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

Position reached on retail tenancy

The national cabinet has reached agreement on retail tenancy. This, from the ABC:

Prime Minister Scott Morrison has announced new rental waivers and deferrals for commercial tenants hit by the impact of the coronavirus crisis.

Under the scheme, which was announced after a meeting of the National Cabinet on Tuesday, landlords will have to reduce leases in proportion to the reduction in the tenant’s business.

The waivers will have to account for at least 50 per cent of the reduction in business.

Deferrals — rental payments that will need to be made, but can be put off — must be spread over the remaining time on a lease and for no less than 12 months.

That means that if a tenant had three months remaining on a lease, they would still have at least a year to make any deferred rent payment.

The code will apply to any tenancies where the landlord or tenant applies for JobKeeper and where they have a turnover of $50 million or less, Mr Morrison said.

The arrangements will be overseen by binding mediation and a mandatory code will be rolled out in each state and territory.

Mr Morrison said landlords were legally required to speak with tenants about rental arrangements and if they refused they would “forfeit their way out of the lease”.

Click on the link for more on this story.

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retail leases

Tabcorp stands down 700 people

In an announcement to the ASX this morning, Tabcorp announced it was standing down 700 employees.

The temporary standing down of over 700 Tabcorp employees to 30 June 2020 in businesses of the Group where there is no work as a result of COVID-19 shutdowns. Our focus is on retaining jobs for the long term. During the temporary stand down period, affected employees can access their accrued leave benefits and are expected to resume work when business activity returns to normal levels.

Tabcorp is currently exploring its eligibility for the Federal Government’s Job Keeper Wage Subsidy.

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Lotteries

Ovato offers little help to small business newsagents in dealing with the AFL trading card problem

Ovato is being inflexible in helping newsagents deal with the supply of AFL trading cards. here is the company’s position:

Team Zone AFL Cards – 85864/210

O/S March 14th

Initial allocation based on 80% of 2019 sale & small agents full carton or below got full supply larger agents received on average just 35% of total supply

Current sales in newsagents are 15% of initial supply after 10 days on-sale and sales are tracking -10% YoY

Returns policy as previous years. Agents need to phone / e-mail the contact centre to confirm how much stock is wanted to be returned. Publisher will send Aus Post return label to agent. Once agent confirms returns have been sent credit is given.

 

Select AFL Cards – 15035/70

O/S March 2nd

Initial distribution was 60% of final sales in 2019.

Current sales in newsagents are 30% of initial supply after 3 weeks on-sale and sales are tracking -10% YoY

Returns policy: Stock can be returned for credit but is full copy return.

For those outside of newsagency businesses – this is stock newsagents did not order. They are forced to carry the financial burden off dealing with this. This is unfair given that there is no reasonable process in place for newsagents to mitigate their financial costs for this product.

The Ovato approach places an unfair burden on small business newsagents.

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Ethics

Is Ovato imposing an unfair financial burden on small business newsagents because of COVID-19 impact on magazine distribution?

This is a serious question: Is magazine distributor Ovato hitting small business newsagents with an unexpected cost as a result of an impact on its operations due to COOVID-19?

Many newsagents have reported an unexpectedly high magazine charge. For some, the charge is higher than their cashflow supports, they will be unable to pay the bill.

So, I dug deeper. I have found examples of Ovato increasing supply of titles beyond what is reasonable over the last two months, even longer this year. In one instance, for Reader’s Digest, based on a 25% return rate, Ovato increased supply 37.5%. Then, another 10% and a month later another 16.5%. There is no justification whatsoever in the sales data from the store for any increase.

It’s not just Reader’s Digest. There are other titles too.

Ovato has, as I understand it, a requirement in some magazine publisher contracts that they distribute all of what they receive. If my understanding is right and this clause has not been set aside in the current situation, the closure of most transit location retailers will have increased the volume of inventory that Ovato must place elsewhere, thereby increasing the cashflow obligation on newsagents.

