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VANA Industry Awards 2019

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It is our pleasure to say a massive congratulations to our clients who won the prestigious VANA Industry Awards at the divine Plaza Ballroom on Saturday night and who basically took up all the awards.

I know most of these people personally, and I know they worked tirelessly in their businesses. 

We wish them our good wishes.

The newsagent of the year was won by our client - Mentone Newsagency, check out their website to see what they do and what they do.

VANA Mentone newsagency award

The lifetime achievement award was won by our client John Blames

Colav newsagency VANA awards

 

Rookie of the Year by Somerville Lotto

 

Somerville lotto Vana awards

The Lottery Agent of the Year recipient was won by our clients at Wandin Newsagency

The Community Newsagent of the Year which was won by Jodie & Adrian Grzeschka our clients from Corryong Newsagency.

 

 

 

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Tabcorp commissions to its agents?

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the lotto

The Lott is changing their commission structures, the following organisations

Australian Lottery and Newsagents Association (ALNA)
Lotteries Retailers Associations (LRA)
The Victorian Associations for Newsagents (VANA)

are now busy explaining to their members what is happening.

The best one explanation, I thought was the one done by tatts and distributed by VANA

Retailer_Information_Pack_Tatts

I would suggest if you want to know what is happening, have a look at this one. This is the one I am going to quote here by pages.

Here are some more documents that have been released

Explaining-the-new-retailer-model-for-ALNA-members_FINAL.pdf

New-model-for-lottery-retailers_12-March-2019.pdf

New_model_for_the_Lott_12_March_2019_FINAL.03.pdf


So here are my thoughts, on the first reading, it is clear that lotto sees a tremendous future online 

Here is there retail only customer vs a retail and digital customer chart.

Digital comparsion

 

That is a big increase alright.

The new commission structure is to help this movement by rewarding the agent for helping this move.

What is not explained is what is the effect on the retail agent shop sales as the Retail Registered account becomes a Registered & Digital Account?  Does it based on current figures goes up or down? It is not stated. This would be my first question! It is an important question as almost all of the commission increase is in shop sales and the figures supplied assumed in the Tatts and ALNA documents that it is as in 2018, something I am not sure it will not be.

Now it clearly does have some immediate positives, e.g. the DigiPOS fee will be removed, and for those that have brought it, that money will be refunded, but it does have some negatives, e.g. the player card commission is gone.  Overall it did appear to give the agent more in fees. According to the ALNA figures, an agent doing $22,000 a week in sales can look forward to $220/week extra profit based on the financial year 2018 figures. 

Reading further however it that it works on cycles which are about 17 weeks. What an agent needs to do is every cycle is to carry out a lot of new conditions to get the increase in commissions. This increase is not automatic. Most of these new conditions are reasonable and I think fair and I do not see them being a problem. I would agree that it is the responsibility of a Lotto agent to keep up to date with what is happening and to inform Tatts of what is happening.

Some, however, seem harsh, for example, if accidentally in your nominated account one time it does not quite have enough money for settlement which can happen, then you have blown your increase in commissions this cycle.  Better luck next cycle.

Another condition is very puzzling listed on page 8 and which I have no idea of how hard or easy it is to do, here it is and I will let you decide.

 

Extra conditions

Now 1% in a stable established market is not easy to get.  Worse if you are an agency in a tourist or sporting area, where you have almost no control over your players so I would not be surprised if some agents go up and down on this figure every cycle. Maybe an agency should make a rule only registered players can buy in this agency.

Lastly, on page 14, I would like to see the calculation sheets on how these were derived. I cannot get all these figures, so I am not sure what they are telling me. 

You have my thoughts overall, I will say that I am not against it, but I do have concerns. 

 

 

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Newspapers continuing slump

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Years ago here because of the importance to many of my clients, I used to analysis newspaper sales. In those days the newspaper companies ruled a large slice of Australia's retail stores. Milk bars, newsagents, lotto agencies and small supermarkets would go into a panic after a threat of a newspaper rep to cut off their newspapers as newspapers brought in a significant number of customers every day to them. Well, those days are long gone. 

The latest report by the Audited Media Association of Australia, for the last half of 2018, reported most major newspapers publications fell around 10% about the same decline like last year and slightly higher on what I reported here five years ago.

See the latest figures for the decline in newspapers here. 

 

Weekday circulation from ABC

The figures are worse then they look as electronic subscriptions are included which have less profit then printed copies and as the newspapers' financial paying readers who I suspect are now almost all 50+ go, so will the printed newspapers in Australia. 

In retrospect, I am sure that much could have been done better by the newspaper companies, for this I blame personally poor management and the editors. 

Although I liked very much the people personally in News Corp and thought they were really trying to help, I always felt that they needed solid modern marketing professional help which they never got till it was too late.  

