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

The elephant in the room

The elephant in the room at the ANF National Convention this week has been the Bill Express issue. Just about every newsagent I meet asks what is likely to happen and whether they will have to pay back the lease they took out on the equipment. Like so much about Bill Express at the moment not much can be discussed publicly. I can’t help but feel that the Convention would have been a good time for newsagents (and only newsagents) to get together and talk about the situation.

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Bill Express

The Vodafone window

voda_apo.JPGThe Government owned Australia Post shop opposite our newsagency had a big display window promoting Vodafone installed late last week.  It looks better in person than the photo shows.  We are jealous of the professional looking window and the deal they must on to justify the space and stock investment.

Mobile phone handsets are a challenge for newsagencies as our stores carry more stock per square metre than most other retailers, space is limited.  Newsagencies are visually noisy too – a corporate display like for Vodafone would get lost when competing with bold magazine displays and lottery jackpot displays.

We have some ideas on how handsets could be represented and this is something we hope to play with soon.

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Australia Post

Correlation between gifts and cards

Digging deeper into the benchmark study we undertook based on sales data from 89 newsagencies, it is clear that there is a correlation between gift sales and card sales.  In each store with strong gift sales, the card sales were considerably above average for the benchmark.  Based on this, why would a newsagent not have a crack at gifts – even if space is tight it makes sense to try and find a way to play in the category and therefore enjoy growth in cards.

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Gifts

Newsagency of the future workshop

I have been asked by three newsagency suppliers to present my Newsagency of the Future workshop from the ANF conference elsewhere. A couple want it presented internally and another would like me to present it to newsagents on their behalf. When I get back to Melbourne I’ll look into this and maybe consider a presentation in each state. I am certainly keen to open for discussion the issues / challenges raised.

Newsagents have a tremendous opportunity to control their future, all it takes is willingness to embrace change and a desire to think and act as business people focused on the future as opposed to the past.

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Newsagency challenges

Tough decisions for newsagents (3)

Here is the final set of challenges I covered in my presentation of the Newsagency of the Future at the ANF conference yesterday.  These are not tough decisions for newsagents as such, they are challenges which suppliers need to address.  The difficult for newsagents is whether we have the will to engage with suppliers on these issues.

Magazines: Pay on scan based sales.  This will stop us paying for theft.  It will also make publishers and distributors more accountable for what they supply.  The current model has little such accountability and small business newsagents carry a higher burden.  I appreciate that paying newsagents only for scanned sales is a challenge.  Let’s at least open a conversation and see where it takes us.

Greeting cards: Agreed pocket based KPIs.  If a design fails an appropriate KPI and back end arrangements can make the publisher responsible.

Stationery: Buying 20%+ better than today.  Newsagents need better stationery buying arrangements.  If we cannot dramatically cut our buy price of stationery then we might as well get out of the game.

Newspapers: Reward based on success.  I’d like to see publishers treat retail newsagents as business people.  Reward us for growth and initiative which supports the masthead.

Home delivery: Open pricing of our services.  Newsagents provide the service, carry the risk and carry the cost rises.  It is a joke that they are not allowed to set their own fees.  As long as the current arrangements continue publishers cannot expect newsagents to act as business people. 

Retail: Put a price on our real-estate.  We give for free across 4,000+ newsagencies what others charge for.  We need to understand the value of this asset.

Vouchers: Transparent and competitive pricing.  Newsagents have been dudded in this category previously.  We need to make sur that deals negotiated on our behalf work for us and respect the breadth of our network.

My hour long presentation covered more than I have posted here in the last three posts.  These are the points I think we need to consider around the issue of the newsagency of the future – before we actually plan for what our future looks like.

The key for me in all this is that newsagents break free from their past for it is our clinging to territories and old world practices which is stopping us from making our own future.

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Newsagency challenges

Tough decisions for newsagents (2)

Here is the second installment of tough decisions for newsagents which I covered in my presentation to the ANF Conference yesterday.  Here are the store level tough decisions for newsagents as I see them.

Allocate space based on financial return.  This may seem logical.  It does not happen in newsagencies.  Stores are often laid out by retail designers who have not been shown financial data to determine allocation.

Quit declining products before they hurt.  Newsagents hang onto stock long after it is useful  They need to quit old stock early.

