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

Making money from newspapers

The truth is that the newspaper business is still a huge industry and will be around in one form or another for the rest of my life. That is not to dismiss the declines, but only to note that there’s still a lot of money there and what is required is strategic change, not giving up the ghost.

This is Chris Anderson (editor of Wired magazine) writing at The Long Tail blog a few days ago about the financial situation for newspapers and how people can still make money from them.  It’s an interesting read.  Predictably, newspaper folks are talking up the post – see the McClatchy editors blog post on this subject.

What people forget is that industries peak at the top. Which is to say, at the very time that the first and second derivative people are writing off a business, those who can stand back and see the value still left in it can make a mint. Laugh at newspapers if you will, but I’ll bet some private equity firm out there is looking at the chart above and licking their chops.

There is not much in the post from an Australian newsagent perspective other than caution to not become a victim of the new generation of newspaper ownership.  Bean counters operate very differently to newspaper proprietors of yesteryear.  Lack of newspaper ownership diversity in Australia is protecting (not sure if that is the right word) us (for the moment) from what Anderson writes.

As a newsagent, at the end of the food chain, I want an equitable return from my labour and real-estate investment in newspapers.  I need annual growth – from increased sales, better margin or some other direct financial benefit.  I the growth is not achieved, the category loses ground and becomes of less interest – especially for shopping centre newsagents paying $1,000 per square metre of floor space and more.

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Media disruption

Newsagents, publisher in court

It is good to see the case WA newsagents have against West Australian Newspapers finally get to court. The Australian had the story yesterday. This battle has been around for years, costing newsagents hundreds of thousands of dollars as they had to absorb increased wages and costs including fuel. No increase for ten years is appalling behaviour by a supplier.

News Ltd, the publisher of The Australian, ought to check its own record, it’s not a whole lot better than WAN. Kerry Stokes, WAN shareholder seeking a seat on the WAN Board, is quoted in the article as offering an alternative to newsagents:

“How about instead of this being just about you delivering papers and getting so much per paper, what say we take a base and we give you a much higher commission for every increased paper you sell?” Mr Stokes said. “So if you sell 1000 papers now, (and then) you sell 1100 papers, maybe we double the commission rate on the next 100. We’ve got to find ways to sell more newspapers and we’ve got to make sure we don’t send our suppliers broke. The system is inequitable.”

I like the sound of that – a supplier talking to newsagents as if they are business people and offering a remuneration based on achievement. It’s about time.

Newsagents are the most important channel to many suppliers yet we are treated as second class citizens through poor trading terms and poor service levels. But we’re not as organised as we could be so we may facilitate some of that shabby treatment.

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Newsagency challenges

Donna Hay giveaway offer

dhay_gift.JPGDonna Hay is the magazine we are featuring in our giveaway space this week. This is the space we have reserved for magazines with what we consider to be the best giveaway in-store. The product is the hero in this display – that’s why we choose what we promote carefully. While displays like this don’t meet publisher requirements, they work.

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magazines

Kudos to Coles online

coles_sticker.JPGWe do a weekly shop for my software company (biscuits, breakfast bars, candy etc) through Coles online.  Recently, Coles deliveries have been arriving with gifts. Yesterday – three packs of cereal, a large pack of chocolate candy and a jar of salsa. While I am sure the brands are funding this, the gifts make Coles look good.

When the only contact you have with a customer is the delivery, providing something, even a free sample, is a good way to develop the relationship. I guess it is best defined as under promise, over deliver.

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Customer loyalty

Magazine publishers pursuing online

The Australian today published a story from The Wall Street Journal about the hot pursuit by some magazine publishers of technology firms which provide services which fit with their plans.  It’s an interesting read and demonstrates the importance of playing online for mainstream magazine publishers.  It also underscores the need for newsagents to stay abreast of the models being pursued by their traditional suppliers.