When I went to meeting at Fairfax and News Corp which was frequent to discuss circulation. I and I think almost everyone at the meeting would leave thinking that we were talking to a brick wall. It did not matter what anyone said, as nothing was appeared to being listened too and nothing was being acted on. Here is some example from submissions that we put in:

-When the newspaper companies were talking about getting on subscriptions, we pointed out that the only result would be that people paying full price for newspapers would get used to paying only a discounted subscription. Once they got used to paying a discounted price, it would be impossible to get them to pay full price again. We were right because that is what happened.

-Our research showed that many people were buying newspapers just to do the crosswords, so we suggested changing the crossword every edition. Great idea I was told by the News Corp, nobody got back to us about our research and nothing was done.

-We offered to link the computers across Australia to their computers to improve handling of newspapers. Again nothing was done till years later.

-We pointed out that many of the newer statistical software programs and mathematical methods could be used to calculate potential demand sales better, yet nothing was done.

-We pointed out that as smaller companies were dropping unprofitable circulation, so a marketing opportunity was being opened for the larger newspapers that were still serving those areas. The local newspaper sellers should then be armed with leaflets with an offer to promote the other newspapers again nothing was done.

-When we pointed out that repeatably the newspaper companies were making changes that were difficult or impossible for the newspaper sellers to do, no-one listened. The changes would come, and there was no way it could be done. As a result, the public is getting one message from the newspapers advertisement and when they went to collect it was a different message.

Soon we and others just stop making suggestions as nothing was done which is probably what the newspaper companies management preferred although I am sure the shareholder and newspaper sellers lost millions of dollars as a result.

As a person who has been involved in newspapers in Australia all my life it is very sad and overall I doubt that much could be done for newspapers. The newspaper companies although they were huge then and their product was popular was already on a decline for 30 years as electronic media was taking even then a large chunk, and the recent development of the internet speed up this decline.


 

Great article but nothing new here other than stating the obvious.

What I want to see is the percentage decline from 2008 to 2018. This is the number that will surprise and shock. As you say they are counting digital subs in their numbers which just adds another dimension to the inept management and arrogance of Newscorp.

Steve, a few years ago I did such a calculation here which I hope helps, take off another 20% and I think you would have what you want to show here 

Newspaper Circulation on July to September 2008 to 2016

 

I might agree with you about the inept management in newspapers although Newscorp did very well out of some of their online purchases however I never found Newscorp arrogant. I really liked my association with them. Often they were extremely helpful. 

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Shoppers today were eager taking on Boxing Day

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It is expected today that retailers will bring in about $2.3 billion sales today and about $18 billion in the following three weeks.

 

I spoke to a few of my clients and generally, they were happy with the trade this season although many told me that this season started off slow but built up. This slower but longer pattern appears to be a long-term trend. 

Some of my clients will be doing half their yearly trade in this and next month. One of them told me, he was doing an actual speed test of just how fast our system can be under pressure. 

From what I could see, people were queueing up, it is not often that you see shops with barriers in the front and a guard managing a queue to restrict public access to a shop. I took some shots at the DFO Moorabbin, they are actually bigger then they look as people were lining up in a snake queue

 

DFO Moorabbin Boxing Day queue

 

DFO Moorabbin Boxing Day queue
 

DFO Moorabbin Boxing Day queue

 

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Cashless retailers penalise the poor

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Although this issue has not hit Australia yet, overseas with so many retailers going cashless that politicians are concerned that very poor people with problems of electronic banking are having problems shopping.

Some shops now in the US will accept cash but do not give change.

What is happening is that overseas retailers are going cashless. This is partly as its faster as its just a swipe, its cheaper as the cost of cash as handling costs of cash is estimated at a few percent which is more than the fees for electronic cash and more secure as cash is always a security problem. 

China is now nearly all cashless, while the US is in retail about 70% electronic, and Australia is 63%.

At the current trend, cash will vanish in Australia in 2026. I expect long before that almost all our clients will stop accepting cash.

While they don't have a screen and they are not much more than a fit bit just now, smart rings are the new buzz. Watches can be annoying to wear, especially if you have to do  a lot of typing to do. It won't be long now before all you will need to do to pay for things is flash your pinkie like a wonder twin.  These rings without a screen being more a simple deice than a watch will be cheaper and probably will be an alternative for a cheaper option. 

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Fairfax commission rates for December 2018

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This is a composite I created for the current margins.

 

Margin analysis Fairfax Dec2018
Margin analysis for Fairfax Dec 2018

For those people that do deliveries, they are up and so by extension are subagents.

Interestingly for those that are classed as retailers, the margins are continuing down. I would be surprised if this downward trend does not continue. If you think about it from Fairfax view why should these people get more then subagents who are now at 9.6%?

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AMAZON back flips, it is reopening its American site to Aussie

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Amazon Australia as I expected has not done well, the problem is not that our retailers are inefficient or not tech-savvy but our overpriced, undependable and slow delivery services which are holding us back in e-commerce plus our small comparative market. 

So now Amazon has done a backflip and will sell Aussies Amazon stocked and sold products from the US. I expect soon that the 3rd party sellers on Amazon will be released soon.