Adding categories which fit your demographic.  Newsagents need to forget the rules and play outside the square, chasing new opportunities which connect with their businesses.

Get serious about business.  This is business after all.  A newsagency is not a retirement fund.  It is not a place to hibernate once you are made redundant.  It is business and ought to be treated as such.

While the points in part 1 are bigger picture and have greater ramifications, these store level challenges are also important for newsagents.

Take the issue of allocating space on financial return.  We get it wrong so often and allocate space because it is how it has always been.  We get it wrong so many times.

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Newsagency challenges

Tough decisions for newsagents (1)

As part of my presentation at the ANF Convention yesterday I put on the table several tough decisions newsagents which I think need to address. I broke these down into network wide decisions, store level decisions and supplier related decisions. Here are the network wide tough decisions for newsagents as I see them.

Forget about territories. Newsagent commitment to territories is holding us back. It’s dark ages thinking. Unless we can ditch this we will run and be treated like second-class businesses.

Resolve the exit and entry conflict. We need to price our newsagencies for sale in a fairer way. Otherwise, we charge too much and leave incoming newsagents with a business which cannot support the price paid.

Drop the newsagency shingle. Is the term newsagent relevant any more? Maybe not. It ties us to our roots and since we have strayed so far from them maybe we stop calling our selves newsagencies and our businesses newsagencies. We are no longer agents after all.

Improve supply chain efficiency for us. Our supply chain is grossly inefficient at our end. We need to cut costs out so we can compete with others. We should stop pandering to out of date practices suppliers require us to follow such as paying freight on stock which we did not order and which has not performed.

There was more to the presentation than these points. I wanted to share them here to open a broader conversation on these points. Each is a challenge to our future. Each has the potential to block us growing.

Take the issue of territories. That newsagents still think in terms of territories is a major barrier to us thinking and acting as competitive business people. Territories were all but abolished in 1999 yet we cling to them in parts of our business sin a hope of protection. We are kidding ourselves.

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Newsagency challenges

Bill Express marketing fees missing in action

When Bill Express unilaterally removed the marketing and other rebates in February, they introduced a new pricing structure which included the quarantining of around 30% of my revenue from bill payment services for marketing. It is May and I am yet to see any activity for my contribution to their marketing fund. Given the apparent financial stress of the company it is a fair questions to ask what is happening to my money.

Given the out of stock problems of recent weeks and other noise swirling around Bill Express I would have thought it in their best interests to managing the marketing funds they are collecting from newsagents in a more transparent and proactive way.

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Bill Express

Magazine vending machine

novel.JPGThe machine in the photo vends books and magazines 24 hours a day, 7 days a week. It is the brainchild of Novel Idea vending, a UK company which has been placing in this space since 2001. Cosmopolitan magazine is one of the magazines being vended through this device at Gatwick Airport. The publishing Director of Cosmopolitan explains why the vending machine works for them:

‘Purchasing a magazine to read on the plane or on holiday is a ritual for many women. By including Cosmopolitan in these vending machines, we are offering an additional innovative distribution method and extending accessibility to our readers and potential new consumers.’

Makes sense to me.

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magazine distribution

More than software for newsagents

tower_sales.JPGIt has been a busy day at the Tower Systems stand at ANF Convention on the Gold Coast today.   Three of our sales team are here (from left – Luke, Nathan and Tim).   While their job is to pitch our software I don’t hear much of that happening.  Many of the conversations are about more than software.  Since they get to see so many newsagencies in their travels across the country, they become story tellers about what they see in the channel.  At events like this ocnvention they get to share these stories and collect more.

These three days are more about talking with newsagents about their businesses than they are about sales.  It is good to have time away from the shop to make that connection.

For Tower, our support of the convention is about supporting newsagents more so that any sales we may get over the three days.  This is a practical way we can demonstrate our faith in  the future of the channel.  I am disappointed no other software companies are supporting the Convention.

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newsagent software

What do we stand for?

As part of my session at the ANF Convention on the Gold Coast today I have asked newsagents and their suppliers this question.

What do we stand for?

This is a crucial question which newsagents must answer individually and collectively.

In my first conference session this morning, suppliers and newsagents agreed around convenience, being local and service. While these are good, I suspect we need to stand for something which drives cut through consumer attention. Some stores stand for range, others low prices every day and others the happiest shopping experience. These are unique selling propositions which can be represented and which guide every business decision.

