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Panpa Bulletin : May 2011
NEWSAGENTS are under signifi- cant strain, affecting their position as the traditional sales channel for newspapers in Australia. A new survey from the Newspa- per Publishers’ Association and the Australian Newsagents’ Federation reveals one in five newsagents is try- ing to get out of the game. That number rises to nearly one- third of respondents if those wanting to hand back their home delivery runs are included. The majority are attempting to diversify the products inside their shops to make up for diminishing revenues from traditional lines. Meantime, newspaper publishers are pushing further into alternative points of sale, such as petrol stations and supermarkets. The findings come as speculation increases on a possible deal between major publishers Fairfax Media and News Ltd about merging production and truck runs to newsagents, and other retailers. Anecdotal evidence suggests at least one newsagent is either walk- ing away from their shop, or hand- ing back home delivery runs, to the relevant publishers every week. Most complain home delivery is a loss-maker (67.9%). It appears no organisation for- mally monitors closures. A Fairfax spokesman responded to the idea of one newsagent a week closing or handing back delivery rounds by saying, “at least”. A number of News Ltd circulation executives indicated similar levels of activity. However it is clear they work extremely hard to reallocate to other agents those deserted home delivery and sub-agent distribution rounds, thus keeping the negative effect on sales to a minimum. The online survey of 245 newsa- gents, conducted online shows how important newspapers remain to their business but suggests they want and need publisher assistance. With a slowly but steadily dimin- ishing sale of many leading titles, the importance of getting the sales channel right is critical. Most editors take a fall in the audit as a professional, even a personal blow. Yet the performance of the sales channel, which is vital to any product, is beyond their control. It is not sufficient to blame the usual suspects, such as internet or readership habit, if performance at the point of sale can be sharpened. The Newsagents’ Federation, in its own analysis, puts the onus back on publishers, saying: “With better marketing, newspaper publishers have a ready and willing network like no other to sell and distribute the product. The question is: do they value the network?” Alternatively, one might argue that any modern-day sales channel seeks growth opportunities for the products it represents. It is no longer sufficient to simply wait for the cus- tomer to walk through the door, to take money over the counter and think that is the job done. Whether you are a newspaper publisher, furniture franchisor or a technology company, the sales chan- nel must be a driving force for sales growth. If the survey is correct in finding that one in five agents wants to get out of the business, especially at a time when the retail sector is doing it tough, then publishers have every reason to be concerned about the future of their sales channel. The survey reveals anxiety among newsagents as they cope with a vari- ety of commercial pressures. Newspapers will be less important to their business than lottery tickets, magazines, telecommunication products and gifts in the next five years, they say. Right now, only lottery tickets are seen as more important. More than half of the respondents (54.3%) say lottery tickets will domi- nate in the shop in five years. Only 37.9 percent say newspapers would be of critical to their business by 2016. Perhaps more significantly, nearly one in five believe newspa- pers will not be important. Some 44 percent of respondents describe newspapers as critically important to the health of their busi- ness today. The ability of newspapers to drive foot-traffic into their store is moder- ately or critically important, accord- ing to an overwhelming 89 percent of respondents. Slightly less than half (48%) say papers are “very important” to at- tracting customers. Customers’ behaviour once in the shop, however, is revealing. Almost 65 percent of newsagents say that half or fewer of their customers actu- ally buy a newspaper. For publishers, this is a sobering statistic, highlighting that newsagents are missing a chance to sell more newspapers. Some 82 percent of respondents report that half or more of those people in their shops were “repeat customers”. A total 89 percent believe newspa- per sales would decline in the next five years, offering several reasons for the trend. The emergence of new technolo- gies