Another Age masthead post-it ad
None of these stuck on the masthead for weeks and now two in three days.
Wrapping paper sales down, gift bag sales up
Customers are buying less folded wrapping paper and more bags for packaging gifts. When I first heard of this trend from a supplier a year ago I was surprised because I was not seeing it in sales data. Then, I realised that all the sales data I see comes from newsagencies where until very recently, bags were rarely ranged.
Sales data from a small sample of stores for a year and a half to December 2006 shows, at best, no growth in folded wrapping paper sales and, most commonly, declining sales. With retail real estate expensive and increasing by between 5% and 7% a year, this decline is most unhelpful to newsagent. Suppliers, too, are not served well by the decline.
We have three metres of wrapping paper in my newsagency. Without reducing that and in response to feedback from our supplier and our sales data, late last year we added three metres of bags.
While I would have preferred to locate the bags next to the wrap to demonstrate a wide packaging choice, locating them at the front of our card-shop-within-a-shop is working well. This is in part due to it being close to our seasonal displays.
The next step will be to consider a reduction in the folded wrapping paper space allocation.
Newsagents need to look very carefully at their sales data and discuss this with their wrap suppliers. There is no point in ranging product which is not delivering an economically viable return.
Supermarkets and lottery products
Based on what I see happening at Tesco in the UK, it is easy to see why our Coles and Woolworths would like lottery products at their checkouts. Check out this pitch from Tesco, they make it sound like you’re doing the community a favor buying lottery product with them. Their Fast Pay pitch certainly addresses the long line issue. Unless lottery agents get engaged in thins issue, supermarkets will get lottery products and we will be the losers.
Inkfast ink and toner cartridge business going strong
It’s been a while since I have blogged about Inkfast, our online ink and toner business. Inkfast is two years old. We run it out the back of our newsagency. We advertised heavily online through Google, Yahoo and Yellow Pages online. All those campaigns are now off and have been since third quarter last year. Sales are strong with around 70% coming from existing customers and the rest from new business won through word of mouth. Most customers are corporate and most items purchased and not items we would usually carry in our newsagency. Thanks to our turning off of the expensive advertising spend, profitability is good, even with tight margins due to a very competitive marketplace.
I’d go out on a limb and claim that Inkfast is the most successful website created out of a newsagency. Traffic numbers are high and sales strong. It is bringing new customers to us, even though we never see them, every day. We transact more business in a week than we do in the stationery department of our shop in a month. This is in part due to our demographic. Being online, Inkfast is not bound by the demographic feeding our retail location.
The Inkfast experience is unlocking for us supplier rebates as well as an understanding about ink and toner which is helping us create a more successful offering in store for our retail customers.
What we are most proud of is that we created this ourselves from scratch and we rely on no one major supplier. The feeling of freedom is wonderful.
Beyond Intralot, the Vic. Government is set to hit newsagents again
I’ve been told that the Victorian Government transport ticket tender (see my post of 11/9/06) will see retailer commission cut to .25%. That is, a quarter of one percent. While I don’t know if what I have been told is true, I do know that anything less than 4% offers an uneconomic return on labour. This is another question Victorian newsagents would do well to put to their local member of state parliament.
Liquorice regularity
This pack of Darrell Lea liquorice is one of the most efficient products we sell. Rarely is it sold alone. So, it is either a great add on or a great destination product for customers who buy other items while in store. Either way, it’s one of the most efficient products we sell.
I like liquorice because it’s a habit based product. It is. And in my experience liquorice customers are brand loyal, meaning they are prepared to visit our store specifically for liquorice rather than purchase another brand while shopping elsewhere.
It’s habit based products like this which are crucial through this transition time as fewer newspapers are sold in newsagencies. We need every destination product we can get. While I’d prefer killer destination products like newspapers as they were in the 1960s and 1970s, I am happy with the small steps type growth liquorice is providing.
I like Darrell Lea because they understand the importance of not being in too many locations. This loyalty to retailers is returned with good space allocation and strong promotions.