Ovato management need to explain how they are dealing with the shutdown of around 25% of their usual mix of retail outlets. They need to ensure that their allocation systems do not unreasonably increasing supply to newsagents. The evidence suggests otherwise though. If this has been the case, they need to fix it right away. If I am wrong, they need to explain why supply increases where the return rate is 25% or more.

I really thought we were behind the problems of serious magazine oversupply. Research over the last week indicates otherwise. I’d be glad to be proven wrong.

If you are a magazine publisher, look at your contract with Ovato, see whether you require them to distribute everything. If it does, propose that this requirement is set aside for the next six months.

Given the data flow from newsagents, there is no need for oversupply. Indeed, any oversupply ought be considered neglect, a cash grab,. And given the parlous state of Ovato, that is the last thing newsagents need to be exposed to right now.

Here is how we are responding to oversupply to my own newsagencies: we have reverted to weekly tight culls of magazine supply, cutting back to what we know we will sell plus a small buffer to allow of the current unique situation where some magazine categories are in growth.

The oversupply has caused us to invest more time on magazine supply and to be ruthless to protect our business.

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magazine distribution

Zoom meetings keep small business newsagents connected during COVID-19 challenges

For a month now newsXpress has been helping its member community connect with regular Zoom, video conference, meetings. For the last three weeks, these have been daily @ 2pm Monday to Friday with a morning meeting as well on some days and a weekend meeting some Sundar afternoons. A tradition has developed on Fridays with suppliers joining in the meeting.

Conversation is free flowing, with plenty of topics covered. No topics are off the table. People share their stories, how business is going, what is working, what is not working. The meetings often consider issues of collective interest.

newsXpress was on to the landlord challenge close to two months ago so there has been plenty to talk in the Zoom meetings about in terms of how different landlords have responded to the various newsXpress strategies proposed. newsXpress was also onto the jigsaw opportunity early, back in February, and this, too, has been part of the Zoom discussion.

The most significant value of the Zoom meetings has been the opportunity to experience that as a business owner you are not alone in confronting COVID-19, that your fears are fears others share, that there can be comfort from an openly shared experience.

Each Zoom meeting has between 35 and 40 people engaged live with more than 100 watching the recording overnight.

newsXpress also sends a daily email, usually by 7am, with updates on any issues covered in the Zoom meeting the day before as well as news that relates to our channel, links to relevant government resources and details of relevant supplier opportunities.

There have been plenty of stories in the media this week about Zoom meeting fails. These newsXpress meetings have been wonderful and very much appropriate to the times.

Our next one is tomorrow, Sunday, at 3pm. I’ve cast as a more relaxed meeting, with wine (or beer or a cocktail) in hand. Then, on Monday at 2pm, we’re back to weekday business.

Now more than ever we in small business retail need to be connected to each other as we can learn from each other and support each other. That is central to the newsXpress use of Zoom for daily member meetings. Oh, and if you think you don’t have time, people have the meeting on their computer while they get other work done, each lunch or take calls. Multitasking is applauded.

Footnote: I am a director of newsXpress.

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Newsagency marketing group

Unified industry lobbying of shopping centre landlords

This week, ALNA has lead discussions with the newsagency marketing groups Newspaper, nextra, newsXpress and The Lucky Charm to agree a unified approach to shopping centre landlords on challenges resulting from the impact of COVID-19. ALNA sent the following to the Shopping Centre Council of Australia.

2nd of April 2020

 

Angus Nardi
Executive Director
Shopping Centre Council of Australia

Cc: Kate Carnell, COSBOA

 

RE: Australian Lottery & Newsagents Association letter to SCCA requesting landlords to immediately play a bigger role in addressing the COVID-19 Pandemic with their Tenants

 

Dear Angus,

The Australian Lottery and Newsagents’ Association (ALNA) is the national industry body representing Lottery Retailers and Newsagents’ who represents small businesses in almost every rural town, regional centre, urban and metropolitan shopping centre in Australia.

There are over 4000+ Lottery Retailers and Newsagents’ in Australia. They are an important and trusted part of Australian communities and approximately 35% of the Australian population visit these small businesses at least once a week (source – Retail Doctor Group Insights study).

