There is a fundamental difference between newspaper retailing in the UK and Australia. Here in the UK retailers display the front page. In Australia they don’t. While there are flat stacks of newspapers in the UK, every major daily has the front cover displayed in their retail units.
I’m in Brimingham UK and just picked up the Sunday papers. Free today with The Mail, a DVD of On Golden Pond. Free today with News of the World, a DVD of series 2 episode 1 of Little Britain (brilliant comedy series). In some stores their Sunday papers are sealed in plastic while in others they are stacked in holders to keep everything together. A couple of stores I saw where product is stacked without any guide inserts flow to the floor. Two retailers I spoke with are frustrated with publisher obsession with DVD promotions yet they like the sales interest.
Courtery of Kareem Mayan’s weblog is a of a conversation with 5 teenagers at the recent web 2.0 conference in San Francisco. Read the transcript and you’ll get a candid insight into the way this generation is using the internet and some comments about newspapers along the way. Here are aome brief highlights:
Yahoo? What’s that? eBay? Mum likes it. MySpace.com? Never use after high school. Music? Don’t pay for it. Ring Tones: Pay. Enjoy.
Sales of The Guardian jumped 18% from August to September and the pbisher claims it is as a result of their shift to the Berliner format. Year on year they are tracking 7.4% growth. I wouldn’t be surprised to see format change for a couple of Australian newspapers soon.
Aside from very solid gains for the Sunday Age and the Sunday Herald Sun, The Australian and the Saturday Daily Telegraph, the latest Audit results for six months to September 30 are not great. This is despite what seems like unprecedented marketing effort in the form of product giveaways and other promotions to drive sales. Through this same period we’ve also seen publishers placing product in non traditional venues in pursuit of sales – Starbucks, McDonalds and more cinemas.
A smart publisher might want to trial putting an incentive on the table for above average growth achieved by newsagents. I am certain that the right incentive for sales growth would see growth achieved. It would also move the publisher / newsagent relationship to a more commercial and entrepreneurial level. Indeed, the right incentive could be a win win.
I know newsagents who have significantly outperformed these latest audit figures yet they receive no reward. Okay, they (we) get the 25% GP from the extra sales. But on a product selling for $1.00 it’s not much. If they were to receive bonus GP on all sales if they jump a pre agreed hurdle then more newsagents would be engaged.
The current contractual arrangement is not business like in this area. Look at any other traditional supplier / retailer contract and you see incentive bonuses for performance.
The first publisher to create such a program with newsagents should expect to have a better audit result in six months time.
The “Not Happy Jan” TV commercial for the Yellow Pages is still regarded as one of the best according to a report in an advertising industry journal this week.
You coldn’t run the ad today because Jan, having forgotten to place an ad in the Yellow Pages could get more immediate and lower cost success through a Google AdSense campaign or even a Yellow Pages pay per click Bid Smart campaign.
The world has changed.
This article from PR Week lists 10 media trends to watch. Portability of video content and blogs top the list. This is a good report – good reading for anyone involved in the news and information business.
I have been checking current sales efficiency for foreign language newspapers. The rating has not changed. On average, 78% of foreign language newspapers sold in newsagencies are sold alone. This is considerably higher than the sold alone percentage for capital city dailies. This inefficiency could reflect poor retail management by newsagents or; it could also reflect on the customers. Regardless, the situation needs to be addressed by newsagents. It’s time to radically shake up where we locate foreign language newspapers and how we merchandise them. Also, given the high browse/no sale rate it might be time to seal them in plastic.
That we sell foreign language newspapers is a point of difference. However if we are not leveraging beyond the single item sale they are of doubtful value to our business.
Reports around the Net today of Siemens joining Fujitsu and E-ink in demonstrating portable paper like electronic devices which could have application as newspapers. Fujitsu seems to be leading the field with its first (non newspaper) e-paper produce due for commercial release next year. These developments go beyond the e-paper watch demonstrated earlier this year in Japan.
Hmmm a portable electronic newspaper which folds like paper and is wireless enabled. Talk about disruptive technology.
