Part of the problem with the retailing of newspapers in Australia is the predictability of the display. A stack of papers and a poster. Occasionally a special poster. The most vibrant displays centre around competitions (and readers here know what I think about them).

With newspaper sales flat (at best) surely it is time to reinvent how we merchandise. Further to my post yesterday I’d suggest that there are sales to be achieved if we take a new approach.

Changing magazine locations around in a newsagency where there has not been significant change for a couple of years or more always boosts sales by between 5% and 10%. The same is true with greeting cards.

While many newsagencies make such changes, many display newspapers today as they did ten and twenty years ago. We’re too predictable!

While publishers are responding to changing consumer habits by pursuing non newsagent retail outlets, they have let their eye slip off the ball in retailing newspapers in newsagencies. This is the channel which was built for newspapers, surely newsagents and publishers have a vested interest to be cooperatively smart in retailing newspapers.

Off the top of my head, here’s what I’d propose as a starting point:

Publishers should provide more posters each day and different posters. This one headline poster per store approach is nuts. Create different size posters as well – maybe even A4 teasers which can work at the counter and landscape mode strip posters.

Retail is theatre. Publishers need to provide newsagents with other tools which fit with this.

Marketing people from publishers ought to spend a couple of weeks working in a newsagency. This practical experience should unlock some further opportunities.

Pay a bonus for above average sales growth. Like any sales incentive, a bonus will lead to a sales kick.

Create a loyalty campaign which offers genuine rewards for a certain number of repeat purchases in a week. Why just reward home delivery customers (which a higher landed cost) – reward loyal retail customers.

Publishers should use the various promotional tools in newsagencies – in store radio, in store television, on receipt promo spots etc. to display content specific promotions to show the value, today, of purchasing the newspaper.

Develop a co-location strategy in store so that newspapers are in a couple of good locations.

Analyse newsagent traffic generators and work with the two other major categories (magazines and lotteries) of a cohesive strategy driving bigger basket sales. Feed off each other.

Run a competition among newsagents for the best regular day display – i.e. a display for the newspaper – no competition, no special inserts, just the newspaper.

List the top ten newsagents in each state in terms of year on year growth where growth has been achieved by newsagent effort and report to newsagents about what was done to achieve the growth. Let’s learn!

I am sure there are plenty of other ideas.

What I want is a publisher relationship which helps be change the way I manage, promote and display newspapers. I want to reinvent what has not changed for decades. I want to find a way to make newspapers fresh for me and for my customers.

Let’s not be ashamed of newspapers. They are newsagents’ raison d’etre.

Report from MediaPost about the latest ABC results for magazine sales in the US. While the US and Australian magazine markets are extremely different it’s interesting to note the growth for celebrity/gossip related titles and the decline for news magazines such as Time and Newsweek.

To sum up experts shopping at my newsagency comparing even newspapers and the weekly women’s magazines – why read that when you can have a laugh in here (pointing to Woman’s Day and New Idea). Makes sense.

Borrell Associates have released the reaults of their latest research into online real estate advertising in the US. Here’s what they have to say:

“While overall real estate advertising flattens, the online portion will grow 55 percent this year. Online is poised to overtake the longtime leader in this category — newspapers — by 2009. By year’s end, online spending will hit $1.8 billion, garnering a 15.7 percent share of the $11.4 billion real estate advertising market. Lead generation and paid search have emerged as the leading forms of advertising, with agents and brokers paying an average of more than $1 per click and $10 per lead.”

(For more detail you have to buy the report.)

That’s phenomenal growth. I can’t find current research for Australia but I’d suggest we’re not far behind. You only have to consider the News Corp. interest in buying www.realestate.com.au to understand their interest in online.

While it is early days, Real Living ia tracking well from ACP Magazines. Even accounting for us being out of stock for just over half a day (Monday), our own sales are at 25% of allocation. It’s certainly attracting younger customers than we usually see buying lifestyle product.

