May 25, 2019 11:26:24 AM
Bob Phibbs interviewed Mark Fletcher CEO NewsXpress AU on how understanding their Millennial customers led to selling gifts to people who want to make fun of their friends, franchising and the goal of finding the fun in selling your products in a store.
Bob:Welcome, Mark Fletcher With NewsXpress.
Mark: Good day, Bob.
Bob: So who are you and what do you have to do and what about that accent? You're not obviously from the states.
Mark: I'm Australian. I own a company called newsXpress, which is a marketing group of 230 stores in Australia. I also own a POS software company that sells software to independent small retailers in Australia. And that company has got about 3,500 small business retailers using the software.
Bob: Wow. So you must know a few things about retail.
Mark: I've been in it for awhile and certainly I own a couple of retail stores myself and I love retail both physically and online and it's been a passion for a long time.
Bob: Nice. Well, how did you start out?
Mark: In my last two years of high school, I needed to get some afterschool work and so I started working in a business in the country town I grew up in called Pakenham in Victoria, Australia. And, that business was what Australians call a News agency. Now in the U.S., you don't really have news agencies, but if you think about, say, Hudson News that you see at an airport terminal, think about that and you add in around 1500 different greeting card designs, you add in probably, you've got about 1200 different magazines, you sell lotteries. Back in those days, they were selling tobacco as well as also being the main source of stationary for the local town. So it was a real mixed business. And news agencies in Australia were started in the 1800s by magazine companies looking for ways to distribute their magazines.
Bob: Right. And so have you started one of those and then you ended up buying them and franchising, is that what your story is?
Mark: Yes, kind of. I started in one of those while I was still in high school. I finished up in high school, then started working in tech and, while I was doing tech work for big corporations like banks and stuff, I was thinking about what I'd learned in the news agency about how manual their processes were because they were managing delivery of papers and things like that. So in my spare time, I started developing some news agency software. And so, I started the business and started selling that software. And that was in the 1980s, and then probably by the early 1990s is when I bought my first retail business. And that's when I got involved in newsXpress and the franchise group that we've got running now.
Bob: Got you. Well, franchising is very different. I've been a franchisor and I've worked with them certainly and there's people that feel like they've got an unfair advantage and they're just big companies. But, I always try to have to take pains to tell people, look, a franchise is just a proven business model. Ultimately they've cut your success path down and hopefully you've learned from some of the slings and arrows they took earlier, but it's still up to you to actually drive that and become a successful business person, wouldn't you say?
Mark: Oh, very much so. newsXpress isn't like a 7-Eleven or a McDonald's franchise in the sense that we have a small monthly fee and we don't charge any fee on revenue. And in our contract, there's really only one requirement for the stores and that is that they stock Hallmark cards. Outside of that, what they do is up to them. Our job is to present to them a suite of opportunities because we're dealing here primarily with 240, in America you'd call them mom and pop businesses. A little bit like Hallmark Gold Crown stores, but on a slightly smaller scale. And so we don't want to presume that they all should look the same and feel the same and act the same, because a lot of these businesses are in country towns where that town has a different style of doing business, say, to the town, a similar town, a similar size town in another state. So again, we present them with opportunities, with commercial deals and things like that, but they choose which of those they go with. So it's very flexible and very independent. And small business retailers love their independence if nothing else.
Bob: That's for sure. My first client, I had to go back to him three times and I finally said, "This is the last time I'm coming. If you want to sign with me, that's great. If you don't, I'm not coming back again." And that was when he kind of like, "Oh, okay. I guess they have to do this." It's not on the top. They have so many things to do that it's not necessarily what you think is what they're going to find the most important thing to do, that's for darn sure. Well, you've certainly seen things change. What has been the biggest challenge for you certainly down there in Australia over the last three years and how you've overcome it?
Mark: So if we look at it in terms of the specific channel, our core products were papers, magazines, lotteries, stationary and greeting cards. Now the big problem is the migration of certainly newspapers and magazines online. And so these two core traffic generators for the businesses have been drying up. And now what we're seeing in Australia, not as much here in the U.S. because of how it's regulated, but in Australia, we're seeing really significant migration online with lottery purchases. And we've got one major national lottery company that handles all except for one state. And so then they're doing almost 22% of their lottery sales online on a daily basis, which is very significant. So that loss of customers to online is a big challenge. And so, how do you get 230 independently owned retail businesses transacting online? And that's part of what we've been doing through newsXpress over the last six or seven years. We've been very innovative with seven or eight consumer-facing websites, none of which operates under our brand. And that way we connect our locally owned independent stores to this national website and effectively deliver to the stores retail sales they would otherwise not get.