Explode, the new magazine for boys 14 to 17 has been out for two days and is showing signs of acceptance in what is traditionally a tough market for new magazine titles. Explode seems to be FHM or Ralph for younger guys. Just look at the point of sale material provided by the publisher (above). Based on anecdotal evidence from a few newsagents late yesterday and applying reasonable analysis of sales decay for titles in this segment I’d expect a sell through rate of 70% for this first issue. If Explode achieves that I’d call the launch a success. This weekend will be the key. Explode needs to achieve at least 50% sell through by Sunday night to reach the predicted 70% sell through.
Footnote to publishers: Visit almost any newsagency and you will see in store displays like the one above from my newsagency. This is the type of support newsagents give new titles. You don’t see it at petrol and convenience outlets nor do you see it in supermarkets. Support newsagents and they support your products.
While others have been stumbling around the portable video marketplace for some time, it may be Apple’s announced entry with their video iPod which kick starts this medium. Some who have already played with the device give it a thumbs up. (Engadget) The more mainstream portable video becomes and the greater the Wi Fi coverage the sooner there is a channel which disrupts traditional news and information supply chains: TV, newspapers and magazines.
The aggressive move by Vodafone last week to slash newsagent commissions continues to cause a stir – especially now that it is out that a national supermarket chain earns 16% commission on the same Vodafone product newsagents are paid 5% to sell. Newsagent anger is being fanned by the discovery that the supermarket pays recharge revenue monthly whereas newsagents pay overnight. More newsagents are getting customers to sign a petition to take to Vodafone in support of their small business and the battle against supermarket giants. There are 3,000 newsagents offering Vodafone recharge and the newsagent peak body, the ANF, has been unable to leverage this footprint to a good outcome for newsagents on this matter.
I like Alpha. It’s a quality magazine. Even though issue 4 is smaller it’s remains a good read and worth paying for. My frustration is the sales mechanic. Requiring a customer to opurchase the Herald Sun (in Melbourne) leads to frustrated customers. As noted here previously if I were in charge I’d make some changes:
Increase the cover price to $6.95 – the quality of the product supports such a price.
Include teaser articles some of the features in the News Ltd newspapers with a coupon at the bottom of the article encouraging an Alpha purchase for $2.00 off.
Offer a competition entry with purchase of the magazine and promote this on the coupon in the newspaper. Maybe a car giveaway each issue or a holiday or a hit out with a tennis star or a training run with a footy club.
Based on what I see cross the counter I am certain that these changes would boost sales of Alpha.
Trade & Exchange Australia is six issues into its tabloid publication of classifieds. Line ads are free and the publication cover price has fallen from $2.50 to $1.00. Now they have written to newsagents suggesting that old copies be given away once a new issue arrives. Next to the Trading Post T&E is easy to overlook and it seems that’s what many customers are doing.
The Government owned and protected Australia Post retail network released strong retail results in its annual report yesterday. While the newspapers today are running with the story of falling postal revenue, they miss out on the 50% growth in Western Union money transfer business, their flat but healthy bill payment business (170 million transactions) and the 8% growth in retail products. Much of this growth in retail products (including all philatelic merchandise, packaging, communications products, greeting cards, gifts, stationery and office products) was achieved through competition with newsagents. Australia Post operates 863 government owned stores which compete head to head with newsagents.
A few short years ago these stores sold stamps and postage specific products. Today around 65% of their retail space is taken up with items which newsagents have sold for over 100 years.
The government competing with small business in this way is appalling and makes a mockery of their small business policy.
Newsagents would be very happy with 8% retail products growth.
Google’s announcement last week that it plans to offer free WiFi access in San Francisco is like a small pebble being thrown deftly across a smooth lake. The ripple of the bounces and eventual drop will travel far and be felt for years to come. Whether the offer proceeds remains to be seen. If not this time, major city WiFi coverage is a fait accompli. The only barrier is the economic model.
