Computer titles tumble in May
Further to my earlier post today on magazine sales in May, sales in the computer category are down between 8% and 17% for the stores I have looked at. Newsagents carry too many titles in this shrinking category.
Buying and selling titles tumble
May sales data is full of red ink for buying and selling titles. Trading Post, Trade-A-Boat, Parts Peddler, and Businesses For Sale are some of the titles in this category. Looking at same store data I have seen unit sales for the category fall between 15% and 33% comparing May 2006 to May 2005.
New evidence on Internet use in the US
The respected Pew Internet & American Life Project has issued a new report into broadband penetration in the US. Key findings:
– As of March 2006, 42% of all American adults had a high-speed internet connection at home.
– This growth in broadband adoption has been fueled in part by an increase in internet penetration in the past year, from 66% to 73%. Nearly half of these new internet users subscribe to high-speed services at home.
– The 40% increase in home broadband adoption from March 2005 to March 2006 is double the 20% rate of increase that occurred from March 2004 to March 2005.
– 35% of all internet users have posted content to the internet.
– A “broadband elite” of early adopters that had been the biggest creator of user content has been overtaken by the mainstream.
– User-generated content is driven by young home high-speed users – 51% of “under 30†home broadband users have posted content to the internet compared with36% of home high-speed users older than 30.
Hence the Kim Beasley call for a national Broadband strategy for Australia, the continued significant investment mainstream media companies in online businesses and the challenges for print media.
We need Pew type independent research here to understand the shift which is occurring.
Huge discounts on magazines for students
Some great magazine subscription discounts here for students. Great discounts on a considerable range of magazines. Take WHO, for example. Students get it for 40% off cover price plus free home delivery by Australia Post. Newsagents get 25% off the cover price.
UK newspaper and magazine distribution set for a shake up
The UK Office of Fair Trading has announced the release of a new draft proposal for newspaper and magazine distribution arrangements in the UK. The draft opinion indicates that the OFT is not prepared to back down on plans to change newspaper and magazine distribution – this after indicating earlier this year that they would re-think their earlier announcement to shake-up arrangements.
Lazy reporting in MediaWeek
MediaWeek demonstrates lazy reporting in its page two story this week about the Australian Newsagents Federation. What should be a story about newsagents is a story promoting ANF CEO (and former publisher executive) Rayma Creswell.
MediaWeek says Rayma took over the ANF several years ago. Rayma was employed fifteen months ago.
MediaWeek says Rayma “has just been on a national road show visiting members in all major population centres”. This is not true. Rayma has done a tour of NSW/ACT city and regional centres. These meetings were used by Rayma (rightly) to promote the ANF cause and (unfortunately) attack the state newsagent association (NANA) and any newsagent who dared ask her a difficult question.
MediaWeek says that “the challenges to retailers (newsagents) continues to be the growth of supermarkets…” While one could have this perspective, I suggest it is not shared by newsagents. The biggest challenge newsagents face is the supply of magazines outside the top 200 titles on terms which are not equitable. Newsagent sales of top selling titles are growing. Supermarkets have had these titles for years so why Rayma or the ANF would have concerns now is odd. It is with titles outside the top 200 that newsagents have higher real-estate and labour costs. These titles have a sell through rate of 50% or less in many cases. Call any newsagent in the country and I am sure that they will say the magazine supply model is the biggest challenge.
MediaWeek also says that newsagents have long complained about publishers selling subscriptions in their magazines. Rayma was (last I checked) a Director of Luna media, the publisher of Cosmos. Every ANF press release ought to declare this interest. Cosmos engages in this subscription strategy. It is among the worst performing titles in newsagencies by the cash-flow contribution measure.
It seems to me that MediaWeek has been fed a Rayma press release and run with it as a new item. The item does newsagents a disservice.