Bob: Do you see that that's going to change? Do you think that people are going to stop selling, greeting cards have been under the gun since, my goodness, at least 10 or 15 years ago. I think those are one of the first things that went online. You could send a quick little animated greeting and you're done. So what is Hallmark doing? They must be trying to solve this as well, right?
Mark: Hallmark's doing a lot of work in the gifting space. So they're finding non-paper ways of people expressing themselves. And that doesn't mean necessarily through digital platforms, but they're doing a lot of work around gifts and giving their retailers other things they can sell to help people express themselves. But if you look at the situation, what people buy as a car today is different. In retail circles, in conferences, we often talk about getting that millennial shopper and that younger shopper, how do we get them into our stores? And the traditional way of expressing yourself has probably not been adopted by those generations as much as older generations. So what we're focused on is, for example, we have a very strong niche area around sarcasm because sarcasm, it really resonates. And look, it sounds bad and I almost am embarrassed to admit it, but our tagline, we've got a sarcasm website called Gifts For Stupid, which is really about selling these gifts to younger people who they want to make fun of their friends.
And our tagline is, "It's like slapping someone in the face but with words." And we don't mean it to sound violent, we're not intending it to sound violent, but to us that's what sarcasm is. So, we've got now in our stores, around two to three meters of space with sarcasm product and then we have a website selling sarcasm product. And how online plays out is, we know that with the websites, only a small portion of use of websites is about people buying online. The major use of the website is about driving store traffic and we're finding that to be a good success opportunity for us.
Bob: I just have to, of course, go and, yes, some of these, I can't repeat on my podcast, "But were you born in a barn? Mom," already sold out. I guess that was a Mother's Day card for your group. But again, you're trying to figure it out, right? I think that's the story of retail right now is that there is nothing can say, "This is all our customer will go for." You're trying to figure it out and say, "Well, let me figure that out." I mean, if they're going to be sarcastic, if they're going to buy, I'm there.
Mark: Yes. One of the things that's really interesting I think, Bob, is that for years in retail, those of us who kind of work with retailers and try and guide them, we often, certainly I was looking for the next big thing. What is the answer? What is the thing that I can do that's going to make me successful? And I think we're in a time right now where, there is no one thing. It's not a single thing. It's a whole lot of things and it's a lot of small things probably. And if you look at in the Australian news agency channels about replacing magazine and newspaper traffic and greeting card traffic. If you look at through my software company, we deal with bike shops and they're dealing with a massive onslaught online, locally and from overseas. If you look at pet stores and selling pet food, their challenge is online as well.
And so these businesses I think need to find other ways to reach new shoppers, shoppers they probably hadn't sort of reaching in the past. And that requires a new set of, I think tools. So it's certainly a new product, new services, but new tools on how we reach those people and new voices through which we can speak to those people, because the voice that I use for my traditional shopper works for them but it's not going to work for say, a millennial who really is interested in something sarcastic. I've got to use a different voice when I'm talking to them.
Bob: Yes, no, and I appreciate that. I think that whole idea that you could say, you could be like, "That Internet thing might not last, so we need to keep bolstering our newsprint and our cards." It's more of how do I react to what the market is telling me and the market is clearly moving over here, or to your point, it's shattered and now I need to have a shard that represents this, a shard that represents that. I'm the brick and mortar guys, so everything I do is revolving usually around some version of retail sales training or customer service training, because I think too many retailers are settling for crumbs when they could have the whole feast. I mean if someone comes into one of your shops and they buy a card, I don't think the person did their job because I got what I wanted. But if they ended up getting the socks to go with the card and something else, then, all right, so you added value to you showing up today. I mean, how do you think that plays out in your stores or just maybe not even in your stores necessarily, just in retail. Are we coming to a point where retail is looked at is just basically a warehouse we go and ask and get, or do you think there's still a place for the brick and mortar store?
Mark: I think there is a place for the brick and mortar store where people can engage with the product. Here in the U.S., for example, I don't know if you've heard of the greeting card group, retail group called Paper Source.
If I was in the greeting card space here in the U.S., I'd be looking at Paper Source as a really good example of being best practice in that space. They provide this immersive experience that help us, as the shopper experience the products in a way that is not common in retail. Previously in retail, we put the product on the shelves, stack them high, watch them fly, make sure the displays look pretty and hope that the customers pick the item. But to your point earlier, we've got to engage the shopper in a way that's interactive, that's enjoyable, that's memorable. Paper Source does that well. And there are some other retailers do it well. It's very hard for big retailers. I'm a big fan of how STORY evolved in New York and how Macy's are trying to bring that STORY experience to their department stores. Because department stores for sure are a really challenged beast and what STORY was all about was this constant change and being guided, if you like, by shop redirection. And I think that's really exciting to see.