A WiFi enabled city is a city of opportunity on so many levels. For example, with enough wireless enabled handsets in the city Google will be able to deliver interest based advertising as it does today online. It will know where you have been, probably where you are going and will therefore provide options appropriate to that information. This change to the advertising paradigm is how Google makes its money online. Advertisers pay per click and punters are shows the ads based on what they are interested in. This compares to the traditional advertising paradigm which is not based on demonstrated interest.
The impact of WiFi coverage will be felt, I suspect in stages. The first casualties will be free newspapers, those focused more of delivering advertisements than editorial content of real value. These are local newspapers and the ‘thin’ commuter newspapers. However, commuter newspapers will only be affected in there are better WiFi enabled handsets like the Sony PSP device which offers a better screen and an improved experience. The next casualty will be listings followed closely by trader type newspapers and magazines (Trading Post, Trade A Boat). The final impact will be felt by mainstream newspapers. However, since by then they will be part of the citywide WiFi mix and their over the counter offering will have been rejigged appropriately, the impact should be minimal.
Given that newspapers and magazines are built to generate advertising revenue their brands will adapt to WiFi enabled cities. Some expect this to impact newspaper and magazine sales. Others expect it to attract new business.
The Google announcement, even thought so far away and facing huge hurdles, should be enough for newspaper publishers and the newspaper supply chain to be tuning their businesses already to cope with such a change.
The announcement by Google is disruptive to an already disrupted publishing industry. One hopes that decision makers in Australia are taking notice and engaged in planning for their future in a free WiFi enabled world.
We know now that at least one supermarket chain makes 16% from each Vodafone recharge and that newsagents have just been cut to 5% commission for the same product. In return for this 37.5% hit by Vodafone you have newsagents like me continuing to promote Vodafone recharge from the front of my shop as this photo shows.
And here’s a shot of window promotion for Vodafone.
Down at the two supermarkets in my centre today I could not find any Vodafone material.
Maybe I’m stupid for giving my real-estate over to a brand which does not support my business. I’d guess that at least 1,500 newsagents promote the Vodafone brand outside and inside their stores. Not any more. Vodafone needs to demonstrate that it values this small business channel.
Courtesy of Om Malik I’ve got onto this research report (10 October 2005, no. 13, 2005–06) from the Australian Parliament. It’s a soberlng brief report on 3G and the challenges ahead for the players in the space.
Good report from the BBC about UK publishers giving away DVDs to drive newspaper sales. Giveaways are only valuable, in my view, if they build the connect between the newspaper and the consumer. An unrelated gift serves no purpose other than a one off spike in sales.
The Pew Internet & American Life Project has just released a new report. Fascinating US based data on who is online and who is not by age, race and online access speed.
Coles Myer and Woolworths control retail in Australia. This means they control suppliers and landlords. Their power is far reaching, way beyond what I imagine I am sure. It reaches from their shelves through the checkout out past their petrol pumps down the freeways and past factories, past the wharfs where they bring so much of what they sell in and down to the farms where they dictate what is grown and at what price.
The public faces of each of these companies does not reflect their long and powerful tentacles. The public faces are TV and print commercials of happy people working and shopping in their businesses. The carefully crafted advertising front humanises Coles Myer and Woolworths and while often the in store experience does not match the advertised image, we’re drawn back – such is the power of the image in the advertisements.
While there have been some minor skirmishes which scrape the images of these giants, they remain well thought of by consumers. This is despite their all powerful and profit motivated control over so much of our economy. Their respective benign public images have allowed them to extend their reach without challenge. Their move into petrol and convenience over the last two years is a good example. They now dominate in a category where they had no footprint just a few years ago. They have leveraged their P&C offering to create a smoke and mirrors loyalty scheme which bounces consumers between supermarkets and petrol outlets as if they are the silver ball caught on a pinball machine between two bumpers.
Newsagents have seen their businesses eroded by the power of these two retail giants. Whereas fifteen or so years ago they did not carry newspapers, magazines, stationery and greeting cards, today these two stores are very strong in these core newsagent categories. Newsagents have allowed the supermarkets to get away with it. They have been scared by their might.
