Tower Blog

A blog about smart POS software for independent small businesses.

Month: August 2005 (page 1 of 2)

Woolworths goes for self checkout, small business should focus on human contact

Retail is a contact business. Human contact. Consumers are tired of navigating technology when calling a help centre, doing banking or ordering pizza. Consumers want human contact. Or so I think.

Yesterday’s Australian newspaper carries a story about Woolworths forging ahead with its plans to introduce self checkout technology beyond its current pilot stores.

While it may suit Woolworths’ desire to drive down the cost of processing each sale, it takes something away from the retail experience.

Retail is not only about the commercial transaction, it is an opportunity to connect with another human, to share a story or a smile. There is cultural interaction behind the counter, a quip about a news story, a comment on the weather. This is all part of the tapestry of life. These automated NCR self checkout machines have no comment to make or a smile to deliver. They do nothing to serve our need for social interaction.

What a tragedy if the Woolworths trend takes off. Where will high school students get valuable work experience? Who says g’day to those for whom shopping is their only social interaction for the day? What creativity is subliminally stifled by the consistently mundane automated checkout experience?

Woolworths has a social responsibility to interact with its consumers and this move to retreat from human contact sneers at that social responsibility.


Old ladies do not want to be helped across the road every time

We’ve been investing considerable time in making free visits to client businesses to answer questions and check the status and performance of their system. We had one visit yesterday where the client asked us to leave. They said if they wanted something they would contact us. The reaction from them was as if we had thrust junk mail into a letterbox marked “no junk mail”. It’s the first time we have received this reaction and it took us aback. We assumed everyone would want a free onsite visit and while the vast majority do, we need to allow for the occasional client who would rather us not there.

I should note that their concern was not to do with my company as such but more to do with controlling the information employees receive.


Dell Hell: how a snowflake became an avalanche

While it is premature to write off Dell yet, the negative stories being told by Dell customers in blogs and forums has spiked dramatically since Jeff Jarvis started blogging about his own problems at BuzzMachine.

Dell’s customer service problems have now hit the pages of Business Week.

Key to good customer service is having communication lines in place which ensure you are informed about any real or imagined problems. Next you need to actually respond to this information. This, to me, seems to be where Dell has failed. They seem to have ignored people shouting from the rooftops about poor customer service. Where it will end for Dell is open to speculation. They will certainly need drastic and expensive action if they are to make the smell go away.

All of us in the service business can learn from this Dell mess.

I had a client of my Australian software company comment to me about rumors about poor Dell customer service. Such is the power of word of mouth.

The Dell mess has prompted us to look again at our contact mechanisms to ensure that we are as open and responsive as possible.


Free on site visits make for an exceptional relationship

We’re in the middle of trade show season. Four weeks of trade shows in three cities. It’s great to catch up face to face with clients.

We met someone yesterday whose business is located four hours from our nearest office. He was thrilled that we’d made a courtesy visit (without request from him) a few weeks earlier to see how he was going and answer any questions he had.

We have been making more of these visits this year as part of our oasis strategy. We’re trying to provide experiences for clients with our company akin to time in an oasis. So good you look forward to it and you keep thinking about it after it is over.

In the last month we have had face to face visits with over 150 clients at no cost to them. Each visit providing free training, a free system check, a backup check and a solid Q&A session – usually taking a couple of hours.

While the feedback during the visit is good, the reaction at the trade show yesterday demonstrated the value – well after the visit. It showed that our clients are getting value and that the relationship is more than supplier/client. It also gave us important recognition to encourage more visits.


Copy cat marketing in loyalty programs – enough already!

First Woolworths (Safeway) introduced fuel discounts for shoppers who spend above a certain amount in their stores.

Next Coles bought our the Shell retail network and offered the same think.

Now IGA has done a deal and is making the same offering.

Finally, many small businesses are offering fuel discounts in return for a spend above a certain level.

Yeah, creative marketing is alive and well. Not!