How does being local guide our business decisions? Are our products local or our employees local? How does convenience guide our business decisions? Do we really make shopping easy? Are we open convenient hours? Are our shops laid out to facilitate convenient shopping?

What we stand for has to be so compelling and clear that it is reflected in every decision from shop design to staff training to product range to business marketing.

This is a conversation I would like to have with many newsagents – what do we stand for?

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Newsagency challenges

The newsagency of the future

This is the subject of presentations I am giving to the ANF Conference on the Gold Coast this morning. The problem with the title is that no one can know what the newsagency of the future will look like. I have no crystal ball. The future for newsagents is a moving feast for many reasons. My hope from the two presentations is to open a conversation among newsagents about the future – not out of fear but out of opportunity. I’ll blog some key points after the presentation.

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Newsagency challenges

Promoting Men’s Health

mh_may08.JPGMen’s Health is the title we feature at our counter this week. It has a good free gift and should sell out in a few days. Men’s Health is one of those titles which works well as an impulse offer – we think about the titles we put in this space carefully.

We really have the process down pst – a new display can be created in between five and ten minutes.

Last week we sold seven copies of Money magazine from this location – a good result given that the title had been out a while. In fact, it is getting so we can almost predice the sales we will achieve from this display space we have created.

We have replicated the strategy at our Frankston newsagency. The next few weeks will show how it travels in a completely different demographic.

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magazines

Back to the Eighties

eighties.JPGNetwork Services has redistributed a Eighties: The Decade Collection, a one-shot which failed to set our newsagency alight with sales a year ago. I guess the Indiana Jones photo encouraged them to have another crack.

I’ll give it three or four weeks, no more – given the poor performance last time around it is not fair to expect newsagents to fund the second crack for any longer.

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magazine distribution

Gaming Minister ignores newsagents

Victorian Gaming Minister ignores lottery agents

The State Government of Victoria has made significant changes to the sale of lottery product this year. Newsagents and other lottery agents were looking forward to meeting the Minister for Gaming at a meeting organised for earlier today in Melbourne. While the minister did turn up he apparently had to leave early for family reasons and took no questions. The Minister’s refusal to engage is disappointing.

That said, people bleating about the changes ought to move on. The time to be concerned was prior to the decision when the Lottery Agents Association sat on their hands and said all was well.

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Lotteries

YouTube launches citizen journalism site

yout.JPGYouTube has launched Citizen News, a citizen journalism channel.  The YouTube mission for the channel “is to make the site a go-to destination for news on the web”.

Citizen News is further evidence of the media distribution channel being turned on its ear.  The distance from content maker to consumer is shorter than event thanks to the disruption of mobile devices, broadband and smart online services such as YouTube.

Understanding these developments can help us navigate our own future.

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Media disruption

Chasing a person of interest

sr_thief_may08.JPGThe man in the photo appears to have forgotten to pay for two Murano glass clowns worth $200 each from our Sophie Randall Forest Hill store in the last 24 hours. This happened Thursday afternoon and yesterday lunchtime. In each case we had different people working. He was in an out in less than 90 seconds, wearing the same clothes each day except for the cap. He was back today and was headed for our store but saw us spot him. Security followed him but lost him.

While I don’t expect any of the 1,000+ daily visitors here to recognise the man, I figured it is worth trying.

The video footage shows him leaving with goods in hand and not paying. While we suspect he knew what he was doing, we are prepared to provide the benefit of the doubt if he makes contact and returns to goods.

While it is shutting the gate after the horse has bolted, we are making some changes not only in this store but in other stores in or group to tighten security and to make it clearer that people stealing will be identified.

Situations like this remind me why retailers become bitter and trust no one.

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theft

The dark Bill Express screen

be_screen.JPGI was surprised when Bill Express announced their deal with the Swish group last month about in-store advertising screens. This was the day before Bill Express sought suspension because of a supplier dispute. The Bill Express / Swish deal trumpeted a combined massive network and talked up expectations. 3,500 newsagents knew otherwise. We knew that Bill Express had failed to get even close to the claims it had made to them around revenue from the in-store advertising screens. Many of us saw the ASX announcement as more spin to ignore.