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magazines

Losing small magazines

small_mags.JPGThe photo shows what a small magazine, around A5 in size, looks like in traditional newsagency fixturting.  While we can put a block of wood underneath to raise the cover, most newsagents don’t.  the title gets lost.  With more magazines opting for this smaller size it’s a challenge we need to address.

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magazines

Pregnant feature

preg.JPGOne of our team decided to put this week’s NW together with a bunch of baby and pregnancy magazines – NW has a cover story about pregnant stars. The unlikely display is working.

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magazines

Marketing your newsagency

I have written a brief paper to help newsagents engage in free marketing opportunities using point of sale software. While I have written this from the perspective of Tower Systems software, some of the facilities used for this free marketing will be available in other systems.

Newsagents have tremendous opportunities to promote what they want, they control various mediums which leverage existing excellent traffic in their businesses. This can be done for little or no cost and little or no labour involvement. My paper, How to market your newsagency using point of sale software, highlights these opportunities. While some of the ideas will be obvious to the reader, most are not used consistently and professionally by newsagents.

Newsagents can easily use mediums they control to pull people back to their businesses.

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newsagency marketing

Compendium loves their customers

compendium_gift.JPGCompendium is a great company to do business with. They always go above and beyond. Every order comes with something extra – either a small gift or something free to help you better promote their products in store. They think of every detail.

The photo shows the free easter egg we received with an order last week. Where others would put an egg in the package, Compendium bagged it and included a tag so we understood the context of the gift: we LOVE our customers. This gift and others show us with every order that they love us. It makes us feel better about their product.

The Compendium rage works well in a newsagency, as an add-on gift for card purchases especially.

It’s great when you have a supplier providing excellent products with a good margin and being an absolute delight to deal with. Compendium sets a high benchmark among newsagent suppliers.

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Customer Service

Passing People’s Friend on

pf_apr2.JPGI give my my mother a copy of each edition of People’s Friend and she shares this around with people in her village. One chap happy to read a copy used to work as a printer Scotland producing People’s Friend decades ago. He hadn’t seen the magazine for years and was surprised to find it circulating around the village. Readers of People’s Friend are a loyal bunch. It remains one of our top selling titles at Forest Hill, sitting in the middle of our top ten.

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magazines

The entrepreneurial newsagent

On the back of the BRW article last week about New age newsagents in which I was privileged to participate, I am preparing a presentation for the QNF State Conference on April 22. My topic is Becoming an Entrepreneurial Newsagent.

Newsagencies are not the businesses they used to be. They cannot be. Collectively and individually we are evolving at a rapid rate. Complete new models and adjustments within the traditional model. But not enough of us are engaged in this journey.

My QNF presentation will consider what a Newsagency of the Future may look like and how we can get there.  I’ll be drawing on current newsagent benchmark and basket data as well as a range of external research.

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newsagency of the future

Trading in the dark

Each of our newsagencies and two of our gift shops suffered multiple blackouts today as Melbourne was buffeted by extraordinary winds. We stopped counting blackouts after seven in a few hours.

At Frankston they shut the newsagency and started playing the Carry-On partwork DVD on a laptop using battery power.

The major retailers have a straightforward approach to blackouts, they close. It makes sense given the size of their floorspace. There are OH&S implications as well as the heightened risk of theft.

We left it up to the managers to make a local call as to whether to stay open. At Forest Hill we are at an entrance to the centre and have good natural light so it was easier. Elsewhere it was a wait and see game. Frustrating not only for us but other retailers and customers trying to shop.

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Newsagency challenges

Magazine wraparound trash

mag_wrap.JPGWrap around advertisements and promotions are growing in popularity on weekly magazines.This week New Idea and Woman’s Day have promotions wrapped around the cover – lip balm from Amcal and coffee from McCafe respectively. I have two issues:

  1. When a magazine is put back on the shelf after browsing the wrap around catches and tears – making the magazine look damaged. Customers are less likely to purchase a copy with a damaged wraparound even if it is an advertisement or a promotion.
  2. The promotions pitched on these wraparounds usually require redemption elsewhere – McCafe and Amcal are this week’s partner retailers. While I understand this is part of the promotion, driving traffic to other stores, sometimes it does not work for the newsagent since traffic is being driven to competitors.