Answering a question from an industry colleague yesterday I discovered that in my newsagency we received over 400 new titles in the last year. Once we accounted for new titles for the same product (romance story magazines, cowboy fiction etc) we are still looking at over 300 new titles.

I then went and looked at the performance of these. Fewer than ten of the 300 titles actually generated a cash flow positive return for my business.

Depressed, I had a look at data from seven other newsagencies. Their new title list ranged from 200 to 400 depending on location and business size. They too did not achieve a reasonable economic return from the new titles.

The titles which work are those with some strategy behind them, titles which fit an existing segment yet add value to the segment or are introduced in such a way as to create a new segment.

There are too many me too titles which don’t add value to the range already in store and no one is policing this. Newsagents think that distributors make ranging decisions. I see no evidence of magazine distributors making any ranging decision. With the bulk of their revenue coming from a fee for service it places their criteria for carrying a title in a different place to newsagents who are paid for success – yet newsagents don’t get to choose if they carry a title.

Magazine distribution in Australia is in a mess and newsagents are close to breaking point.

The system needs urgent work to stop its collapse.

Newspaper publishers want newsagents to display their product in a common way. They like the clone approach. While I understand this and would probably seek the same one size fits all approach if I were a publisher, experience this year in my shop is proof that this approach may well be flawed.

Comparing 2005 with 2004 from January 1 up to August 16, I am happy to report that overall over the counter newspaper sales are up 5.9%. For our highest selling newspaper sales are up 8.4%. Both increases are ahead of industry averages.

We’ve achieved this by breaking the rules. We do not have an approved newspaper display unit. We locate newspaper product in two locations. We display front pages and not posters. We offer value add deals to newspaper customers to enhance the over the counter offering. We retail. We make decisions locally in order to sell more product.

It’s time for newspaper publishers to relax the rules and reward the kind of growth we have achieved. The approach of the big stick is not working. Publishers need to allow newsagents to truly retail their product. (Especially in the light of petrol and convenience, supermarkets and coffee shops dictating to publishers how newspaper product is presented.) If sales are above an agreed goal they ought to pay premium commission. It’s less than the cost of a Monopoly competition or a telemarketing campaign to attract customers who are loyal for a fixed term.

This would be easy to test. I am sure that a sales boost would follow if there was an appropriate incentive. This would need to be a lift from the traditional 25% commission to, say, 50% for over achievement. In my case I estimate that this would be worth at least $2,000.00. The publisher wins. I win. Advertisers win. Well done all round I’d say.

I know that there people from News and Fairfax reading this blog so how about it folks? Are you up for an incentive program for newsagents which could/should boost sales?

I hope so.

Newsagents are like cab drivers. People talk to them about anything and everything. Standing behind the counter in a newsagency is a great way to connnect with the pulse of the street without conducting an expensive poll.

Yestreday a semi regular and quiet customer commented on how good The Australian newspaper was looking. I was surprised because it was unusual for this customer to speak and because The Australian is not a big seller in my shop.

He’s right though. The Australian is looking very good. While they do promotions from time to time they seem (in the main) on content based promotions (such as the current World War series) than winning cash and other prizes.

Further to my earlier post, I have now determined now many titles of the 1,650 titles I carry which generate above the required $5.00 per month gross profit return. It’s 35% based on July 2005 sales.

That is, in July, 65% of the titles we carried generated an uneconomic return for my business.

This strengthens my claim that newsagents ought to be paid a service fee equal to the cost of real-estate and labour for the title on their business or they ought to have the opportunity to permanently stop supply.

This independent owned small business channel is drowning in stock at one and, for some titles, starving from lack of oxygen (supply) at the other end.

The Federal Government in 1999 led us to the trough of deregulation and did a half baked job. The years since have been very tough on newsagents yet they continue, struggle many, without the benefit of the subsidies of other industries.

While I have talked about digital magazine technology here before, the University of Texas is soon to publish the first edition of a video magazine about the season of their football team. No physical magazine, pure online. Using video technology to truly lift the stories off the page.

By cutting production costs and eliminating a more traditional supply chain, the economics of special interest publishing dramatically change.

