Nor has the ANF sought permission from newsagents on this.
Newsagents may wish to email the ANF asking that they not represent them in discussions with Mobius and Allco. Emails could be sent to: reception@anf.net.au.
The ANF would be well advised to compare the number of newsagents registered with its legal strategy compared to those registered with the Class Action which was started by an independent group of NSW newsagents. I expect that the numbers will show newsagents want the Bill Express equipment agreement challenged before there is any consideration given to negotiating a settlement.
We reused most of our Grazia display from last week this week. We have used this week’s posters on the stand. Having the monochrome background enabled us to get away with it and to give Grazia our premium position two weeks running.
The stand (to the left) is important in a display like this – it provides a place off of which consumers can make their purchase. There is no point in having a pretty display unless there is an opportunity to act.
I am surprised at the lack of Olympics themed magazines and related products. With the Beijing Olympic games just over a week away we have very little available, certainly not enough for a feature display. Maybe we missed out but I suspect not. We had more feature magazines and one-shot titles for the Rugby World Cup.
US research company Borrell Associates has released a report predicting that 39% of the ad spend on print yellow pages in the US will disappear over the next five years.
Check out the demands ASDA in the UK (Wal-Mart owned supermarket) is putting on magazine publishers as reported by the Guardian. I particularly like the proposed setup charge for a new title. New titles are expensive for newsagents, we carry the stock while the title finds its level. A new title setup charge would respect our labour and real-estate investment and see the publishers carrying the risk rather than us. I also like the proposal of being paid a fee for space allocation. Given rents in for shopping centre newsagents today this is likely to become an economic necessity. Some of the requests by ASDA are way over the top.
We have placed Take 5 in our prime counter promotional position today because of the free guardian angel brooch which comes with the magazine this week.
While I’d prefer customers buy one of our guardian angels, I’m equally happy to sell magazines because of such a good giveaway.
We achieve between 60% and 75% of weekly Take 5 sales on Wednesdays, the first on-sale day.
The Banking Industry Ombudsman website has some helpful information for canceling a direct debit which may be useful to newsagents who have had payments deducted for Bill Express equipment this week even though they had cancelled the direct debit authority with their bank.
If you have given a third party an authority to debit your account, that authority may be cancelled either by notice to the third party and/or by notice to the bank. This is reflected in clause 19 of the New Code of Banking Practice, which says that a bank will promptly process your instruction to cancel a direct debit request and will not direct or suggest that you should first raise any such request directly with the third party. The bank may suggest that you also contact the party and this is a prudent course to take to ensure that the authority is cancelled.
Newsagents who cancelled their direct debit authority and had money taken our for the Bill Express equipment this week ought to make representations to their bank about how this is a breach of the Code of Banking Practice.
If your bank refuses to refund the money they allowed to be deducted after you cancelled the direct debit authority, you should advise them you will make a complaint to Financial Ombudsman Service. Click here for details of how to register your dispute online.
Mark Hawthorne at The Age today continues excellent reporting on Bill Express and the collapse of OnQ.
We have spoken to the Administrators of OnQ and they have provided a formal proof of debt form. This will need to be completed and lodged with Worrells in advance of any creditors meeting. My view is that OnQ is indebted to my newsagencies for the rebates as documented in Schedule D of the Bill Express agreement.
While there is no money in OnQ, by registering as a creditor newsagents can at least have a voice at the table as the last rites are performed and therefore hopefully be better informed. I will publish an updated example of the form completed later today.
When a creditors meeting is announced I will publish details here along with a proxy form.
Meanwhile, a group of around 20 newsagents yesterday met with representatives of the ANF in Melbourne. Most of the meeting was taken up with Bill Express matters. The difference between the ANF approach and that of the team behind the NSW instituted Class Action was evident. The ANF approach is to negotiate a settlement of the Mobius debt newsagents have been saddled with. The NSW Class Action approach is to challenge the debt on the basis of legal precedent. As I blogged here last week there are precedents worth considering.
The major flaw in the approach the ANF is taking is that it accepts that the equipment rental agreement is separate to the Bill Express agreement. That acceptance leaves the ANF strategy pursuing an outcome which is unacceptable to newsagents. Unless the ANF changes its approach or communicates its reasoning in a more convincing way it will continue to lose members on this issue.
The ANF Directors needs to practically and publicly demonstrate that they will pursue the Mobius agreement issue until the very end and that they will put the needs of newsagents ahead of their own. If they are not prepared to do this they ought to resign. On the evidence so far this year, the Directors of the ANF have not put the needs of newsagents ahead of their own.
My understanding is that the majority of newsagents attending the meeting in Melbourne with the ANF yesterday signed up for the NSW Class Action and not the ANF strategy.