I know I can’t get the wraparounds dropped – I am guessing they are too valuable for the publishers. I wish there was a way for them to not get trashed when put back on the shelf. of course, in new style fixturing it does not happed as there is one deep shelf for 50 or so copies. However, newsagents don;t have that. They have pocket based fixturing and the reuslt is the magazines get trashed, and flyers get lost. This wastage must have a cost to the promotion.

I don’t feel the same about the wraparounds as I do abut the post-it ads on newspaper mastheads. Magazines are not the same as as a newspaper. Also, the wraparounds are on the lower corner of the magazine cover and not across the masthead or important news.

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magazines

The merchandiser photographer

Publishers pay merchandisers to visit newsagencies and create displays to promote their titles. The merchandiser takes a photo as proof of the work done.

In one of my newsagencies, one merchandiser visits each week, photographs the display my team have already done and leaves. The visit is 90 seconds or less. I saw it myself recently. Not only is this merchandiser claiming our work as this but they are also denying us access to the additional materials they have available to support the titles involved.

We have reported the scam back to the publisher. Hopefully we will see some action soon.

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magazines

Social responsibility and newsagents

Scoop NZ reports that OfficeMax in New Zealand is providing shredded paper for use as bedding at the Auckland zoo.

Lawson, a c-store chain in Japan, announced yesterday a plan to cut carbon dioxide emissions by 10% by 2012 – with 2006 emissions as the base.

More businesses are making moves on environmental matters.  Newsagents need to debate the moves they can make collectively.  We have enough challenges with groups like Planet Ark talking us down, we need to act to be relevant and socially responsible on environmental issues.

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Newsagency challenges

Life in the A&R Whitcoulls Borders offer

There are plenty of rumors circulating about the future of Borders bookstores in Australia.  One is that the A&R Whitcoulls deal is not as dead as reported in the press.  Since it has regulatory approval in New Zealand and Australia the only issue appears to be the structure of the deal.

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Book retailing

Learning from Easter

feggs.JPGDespite a stunning display, Easter eggs did not work as well at our Frankston store as we expected.

It was our first Easter since buying this business and eggs were a new category for the business. We did a best guess purchase and got it wrong. What is odd is that we took the same approach out at Watergardens and there it worked a treat.

While there are obvious demographic and store location differences, there are other boundaries for us to consider. The Watergardens shop-fit positions our business as having a broad product base. Our Frankston store, yet to be re-fit, is a traditional newsagency. This traditional fit is part of the issue – we need to not push the product mix boundaries too much until we reposition the overall business.

We have added other categories in Frankston with success since taking over: ink, plush and books. We felt invincible. The easter experience has been a lesson for us.

Easter has been a lesson – not only for the Frankston experience but also for the overall soft sales due to prices and weather.

We have $1,000 in eggs left. The sale started Thursday – this is the best day of the week for moving discounted stock.

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confectionary

Silly Stationers Supply

Stationers Supply, a warehouse supplying newsagents in Melbourne, Sydney and Brisbane, has reportedly decided to remove 3M products from its product mix. This is nuts. 3M brands like Scotch, PostIT and Command are important to newsagents. For a warehouse to remove them will only harm the warehouse as newsagents will source what they need elsewhere.

UPDATE 02/04/08 (10:30AM) : Stationers management has reversed its earlier decision and will continue to stock 3M.  A 3M rep has contacted me and advised me of this this morning.

I have had a conversation with the MD of Stationers and he says he never made the decision about 3M in the first place.  Personally, I doubt this.

UPDATE: 02/04/08 (01:42PM):  Stationers Supply has contacted me again and threatened legal action if I do not remove this post altogether.  While I could do that it would not represent the events.  I heard through 3M yesterday about the decision – one of my newsagencies had been told.  I subsequently heard through 3M this morning that Stationers reversed their decision.  No legal threat can alter what happened.

