"The press is getting more and more space at the kiosks".
Josef Jungo, K-Group, on the publishers' criticism and the free distribution of *20 Minuten*
Josef Jungo, K-Group, on criticism from publishers and the free edition of 20 Minutenby Markus Knöpfli Last year, K-Group increased its turnover and investments in Switzerland. Nevertheless, it is repeatedly criticized by publishers. However, the experiment with 20 Minuten at the kiosk is only one point of criticism that Josef Jungo, Managing Director of K-Group Switzerland, addresses.
Last year, the K-Group invested 33 million Swiss francs in Switzerland alone. For what?
Josef Jungo: We invested a good 40 percent in maintaining the sales outlet network, in new buildings and conversions. Around 30 percent went into technical equipment, such as the new order picking system or the data warehouse.
30 percent of the investments are spent on new concepts such as convenience or new press display units.
What proportion of K-Group Switzerland's turnover was accounted for by the press in 2001?
Jungo: Around 33 percent, or just over half a billion francs.
Valora's 2001 half-year report mentioned a "slight decline in sales" in the press division. What is the picture for 2001 as a whole?
Jungo: This segment has been in decline for around five years and once stood at 35%. Last year, newspapers continued to lose ground (free newspaper effect), but the decline leveled off significantly and magazines have even almost stabilized.
The decline in the press sector comes as no surprise to publishers. They say that the variety of products on newsstands has increased to such an extent that there is less and less space for print titles.
Jungo: The opposite is the case. As I said, we invest up to 15 million francs a year in our kiosks, which are also being enlarged. The press always gets more than 50 percent of the space, and this proportion is getting bigger and bigger. We are also investing in new press offices and walls that offer more opportunities.
The publishers also criticize the fact that promotions are not fully implemented. What the K-Group offers cannot be checked down to the last depositor.
Jungo: We primarily carry out promotions at our own points of sale and only with retailers who work closely with us. What is also important is that when we make a nationwide promotional offer, we only ever talk about 1000 of our 1350 sales outlets. The reason: not all kiosks are equipped in the same way.
So can this problem be solved with better communication on your part?
Jungo: That's one part of the solution. Other parts are quality management and close cooperation with the media companies. Both have been intensified and are producing good results.
How much does K-Group Switzerland earn through promotions?
Jungo: Last year it wasn't four million francs.
However, the K-Group is increasingly being criticized for offering sales promotions to publishers and other companies instead of selling newspapers.
Jungo: The fact that this is completely untrue can be seen from the press sales revenue of half a billion francs, which bears no relation to the modest promotional revenue. Our investment in kiosks alone is four times higher. The only thing that is true is that we want to make even better use of the potential of one million paying customers per day and present the opportunities to our partners - including advertising agencies - more effectively. After all, when a new product is advertised, this can be supported very specifically at the POS. But our main interests are clearly a good offer and good sales.
Some publishers also criticize the fact that promotions are too expensive. They say it is more worthwhile to invest money in subscription advertising than in individual sales.
Jungo: I can't generalize like that. I think you need both, because retail sales are usually the stapes for subscription customers.
What is the K-Group doing to drive up press sales again?
Jungo: We've already talked about our investments. We will also soon be opening the first of our newly designed press centers in Bern, where we will be able to present even better by title category. The dual presentation of press titles is also an issue. We have also succeeded in convincing department stores that sales increase with larger press walls. And finally, we want to intensify our contacts with publishers so that together we can react even better to events such as the death of Queen Mum or Simon Ammann's medals.
What was the real reason you stopped the attempt to give away 20 minutes for free at the kiosks?
Jungo: The decision was based on normal business considerations, although there was no unanimity internally. Our primary focus is on selling press products, not giving them away. The distribution of free newspapers, on the other hand, is a service in the area of fine logistics, but it destroys one of our core businesses - on the one hand at the POS itself, and on the other hand it disrupts our relationship with the publishers.
This last point was probably the main reason for the stop, wasn't it? Your own study said that neither press sales nor sales of other products suffered as a result of the trial.