I think about this in the context of the current economic model of niche magazines in Australia – magazines carried by newsagents and which sell one copy per issue. There is doubtful commercial value for newsagents in carrying these titles.

Read more on the Texas U plans here.

Wired News carries a story about television and podcasting and outlines several plans for mainstream TV networks to embrace podcasting. It also lists podcasts of programs such as Meet The Press and Nightline which are doing well on iTunes rankings.

Maybe it’s a population thing but once again Australian media outlets are slow at embracing the mobile world. Podcasting unlocks a new audience yet our mainstream media outlets are not playing.

The 100% Federal Government owned Australia Post launched their BIG Savings for business sale on August 8. It runs until August 21. The sale is promoted through a four page colour catalogue.

My newsagency – newsXpress Forest Hill – competes with a government owned Post Office directly opposite our front door. We sell stationery, they do too. We sell greeting cards, they do too. We have Western Union, they have it too. We offer a bill payment service, they do too. We sell phone recharge, they do too.

Their big glossy sale catalogue offers big savings on house brand copy paper for $5.75 (our price is $5.50); HP C8727A black ink cartridge for $29.95 (our price is $28.95); HP C8728A tri colour ink cartridge for $34.95 (our price is $33.95). I could go on but you get my message.

That the government of Australia owns and operates retail businesses in areas well serviced by independent retailers like me and others is appalling. That they leech off the postal service traffic (which must go to their outlets) is an appalling advantage I cannot compete with.

But that they claim big savings in this campaign is a crock. Maybe big savings off their prices but not off prices in my independent newsagency and other newsagencies like mine.

And interesting sideline in the four page catalogue is the amount of house brand product they now sell. Eight items. I wonder if this is done as leverage to get all Post outlets carrying the product as someone cleverly suggested to me. Why our Australia Post is engaging in this is beyond me. They are a postal service, not a retail chain.

But then if you’re building the chain for privatisation then it’s important. Are they privatising? I don’t know. Should they privatise? Yes. BUT: not as a national chain. each government owned Post Office should be sold to an individual or a locally owned independent business.

Having the government compete with independent retailers who were there first is offensive and demonstrates a lack of regard for small business.

Just as today’s new apartment complex is potentially tomorrow’s ‘ghetto’, newsagents carry pockets of what I’ll call ‘ghetto’ magazines. Poor magazines. Magazines at the end of the food chain. In fact, these magazines don’t even make a living. Well not for the newsagents at least.

While other retailers competing with newsagents get to cherry pick what they carry, newsagents carry the range. This can mean anything up to 2,500 titles. My store has 1,700 pockets for magazines. We carry 1,650 different titles at any one time.

Each pocket costs me $2.95 per month. Add to this a reasonable labour cost per pocket per month and I’d estimate a per pocket cost of $5.00. I need to make $5.00 gross profit per month per pocket just to break even.

Now I want to share with you the numbers for two magazines.

Moto Posters. Cover price: $5.95. Distributor: Gordon and Gotch. We usually sell one and until two issues ago used to receive two copies. In their wisdom, Gotch now allocates three copies to us. The one copy we sell generates $1.48 in gross profit for us. This is a loss making magazine. Once we factor in the cost of capital in holding the stock we return for credit the picture becomes worse. The current issue arrived in our shop on June 8, 2005. It has another couple of weeks to run before being returned. We will then wait at least a month and probably longer before we receive a credit for the unsold stock. This means we will carry the cost of the unsold stock for four months.

Make Girls Costumes. Cover price: $2.99. Distributor: Retail Distribution service (RDS/NDD). We usually sell one copy, occasionally two. We are sent three of each issue. For each copy we sell we make 74.5 cents gross profit. The current issue arrived in store on May 11. Unsold stock is due to be returned next month leaving us five months to carry the cost of stock which will not sell. Five or six months capital invested for a 74.5 cent return if we are lucky.

There are some who will say these are extreme examples. I would disagree. They are real examples. Live, in my newsagency today. Sure there are other examples I could write about which show good profit generation for my business and efficient use of my pocket real estate. However, it is unreasonable to rely on profit from high volume titles to support ‘ghetto’ magazines.