Bob: It is. I am on the other side. I visited the STORY at Herald Square and I was totally nonplussed. It comes back to me of if you're going to have a concept, someone's got to be excited about being there. To your point, Paper Source, they seem like they enjoy being there, they seem to be glad to be there. I think that's one of the biggest challenges we have that so many retailers are settling for crumbs when they can have the whole feast. They just don't even realize that, whoever you put on that floor has got to want to be there, not just who can fill a shift. And then have you really trained them how to engage the shopper and make them feel like they matter?
I know I was in Portland recently at a gift store, and I walked in. This young woman walks up to me. She has something in her hand and she goes, "Have you ever seen as silly a chicken as this?? And it was some kind of a little stuffed chicken thing, and there's a whole basket of them. I said, "I haven't." She goes, "I just want to make sure you saw that while you're looking around. Okay, I'll be over here and I'll come check on you in a minute." And I could see someone like, "Oh, I hate people that do that." It's like, "Get over yourself," because that was fun and she was trying to have fun with it and you know what? She engaged everybody she met and, oh, and by the way, yes, people sought her out to buy more from her. And that's what we've lost.
It seems like we've lost that whole, having fun at work and being playful. And I think that's really what the successful retailers are going to discover, that the greatest asset they have really is their customers. And with 80% of your merchandise being able to be sold by, I don't know, all of your competitors, there's very little you can differentiate other than that experience. Wouldn't you agree?
Mark: Very much so. In our stores, one of the categories we're strong in is jigsaws and we partner with the German brand, Ravensburger. They make beautiful jigsaws. And probably three years ago, we were educating our retailers and saying, "Here's this one thing. You do this one thing and your jigsaw sales will increase." And the one thing was to set up a small table in store with a jigsaw, with some chairs around the table and let people do a jigsaw. And some of our franchisees were like, "Oh, what if someone steals a piece of the jigsaw?" And what if this, and what if that? And now the point was, it's a $20 jigsaw. Life's not going to end. Just try it. Anyway, they did. And surprise, surprise, shock and horror, they sold more jigsaws. And we've even got one of our stores now has evolved and they brought Barista Coffee into the store in a large table. And they are doing jigsaws on a daily basis and it's become, this is a town of population only about 2500. So the news agencies become a collection place where people come and talk and buy coffee and do jigsaws and they buy jigsaws as a result. And so sometimes the best way to get from A to B is to head towards C or D and you end up at B because people have enjoyed the experience and they buy the jigsaw at the end. And I think that's what experiential retail's about. And independent small retailers can do it. Sometimes they just don't get that they can do it and do it well.
Bob: And that community aspect I think is really important that we're seeing more and more people try to figure it out. That's why when you walk into a Chipotle or you walk into a Starbucks, they have the communal tables now. There is more of that. There's, I think this idea, certainly the Apple stores have been trying to go after with some of their new store designs, that this community gathering place is where we're going, it's kind of like everybody's trying to be the next Starbucks to say, "People come to my store and just hang out." But I think to your point, just having that opportunity of having a jigsaw with chairs around it already says, "Why don't you sit down and try it?" It would be great to have someone invite me to do that. But once someone does, then other people will be like, "This looks fun, "and suddenly it all works. Because otherwise, you've got a bunch of boxes with jigsaws in them that nobody is even thinking about, but when you make it easy for them, yes, why not?
Mark: Exactly. And it's this whole thing of, even if somebody just puts one piece into the jigsaw, you know for some people, that is their accomplishment for the day. And if I can be sure of that as a retailer, I'm really happy because they'll remember that, they'll remember the store and at some point, that's got to be valuable to me as a business owner. And there are so many things we can do it with. In some of our stores, we sell bath bombs and things like that. And so we would say to those store owners, "Get an old cast iron tub or something, a little bit of size, put some water in it and let people smell and experience just with their hands, the bath bomb."
And again, what if it spills, what if this? What if that? We're like, "Just have the experience." Look at Lush, Lush does it really well. Again, it's experiential retail and we can do that in indie retail. We've just got to have the guts if you like, to try it and find how much our customers want to interact with us because we've been, again, brought up in this retail world of, "Oh, can I help you?" or "Have a nice day." All of those cliche things that we hear. And I think if we pull back from that, engage authentically, we're going to have a far more enjoyable experience and the shopper will have a more enjoyable experience and we both benefit from that.
