It’s when the elderly female customer asked this question that I realised we need to touch more in our retail businesses. Not in an offensive way. The odd touch here or there at the right time provides a connect no internet business can get close to. Two people, connecting on a common interest, touching skin provides a warmth critical to our success. I understand that the social networking facilities online will change the way we interact with each other, until that is ubiquitous retailers like me ought to exploit the opportunity to touch our customers. Yes, you can touch me for luck.

Newspaper publisher Fairfax has made a bold move in purchasing New Zealand most visited website, Trade Me. This is a coup for Fairfax and helps put to rest the jokes about their missing out of a piece of Seek back when it was available years ago.

Trade Me is a very successful business and kudos to Fairfax for negotiating the deal. While the announcement says it will operate as a stand along business, I would expect to see integration with the broader Fairfax offering.

The Fairfax announcement provides no indication as to whether Trade Me will open in Australia nor whether the investment has any relevance to Australian newsagents. The latter is important to me because Fairfax demands a lot from its newsagent channel in support of challenged product (newspapers). Newsagents could reasonably ask if they fit with such an acquisition. The reality is probably not and that’s okay – newsagents need pursue their own future in response to the disruption to their core products of newspapers and magazines.

Government owned Australia Post and Qantas owned Jetstar are proving the value of being mates now that they are closer to selling Jetstar tickets at Post Office outlets. More here at my small business blog. More here too at news.com.au. Small business travel agents are being done over by Australia Post the same as newsagents. That’s the value of government ownership for you.

Newsagents are being encouraged by one of their associations (the Australian Newsagents’ Federation) to install scrolling poster units from a company called Moving Tactics. These units hold 20 magazine posters and scroll through, promoting the products in store. I see several problems with these units:

Customers spend little time in line in a newsagency so point of purchase displays need to move through their messages quickly.

Newsagents are contracted to provide a certain number of poster facings to at least one supplier. Using this scrolling unit would not, in my view, release them from that obligation yet the promotional material suggests otherwise.

Mechanical poster display units are dinosaur units – LCD is the way to go if you want your store to look relevant today. As I have discussed here I use an LCD unit in my store with excellent success.

Reaction time is slow given the archaic technology. Take the Powerball jackpot. If the $22 million does not go off this Thursday I would want the $33 Million promoted in a consistent marketing message in store from Friday morning.

These units make newsagents lazy. We’re better off creating stories in our shoops based on what is appropriate for us and for our customers. Abrogating that responsibility to a company located far away from the action of our shop is lazy.

Hopefully there will not be much take-up of this offering. Newsagents will gain more from active involvement in their businesses than giving the opportunity over to someone else.

I’d rather see newsagents use LCD screens like I and others are using. The association would have been smarter in visiting these innovative newsagencies and seeing LCD technology working well.

The latest Australia Post (27/2) catalogue distances the government owned corporation further from the Act under which it operates. Less than 2% of the promotional space in the catalogue is used to promote postage stamp product. The Government continues to turn a blind eye while the government owned shops take more sales from small business. newsagents, photographic shops, stationers and telco shops. This underscores the cynicism of the Government’s recent decision to protect Qantas from competition and force consumers to continue paying too much to travel between Australia and the US.

I’ve been involved in a research project into the cash-flow impact of magazines on Australian newsagencies for the last few months and have just completed a paper on the subject. While I’m not ready to share the full results here I’ll share this from the final paper:

The bottom 50 titles, as measured by cash-flow (taking into account cost of goods, credits for returns, income from sales, cost of real-estate and cost of labour) accounted for between 18% and 20% of all negative cash flow in the magazine department. Put another way, eliminating the bottom 50 titles in the research project would cut negative cash-flow by between 18% and 20%.

Given that an average newsagency has 1,000 titles, we are talking about 5% of titles costing between 18% and 20% of the loss made from magazines.

Imagine the value to the business of cutting the cash loss and using the reclaimed space to better promote the more successful titles.

Given the way newsagencies are valued, a cash-flow savings of $4,000 conservatively equates to a $12,000 increase in the sale price sought for a newsagency. This means that eliminating the bottom 50 titles is worth, in terms of the sale price of a newsagency, between $12,000 and $60,000.

These numbers are an indictment against the magazine supply model and the companies in control of that supply model. Newsagents cannot sustain such losses from a small number of titles.

I have now run two briefing sessions for newsagents where I take them through the data from the magazine cash-flow study. It’s a sobering event. The key will be how magazine distributors and publishers react – especially the small publishers responsible for the titlee causing most of the cash-flow problems.

I’ve heard a strong rumor that News Ltd is to launch a promotion on one city in a few weeks which will only be available at a certain petrol outlet. If true, this would be the second time this has happened. The newsagency channel was created to distribute and sell newspapers and magazines more than 120 years ago. Petrol outlets have had newspapers only recently. News Ltd relies on newsagents to keep the costs of distribution down and invest in over the counter sales at a rate unmatched by any other newspaper outlet. If News Ltd refuses to include newsagents in what looks likely to be a high profile campaign then newsagents would be right to respond. Some folk in News Ltd have to decide how important newsagents are and if the answer is ‘not important’ then they ought to stop the death of a thousand cuts. If I’m wrong let me know: mark@towersystems.com.au.