End of month loading (bloating)
Many newsagents are complaining today about hefty invoices from Gordon and Gotch for magazines. It’s the 30th and What Gotch has supplied today makes it on to the May statement. Newsagents have not ordered this product – it has been scaled out by Gotch. Most of the titles delivered today will have sell through rates of between 35% and 50%. That is, more than half the stock supplied today will be returned by newsagents in a month or two at their cost. Newsagents will get the credit for returned stock a month later.
So, today’s oversupply only serves to suck cash out from newsagent accounts for use by Gotch for a few months.
Not one newsagent competitor (Coles, Woolworths, 7-Eleven, BP, Shell, Mobil) has to put up with this.
The magazine supply model for these titles hurts small business newsagents and those employed by them.
Poor Bec, is her popularity waning?
Overheard two customers talking in my shop today when considering a New Idea purchase (Bec Hewitt is on the cover). One said to the other, don’t buy it this week with her on the cover. She makes a fortune selling her stupid stories. The other lady quickly dropped the magazine and left. Based on the sales data I have seen from yesterday in a few newsagencies, the Bec factor is not as strong this week as on other weeks.
Tattersalls pushes online lottery purchase
Just a quick reminder that this week’s Division 1 prize pools total more than $35 million! The week kicks off on Tuesday May 30 (draw 641) with an $8 million Super7’s Ozlotto jackpot. On Thursday, Powerball Division 1 prize pool is $3 Million (Thursday June 1, draw 524) and Saturday night’s Tattslotto Superdraw (Sat June 3, draw 2595) is offering a $27 million Division One prize pool !
Don’t miss out! Drop in to your local Tattersall’s Outlet, or purchase your Super 7’s, Powerball and Tattslotto entries online.
Good luck for the draw!
So opens the email from Tattersalls. The purchase online message is bold in the email and a link to their website. In Queensland, newsagents receive trail commission for a short time from online business. Elsewhere they receive nothing. So, while we continue to provide brand building effort we receive no compensation for helping the push to online lottery purchases.
Visit any newsagency today and you realise the importance of lottery business. Tonight’s OzLotto has jackpotted to 8 million. If other newsagencies are like mine they will experience a 33% sales jump not only in lottery sales but other categories of the business.
How to increase Women’s Weekly sales 45%
We put Australian Women’s Weekly front and centre of our shop last Wednesday for five days. We achieved a welcome sales kick compared to the same first five on sale days for the previous four issues. We broke the rules, ditched the glossy brochures, took the magazine out of its usual place and created our own basic display. The result is a 45% increase compared to the previous best first five days. This demonstrates the value of a non-corporate local newsagent approach to pursuing sales growth and that impulse sales can be achieved for a title like Australian Women’s Weekly.
While the publisher prefers and rewards kick arse retail displays, it’s more basic activity like what we did last week which is more valuable to them. Newsagents are rewarded weekly for feature magazines displays. Our display would not receive any awards. However, the sales kick we achieved is greater than what you would get from any pretty display.
Newspapers’ deep depressing dive
Respected Merrill Lynch analyst Lauren Rich Fine has written a report titled “DEEP Depressing Dive”. It’s an outlook on the newspaper industry in the US. While I’ve not seen the report there are sobering quotes in stories at MediaPost and Editor & Publisher. We’re at least a couple of years behind the US here in Australia. This is in part due to a strong distribution network (newsagents) and more entrenched consumer habit which harks back to the newsagent network.
Publishers are chasing sales outside the newsagent channel and while I understand that, they stand to gain more by supporting the newsagent channel and therefore reinforcing the newsagent visit as pat of daily life. My contention is that greater focus by publishers on newsagents would achieve more (a sales kick or less of a fall) than chasing petrol outlets and coffee shops where the publisher has less influence over the representation of their brand.
Burke’s Backyard magazine suffers
Since Burke’s Backyard was taken off TV, sales of the magazine of the same name have been falling in the newsagencies I see data from. What was once a strong title is fading fast. This is disappointing because the product is good – but not sufficiently top of mind to be self supporting. The category is strong – Better Homes and Gardens sales are as strong as ever. My feeling is that the fall off for Burkes Backyard is greater than we saw for Money when that TV show was taken off the air.