Newspaper masthead trash
The Age today has another post-it type ad stuck above the masthead. It’s covering the promotion of a free DVD they are giving with the paper today which is odd.
The publisher needs to understand that these post-it notes frustrate customers. Just look at how many are removed at the counter or outside the shop and thrown on the ground.
Also, as a retail only newsagent I don’t want to help the publisher convert retail sales from my shop to home delivery sales.
Magazine relay grows health title sales
Our decision to break with magazine layout guidelines and consolidate health magazines from a couple of locations into this new space next to food is working well. Browsing of the category is up as are sales. This is one of an anticipated eight to ten category location changes we will undertake this year.
Home and furnishing magazines have lost 15% of their space allocation as a result – their sales support such a reduction.
We know that half the battle with magazines is the browsing experience. Our approach is to focus on faster moving categories, provide an easy to navigate layout and support the category with logical adjacencies.
I know I complain here about the magazine supply model, particularly the extraordinary oversupply of fringe titles. For all that doom and gloom, magazines do provide fulfilling experiences such as with health.
Powerball sales driver
The Powerball jackpot last night to $33 million is fantastic. Many newsagencies will see a 10% to 20% increase in traffic and lottery sales. Smart newsagents will have up-sell opportunities at their sales counter. We are using the opportunity to drive magazine sales and stationery with some very specific offerings. Our Magazine Club Card is a key offering. We’re also dressing the store to create some excitement. Hey, it’s $33 million so the dream is very exciting!
The jackpot has come at an excellent time. School is back, work is back and Easter is a way off.
Supplier thuggery from NDD
I sent this letter to magazine distributor NDD last week in an effort to gain agreement on magazine supply terms. They have responded today in a most bizarre way.
NDD says that since my trading name has changed I need to compete a new credit application. While the trading name has changed, the economic entity has not. My legal and accounting advice is that there is no justification for demanding a new credit application and that the request may be for other reasons.
The NDD letter says they welcome the opportunity to formalise their trading terms but will discuss “business rules”, and by this I am guessing the content of my letter, only after I have correctly completed the Application for Credit Account and Guarantee.
The NDD letter also says that all discussions with them have to be conducted in the strictest confidence. This is unfortunate yet not uncommon in the newsagency channel. Keeping deals secret means that the broader newsagency community is less able to leverage its strength. They want me to agree in writing to confidentiality. They want me to stop blogging about their gross over supply. that means I could not talk about the Bargain Shopper mess when they sent too many, sent more, sent more and sent more again – all in a grab for my cash.
I am disappointed that NDD is playing a game on this by demanding accounts paperwork before discussing the far more important issue of the failure of their supply model to transact with my newsagency and other newsagents on an equitable basis.
Print is Dead?
A scary photo (for anyone involved in print media) of slide from a presentation covered at the Print is Dead blog.
I know many think that the claim print is dead is unhelpful and will be proven to be untrue. I am inclined to agree. However, print won’t last as we currently know it. Look at music and the upheaval of the last ten years. Stores like JB HiFi have grown because they and reengineered their business model.
The Print is dead blog is a good read and forces us to get our collective heads out of the sand.
The Government on Australia Post – it’s not our fault
Here is the response from Helen Coonan, the Minister responsible for Australia Post responding to my letter of November 16, 2006. This is the third crack at a response from the Minister’s office.
The letter does not respond to my queries and continues the Government’s hide and seek game with the Act under which Australia Post operates. See for yourself – below is, part of what I wrote to the Minister three months ago:
For decades, Australia Post stuck to post products and services. Now, with a considerably broader retail offering, the benefits of its exclusive brand and post products provide an unfair advantage.
Australia Post offers products which I consider are not permitted under the Australian Postal Corporation Act 1989. I urge you to look at the enclosed Christmas stars at Australia Post catalogue. Over the twelve pages, I counted one hundred and fourteen items which I consider to fall outside of what is permitted under the Act.