The current COVID-19 Pandemic is impacting our small retailer’s businesses in a significant way. Newsagents and Lottery Agents are not businesses with huge financial capacity or large margins, they are generally mum’s and dad’s, family enterprises, who are having a go, being their own boss and working hard to make a success of their business.

Their biggest immediate concern now to surviving this crisis, is their financial capacity to continue to pay rent to their landlords during the crisis. Many are reporting that they will have limited capacity to continue to pay rent over the several months it may now take before any recovery in customer visitation occurs after social restrictions are lifted.

When they have reached out to landlords and their representatives as almost all have, and as the Prime Minister has suggested they do,  to have a conversation about sensible rent relief and abatement to meet the requirements of their business surviving this crisis that is no fault of their own, they are consistently and overwhelmingly met with delay and obfuscation.

Examples include:

  • Landlords and their representatives who simply point to government or bank support as the only solution.
  • Landlords and their representatives who ask tenants to sign a confidentiality agreement before any discussions can occur.
  • Landlords who have asked retailers to dip into reserves (assuming they have them) and pay up, saying every business should have sufficient funds to operate with a downturn in business for at least a few months. We expect our April invoice to be paid.
  • Landlords and their representatives who use delaying tactics like requiring evidence that tenants have accessed every single state and federal support scheme announced and who require detailed P&L’s and projections in a fluid global crisis that no one can realistically predict.

We are relying on each other to get to the other side of this crisis, and many businesses have stepped up in this crisis, banks have for example stepped up to assist individuals, businesses and landlords alike, providing short-term solutions to get each other through and governments across the board have as well.

But when it comes to landlords being asked to step up, they roll out the good work of others as solutions to the predicament of their small retailers, and ask for unrealistic bureaucracy to delay outcomes or conversations actually occurring, rather than contributing consistently to shoulder the load they abrogate all responsibility.

This behaviour puts the mental wellbeing of many small business owners and their staff at risk in a crisis, and this is un-Australian and disrespectful to your members business partners and our community more broadly, who are all in this crisis together with you.

Consequently, we are writing to ask your industry to step up, to show some leadership and to genuinely partner with your commercial tenants, to help see them through the crisis through immediate dialogue and delivering rapid outcomes.

—-

In conjunction with the four major Franchise and Marketing groups in our sector, which include; The nextra Group, Newspower, newsXpress and the Lucky Charm Group, who collectively represent approximately 1000 retailers, along with the rest of our members who are not part of these groups, we are asking you and your members to do this without delay.

Many many of these businesses are tenants in your members businesses, we ask that your organisation and your members do significantly more to address this consistently objectionable behaviour.

We believe arrangements between landlords and our retailers’ that properly acknowledge the significant reductions in turnover occurring, are immediately put in place without delay, as the Federal Government have done. Then as a result, reduce commercial rent payments immediately and in the case of those tenants who have already paid for April rents, refund them.

For these effected businesses, rent payments will need to be reduced to close to zero in most cases for six-months as this will be critical to their survival, as it will be for the long-term survival of your members businesses. For shopping centre and CBD newsagency businesses, we seek an immediate measure to suspend all rent related obligations for three months with no change to rental period and no requirement to catch up rent that would have been paid in the suspended period and a commitment to review an extension of this six weeks into the three months.

Re-starting rental payments after the crisis will deliver small retailers the capacity to continue in business and landlords will still have tenants able to pay reasonable rents as a result. The alternative is broken lives, empty shops and having to offer six-month or more rent holidays to attract new tenants

We implore you to work with us on this to find a sensible solution now. This remains the big piece of the puzzle that is still unresolved and urgently required to make it possible for small businesses to go int a semi-hibernation state during the crisis and to not lose the capacity to come out the other side.

We thank you for your time, consideration and support.

 

Yours sincerely

Ben Kearney
Chief Executive Officer
Australian Lottery & Newsagents Association

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Retail tenancy

Sunraysia Daily to print on Saturdays

Great news out of Mildura yesterday:

Sunraysia Daily to print on Saturday
THE Sunraysia Daily will revive its printed publication with a Saturday edition.

