Just over a year ago, deregulation hit the newsagent industry, forcing many to change the way they operated. Maria Cobden takes at look at what the changes have done to the industry.
The saying 'the more things change, the more they stay the same' could well be applied to the newsagency industry one year on from deregulation. Not much has changed.
Deregulation forced newsagents to accept individual contracts from the people who publish the magazines and newspapers from which they derive their livelihood.
Balancing that, the termination clause has been extending from 30 days to a more realistic term, ensuring newsagents have financial stability in terms of cashflow and business worth.
According the Australian Newsagent Federation CEO Paul Waite, "as a whole deregulation has gone very well" although he says some newsagents were, in the beginning, very nervous about the change in operations.
"I guess a lot of that stems back from they had been newsagents for a long time and are used to one system then all of a sudden the system changed."
He believes a lot of the fear that was there prior to deregulation regarding the change in contracts was unfounded.
"Obviously the contracts were written in favour of publishers but the contracts have actually improved the industry itself in terms of value."
He says this because previously the contracts had a 30 day termination notice, "Whereas now there is a contract for a given period of time, for years, which gives them almost like a mortgage document that they can [take] along to the financial markets, particularly, and say my business is worth this and we have this contract in place."
That's not to say it is all smooth sailing; Waite says they are still working through some issues with publishers. One being that some newspaper publishers believe a few newsagents are in breach of the contract by not having a computer system in place. "The irony of that is we are looking at an electronic exchange platform where our publishers can communicate with our newsagents. We already have it in place for the magazines, it is called xchangeit and that has been put in place, we are a partner, a shareholder, in the company that is doing that. But the two major newspapers decided not to participate in that and are doing their own. They said it [xchangeit] was more designed for magazines, and they could be correct."
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Wait & See
During the turmoil of introducing deregulation, most newsagents seemed to be holding their breath to see what the outcome would be. However, one year down the track and that wait and see policy seems to have worn off, and some states are seeing the greatest turnover in newsagency businesses in the past decade.
"For a while, as deregulation was coming in, what we found was that there was a little bit of reluctance for new players coming in."
That has changed. Waite cites NSW figures as an example, where the state has had the highest turnover of businesses last year for 10-12 years. "That could be taken two ways, of course, is it people wanting to get out or is it people wanting to get in? I guess it is a combination of both. I guess some people are leaving the industry because of the hard work, some are leaving it because they are finding what is being imposed on them now is more restrictive than what they had, more disciplined, and some of them are just getting old I suppose. But there are a lot of new players very interested now."
Those new players have a lot to deal with, coming into an industry that is under increasing competition from previously unthought of places.
Magazines are available everywhere, supermarkets and even bookstores are eating into the market, while newspaper publishers often offer discounts for consumers to order direct.
However, Australians still love to read, and one way for newsagents to compete with increasing competition is to diversify without impacting on their core business – and that's just what they are doing. As consumers traditionally visiting a newsagency on a regular basis, for example to buy a daily newspaper, newsagents are in a good position to capture the market with other items of interest. A teddy bear, a greeting card, and soon, if Waite has his way, a bill payment service.
"We are suggesting to newsagents that they need to diversify into other areas and we are adding other services, such as we have a Western Union money transfer service and we now have over 700 newsagents providing that service. We also do the tax forms; tax forms are available in newsagents. We are doing mobile phone top-ups and we are attempting to put in a bill payment, e-commerce solution for them. We are well advanced discussing that with a third party."
Along the same lines, newsagents will soon be delivering home subscription magazines, at least those of one publisher at this stage. "The difference with that will be that on the newspapers, the newsagent still receives a commission, on the magazines that we have done, the newsagents will only receive a delivery fee."
Nor does it end there. "We are looking at newsagents becoming the delivery agents for a whole range of objects." According to Waite, it would work something like this: you want something delivered but you aren't home during the day to collect it. Instead it gets sent to the local newsagent and you pick it up either on your way home or your way to work. Or, because a newsagent's delivery vehicle usually isn't used much past 7:30am, the newsagent delivers the goods to your door.
Interesting times ahead. As to where the industry will be a few years down the track, Waite sees consolidation on the horizon. "I think in five years, 20 percent of newsagents now won't be there. I think there will be less outlets, less newsagent outlets. I think there will be publications sold in more places than now and I think that is inevitable, as much as we don't like that on behalf of our members, it is a fact of life. But I think that the newsagents that remain will be stronger and better businesses, and therefore they will perform better as a result."
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Another area of concern for the future is tenancy agreements. Waite wants to increase the profile of newsagencies in shopping centres with the centres' management. At the moment most shopping centres see a supermarket as the drawcard for customers.
However, Waite says in a number of cases the supermarkets are in competition with the newsagents. What he proposes is to increase the profile of the newsagents by getting shopping centre management to acknowledge the value a good newsagency brings to a shopping centre.
"If shopping centre management said to us what should we look for in a good newsagent, we would be delighted to tell them, delighted to work hand in hand with them."
Publishers and distributors are evolving too. ACP's distribution arm Network Services is currently trialling a system where newsagents deliver subscription magazines, and the trials are so successful they are looking to send high profile magazines this way shortly and introduce other titles to the system down the track.
However, this does not mean glossy magazines are going to be tossed out the window of a car like newspapers; the magazines must be delivered flat.
Network Services group sales manager Ainsley Stacey says newsagents were already driving past the houses that it was delivering the magazines to, so it made sense just to give them the magazines to deliver. He says there is also now more responsibility, orders can be traced and any problems rectified.
They are also diversifying into new markets, having started up a website (www.magshop.com.au) where subscribers can order their favourite magazines online.
The ever-evolving newsagents also have to contend with the way publishers see their industry moving.
Currently newsagents are basically split into three categories: those who have the traditional retail store; those who dabble in retail as well as the distribution of newspapers and magazines; and t
hose who just deliver the product.
Even though the industry is deregulated, there are still set delivery areas, and the publishers own those areas.
Those who just deliver newspapers and magazines to both subscribers and the retail outlets in the area, rather than having a store of their own, are know as 'round-only' newsagents and are more prevalent in SA and WA. But Waite doesn't rule out this system being taken up in other states.
"There is some talk from the publishers that that system seems to work very well and indeed that they could like it to be rolled out across Australia. I use the word 'could' advisedly, because they are not saying they will but the system does work fairly well over there."
From the Coalface
Elaine Munro of East Geelong Newsagency in Victoria agrees that deregulation hasn't made a huge impact on the industry.
Having started out as a newsagent in 1991, Munro has seen the industry go through quite a few changes: "The competition that we face now is certainly different from 20 years ago."
She believes the increase in competition gives newsagencies an opportunity to become a destination store for customers, by offering great customer services and diversifying into other markets.
Her philosophy that customer service is a point of difference smaller retailers have over other retail outlets is backed up by the customer surveys her newsagency sends out on a regular basis to find out what its customers want.
Munro is also a great advocate of getting involved in the industry, getting out and meeting the people and finding out what your industry partners are all about; in fact, she believes it has been part of the success of her business.