Each magazine title in a newsagency has to pay its own way.

Supermarkets, Petrol and convenience outlets and others compete with newsagents for magazine sales. However, it is not competition in the true sense of the word. These other retailers competing with newsagents take the cream. I’d estimate that they choose less than 5% of all available titles – these are the titles which generate an estimated 85% of all gross profit earned from the magazine category.

With newsagents finding it challenging to get sufficient stock of the high volume titles and being over supplied with the poor performing product, it is only a matter of time before the magazine category is radically overhauled in newsagencies.

The solution is that magazine publishers and distributors start to respect the real estate and labour investment newsagents make in their speculative titles and supply models each month. It is time for a minimum monthly return per pocket guaranteed to newsagents. The fee could be based on a formula which takes into account the monthly rent.

In my newsagency I want to charge a per pocket servicing fee of $5.00. This is the minimum. I’d want to make at least $7.50 per pocket before I would agree to reducing the publisher paid pocket servicing fee. The alternative is to cut the magazine. However, I don’t control what I receive. If I could cut these under performing titles I could use the space for more successful titles or for other product categories.

I’d be interested to hear what other newsagents, magazine publishers and magazine distributors think about this.

So, while city fathers tear down ghettos to make for a better city, newsagents and their trading partners ought to consider removing ‘ghetto’ magazines from sale since the capital, real estate and labour cost reduces resources available to boost sales of titles which might otherwise have a strong future.

Mark Fletcher
newsXpress Forest Hill

I’d love to see the tabloid TV shows tackle this one.

At the government owned Australia Post store opposite my shop they are offering 256MB USB memory sticks for $75.00 each. We have them for $55.00. Comparable on quality, brand name but NOT on price.

While I’m happy for Australia Post to be more expensive, their pricing policy ought to attract the same scrutiny from the tabloid TV ‘current affairs’ shows as they given to pharmacists on their markup policies. (Recent comparisons were made between pharmacy prices and supermarket prices with pharmacists looking greedy even though the comparison was biased in the supermarket favour.)

Unfortunately, punters locked in long lines through Post Offices waiting for mail services at the back counter will get lured in to buying stationery items.

This is why the government ought to sell off its retail network to independent business people so that the unfair advantage of the postal services counter is not used by the government against businesses like mine.

Of course, if Australia Post undercuts my price on USB stick I’ll have another crack complaining that they are using revenue from their mail business to underpin unprofitable markup policies for stationery.

Having my own government competing with my business angers me. They have no business selling stationery, greeting cards and other items carried in newsagencies like mine for decades prior to Australia Post entering the space. They have an unfair advantage and no one seems to care.

What started as a strategy by newspaper publishers to boost consumer interest has grown into a magazine segment.

Just three months ago Lovatts launched their Sudoku magazine (pictured above). They were first. They have been quickly joined by a bunch of publishers. An average newsagency today has eight different Sudoku titles in stock. I’d estimate that the stock holding is worth between $250.00 and $800.00 depending on the size of the newsagency. That’s an unbudgeted expansion of stock investment for newsagents.

Beyond the significant cash flow challenge for small business newsagents is what to do with the new segment. Many put Sudoku product in their crossword section. Lovatts know their product and encourage newsagent to display Sudoku as close as possible to newspapers. This is what we do and it works.

Sudoku presents newsagent suppliers with an opportunity to work together to facilitate segment wide marketing and management. The current approach leaves too much to chance with the end result a lower sell through rate and a higher capital burden for newsagents.

I’d like to see one publisher take the lead and bring the other players together so that newsagents can create a strong Sudoku story. Here’s my wish list:

An in store display strategy which brings some theatre to the Sudoku offering.

Training materials (maybe a DVD or video) for employees so they better understand the Sudoku offering.

Over the counter promotional materials.

Co-operation on point of purchase display materials.

Advertising for the segment linking back to newsagencies as the specialists.