After temporarily ceasing all its printed publications last weekend due to the economic impact of the coronavirus, the Elliott Newspaper Group decided on Thursday morning to print a Saturday only edition while the crisis continues.

Elliott Newspaper Group managing director Ross Lanyon said the move wouldn’t have been possible without the support of staff.

“We have seen an enormous community push for us to revive a printed product this week and we are listening to our readers,” Mr Lanyon said.

“While we have a strong online presence with our revamped website, people still love their paper and are desperate for it back.

his is terrific news as newsagency sales of the Saturday paper were terrific.

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Newspapers

Bauer closes NZ magazine business permanently

NZ Herald reports that Bauer has closed its NZ magazine business permanently.

New Zealand’s biggest newstand magazines have been folded, as Bauer Media NZ abruptly closes its doors permanently as a result of the Covid 19 crisis.

The New Zealand wing of the German-owned company publishes a range of New Zealand magazines including Woman’s Day, New Zealand Woman’s Weekly, The Australian Women’s Weekly, the Listener, North & South, Next, Metro, Kia Ora, Home NZ and Your Home & Garden.

The closure brings to an end many decades of publishing in New Zealand, with around 300 staff out of jobs.

A staffer spoken to by the Herald said they were “devastated” and “didn’t see it coming”.

This move is a shock.

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magazines

Sing Tao newspaper closure costs newsagents

Newsagents have lost out from the unexpected collapse a few weeks ago of Sing Tao Newspapers Pty Ltd. Despite this, the liquidator is pursuing newsagents for what could be dubious amounts. Further, they are being heavy handed in their approach.

Newsagents were supplied newspapers by the company. Newsagents paid for newspapers. Then, later in the cycle, they claimed for unsold product. Who knows what the actual debt is given the surprise collapse of the company. Timing is key in determining an accurate position.

The liquidator is threatening legal action to recover what they claim is a few hundred dollars owed in one instance shown to me. I doubt a liquidator would take legal action to recover this.  However, I am no expert and offer no advice.

If I received such a notice, I’d show the liquidator an invoice for my costs from the collapse covering any uncredited returns.

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Ethics

News Corp. to suspend print editions of 60 community papers

Nine has this story:

Rupert Murdoch’s News Corp will suspend publication of 60 community newspapers including The Manly Daily, The Wentworth Courier and The Diamond Valley Leader due to the COVID-19 pandemic.

The company announced on Wednesday morning it would turn its 60 community newspaper mastheads to digital-only products and suspend print publication from April 9 due to rapid declines in advertising revenues.

It’s understandable. Ad revenue has all but disappeared. The question is, will they come back?

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Media disruption

Nine suspend some sections of print newspapers

Mumbrella has this story:

In light of the coronavirus (COVID-19) outbreak, Nine has pivoted its publishing arm. The changes include the suspension of some print sections and the optimisation of newspapers’ webpages to provide consumers with COVID-19 updates.

Non-weekly magazines have been suspended and some lift outs have ceased. The staff impacted by the changes will be redeployed as appropriate, said a Nine spokesperson.

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Media disruption

NZ government closes non daily newspapers

Kiwi blog has this story:

Govt closes down all non daily newspapers

The Government announced:

  • The current focus for government and all New Zealanders must be on minimising the movement of people to stop the transmission of Covid-19

  • In relation to news and  this applies both to the movement of staff of  organisations and their supply and distribution lines

  • The focus for news and media as an essential service has to be on the provision of timely news and current affairs

  • Daily newspapers are currently included in the definition and are expected to take strong measures to ensure safety of staff and the public; combined with their digital reach, they remain essential at this stage for the timely dissemination of news to the majority of New Zealanders

  • Printed periodical and non-daily publications are not considered essential under the news and media designation

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Media disruption

Ovato seeks help from banks

This story The Australian just now:

Printer Ovato cuts pay by 40pc, seeks bank aid

Australia’s largest printing company, Ovato, is seeking help from its banks amid the coronavirus crisis and will slash pay by 40 per cent for most of its staff, including all executives and board members.