The announcement from Starbucks was drenched in the harsh reality of business. Sixty one underperforming Australian stores will close within a week. Tenancies vacated, employees (partners) let go, supplier relationships terminated.
This is how corporates act. They put up with poor numbers for so long and then make the decision which has to be made.
While I didn’t care for their coffee – how could you in a country blessed with so many exceptional independent coffee houses – I admire the business model. Margins are good, better than newsagencies. They controlled their brand and most of what they sold. Rent and labour would be key challenges.
If Starbucks can reach this decision with key factors – range, margin and buying power – working for them, what is the situation newsagents face? How many in our channel are looking at their businesses as the suits at Starbucks have done over the last few weeks? If these same suits controlled our channel, how many would they close on the numbers?
A key challenge we face is the percentage of our sales over which we have no margin control and over which we exert no margin leverage. This must change, especially for circulation product. While some newsagents do already, more of us must diversify and offer a broader, good margin, product range. Newspapers, magazines, lotteries, transport tickets and low margin confectionery will be part of the mix but they do not contribute enough to the bottom line for you to use these as springboards for th level of growth we need to stay in the game. (Read me earlier post this morning about the Daily Telegraph to understand this point.) These products, by the very nature of the controls around them, restrict what we can achieve. Our future lies in leveraging the traffic of these regulated products into sales of other, more profitable, lines.
The alternative is that more in the newsagency channel face tough decisions like those faces at Starbucks recently.
While consumers would be happy that the Daily Telegraph has not increased its cover price for eight years, newsagents are not happy. What newsagents earn is based on the cover price. Having this fixed for eight years makes the Daily Telegraph considerably less valuable today than eight years ago. Rents are rising 5% a year and wages between 3%b and 5% a year. This freeze on the cover price is not sustainable, especially when the publisher requires newsagents to place its product in premium retail space.
The publisher can sustain the fixed cover price because the majority of their income comes from advertising which has not remained capped over the eight years.
This is a good example of poor treatment of small business by big business. Newsagents cop it because they are the weak party. They are too scared to take a tough stance in negotiations because of the fear they will lose newspapers or at least see them placed directly in more outlets.
The price of the Daily Telegraph is one reason newsagents in NSW are doing it tough. Any publisher who doubts this should take six months off and live the life, physically and economically, of a newsagent.
I am okay with magazine publishers including subscription offers in their publications. However, I am not okay with them talking us down in the process.
The photo is of a flyer inserted with National Geographic. This flyer claims we are expensive. We are. Rent and labour in newsagencies make up the most of our costs.
National Geographic is happy to use both these resources to promote their business. It is offensive they talk us down in this way.
Newsagents are about to receive a letter reminding them about the importance of the accuracy of returns claims. Network Services has increased the number of newsagent returns being audited. This has resulted in some breach notices being issued and several newsagents having their contracts terminated.
Based on my recent experience on behalf of another newsagent, I am concerned that the Network process for resolving a dispute about a returns discrepancy is not structured fairly. There are various reasons there could be a discrepancy and newsagents need certainty that all of these have been fully considered before any breach notice is issued.
I wish that Network would apply the same vigilance to the supply side of the magazine transaction. Too many non ACP titles are supplied at quantities not justified by sales data. I consider this breach to be as serious as a breach by a newsagent in over claiming on returns. Unfortunately, Network appears to not see it that way. A higher sell through as a result of a more accurate scale out model would result in fewer returns and therefore fewer problems with returns discrepancies.
Having said all that, fraud cannot be tolerated so if newsagents deliberately make false returns claims they can suffer the consequences.
OnQ, the parent of the collapsed Bill Express company, has announced the appointment of administrators. This move was only a matter of time given once Bill Express collapsed.
I am a creditor of OnQ as are most newsagents. The Agreement I signed commits the company to paying rebates as outlined in Schedule D attached to the Agreement. While the company will claim that it varied the Agreement, I’d like to hear how a judge views that. In the meantime, I’ll register as a creditor. If I get a form for this I will post it here.
I will be interested to see what happens now with ETT, a public company 43% owned by Bill Express. If it collapses that will be three related ASX listed companies collapsing.
Party like there’s no tomorrow. This is the theme of new marketing collateral from Tattersalls. We are going all by placing the poster in our empty Tattersalls scratch ticket bays.
Woo hoo.
We have created a partworks row in front of our counter at the entrance to our Forest Hill store. As with my last post, this says we are specialists. Each of these partworks has been or is being advertised on TV. Newsagents are the exclusive retail partner. By being bold about these products we are connecting our business with current TV campaigns and thereby leveraging the relevance that link brings.