Jungo: Logically, the relationship with our strategic partners also plays an important role, but ultimately business considerations were paramount. All the more so as several publishers were bidding for the distribution and print jobs of their competitors, the commuter newspapers. It was also strange that those who wanted to ban us from the test were particularly interested in the test results.
Last year, the K-Group invested 33 million Swiss francs in Switzerland alone. For what?
Josef Jungo: We invested a good 40 percent in maintaining the sales outlet network, in new buildings and conversions. Around 30 percent went into technical equipment, such as the new order picking system or the data warehouse.
30 percent of the investments are spent on new concepts such as convenience or new press display units.
What proportion of K-Group Switzerland's turnover was accounted for by the press in 2001?
Jungo: Around 33 percent, or just over half a billion francs.
Valora's 2001 half-year report mentioned a "slight decline in sales" in the press division. What is the picture for 2001 as a whole?
Jungo: This segment has been in decline for around five years and once stood at 35%. Last year, newspapers continued to lose ground (free newspaper effect), but the decline leveled off significantly and magazines have even almost stabilized.
The decline in the press sector comes as no surprise to publishers. They say that the variety of products on newsstands has increased to such an extent that there is less and less space for print titles.
Jungo: The opposite is the case. As I said, we invest up to 15 million francs a year in our kiosks, which are also being enlarged. The press always gets more than 50 percent of the space, and this proportion is getting bigger and bigger. We are also investing in new press offices and walls that offer more opportunities.
The publishers also criticize the fact that promotions are not fully implemented. What the K-Group offers cannot be checked down to the last depositor.
Jungo: We primarily carry out promotions at our own points of sale and only with retailers who work closely with us. What is also important is that when we make a nationwide promotional offer, we only ever talk about 1000 of our 1350 sales outlets. The reason: not all kiosks are equipped in the same way.
So can this problem be solved with better communication on your part?
Jungo: That's one part of the solution. Other parts are quality management and close cooperation with the media companies. Both have been intensified and are producing good results.
How much does K-Group Switzerland earn through promotions?
Jungo: Last year it wasn't four million francs.
However, the K-Group is increasingly being criticized for offering sales promotions to publishers and other companies instead of selling newspapers.
Jungo: The fact that this is completely untrue can be seen from the press sales revenue of half a billion francs, which bears no relation to the modest promotional revenue. Our investment in kiosks alone is four times higher. The only thing that is true is that we want to make even better use of the potential of one million paying customers per day and present the opportunities to our partners - including advertising agencies - more effectively. After all, when a new product is advertised, this can be supported very specifically at the POS. But our main interests are clearly a good offer and good sales.
Some publishers also criticize the fact that promotions are too expensive. They say it is more worthwhile to invest money in subscription advertising than in individual sales.
Jungo: I can't generalize like that. I think you need both, because retail sales are usually the stapes for subscription customers.
What is the K-Group doing to drive up press sales again?
Jungo: We've already talked about our investments. We will also soon be opening the first of our newly designed press centers in Bern, where we will be able to present even better by title category. The dual presentation of press titles is also an issue. We have also succeeded in convincing department stores that sales increase with larger press walls. And finally, we want to intensify our contacts with publishers so that together we can react even better to events such as the death of Queen Mum or Simon Ammann's medals.
What was the real reason you stopped the attempt to give away 20 minutes for free at the kiosks?
Jungo: The decision was based on normal business considerations, although there was no unanimity internally. Our primary focus is on selling press products, not giving them away. The distribution of free newspapers, on the other hand, is a service in the area of fine logistics, but it destroys one of our core businesses - on the one hand at the POS itself, and on the other hand it disrupts our relationship with the publishers.
This last point was probably the main reason for the stop, wasn't it? Your own study said that neither press sales nor sales of other products suffered as a result of the trial.
Jungo: Logically, the relationship with our strategic partners also plays an important role, but ultimately business considerations were paramount. All the more so as several publishers were bidding for the distribution and print jobs of their competitors, the commuter newspapers. It was also strange that those who wanted to ban us from the test were particularly interested in the test results.