What happens with the costs of delivery to the Australian consumer from Amazon overseas sites will be interesting. Will they keep the Prime subs which allowed free postage over $49 from the US store?

For Australian retailers, the opening of the Amazon sites overseas is going to increase competition, and the two immediate issues are they need to look at their e-commerce and their delivery options.

Where we are unique in our market space is that our point of sale software is a unified commerce solution which brings together both of these issues into one platform in your POS system. Pieced together systems, that our competitors offer cost more money and lead to problems as different systems both in use, training and the need to talk to each other. Plus there is no long-term as who knows what the individual and separate parts are going.

Only our unified system gives you long-term as well as a day-to-day business solution. Click here for more details

 

 

 

 

 

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Retail apocalypse in Australia?

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The retail apocalypse in the US is the closing of a large number of brick-and-mortar retail stores and shopping malls from 2010. Here are some haunting photos of abandoned shopping malls across America

 

The question being raised in Australia now is going to happen here too? It is difficult to say, but so far almost everyone agrees that it has not happened yet. 

I went to the Australian Bureau of Statistics and went to their page here on retail.

 Then selected chart number 8501011

Then using excel made a graph of yearly sales for every sector since 1982 to 2018.

Australian retail sales 2018

As you can see overall, it does look good. Overall retail sales and retail property overall in Australia have been healthy. Yes, there have been terrific changes in the retail landscape, for example, video rentals, books and newspaper sales are all down, but others such as food and footwear are up. This up and down by different sectors in retail has been going on since retail began.

Now some of the sectors in our marketplace look good.

ABS Pharmaceutical, cosmetic and toiletry goods retailing

 

However when you look at the one that seems to be now creating the most concern in our market space - newsagencies.

Newsagency and books 2018

It does not look so good, and I have been to many discussions and meeting about this sector's performance that is concerning many of its suppliers, as you can see its high water mark was about 2010. 

However, there are several points to keep in mind. The first point is that many shops move across sectors. A shop that is doing poorly in newspapers can switch to other fields e.g. I have had clients that have turned their shop into a cafe, gone into art supplies, become gift shops and toy stores. Soon it is no longer a newsagency but something else. 

The problem is that most suppliers cannot move so quickly. A newsagent once he moves partly to becoming a cafe, soon loses interest in magazines (profit margin 25%) because they have more valuable stuff to sell like cake and coffee (profit margin 55%). The magazine company soon gets very upset.

The other issue here is that just because a sector does poorly does not mean that an individual shop in that sector does poorly. I have a client that is bookshop nearby a large bookshop closed down, and their sales went up dramatically as many of the customers of the large bookshop came to them.  

Which is moving to an interesting point that often what we see in a sector as the sector drops the players inside that sector do better! 

For example in 2013/4 according to IBIS, 2500 newsagencies did about $1.9 billion in turnover about $760,000 each, in 2017/8 1960 newsagencies did about $2 billion in turnover about $1,020,408 each in turnover. Probably what happened is as the newsagencies consolidated, they kept enough of the clients, so individually they gained and then sold these customers other products to them.

 

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Lottoland a lot of correspondence coming through

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I got a lot of correspondence about it. Interesting they are all coming through attached with confidentiality clauses so I cannot talk about it. Why should these people only want to be talking in secret?

The point that seems to be concerning people, in particular, was my quote from NANA that

“Throughout the campaign orchestrated and funded by Tatts Group Lotteries, a campaign on which they have spent more than $5m, they portrayed the resistance they have created as being initiated and managed on a grass roots level by newsagents and other lotteries outlets. Make no mistake, the campaign was and is funded and orchestrated by Tatts Group Lotteries. Some newsagent and lotteries associations have tied themselves to the campaign and appear to act as mouthpieces for Tatts Group Lotteries.”

Actually, the figure of $5 million is, of course, a gross understatement, the $5 million figure is for last year, this year I am sure that it will be much more than that.

 

The gaming industry has been following the news closely, here are some links.

IGaming Business

Focus Gaming News

Reviewed-Casinos

One point please consider, whether the legislation through or not, lotto agents are on their own the day after.

 

PLASTIC BAGS out Coles and Woolie

POS SOFTWARE

 

With the recent announcement by Coles and Woolies that they are phasing out plastic bags, many of my clients could see this as an ideal time to access what they are going to do about their packaging too.

On one hand, by having bags it certainly encourages people to buy more, many people appreciate these bags. The other problem is that if they bring in their own bags, they are limited to how big their bags are. So I have had clients after getting rid of bags brought them back in the shop.

On the other hand, many in the public do not like it and in places like Canberra, they have already implemented bans, plus it costs. An article on the ABC that estimated the cost savings to Australian supermarkets of plastic bags was $171 million a year?

Here is an idea you may want to chew on, free bags if the customer purchases over a certain amount. It may encourage them to buy more. Easy to implement such a change in our point of sale system.

Anyway now is a good time for many of you to make a decision.