The fuel discounts are a crock! Give customers good service, good prices and a good experience in your store and you have the best ever loyalty program. Simple.

This copy cat approach to marketing is nuts.


How big will the chain stores be allowed to get before government, suppliers and the community realises that they are too big?

In the UK and the US there are movements now seriously and openly questioning the economic and social impact of national and global retail brands while here in Australia we cheer on their continued growth.

We have watched our butchers, greengrocers, milk bars, delicatessens and petrol outlets be taken over by the two national retail giants in their pursuit of growth.

Besides occasional comments from the Labor Party and consistent comments from Senator Andrew Murray of the Democrats, little is said by politicians about what will be a problem.

Our towns and cities cannot afford any more independently owned retail businesses to close yet the small business lobby seem ineffective in gaining media and public focus on the problem. While the lobbyists are busy, their efforts do not seem to be addressing the issues which need to be addressed.

We need an organisation in Australia like the New Economics Foundation in the UK – they are a well funded independent group which researches these and other matters and publishes reports which gain media and political attention. It is their research into clone towns in Britain which helped facilitate the Parliamentary enquiry into the problem of clone retail.

Talk to any supplier involved with our two major retailers in this country and they will (if they are honest) express frustration and anger at the control exerted by having two so strong retailers. Everyone else in retail deals with the crumbs they leave behind.

As a community we won’t realise they are too big until there are many more small businesses closed along the way.


Why Australia Post should be sold

Tower Systems is a small business. We serve independently owned small businesses. We also own a newsagency. It’s for those reasons that I re publish below a blog entry I have made in another place about the comments yesterday by Federal Finance Minister Nick Minchin that the Government does not have the sale of Australia Post on it’s agenda. This is bad news for small business and further supports my view that this government does not genuinely care about small business. Here’s the blog entry:

The Sydney Morning Herald carries an AAP report that Federal Government Finance Minister, Nick Minchin, was asked yesterday at the National Press Club whether Australia Post would be privatised. He listed the various government businesses which are for sale or being readied for sale and commented: “There are a few other smaller business that could be considered but we’ve not turned our mind to Australia Post and we have no policy to do so.”

That the government owns a retail network that competes directly with independently owned small business newsagents is appalling. Australia Post is a tough competitor. They target newsagents with their promotions. They have only commenced this competition in fairly recent years. They are leveraging the goodwill of the postal service to hurt this already challenged small business channel.

While the mail delivery and stamp production should be controlled by the government, the retail network should be completely sold off. Some have been but not all.

Nick Minchin and the Government are wrong on this. Their refusal to even consider the sale of the retail network is proof of a lack of commitment to small business. Here they are profiting from exacting commercial success in a competition with newsagents.

A true free enterprise government would allow free enterprise to operate rather than allowing its own retail stores to profit from the customer traffic which MUST go to their retail outlets because of draconian controls on the sale of postage stamps.

Nick Minchin and the Federal Government ought to sell the retail network to individuals or to small businesses. This would demonstrate support for the small business sector.

My own newsagency is directly opposite a government owned Australia Post shop. They compete aggressively for stationery, greeting cards, phone recharge, Western Union and bill payment. They do so on unfair terms. They get better landlord treatment. They have guaranteed traffic. They control how their store is laid out. They leverage their government protected monopoly traffic so they can sell products which are crucial to my success.


No means no and it’s time suppliers started listening to small business

It frustrates me to see the oversupply by major suppliers to small businesses – the overloading of stock way beyond what could be reasonably sold. Over supply in terms of range and in terms of quantity of an item.

I see it across several retail channels. I see it happening to the independents and not the national and international chains. And the independent retailers let it happen time and again. They say no and then don’t fight hard to prove that no actually means no.

The result is over stocked stores and under performing businesses.

My theory is that some national and global suppliers have a strategy of oversupplying their small business retail outlets because they can get away with it. And they can because these small business owners are too tired from struggling through each day to actually do the measurement necessary to know they are being ripped off.