Ovato, previously known as PMP Group, said ANZ and Assetsecure have agreed to waive the testing of financial covenant ratios.

It is also working to secure “similar waivers and covenant relief from noteholders” of the $40m secured subordinated notes due in November 2022.

Chief executive Kevin Slaven said the company is working to ensure its expenses match its revenue during the economic uncertainty.

“While this uncertainty continues, Ovato remains confident in its ability to maintain our service standards with plants operating in all Australian states, albeit at reduced capacity,” Mr Slaven said in a statement released late on Tuesday night.

Chairman Michael Hannan said the group is facing the “unprecedented crisis with the most experienced management team in the industry”.

“We have acted early and are adapting to the daily changes. We have managed capacity by shutting down equipment at all sites, while retaining the flexibility required to ramp up or down quickly.

“I am proud to say that we have had good co-operation from our entire workforce, which will see an effective 40 per cent pay reduction for most of our staff, including all executives and board members,” Mr Hannan said.

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magazines

State governments support small businesses

Newsagency marketing group newsXpress, of which I am a Director, in its daily support email to members, included this list of financial support from state and territory governments, which you may find useful:

State government support packages.
Here are links to state / territory government support packages announced to help businesses through the COVID-19 situation. While each state has different rules, some will allow the packages to be used for useful things such as website development and other activities that support the operation of the business. Please click on the appropriate link for your location and read up what you may be able to tap into. The text for each state is from the government websites.

  1. Victoria. $10,000 grant that could be used for business improvement including web development or similar.
  2. ACT: Earlier in the month, the government released a recovery plan, including a $20 million business improvement scheme. Under the scheme, businesses will be eligible for grants of $10,000 for improving business premises. This can include new equipment, new fit-outs and physical changes to attract customers. It is not currently clear what is required for eligibility. If they can also contribute $10,000 of their own, they will receive an additional $10,000, for a total of $30,000 funding.
  3. NT: $20 million All Territory businesses will be able to access a $10,000 grant, followed by an additional $10,000 grant if they contribute $10,000 of their own.
  4. Western Australia: No grants as such, other than the Lotterywest announcement from Monday. However: The WA Government will waive rental payments for small businesses and not-for-profit groups in State Government-owned buildings for six months. One-off $2,500 credit on electricity bills for small businesses that consume less than 50MWh per annum.
  5. Queensland. Nothing substantial for small business here.
  6. Tasmania. Several grants available, somewhat limited in scope and subject to eligibility.
  7. New South Wales. Several options available, somewhat limited in scope and subject to eligibility.
  8. South Australia. Nothing specific yet.

Our advice is that you carefully read the information for your location and that you then apply for every thing you could possibly be eligible for.

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Newsagency management

Pandemic selling out

Yeah, I know it’s April 1, but seriously, Pandemic, the game, is selling out. It’s been a hit. We jumped on a couple of months ago and are grateful for the insider supplier tip.

Pandemic is another early adopter move that has provided some welcome sunshine in an otherwise challenging time for retail.

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Opportunistic retail

ACCO to open direct accounts with newsagents

A news release just now from ACCO.

NOTIFICATION TO NEWSAGENTS 

With the continuous changing landscape of our market, external conditions and the need to better service the newsagent channel, we are pleased to advise that effective April 1st 2020 a new team of ACCO Representatives across Australia will be calling directly on newsagents in each state. 

This exciting new venture doesn’t change our relationship with the Newsagent Wholesalers or Buying Groups, this simply gives you a more direct voice and relationship with ACCO Brands. We will assist you in merchandising, improving store layouts, showcasing new products and providing you with an opportunity to purchase our marketing leading brands including Marbig, Artline, Spirax, Colourhide, Stabilo, Maped, Cumberland to name a few. 