World Cup beats Commonwealth Games
Even at a few weeks away magazine and newspaper sales are such that the World Cup lead up has been more economically valuable to my business that the entire Commonwealth Games.
Start up announcement
After man-years of effort, we felt ready yesterday to send this fax to newsagents announcing Find It, a place for people to buy, swap, sell and find. I mention it here to declare my commercial interest in the classified advertising space. Find It is two months away from beta release. The challenges for a start-up in the online classifieds space are not lost on us.
World Cup promotions
The Herald Sun World Cup medallions are proving popular with customers. In fact, all things World Cup are selling well.
Is this blog entry about asian newsagents racist?
I’ll let you decide. Read what ‘gingerkitty’ wrote in her entry My phone conversation with the asian newsagency owner on February 23 this year.
Consumers don’t like post-it ads on The Age
Age customers were annoyed yesterday by the post-it ad on the front page. Many pulled the ad off and left it at the counter. Several had questions about the subscription offer (which we could not answer). I’m not that thrilled by a campaign which stands to cut my retail sales and profitability of the title. A better return could be achieved with a loyalty offering for regular retail customers.
Melbourne Observer publishes online
Further to my post a couple of days ago about the San Jose Mercury publishing print ads online, I am reminded that the Melbourne Observer publishes the whole newspaper online as a PDF file. They have been doing this since September 2002. They tell me: “anecdotal evidence suggests that many Melbourne people who are introduced to the paper via the Internet, convert to becoming newsagency customers to buy the Melbourne Observer ‘hard copy’ each week”. The Observer is a popular title especially among the demographic frequenting my newsagency. What I appreciate is their support in the pages on the newspaper. This builds loyalty from retailers and consumers. Another Observer feature gaining more attention is their free classifieds. With the demise of Trade and Exchange I’d expect this to grow in popularity.
More sales flow from beasconsfield mine rescue
Woman’s Day is not the only title enjoying a sales lift thanks to more coverage of the Beaconsfield mine rescue from what I can see. Australian Women’s Weekly went on sale yesterday and our sales were up 150% on the average of the first day’s sales for the last six issues. Sure, we pushed it at the front of the shop (see photo above) – it’s what all reatilers shold do with this issue given the massive TV support from the nine network. The Bulletin (also with beaconsfield coverage) sold out.
Who cares about the Postal Act?
Not Australia Post that’s for sure!
Visit one of the 800+ Government owned Post Shops and pick up a one of their BAG the Bargains catalogues. When you flick through the 12 pages, ask yourself whether Sections 14, 15 and 16 of the Australian Postal Corporation Act 1989 permit Australia Post to be in the business of selling items such as: Computer printers; Printer ink; Melway street directory; Shredder; Copy paper; Laminator; Label maker; Computer mouse; Suspension files; Manilla folders; Notebooks; Level arch files.
Each page of the BAG the Bargains catalogue is full of items which are not incidental to the stated core business of Australia Post. A visit to any of the Government owned Post Shops will further prove that pursuing stationery sales is a key growth strategy for the Corporation. Up to 80% of the floor space in each retail outlet is non postal product. These stores are given special treatment by landlords. Newsagents cannot carry postal products on an equitable basis.
Australia Post is leveraging its respected Government created postal service brand in pursuit of home and office stationery sales in areas which have nothing to do with postal services and which compete directly with independently owned small business newsagencies like mine. Australia Post is taking stationery sales from my business and many other newsagencies on an unfair basis by operating outside the provisions of the Act.
I’ve written to the Senator Coonan, the Minister responsible for Australia Post and Senator Bailey, the Minister for Small Business and provided copies of the catalogue for their comment. I’ve also take the matter up with the Leader of the Opposition, Senator Andrew Murray and Senator Bob Brown. Hopefully, someone will have enough concern for small business to research the impact of the Australia Post non postal retail activity on independent small retailers.