[Here I listed items such as specific books, stationery packs, and other traditional newsagency lines now sold by Australia Post.]
These products, and others in the catalogue, are not incidental to nor do they relate to the supply of postal services. They are products outside what the Act permits. Of course, this comes down to interpretation. But what do Cookbooks, Gardening Australia magazine books, Chess Sets and Binoculars have to do with what is permitted under the Act?
For decades Australia Post was profitable without selling calendars, greeting cards and the broad range of stationery it offers today yet now it seems that Australia Post and the Government consider such product categories essential to its commercial viability. I would have thought that the postal product offering ought to be viable as a stand alone business – it is a monopoly after all.
Australia Post is using its powerful brand and exclusive postal products to draw traffic into Government owned stores and away from independent small businesses like mine. Is this an outcome that the Government wants? Is the Government happy to ignore the pleas of small business so that its own national retail network profits?
For decades, newsagents were profitable while they had a monopoly on the distribution of newspapers and magazines. In 1999 the Government facilitated the deregulation of the distribution of newspapers and magazines. As we have lost the benefits of exclusive traffic as a result of this deregulation, Australia Post has increased its range of newsagent type lines and thereby very successfully leveraged its continued exclusivity to more effectively compete with us.
The Government is profiting at the expense of my newsagency and other businesses like mine which compete directly with a Government owned Australia Post outlet, yet the Government refuses to even acknowledge that I may possibly be right. In response to my letters documenting breaches of the Act all I receive is vague government-speak.
In my September letter I said that “Australia Post is our droughtâ€. A review of their Christmas catalogue illustrates how much this is the case. For many years now it has been draining newsagencies of revenue. Many are close to death as a result.
This is a very serious problem, causing families much heartache. Please take notice. Please understand that Australia Post is stealing our customers by straying from what is permitted under the Act and that its behavior, under your watch, makes a mockery of your claimed support for small business.
I urge the Government to amend the Australian Postal Corporation Act 1989 to limit what Australia Post can sell through its own retail outlets and to names postal items such as envelopes and Post branded packaging materials. Such would be the action of a Government committed to small business.
For the record I did not write from newsXpress. I wrote from Springfield Consulting, the company I own which trades as newsXpress Forest Hill.
Navigating the Media Divide, a must read report from IBM
IBM Institute for Business Value study has published Navigating the Media Divide: Innovating and Enabling New Business Models a report which everyone involved in print media ought to read, newsagents especially.
While IBM makes an excellent case for change within newspaper publishers and other ‘old media’ companies, the case is equally timely and relevant for Australia’s 4,600 small business newsagents. Between 30% and 60% of our retail businesses relies on old media products. The report goes to the heart of the threats they face and how the publishers need to react to remain viable. The summary sets the report up well:
A new media world has arrived. Pioneered by teens and gadget-savvy professionals, it has quickly spread into virtually every consumer segment, and started to encroach on traditional media. The number of unique visitors to MySpace.com has now surpassed the 50 million mark – something akin to the number of U.S. households that tune into the Super Bowl.1 Every day, consumers around the world watch about 100 million videos on YouTube – putting that number in context, the top 15 British primetime television shows combined attract about 100 million viewers, as do the top 4 U.S. shows.2
The report has several recommendations but one speaks directly to newsagencies in my view: Refocus capital investment from traditional business to new models. What this means is changing the design of our stores, bring in new products and services and plan for a life less reliant on the products around which the newsagency channel was created. I see nothing to fear in such fundamental change. Yes it will be challenging. It will also allow us to take control of our businesses, probably for the first time since newsagencies began.
Kudos to IBM for creating this report. While they have commercial reasons, down here at the small business level the report can be an excellent catalyst for change as it’s a view, in part, of our world without the bias of a supplier or a potential supplier.
The report concludes with, in part:
The current clash between traditional and new media is reaching a fevered pitch. Industry incumbents are responding – but perhaps not quickly or completely enough.