Effective 1st April, 2020 all Newsagents can open a direct account with ACCO Brands Australia subject to ACCO Brands General Terms and Conditions of Sale. This includes the option of 30 day payment terms and $550.00 (ex GST) Minimum Order Value. Alternatively, you now have the option of paying via credit card at the time of order placement and be entitled to a reduced Minimum Order Value of only $250.00 (ex GST). The payment via credit card, at the time of order placement will waive the surcharge for ordering under $550.00 (ex GST) – Note surcharge will still apply if the order value is less than $250.00 (ex GST). This facility is only available when you order via our website (accobrands.com.au). 

As we work together in these unprecedented times, we are pleased to offer you this improved service and continue to provide you with market leading brands, strong products and great customer service. 

5 likes
Newsagency management

Lotterywest to pay every Lotterywest retailer $30,000

Lotterywest sent this email to their retailers today:

Today we are announcing a $17.5 million COVID-19 Retailer Incentive Package to assist Lotterywest retailers during this very difficult time.

The package includes $30,000 for each Lotterywest retailer, which will be paid in three $10,000 monthly instalments, starting from Wednesday 8 April 2020. We will also suspend terminal and service fees for every store for six months.

Premier Mark McGowan and Lotterywest have also established a $159 million COVID-19 Relief Fund to provide support to organisations that are helping people experiencing hardship, announced by the Premier earlier today. Read the full media statement here.

Lotterywest responds to COVID-19

3231881.jpg

Here is a list of Questions and Answers we’ve put together about the package.

You can also access all the information on the Retail Link website.

We’ll continue to keep you updated. In the meantime, please direct your questions to your Retail Relationships Officer, or contact our Customer Services team on 133 777.

Thank you and please take care.

Kind regards

Susan Hunt PSM
CEO Lotterywest and Healthway

———

What an extraordinary move for WA newsagents and lottery retailers. I know from calls already tonight that this announcement has delivered extraordinary personal relief in addition to the money that will flow.

Kudos to Susan Hunt and the Lotterywest board and to Premier Mark McGowan for delivering on his election promise to Lotterywest retailers.

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Leadership

How the government’s inaction on retail tenancy in this COVID-19 world is problematic for small business retailers

The Prime Minister late yesterday asked business owners and landlords to sit down and work with each other to find a solution to the retail tenancy challenge presented by the restrictions imposed in government responses to COVID-19.

Based on my work with retailers in many situations, city, country, high street and mall, the approach of sitting with landlords will not work for most.

While some individual landlords have already delivered practical help with rent holidays and rent discounts, too many have not. In the shopping mall situation, I am not aware of any of the major landlords like Westfield offering any financial support. Indeed, in my now experience with Westfield, their approach has been quite threatening – don’t close, pay your rent on time.

At the independent landlord point, I have seen discounts as high 75% for six months put in place, April / May rent free in a couple of situations. The most common discount I have seen is 50% off for April with a commitment to reassess.

My experience is that independent landlords are more likely to act sooner and at a more valuable level.

This is where the Prime Minister’s announced approach is problematic as it relies on too much work to be done, too many conversations to be had. Big landlords like Westfield operate in silos, they treat each tenant differently with independent small business retailers usually be treated worse than big retailers.

What we need is national consistency. We need this urgently. We need the federal government to set a position, urgently, that all – retailers and landlords – can rem;y on as a single national position. Without this. the weak will carry the higher per square meter cost, as is the case today.

I urge the Prime Minister and others in authority to resolve this nationally for the benefit of the mental and financial health of small business retailers.

We have been hearing about something coming for two weeks. With each day that passes with no decision, the perspective and health of those so desperately waiting deteriorates and this is problematic for their businesses and those who rely own their businesses.

We can’t trust the Westfields of the world to fix this. They have no track record in this regard. This is something the federal government needs to address, and urgently.

1 likes
retail

News Corp. removes paywall for 28 days

In a move that it says is designed to help the community, News Corp. has removed the paywall for its mastheads for the next 28 days. I wonder if the move is more about getting more people to taste their wares before they offer a sweet post-corona deal to stay inside a paywall. Or, maybe, it is about broadening the reach of their mainly ignorant opinion writers who yell nonsense daily. Or, maybe, it is neither and purely innocent.

1 likes
Social responsibility
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