Staging events to broad awareness of Sudoku as being more than a newspaper run promotion.

I am sure there are more ideas which could be added to the list.

In return for newsagent commitment to build this segment ought to be a commitment from all suppliers to give newsagents exclusivity over Sudoku product.

The current approach leaves too much in the hands of individual newsagents and while some will do well at developing this new segment, there is more to be gained for the channel and for suppliers from a national supplier driven strategy.

The Sudoku opportunity is made for the newsagent channel.

Go to almost any newsagency this week and you see a display promoting the 10th anniversary edition of Marie Claire. Look on the shelves and you see the 400 page magazine stacked along with the free gift on the cover.

Now go and look in the other outlets with Marie Claire. Little or no support featuring the 10th anniversary. In some cases product is shoved in fixtures which don’t hold a 400 page magazine. In other cases little care is taken to protect the free gift.

This is a perfect example of the value of the newsagent channel to publishers. The complaint add on promotion for products outside the norm.

I’m a newsagent. I like these promotions. I like that I can demonstrate my point of different.

It annoys the crap out of me that elsewhere in my business, for selected titles, magazine distributors offer terms which are inequitable.

We are in very advanced negotiations to buy a controlling stake in what we think is a wonderful search engine. Rupert Murdoch Aug. 10, 2005

It’s an interesting quote from Murdoch at News Corp’s 4th quarter results and briefing.

The Pacific Area Newspaper Publishers’ Association (PANPA) has just held it’s annual conference and today’s Australian newspaper reports several interesting items from the event:

Andrew Jaspan of The Age talked about the need for newspapers to have brand clarity.

At least five speakers quoted the Rupert Murdoch speech to the American Society of Newspaper Editors in April where he said newspapers had been ‘caught napping’ by the digital revolution. (Following the speech News Corporation has dramatically ramped up its Internet strategies.)

The challenges faced by newspapers (and their supply chain), often discussed in this tiny space in the blogoshpere are: faster, easier and funkier mobile access options; disconnect with the younger demographic; relevance; lack of brand respect; growth in citizen desire for involvement in reporting news; and, a dramatic new paradigm for advertising which challenges the economic model of newspapers.

Newsagents are well placed to have a conversation with publishers about these matters since we are at the coal face every day and interacting with current and would be newspaper consumers.

Technorati is a respected authority on what’s going on in the world of weblogs. So what they measure and report on matters.

Here’s a summary of from their State of the Blogosphere issued last week:

By sheer volume blogging is important in personal, social, corporate and community information sharing. Some rely solely on blogs for news. Others rely on blogs for the gossip fix.

Blogs are part of the media mix despite what some mainstream media outlets say. (New York Times, Aug. 5.) The advertising support higher profile blogs attract is testament to the importance marketers place on the eyeballs scanmning blogs.

Jeff Jarvis at BuzzMachine brings together several items in a blog entry about changes impacting newspapers and, in particular, classified advertising. Jeff quotes several sources and offers his own comments including these gems:

In short: Newspapers will compete with Google’s AdSense and try to grab the auctioned pay-per-click advertising that is going there. Newspapers are trying to hold onto local in this new ad universe. They are also hoping to grab new advertisers at a lower cost: The bet in hyperlocal is that the small advertisers who could never afford newspapers could now take advantage of ads that are affordable because they are highly targeted and have next-to-no cost of sale and production.

For newspapers, it’s already clear that the classified marketplace is being replaced. But this also has big mplications for Google.

All relevant in the context of the free classified model launching with Sydney’s Daily Telegraph this weekend.

I guess selfishly I’m happy for newspapers to play because it makes the papers I sell relevant in the changing marketplace. On the other hand, I wish there was more focus on the relevance of the newspaper as a newspaper.

Australians love magazines and they are taking to new and revitalised offerings if these experiences in my newsagency and newsagents I talk with are anything to go off.

The latest to achieve good results is Notebook from FPC Magazines. We have sold 70% of allocated Notebook stock in the first seven days – without any major in store display other than a counter unit and co-location across two segments. In most cases Notebook was purchased with another title.