(ASX:BXP) subsidiary, Xip Media Pty Ltd, to sell advertising onto its extensive digital signage network which operates over 5,000 video screens in approximately 2,200 newsagencies and convenience stores throughout Australia. The agreement applies to all existing Bill Express newsagencies and any future sites and will, when combined with the Swish Group digital signage network of approximately 1,900 screens in 1,800 venues, make it the largest digital signage network in Australia with approximately 7,000 screens in 4,000 venues. The combined Swish Group/Xip Media network will be more than ten times the size of its largest competitor in the rapidly growing digital signage / out-of home market.

Key to the Bill Express pitch to newsagents years ago was the revenue opportunity from the in-store advertising screen. More than four years on this screen is clearly a dud. We initially had the smaller screen.

Close to two years ago they installed the big screen in the photo. It has been down more than 50% of the time. When it was working the ads were, more often than not, inappropriate for our customers – promoting products not in Victoria or products which do not speak to our customers.

The earlier incarnation of the screen angered us as much as other newsagents because it was promoting the payment of bills for councils in other states – it made us look bad. Some customers even joked about this.

While we reported the new big screen not working, nothing happened.

Key to the screen pitch was the revenue split opportunity Bill Express pitched to newsagents. I am yet to meet a newsagent who made money from this. The company backed itself by providing a monthly rebate for in-store advertising. This was dropped a few months ago along with other rebates to newsagents.

The failure of the advertising screens to live up to expectations is just another problem for Bill Express. I’d be surprised if the Swish deal proceeds.

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Bill Express

Magazine makes money online

InfoWorld magazine moved from print/online to a pure online play a year ago. The International Herald Tribune reports that the online InfoWorld is generating ad revenue of US$1.6 million a month with operating profit margins of 37%. A year earlier, the print/online model it had operating losses of 3% on monthly revenue of US$1.5 million.

These are the things magazine publishers are talking about, alternative models and channels to market … things newsagents need to discuss.

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magazines

Connecting with Gen Y

Why Gen Y Is Going to Change the Web is an excellent post Sarah Perez at Read Write Web. Gen Y matters to newsagents because many of us employ them and because we need them as customers.

Part of the challenge for traditional media is the apparent disconnect between Gen Y and traditional media outlets such as TV, newspapers and magazines.

The newsagency model is built on structured, traditional media, a one way communication from producer to source. The communication model with and for Gen Y is unstructured. Drawn it can look like a bowl of spaghetti. Take a look at this – Sacha Chua’s Gen Y Guide to Web 2.0 at Work (made for IBM). It beautifully illustrates the point of the disconnect between traditional communication channels and Gen Y.

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Media disruption

Financial year diaries

fyd.JPGFinancial year diaries have never been big for us at Forest Hill – our customers are mainly retired people happy to forget their need for such things. That said, we don’t ignore the opportunity and always carry a small selection. The key with anything like this is to buy appropriately. While suppliers pitched enticing deals, we bought based on our sales data and not their spin. We allowed for some growth.

The performance figures I see from many newsagencies suggest that in the stationery department newsagents are bad buyers. Stock turns are low and the cost of dead stock – items and whole categories which have not registered a sale in six months. Buying is too often based on supplier or sales rep hype rather than sales history of the same or similar products in the business.

Ideally I would like to see a code of practice by sales reps guiding them to use sales performance to guide the order they pitch. With new owners especially I often see sales reps overselling and then wondering why new newsagents struggle.

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Newsagency challenges

Frustrating break fees

I am disappointed that the ANZ a few weeks ago significantly increased the break fee it applies to retailers exiting its merchant arrangements. The timing is curious – we received our letter a few weeks after the Bill Express difficulties became public. Even if you are out of contract the ANZ seeks to whack you.

The whole idea of break fees is disappointing. Any supplier ought to be confident enough of the services they provide that they don’t seek to handcuff you to their business.

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Bill Express

Sophie Randall expanding

sr_pic.JPGOur Sophie Randall cards and gifts business is expanding to a location on Toorak Road, Toorak.  Documents have been signed and the design of the new location is almost complete.  Our hope is for an opening some time in late June.

Sophie is the card and gift model we are developing through newsXpress as a complimentary model for newsagents – pursuing higher margin card, gift and related item sales and attracting customers who are less likely to shop for these items in a newsagency.

The Toorak location will be our fourth in Melbourne.

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