Is it illegal? Maybe. Is such over supply unethical? Absolutely.

Even with software like that from my company it takes time to read the reports and then guts to act and with some of these suppliers also providing working capital for the business the challenge is made all the more difficult.

I don’t know what the answer is, however, the more small businesses owners who stand by a no I don’t want any more of this or that the better. Training in getting to no would be invaluable!

If I see it in the data for any business I analyse I tell them and offer to speak to the supplier involved. In most cases they want to back off and find another way to balance the business. It’s sad to see people making decisions which are not businesslike and which will only serve to further harm the business in the long term.


Blogging hell for Dell continues

The noise in the blogosphere about poor customer service from Dell Computers has reached a new peak in the last week. This report from Online Media Daily shows that Dell is starting to listen. Maybe too late she cried.

Jeff Jarvis, who started telling his story about Dell Hell a couple of months ago on his BuzzMachine blog, wrote an open letter to Dell last week in a post which was the third most linked blog post in the world that day.

The mighty power of the blog.


Our podcast experiment is moving slowly

This is a one step forward and two steps back project as we learn our way through making and publishing podcasts.

We’ve spent a lot of time listening to other podcasts and working our what we like and don’t like.

Quality of content and the recording is the key. We’re taking our time getting that right. We know from client feedback that they will listen to the podcasts so we have to make sure we deliver.

First up we’re going to be using the podcasts for training and motivation. This is where we see the most value – taking our training series out to places we cannot get to.

We record our first podcast later this week and hope to have it on the site by Friday.


24 years of trade shows

We’ve been doing newsagent trade shows since I started this company in 1981. (Australian newsagents being our key vertical market.) We usually do three each year, sometimes four or five – depending on whether there are national events.

I reckon we’ve done at least 130 newsagent trade shows over twenty four years.

That’s a lot of trade shows.

I like trade shows not only for the sales opportunity but also to see what our customers think about us. In our marketplace customers will tell you if they are unhappy – often after they have told others. By presenting at trade shows you invite comment on all manner of things. It’s an ideal temperature check and the challenge is to be honest and thorough in analysing the feedback.

I can recall a couple of trade shows some years back when we spent more time resolving problems than selling. There were few smiles and our tiredness at the end of the shows was more to do with what we were doing wrong than the sales success of the show.

In recent years, this weekend included, the trade show floor feedback has been excellent. Most encouraging for our unrelenting focus on customer service.

You know you’re doing something right when existing customers bring their colleagues to your stand and point them at your product and urge their colleague to dump their existing technology and go with our system.

We overstaff our trade show stand so that we can give everyone enough time and so that we can get the feedback we need. We see the trade shows as an opportunity to ask questions and learn. It works. We come away with plenty of suggestions – well thought out suggestions which we have been able to discuss face to face and therefore finesse prior to putting them to our development team.

We see our relationship with our customers as one of collaboration in pursuit of better business outcomes for our customers. The trade shows are a key element in pursuit of that goal.


The arrogance of big business and the con of discounting

I was looking through a catalog from a competitor (of my retail business) yesterday and found some items at a price which surprised me as they were considerably lower than our cost price. Same brand and model. The low prices were wrapped in text suggesting that everything is the store was just as keenly priced.

I checked the store and the savings were genuine. But on those items only.

Okay I understand the concept of loss leadership.

I doubt this is loss leadership. My understanding is that this is big business arrogance – demanding rebates and special offers from suppliers in order for their brand to continue to be carried in the national chain of stores. In return for continued stocking they provide an exceptional price which allows the store to offer the price.

Okay, that’s business.

If you price compared this store every day of the year I bet you’d find the products in my small independent retail store and the independent retail stores my software company serves loiwer overall. This group does not “SELL FOR LESS” as they claim.

Sure I don’t match their exceptional deals. What I do match is the day in day out pricing and service obligation.

Sadly, independent small retailers don’t have the money to advertise this message to consumers.