Bob: Absolutely. Absolutely. How has your way you thought about retail changed in the past few years?
Mark: It's changed in the sense that, for many years I would look at big retailers and obsess about trying to copy some of what they do, because big retailers know everything and sometimes that's not the case. The thing now is it's like you pick up a bit of mud, you throw it against the wall. If it slides off, don't do that again. But if some of it sticks, learn from that and improve on it. And so keep trying things. Keep experimenting. We saw that Lululemon, and I don't know if that's how it's pronounced even, but that's how I pronounce it. So they were doing yoga in some or all of their stores, and so we suggested that to some stores within our newsXpress group, and we had a couple of stores that tried it. They closed at 6:00 at night and did a yoga class and they rang and said, "You're not going to believe this. We had 30 people turn up, pay $5 a person to do yoga after the shop had closed." And I'm like, "That's amazing. Isn't that fantastic?" They said, "No, no, no. What you're not going to believe is they wanted to spend money with us after we were closed. They wanted to buy a product that they saw."
Bob: And you're like, "That doesn't surprise me. That's why you did it." It's good.
Mark: Exactly. Exactly. And so you said what's changed. It's about being prepared to try things that previously we'd never have tried. I think that's pretty cool.
Bob: No, I agree with you. And so I want you to picture, Mark, that you've got a friend and she says, "I want to take you out to coffee." And so you go to your local coffee house and she springs on you, "I'm thinking about going into open my own brick and mortar retail store." So what would you tell her? What would be your best advice to a friend who was looking to go into retail?
Mark: The first piece of advice would be don't stock what you like, because you're not the customer. Through my software company, we had a gift shop customer and she was in a fairly well-to-do area of Melbourne and the name of her shop was My Dream. And when I saw that name on the shingle, I shattered and said, "Oh my God, what am I stepping into here?" And of course it was because everybody told her she was really good at choosing home decor and things like that. And she created a shop that was her home. And it looked nice, but it closed within six months. So I would say don't stock what you like. Work out what you think you want the business to stand for and then throw half of that away and bring in things that scare you, things that are going to challenge you.
I was just at the Magento conference in Las Vegas and I've forgotten her name, but she's the head of the California Symphony. And she was talking about diversity. Not diversity in the way that we might've talked about it, but diversity in terms of how you attract different people to your business and in their case, to the symphony. And it resonated with me because one thing we've got to do as retailers is be more diverse in our focus. Previously it was about unique selling proposition. Be good at this one thing. This is going to be your point of difference. And I think now, with the way the marketplace is, we need to yes, do that, nail that one thing, but also nail something else that's allied to that, that brings in a different shopper, so that you're not as reliant on that one type of shopper you want to attract into your business. So I would say to this person, this friend I'm talking with in the coffee shop, "Be open to being more than what you think your business is going to be and listen to other people. And once you're open, start changing. From the day you open, start changing."
Bob: Yes, I love that idea. I love that idea. Pick something that surprises you or scares you because otherwise you're going to end up looking at merchandise you've already bought once and you're going to get bored with it, and then when you're bored with it, I guarantee your customer is going to be bored with it. So tell me, this is the name of the podcast is, "Tell Me Something Good About Retail." So Mark, tell me something good about retail before we're done here.
Mark: What's good about retail, particularly small, independent retail, is that is where so many people get their start in retail. So these indie small retail businesses provide good work, good learning experiences for people who are joining our profession. And I think that's really, really important. We play an important role. It doesn't matter which country you're in, small shops matter to local communities, small shops matter economically. They matter to people who are looking for a job after school, they matter to people who are looking to develop a career in retail. So I think that's really good about it. I think good brick and mortar retail has got a bright future if you embrace change and you embrace excitement.
Bob: I think that's a great way for us to end. I feel that brick and mortar retailer kind of normalizes people. That until you've worked in a brick and mortar store, you don't learn it's about somebody else other than you. And you can learn that at 18 or you can learn that after you've opened your store at 45 and go, "I should have learned that earlier, right?" That's kind of it.
Mark: Yes. I really agree with that. That's absolutely true.
Bob: How can they find out more about your stores down there in Australia?
Mark: NewsXpress is online at newsxpress.com.au. And my retail software company is Tower Systems Australia.
Bob: Fabulous. Well, it's been a pleasure talking with you today, my friend, and continued good fortune.