was the most commonly cited factor (78%) and 67 percent of re- spondents believe changing reader habits are key. More than a third say the qual- ity of journalism is an issue and 30 percent reckon free newspapers and reading materials have a detrimental impact on newspaper sales. Late home delivery is cited by 14 percent of respondents. When asked what they are going to do to mitigate falls in their own revenue, an overwhelming 82 per- cent are looking to diversify their product offerings. The ideas range from bigger com- mitment to cards to dry-cleaning, photocopying and ancillary office services, confectionery, giftware and toys, plus banking and post office related services. Ten percent are attempting to find a buyer for their distribution round, or are thinking of handing it back to the publisher. It is no secret that newsagents find newspaper publishers tough to deal with. Many issues raised in the survey existed two decades ago and remain relevant today. Newsagents complain publish- ers are not doing enough to help promote home delivery (67%) and an almost identical number say they can’t make a profit from this part of their business. Publishers need to “improve the product” (36%) and offer more deals or discounts for home delivery (24%). Asked about support from their suppliers, only 14.7 percent say newspapers provide excellent serv- ice, compared with cards (41.4%) and stationery (34.5%). However, the survey found 68 percent of agents believe newspa- pers deliver moderate to excellent service. High on their wish list is a more effi- cient returns process with 60.8 percent saying this was “very important”. www.panpa.org.au We want out SNAPShOT OF RESPONdENTS The PANPA Bulletin | MAY 2011 | Mark Hollands NPA 1 in 5 newsagents ready to quit “At the rate I’m going, I may have to continue with my distri- bution round, (because I don’t think anyone would want to buy it) but more than likely I will close my shop down in the near future. Can’t afford it any longer, mainly caused by mag publisher bills and the unwanted titles they keep sending!!!!” “Newsagencies won’t be around in 5 years’ time. You can buy all you need at the supermarket and the newsagents are being shafted by the newspa- per and magazine companies why bother?” “The fault with the newsagency system over the past few decades is we have presided over our own demise. The system is strong but our organisation & market influence has been taken by others, e g 7 eleven, roadhouses, Office Works, Harvey Norman, Telstra, Optus, Australia Post, Aldi, Coles Wxpress etc . we’re a disjointed rabble” “We provide as many services that the public need or want so as to make us a destination shop, at the same time all product have to be profitable, which the newspapers (with advent of home subscrip- tions on ridiculous rates) are no longer” “Home deliveries need to be totally revamped. Delivering a product to a person’s home for less than they can buy it in store is crazy” “We are moving away from core items shrinking margins and publishers master- slave attitude which only applies to newsagents not coles or woollies” Newsagents in turmoil. . . a recent survey reveals one in five newsagents is trying to get out of the game. IMPORTANcE OF NEwSPAPERS TO YOUR bUSINESS CIRCULATION colleagues are aware of the issues. They spend a lot of time help- ing many newsagents who want and appreciate assistance with their business. Yet prejudices remain, and this came through in the survey. It is all very well that their federation says newsagents are “ready and willing”. But sales channels cannot be passive in the modern economy. In other sectors, the channel has sales targets. Commission is increased as sales growth accel- erates. There are no gold stars for be- ing ready and willing. Editors sweat every sale. So do ad managers. We need to meet halfway, and identify mutual needs and strate- gically energise the customers of tomorrow. - Mark Hollands TOdAY IN FIvE YEARS TIME 150 100 50 0 5 4 3 2 1 39 35 17 8 Responsecount choice 137 100 50 0 5 4 3 2 1 49 44 31 20 Responsecount choice 88 EXPERIENcE 112 85 48 Response count 10 years 6 -10 years 6 -10 years 0 20 40 60 80 100 120 APPROXIMATE TURNOvER 55 84 53 Response count $21,000 - $30,000 $12,000 - $20,000 below $12,000 0 20 40 60 80 100 Over $31,000 53 TYPE OF bUSINESS Response count 0 50 100 150 200 12 179 54 distribution only Retail and distribution Retail only The Newsagents’ Federation, in its own analysis, puts the onus back on publishers, saying: with better marketing, newspaper publishers have a ready and willing network like no other to sell and distribute the product. The question is: do they value the network?” “