Why this independent software company owns a retail (non software) business in its vertical marketplace

For almost 25 years we have been developing software for Australian newsagents. Nine years ago we bought one of these newsagent businesses. We still own it today. It’s a busy business in a shopping centre here in Melbourne. I bought the newsagency so we could put into practice what we tell our 1,300 newsagent clients to do. I also bought it to get close to what our users experience.

This week we have been experiencing the benefit of being a user of our software even more so than usual.

One of the challenges newsagents face is lack of stock. With supply quantities for magazines tightly controlled it is not uncommon for newsagents to sell out of the top 10 or 15 titles well in advance of the next issue arriving.

This has bothered me for some time … primarily because of the frustration I experience in my own newsagency when we’re out of stock. I estimate this lack of stock in my business is costing us around $25,000 in lost sales a year.

Our suppliers have sales data but not the day by day data necessary to measure the likely impact of an increase in supply. So I needed to build a business case, one so compelling that the increase in sales was proved by the data I could present.

While our software has good reporting tools, it was missing the ability to report on what is called sales decay in the magazine sales world. That is, the rapid fall off of sales from the on sale date through to the off sale date. We created the report, checked with the magazine companies to ensure it would suit their needs and then released in for trial to our user community with a background to the business case they can make with the results achieved by the report.

The report has uncovered sales patterns which challenge convention in the case of a couple of magazine titles. This is important new data which will help the small business newsagents. It’s helping in my business.

Had I not owned a newsagency I would not have seen the need for this report. Newsagents certainly have not asked for it. Nor have magazine distributors. Both sides talk (too much some say) about the need for certain business outcomes. It’s only when we sat down and deeply analysed this specific situation of sell outs that we uncovered a patch of turn which was not covered by existing newsagent reporting tools.

The Magazine Decay Report is now an important tool in my business both in terms of understanding sales patterns and leveraging more equitable supply from by magazine distributors.

This new report gives us a competitive advantage for a while.


Corporate social responsibility in this small business

We have appointed a Social Responsibility Officer, someone to be an additional conscience as we try and pursue a more socially responsible road in all we do here. It’s a tough road and we’re feeling our way – not that we were irresponsible in the past.

I have been searching the Net for advice from others talking about social responsibility. It bothers me that social responsibility has become systemised like the Total Quality movement of the 1980s. It’s like: do this course, sit this exam and you have the social responsibility seal of approval; or, sit on this community committee, give a reasonable amount publicly, get the certificate and you get the seal of approval.

What we are trying to do goes beyond such a systemised, dare I say, corporate, approach. Since this business has one shareholder and is relatively small (40 employees) we have the luxury of being able to make decisions from a personal, human, perspective. So when we consider social responsibility this is the perspective which matters to us: how we judge the decisions in the context of our social, justice and related beliefs.

A good (small) example is the treatment of people. In big business the production line approach is common in pursuit of the common customer experience. Their attitude is that you determine the customer experience through regulation and discipline. In my business the approach is flexible, allowing individuals to be themselves. We encourage creativity. Sure we maintain a clear focus on the customer experience, however, each person has flexibility in how that is delivered. Rules and regulations are kept to a minimum. I’d suggest that in big business you are more likely to see the stifling of creativity and individuality.

I don’t want to be responsible for stifling creativity. The personal individual experience is better for our people and for our customers. It is also better for the community. There is more likely to be a passing on of stories and experiences than in a clone like regulated big business experience.

So, part of our social responsibility is to allow people to be themselves with a watchful eye on the goals of the business.

We’re working on a social responsibility manifesto so that we can better explain what it means to us and those we interact with.


Dell Hell … the power of the (Jeff Jarvis) blog

Jeff Jarvis writes to Michael Dell, via Jarvis’ blog, and strongly makes his case for Dell to fix their now serious customer service issues.