Looking at sales of other magazines in the segment, Notebook has not impacted them.

I would be interested in the sales data from the non newsagent outlets carrying the tile and whether they have achieved similar sell through in the same timeframe.

The challenge for a newsagency like mine where we carry almost 2,000 magazine titles is to do new launches justice while also providing appropriate support for titles being refreshed (and re-launched) and regular titles.

NASA has reported (Aug. 7) that Mission Specialist Steve Robinson sent this podcast from space. The podcast was recorded as the Shuttle flew over the southeast tip of Indonesia.

NASA specifically calls the recording a podcast. This further legitimises podcasting as a medium for publishing material. It makes podcasting more interesting and puts it on the radar of more punters. It will also increase coverage of the new medium by mainstream media. It makes podcasting more mainstream.

That podcasting is barely a year old and already it has a NASA seal of approval is phenomenal. I was talking with someone just a few months ago who said pod what? Today they’re playing, downloading music and news shows to their taste from around the globe.

The Age carried the story with this opening paragraph:

Technology experts who predicted that podcasting would “take off” have been proven right, literally, with a Discovery shuttle astronaut transmitting a message from space.

This is the story to me. The coverage in mainstream media of the NASA podcast. Especially when it is mainstream media (like Australian newspapers) which has been (for the most part) slow to play with the medium.

Podcasting is changing the way people consume news and information in addition to music. Indeed, music was a no brainer. It’s the use of the medium for news and information which interests me the most. The NASA podcast, while done for publicity I am sure, underscores the importance of the medium and can only strengthen its future.

Read this article by Michael Grebb at Wired News about IPTV and you can see we’re closer to a future of on-demand, personalised TV and movies. It seems that all previous attempts to harness the Internet for television type offerings have been trials for what we are about to see.

No wonder there is much interest among the Foxtel partners and side players in the plans of Telstra and others in this space.

It will be interesting to see the government play its hand, if it does at all.

While I watch the Herald Sun Monopoly promotion draw to a close and The Age/Starbucks 50 cent deal override the values of this respected broadsheet, I am enjoying reading the research undertaken by the Readership Institute at Northwestern University.

The Readership Institute at the Media Management Center, part of Northwestern University, partnered with the Minneapolis Star Tribune to create front and inside pages that drew an enthusiastic response from younger adults. News and advertising content were tested with a total of 340 young adults in March 2005. The tests showed that hard news and advertising – handled in this a new (reader-intensive) way gets much stronger (2:1) results than the current approach to telling and selling news and advertising.

You can find a good overview of the study and findings here. Check out the rest of their website and you will find copies of their presentations to two recent major newspaper industry conferences as well as copies of the front and news pages tested as part of the study.

This is smart research by the Readership Institute and smart engagement by the folks at the Star Tribune. They have found a way to engage with the under 30 consumer – a kind of a holy grail for newspapers. They have found this by talking with prospective customers.

As a retail newsagent I would rather be working with a publisher using research to understand audience and build their readership than competitions which provide a short term boost at best.

It is tragic seeing customers buy two or more copies of a newspaper when a competition is running and discard the copies in the bin once they have retrieved the entry coupon.

These are newspapers. If people are not buying them to read them then what’s the point? Sure there are technology challenges. Maybe engagement customers and prospective customers will help publishers, editors and the retail channel find ways to snare sales we’re currently failing to achive.

It is interesting to watch the growing involvement of governments in Australia and overseas in the broadband play by non mainstream media companies. How they react to what I expect is signifcant lobbying by media companies will speak volumes for their competition policy. My view is that when it comes to competition policy our current Federal Government has double standards.

News Ltd has announced that The Saturday Daily Telegraph will carry Weekend Shopper – a free classified liftout offering free ads for general buy-and-sell items.

While there are some rules (items up to $300 and location of advertiser) this is a major change to the newspaper classified advertising paradigm in Sydney.

With craigslist.org and other pure online plays becoming established in Australia the classified space is very much in play.