My question for newsagents is: Are we responding to the changes we see?
You can download the Executive Summary or the full report.
The timing of seasonal displays
How early should seasonal displays for Easter, Valentines Day, Mothers Day, Fathers Day etc go out? It’s a question newsagents ask often as we bounce from season to season in the first half of the year, especially in the greeting card space.
My view is that the season ought to go out as early as possible, especially if it can be done without taking away from your everyday range. Who knows what needs customers have for buying a card an d getting it in the mail in advance of the season? Further, seasonal displays freshen the retail offering.
Ben Kay, manager of my store at newsXpress Forest Hill disagrees. He reckons retailers go out too early with seasons – Christmas displays in September/October etc. Ben would rather some ‘clean air’ between seasons.
As a consumer I’d like ‘free air’ between the retail seasons. Who doesn’t like normalcy? As a retailer I need to maximise every opportunity – hence the decision to go early with seasons. When Valentines Day came down, Easter went up and it’s selling already which in itself vindicates the decision. We’ve started Easter with this small display and it will grow every few days as we get closer.
Smiggle Australia Post deal locks out newsagents
The deal I mentioned here last month between Australia Post and Smiggle social stationery seems to have blocked independent retailers like newsagents getting Smiggle product into their stores. Two newsagents I know of who were on the road to stocking Smiggle have reportedly been told by the company that Smiggle will not proceed because of “a corporate deal”.
Free Brisbane newspaper next month
A contact within News Ltd and two outside have said that the Brisbane edition of MX, News Ltd’s free daily newspaper, should be on the streets by mid March. While there are still distribution issues there seems to be a feeling that they need to get on the streets regardless.
Newspaper circulation boost on campus
University students across Melbourne this week are being offered The Age for 40 weeks for $20.00 which includes home delivery on Saturday and Sunday for the 40 weeks. That’s revenue of 7.1 cents a copy. University schedules being what they are, students will not pick up their copy every week day.
I am curious to know what the folks at The Age will report in their audit numbers. Do audit bureau reported sales include real counts of copies collected or what could be collected over the 40 weeks? Given the on campus management of the collection I suspect the audit number would be the latter.
UPDATE (27/2) I have been contacted by Fairfax and they have confirmed that only actual copies collected on campus are counted in audit figures.
The brochure put in student welcome packs connects with the market using the promotional line: The easiest way to pick up on campus…
Censorship and blogging
I am sure I am not the only blogger pressured to censor or remove or edit blog entries. If the blog entry is inaccurate or the situation has changed, I’ll update it. Otherwise, it remains published. One of the benefits of blogging is that there is less filtering – stories are able to gain readership which in the old media world would never have seen the light of day. Companies need to understand that you can’t rewrite history by removing a blog entry.
Lottery agent’s association wrong on Intralot supermarket pitch
The Lottery Agents Association of Victoria said the State Government was unlikely to approve Intralot’s opportunistic application.
Association CEO Peter Judkins CEO said Mr Fletcher’s petition meant well but even if the unlikely approval was made, changes would not come before mid next year.
This is from a story in the Geelong Advertiser on February 13. Judkins has no idea if the government is likely to approve the bid by Intralot to sell scratch tickets in supermarkets. He is wrong to take pressure off the government as he has through this story. Further on the article…
But the CEO said the association would join Mr Fletcher’s fight, should the approval begin to grow legs.
I’ve not heard from Judkins so I am not sure how he plans to support the petition.
The time for Victorian lottery agents is to act now. We ought to be on the steps of parliament mocking the big fat and rich Coles and Safeway organisations and the risk to communities, responsible gambling and family owned small businesses if they will scratch tickets. Unfortunately, Judkins and his association would have us sit on our hands. I’d rather be a dill and find that Intralot loses than be Judkins and find that Intralot has won because by then it would be too late.