Had Dell responded to Jarvis’ please for help through the usual dell channels none of the blog entries would have been necessary. The people at Dell have made this problem far more public and far more serious for their company than they needed to. All they had to do was to deliver on their customer service promise. Duh!

Once Jarvis did blog about it Dell could have jumped in then. But, no.

The lesson for all companies, not just hardware companies or software companies like mine is use the processes you have in place for customer contact and customer service, listen to the complaints and respond. Denial achieves nothing.

Well done Jeff Jarvis. There is a lesson for consumers on speaking up and a lesson for us in business to listen!

If you’re in business read all of Jarvis’ blog entries on this. Learn. In a few minutes yet get a semester of business learning.


A coffee experience

I have recently had two coffee purchasing experiences. Each involved buying three cups of coffee.

Independent coffee shop: Usual choices. Efficient order taking. Friendly smile. No up-sell pressure. Discount automatically provided.

Starbucks: Too many choices – I just wanted a coffee. Up-sell offered. Frustrated look on employee. Regular price charged.

Okay I am biased. I’ll copy that. However, this time I went into each store deliberately to assess the experience. In Starbucks I sensed that the employee was counting through the steps of the sale. You know, the production line approach. Whereas at the coffee shop there was a bit of conversation. At Starbucks there was pressure to move through the sale at a certain speed, as if a clock was on. At the coffee shop, even though it was a little frustrating, there were in no hurry.

The coffee was almost the same quality so it was the experiences (cultural and social) which separated the two in my mind.

The locally owned shop was a far better experience for me. For others it will be different. Some people like the sameness of the Starbucks experience. Others like that they can do “starbucks” as it’s more socially acceptable than a local coffee shop – such is the power of marketing I guess.

My point is that as consumers we ought to be fighting the drone retail experience. It is killing a generation. All these school leavers working ion the huge corporations learning their eight to ten steps for each sale and not being allowed to express themselves in their work place. It’s so sad. These corporations stifle individuality in pursuit of the common experience.

Beyond the generation being homogenised the community and our culture are being homogenised as well.


This is why our retail chains and global brands need to get smaller and not bigger. It’s why local is more important than national and international. It’s why pharmacists need to dispense prescription medication and not supermarkets.

Retail is personal. Every experience is different and needs to be driven by the needs of the consumer. Supermarkets, companies like Starbucks and their global ilk don’t get that in my view.


Sales decay

We’ve been researching sales decay for limited shelf life product in order to determine best practice for reporting this – especially in the small business sector in which we play. Our interest is because sales decay, for products with a seven day shelf life like magazines, is something about which there is plenty of talk but little in the way of facts.

The rule of thumb is that you need to have sold 80% of your stock by the end of day three to achieve a sell out and that, in fact, you’ll sell 50% day 1, 20% day 2 and 10% day 3.

In one of our key marketplaces we’ve found people making decisions based on what they think about sales decay as opposed to what they know. In fact, they know nothing.

There is early research indicating that enough of what people think is wrong for there to be value in new research. This early research is allowing us to compare similar businesses in different circumstances and thereby uncover opportunities.

Hence our interest in decay.

It’s surprising to me that that not much effort is being expended by independent software companies in the small business sector in reporting on sales decay.

It seems that by analysing decay trends we might be able to help our clients find new opportunities to slow the decay.



This report makes for fascinating reading, especially this recommendation:

Recommendation 3

The Committee recommends the establishment of an independent Retail Industry Ombudsman through which small business can bring complaints or queries relating to the retailing sector for speedy resolution. The Committee believes that the Retail Industry Ombudsman should consider, among other things, the application of the Retail Industry Code of Conduct (Recommendation 5) in his or her deliberations.

Where complaints received by the Retail Industry Ombudsman raise issues that fall within the jurisdiction of another established body, such as the Australian Competition and Consumer Commission, those complaints should be referred to such bodies for further investigation.

The Committee recommends that the Retail Industry Ombudsman be appointed and funded by the Government.