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Newsagency challenges

Retail tenancy size and newsagencies

Don’t believe what they say, size matters, it matters a lot when you have to pay the rent off the back of an old retail model built back when small was beautiful.

Landlords like big newsagencies – 250 square metres and above. The size isn’t a problem if a margin model can be built which supports the cost base.

Where newsagencies struggle is with margin for the lottery, magazine, newspaper and some confectionery categories. 25% or less does not cut it today. These products are usually supplied with a model which leaves the newsagent with less control over key business levers.

The 25% GP on newspapers and magazines was set decades ago, before the rents and sizes of today.

The only answer is for newsagents in these larger format businesses to devote less space to the 25% and less margin products and more to the products which provide opportunity and reward for entrepreneurial effort.

If landlords want these larger format traditional newsagencies and 25% and lower GP suppliers want to be represented in these spaces then something has to give otherwise we will see newsagents reject the opportunities.

I am aware of a couple of situations at the moment where the landlord wants a “traditional newsagency” and some suppliers will only permit their top selling products if a broader offer (read less successful products) is included in the mix. While smart newsagents use a lease consultant to navigate such challenges with the landlord, many do not and end up with a lease which does not work for the traditional model.

The market will ultimately decide how this plays out. The result will be a smaller hybrid newsagency with less of the traditional newsagency range. There will be pain for some who do not work the sums of occupancy cost.

When it comes to shopping centres inn Australia, size does matter for small business.

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Newsagency challenges

Double or Nothing book free

Harper Collins is providing free access to the full manuscript of Double or Nothing, the true story of two friends who bought a Las Vegas casino. This is a bold move for a publisher, one I’m surprised to see from a mainstream publisher. Good on them!

Anyone can read them manuscript free at the Harper Collins website using their Browse Inside service. It’s a great way to promote a book.

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Book retailing

Leveraging magazine sales decay

fhn_aww.JPGUnlike weekly magazines, monthlies each have different sales decay curves. Knowing the decay for a monthly is important because it lets us know when we have the best low-hanging fruit opportunity. With Australian Women’s Weekly in one of our stores it’s the first week. If we promote hard in this time we can more easily boost sales than if we promote later in the four week on sale period. The challenge is promotional material – ACP tends to supply promotional material in week two or three.

Last week, with one posted available, we created minimalist display with the product the hero. It’s worked. Sales are stronger than our average decay curve for the last six issues.

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magazines

Bill Express share price watch

Watching the share price tumble of Bill Express has become a popular sport among newsagents. Today’s 28.5% drop in their share price have been cause for considerably commentary.

It didn’t need to be this way. Had Bill Express treated newsagents differently they could have relied on their key retail network for support rather than today’s game of guess how low the share price will go.

One of my newsagencies was advised today that we are now ranked 35th in Australia for bill payment transactions. That’s 35th out of around 3,500 newsagents. We’re in the top 1%. We’re not making money from bill payment, nothing.

Bill Express could turn newsagents around if they act quickly: reinstate the $250 a month marketing subsidy; start actively promoting the network; make the IT infrastructure more reliable; improve Help Desk support; and, make running Bill Express cost less. While these are not new suggestions, maybe the new low share price will focus the attention of the Board of Bill Express.

Click here for some background on the frustration newsagents feel toward Bill Express.

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Bill Express

Promoting Burke’s Backyard magazine

burkes_mar31.JPGWe’re using our new feature space at the counter to promote Burke’s Backyard magazine. The free seed offer this month is compelling and, we feel, is ideal for an impulse purchase at the counter.

While the publisher would probably prefer a power end display, I know that this smaller display at the counter will result in more sales in our newsagency.

We also have Burke’s Backyard displayed in the gardening section to make sure we take care of our regulars.

This close to the counter display permits a pitch in the right circumstances.

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magazines
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