Here’s the Geelong Advertiser article:
On this same topic of lotteries in Victoria and Itralot, Kenneth Davidson of The Age has written an interesting opinion piece which looks at the Upper House Inquiry into the regulation of gambling in Victoria.
Knitting and chocolate and newsXpress Forest Hill
I’m going to have to rethink long tail, niche, magazines as a result of this blog post by chocolatetrudi. It seems that Trudi was in my shop browsing and found some titles covering her special area of interest – knitting – and found a magazine she had been chasing for some time.
We pride ourselves on our niche title range and while it does not generate the return on space we would like, feedback like that from Trudi is encouraging.
We’re planning some changes to capture more of this market without the retail costs – more on that another time.
Pregnancy magazine twins!
Pregnancy and Baby is an Australian magazine which we get through Network. Pregnancy and Baby is a UK magazine which we get through NDD. Twins! Identical twins!
This is another example of magazine distributors not respecting newsagents. With almost identical content my customers will be confused by the offering – especially this month with the UK product plastic bagged and with a free book and costing less.
If newsagents controlled, centrally, what titles got access to their network this situation would not happen.
Newsagency store design for today
Store design is critical for newsagents as the focus on core products changes as a result of online influences. Too many newsagencies have a design which does not reflect today’s needs.
Here’s a photo of the Relay store at Adelaide airport. Relay is a brand of HDS Retail, the company which also owns the Newslink branded stores.
See the full face display of magazines. This works for the top 300 or so titles as they have done with this store – although magazine covers are dark in the fixturing on the wall.
What HDS has done with Relay is, in part, what I mean when I talk here about the need for newsagents to reinvent how they display magazines. The days of a massive range where only the top third of a cover is showing are over. Is the Relay design suitable for a newsagency outside of a major airport? Probably not. However, there are some ideas worth borrowing and finessing to suit a high street situation.
I’m involved in designing a new newsagency store layout at present are our goal is between 1,000 and 1,300 titles but with a third of these displaying full face and the rest displaying half face.
Newspaper records 52% circulation growth
The Sydney edition of News Ltd’s MX free daily newspaper increased circulation by 52%. The Australian has the story. MX was a huge hit in Melbourne for several years before the launch in Sydney. The 52% increase will encourage News executives who are considering/planning a Brisbane launch as I blogged here a few weeks back.
Free daily newspapers need a certain level of traffic access for little or no cost and my understanding is that there is a question as to whether Brisbane can deliver this.
Print declining, online video soaring
Read this story from Editors weblog. It quotes Laurent Rich Fine, respected newspaper analyst at Merrill Lynch & Co. This story supports why I see newsagent revenue per home delivered product falling, why publishers want their products in as many retail outlets as possible and, why retail newsagents need to revisit capital investment in print media product. Here’s a taste of the article:
“Interest in news is greater today than it’s ever been,” said Fine. Yet newspaper companies shouldn’t cling to profit margins and models that don’t work anymore. “There’s no way to go back to where the industry has come from,” she added.
So don’t waste time in nostalgic reminiscence, especially as newspapers are experimenting with online features that are proving to draw readers and money.
Fine does believe that large newspapers will continue to strive, as well as local ones. “I think there’s an enormous, unsated appetite for really local news,” she said. Thus the overlying uncertainty concerns midsize metropolitan dailies.
According to her, newspapers can’t operate on the same business model, can’t expect similar profit margins, and should expect their print products to lose in importance.
Newsagents can’t operate on the same business model, can’t expect similar profit margins, and should expect print products to lose in importance.
State by state differences in lottery offerings
How can it be that the state owned NSW Lotteries can offer lottery retailers free promotional product while Tattersalls in Victoria offers nothing?
In NSW on Feb. 23 and 24 if you buy a 30 game Megapick in draw 2671 you get eight standard Autopick games of Monday and Wednesday free. The seller gets commission on the paid for and free product.
This is a good deal for the consumer and for the lottery agent.
There are similar deals for Powerball, 6 from 38 Pools and instants.