The Committee recommends that the Retail Industry Ombudsman be required to produce a bi-annual report to the Parliament in order to increase transparency in the retailing industry.

While the recently established Retail Grocery Industry Ombudsman is a welcome move, it does not provide small business non grocery retailers a place to take their issues.

Back in 1999 the parliamentary committee expressed concern about the challenges facing independent small business retailers and made a series of recommendations to support their future. The lack of action by the Federal Government on the recommendations of the committee demonstrates a lack of support for small business.

The aggressive pursuit of competition policy has come at a cost to small business and the community which will only be measured when it is too late.


Loyalty programs, cards, schemes

At the counter of a major department store yesterday I was offered one of their new loyalty cards. “But I already have xxx” I said. “You can use this too.” was the answer.

This national chain is introducing another loyalty card but this one is branded specifically to their brand of stores as opposed to the other card which operates across the group.

The employees behind the counter overly excited about the benefits of joining – especially the financial rewards.

Always a sucker for a new loyalty scheme I eagerly signed up.

At home I pulled out the card and the paperwork it came with and set abut reading the fine print. Boy is there some fine print.

This is a department store remember. Fashion is a key product category. The best they are offering is a 1% rebate for purchases. That is the best. At worst it is as low as .3%.

Having felt that they were not really rewarding me for loyalty I’ve done a quick comparison to smaller stores in the fashion space. The best I can do in terms of a loyalty scheme is 10% off and that’s without too much effort.

So if a smaller group of stores can offer 10% and this monolithic group can only offer 1% I no longer feel that valued.

All of this is on my mind because we’re enhancing the loyalty facilities in our software and I wanted to ensure I better understood how retailers use the schemes and how they work and don’t work for consumers.

It seems there are three games at play here: real wards for loyalty; smoke and mirrors rewards to keep the punters happy; and, enough rewards to get punters in so that we can see what they buy. Cynical? Yes! Accutate? Yes!

Of course from a consumer perspective it’s the real rewards offering which works the best. While we will not be dictating how users of our software implement, we will certainly provide the opportunity to deliver real rewards if that is what they wish to do.


Corporate Social Responsibility

I was surprised to read the names of some companies on the RepuTex Social Responsibility Investment index as reported in the Herald Sun.

The Reputex release says: “The RepuTex SRI Index comprises 44 companies from the S&P/ASX 300 Index that have achieved a RepuTex Corporate Social Responsibility (CSR) rating of “A” (satisfactory) or higher. The constituent companies are spread across a broad range of industry sectors.”

From what I can see from information at the RepuTex website, the criteria for gaining a good Corporate Social Responsibility rating is less than clear. For example, there is no indication of community involvement in the assessment. I would have thought that a CSR assessment is as much about assessment by others including the community as it might be about policies and business measurement data.

Small business can own this space of being responsible business owners and operators. Because we’re local, because the owner is closer to the community. Because decisions in large corporations must put the shareholder above all else by virture of their obligations.


Social Responsibility Officer

Further to this post, we have appointed someone as our Social Responsibility Officer – and immediately upon doing so realised that it’s a journey without end and without a roadmap for if we are to be serious about this the ‘officer’ has to have freedom to play across all areas of the business.

So we begin by defining why we have the position and what it’s about. Before we can do that, we have to make sure that those involved are all on the same page in terms of knowledge views. Once person’s sustainability is another person’s squalor – or any other comparison you might care to make.

Our goal in walking this path is to be true to ourselves. It’s one thing to have views of the impact of one size fits all retail, global brands, environmentally sustainable business decisions and social responsibility and another thing altogether to walk that road, head knowing that you have been true to yourself.

One argument often put, including by this writer, is that small business is more socially responsible than big business. It’s time for this business and other small businesses to demonstrate that in a more practical way.