This week newsagents are watching supermarkets do it to them again. We have discovered that a supermarket chain has leveraged 16% commission for product which newsagents receive just 5% commission for. Initial research indicates that newsagents sell more than supermarkets. Yet their commission is barely one third.
At some point someone in government is going to wonder when Coles Myer and Woolworths amassed this power and who let it happen. They will realise the damage to communities across the country. They will realise the jobs lost. They will lament the loss of small business stumblings, entrepreneurship and creativity which trained so many. They will wonder why their constituency has given up.
Newsagents can compete with Coles Myer and Woolworths by respecting and rewarding employees; engaging them in building the business; ensuring that the business has a bright and knowledgeable face for customers; that the product range is good; that prices are fair; that the business actively engages with the local community; that customer service is more than a policy – that’s it’s action every day. We need to out humanise these retail giants and provide a connect with consumers such that they feel the difference shopping in our businesses.
This is how we beat the giants. With small personal steps. Every day. While they can buy better and spend more promoting their businesses they cannot provide better service than an owner standing at the counter ensuring the best customer experience possible every time.
This is what newsagents need to be working on.
In the meantime we should also be educating our politicians and our customers about the social and economic risks of these and other retail giants having more control than they have today.
Fairfax have started podcasting. There are twice daily reports from Alan Kohler and This is a first for an Australian newspaper. The first podcast is a 2 to 3 minute podcast from Alan Kohler and a Garry Barker led conversation looking back at business stories from the week.
This is a great step forward. Now what I’d really like is a video version which I could play in store near the newspaper to boost sales. I could play the podcasts but it does not give me the retail theatre I want. Some publishers are using podcasting to connect with a new audience. I’d like it developed by my publisher suppliers with the retail network in mind as well.
Newsagents were told to get together so we could compete with the big guys. We now have 3,000 in a network offering bill payment and telco recharge product. Our nearest network competitor is Australia Post. Here’s how the value of unity has played out in terms of telco recharge commissions:
This table shows telco recharge commissions negotiated by one supermarket chain compared to newsagents. Even though newsagents represent 3,000 stores and offer easier to access and better quality customer service, this means little to the telcos.
While I accept that a supermarket chain will always negotiate a better deal than a network of newsagents, the difference is offensive. It tells me how the telcos view newsagents and demonstrates their preparedness to use newsagents to pay for the bloated commissions to the gorilla supermarket.
Newsagents have every right to be offended at the commissions being paid to this supermarket chain and to be questioning the future value of recharge in their business. At 5% commission newsagents are not even on a minimum wage payment whereas the supermarkets are in a nicely profitable zone. The rich get richer and while one can remind oneself that this is the way of a free market system, Vodafone and the supermarket chain have an obligation to be socially responsible. A 16% commission for them compared to a 5% commission for newsagents for the same product is greedy.
Vodafone and their telco colleagues are providing an excellent incentive for supermarkets to grow business and a disincentive for newsagents. yet if you read the pitches they send to newsagents they urge effort to grow the business. I respectfully suggest that the best encouragement to grow the business for newsagents would be a fair commission structure, one which can be compared with what this supermarket chain is paid without causing embarrassment.
The executives at this supermarket chain and at the telcos ought to be embarrassed for this exposure of their co-operation to harm small businesses, their employees and their customers.
3 mobile yesterday introduced their mobile TV offering. Initial programs include: Forget The Rules – an interactive show where viewers vote on the ending; live Sky Racing; live CNN; ABC Kids, Cartoon Network and the live 9 network coverage of the Johnnie Walker Super Series. The pitch at their website is watch what you want when you want. As a first cut at TV on mobile phones we’re bound to be excited by this innovation. What I am most interested in what is next along this road. The mobile phone is a different channel to TV and cannot be compared to TV. It’s a channel I’d expect to see newspaper and magazines publishers play in. It’s also a channel newsagents need to somehow connect with if we’re to maintain relevance in the news and information sector.
David Carr has written an excellent piece for the New York Times in which he says print newspapers need “an iPod moment,” a disruptive technology that revitalizes the industry it initially seemed destined to destroy.