Newspaper puts print ads online
The San Jose Mercury now publishes print ads online. Check out this ad from Freemont Toyota. You can click on parts of the ad for greater detail. While the move may seem like a backward step, it enhances opportunities for advertisers and extends the reach of the newspaper brand. In the US where consumers are coupon crazy I see this move as being smart. Here, I am not so sure. I have looked around and cannot find an Australian newspaper doing the same thing.
Telstra follows Vodafone, Optus: cuts commission to newsagents
Telstra is the third major telco to cut commissions paid to newsagents on recharge sales. Newsagents received advice yesterday. What we don’t know is whether Telstra has ‘done a Vodafone’ and cut newsagents to 5% while paying Coles 16% as reported here previously.
Newsagents provide better service to recharge customers than Coles and better point of purchase presence so there is no justification for paying them two thirds less. Newsagents hand over their recharge revenue daily while Coles, in the case of Vodafone, hands it over monthly.
While these large telcos spend millions sucking up to consumers they are looking after major retailers and taking money from newsagents. Consider a $30.00 recharge sale. For that I get $1.50 commission. I lose 27 cents in credit card fees and am left with $1.23 for a two to five minute transaction. To enable me to complete the transaction I have $25,000 worth of capital equipment installed. That’s a lot of $1.23 transactions to costs the costs.
I understand that telcos around the world are cutting retailer commissions. What is unfair is the double standards in Australia. There is no justification for Coles paying Vodafone 16% and newsagents 5%.
Unfortunately, the government nor the ACCC is interested in this matter.
Mother’s Day 2006 up on 2005
I saw data from a cross-section of newsagencies yesterday for Mother’s Day. All recorded strong sales growth. Greeting cards, social stationery and magazines were up on last year with Greeting Cards the big improver. The data shows that, on average, 60% of the time cards were purchased alone – meaning that newsagents remain top of mind with consumers when it comes to a considered card purchase. Cards are usually purchased along around 45% of the time.
Further proof of lottery impact
Today is further proof of the growing impact lottery jackpots are having on newsagent traffic. The various lottery businesses changed the Tuesday game last year so it leads to more jackpots. On a day like today, when a $6 million prize is on offer, we see a 33% increase in sales and good flow on business for impulse purchases such as newspapers and weekly magazines. The lottery ticket is the destination and products which used to be core are the add on. Smart newsagents leverage the opportunity. Smart suppliers like ACP Magazines and News Ltd have provided newsagents with some excellent display tools to help leverage the impulse purchase of their magazines and newspapers (respectively) at the lottery counter. The downside is the drop back in traffic and sales when there is no jackpot of the Tuesday.
TV Week sales up thanks to 3D
Sales of TV Week in my newsagency were up 25% yesterday thanks to the 3D cross promotion for the Medium TV show. Because of a 22% supply cut three weeks ago I’ll sell out today and have no TV Week stock for five days. This will turn customers away, maybe some will not return – such is the fickle nature of magazine purchases. I could buy replacement stock from Coles or Safeway as they have plenty but that would screw with the sales data I provide to ACP. ACP agreed that the 22% cut was too severe and that it would be fixed. I’m waiting.
If you think I am complaining unreasonably, consider this. PBL owns ACP and Network Services. ACP is tight with magazine supply – supplying close to sales quantities to newsagents to minimise wastage and maximise return. I’d do the same if I were them. However, this model makes it challenging for good newsagents to chase significant growth. Network Services, on the other hand, supplies based on a model I cannot fathom. There are titles with a return rate of 50% or more, that is we sell less than half we receive, and Network has just increased our supply.
So, one part of the PBL group is choking us while the other is drowning us.
This is why the ACCC needs to review the magazine supply model in Australia. Newsagents have been left disadvantaged by the increased competition as our competitors get to choose the product they carry. It is in the supply model for titles outside the top 200 which needs the most urgent attention as this is where newsagents have been made less competitive.