Big box retail worries for independent retailers and communities in Tasmania

The Mercury newspaper carries a story about plans for a new homemaker centre on the outskirts of Launceston. While the story covers the plans for the centre and the growth of big box retailing in general in Tasmania, it does not go far enough in reporting on the impact of this style of retailing on cities the size of Launceston. There is plenty of research in the UK and the US about the impact on independent retailers, those they employ and surrounding communities which the story could have pointed to.

It’s been over six years since there was a parliamentary enquiry in Australia into related matters and given the distance traveled since then it’s time for another. However given the last of results from the last enquiry one wonders about the value of such an enquiry.


Social responsibility in business

Businesses are required by law or regulation or obligation to have fire wardens, safety officers, employee advocates, first aid officers … indeed all manner of ‘officers’.

But not social responsibility officers.

Now this is not a position I would like to encode in or burden with regulation as such however it is necessary if we are to be serious about being culturally, economically and environmentally responsible.

If we’re going to complain about the global brands of McDonalds, Starbucks, KFC and others sucking the cultural lifeblood from our veins then we in small business need to take active steps to ensure that our business decisions are socially responsible. Not as a marketing ploy but because it’s what we believe in.

I am using the term socially responsible to include culturally, economically and environmentally responsible.

We need to live the difference and not just talk about it. This way we can understand the value for us of being independent and local. It will help us articulate the value better when we are competing with a global brand.

So, we’re looking to appoint (anoint) someone internally as our social responsibility officer.


How do you encode humanity into the sales process?

While the global and national retail brands (Starbucks, McDonalds, Borders, K-Mart, Woolworths etc) pursue a common consumer experience and drill train their employees accordingly, too many independent retailers ignore the perfect opportunity to leverage their point of difference.

Missing from to many sales counter interactions in independently owned retail outlets is a touch of humanity, something beyond have a good day. My experience is that too many independents are chasing the big players and creating a me too experience. In my mind this makes it easier for consumers to compare the independent book shop or CD store or coffee shop with the global branded store.

We need to find a way to encode being local and being independent in our consumer interaction without it feeling regulated and required. It’s a challenge. We’ve looked at it from a technology perspective to see how we might facilitate a more human sales experience. We have some ideas and will play with these (and I’m not about to give another free kick to our competitors here). The reality, though, is that you don’t encode more humanity, you can’t. It happens because you want it and because it’s natural. Because you have time and because you enjoy the human interaction.

Being local and independent to my mind means providing less of a corporate experience. This means more local products; a greater local community connect; happier employees; more hand written signs in store; maybe no uniform; and, real communication with consumers.


The challenge of economic rationalism in the magazine supply chain

For 24 years my software company has worked with newsagents. For the last nine of those years I’ve owned a newsagency as well. Newsagencies in Australia are the classical small business. Independently owned, very local and each one different. Newsagencies sell around 50% of all magazines.

Since 1999 the sale and distribution of newspapers and magazines has been deregulated. With deregulation has come greater focus by publishers on the supply chain. There is less room to move today, meaning that selling out in a smaller volume store is okay in their eyes – and I understand that. However, a sell our only serves to starve the newsagent.

We have started researching the impact of sell outs on our newsagent clients.

The graph at the top of this post represents the average per day sales on a weekly title for four months in 2005 (black) compared to the same four months in 2004 (red).

Following several months of sell outs in 2004 they achieved a modest supply increase and you can see from the 2005 figures, in black, that the result was more sales earlier in the week. By mid week they only had five of six copies left.

While it is natural for the sales of a seven day title to slow later in its shelf life, if we look at the weeks where they were inadvertently oversupplied we see stronger than average sales on days 5, 6 and 7. This unscientific and preliminary research suggests that there are significant sales to be achieved by at least some newsagents being supplied in sufficient quantities.

Our involvement in this is in pursuit of hard evidence which we hope will help our client base build their businesses. While we help with marketing strategies and the like, we also see value in building cases to take to suppliers in an effort to alter their scale out decisions – such as the approach for weekly magazines.

We’re not there yet but we do have a sense that the mission is valuable for our client base and therefore valuable for us.

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