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Quilts Presentation

Advisory Board Meeting 4/30/10
by

Doug Weaver

on 6 February 2011

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Transcript of Quilts Presentation

Growing Niche Revenue The opportunity Newpapers have core strengths that can be leveraged to create new lines of revenue. We are the largest mass-market medium in the Kansas City area, with valuable content that can be repurposed, plus a customer-service infrastructure to facilitate retail transactions. So here's what we did We turned a cost center - the switchboard - into a revenue producer Today: A variety of revenue sources Book publishing Repurposing of Star content Retail merchandising The revenue pie Quilting books 44% The Kansas City Store 37% Custom books 15% Newspaper stores 2% Info store 3% Ups and downs ... Uneven performance, but a good finish to 2010 Operating costs flatten ... Recession forced considerable cost controls in 2009 Inconsistent on proft ... Last year, revenue was down, expenses were up Value proposition: Kansas City Star Books The Kansas City Star is in the content business. Book publishing is a natural extension of the newspaper’s mission as a chronicler of the region, its interests and history. Value proposition: Rockhill Books Kansas City Star Books’ experience in book publishing can be leveraged through custom publishing, in which The Star is paid to author, edit, produce, market and distribute a book for a client or for other newspapers. Value proposition: The Kansas City Store The Kansas City Star is in an ideal position to leverage its relatively inexpensive promotional space and its wide subscription base with a retail and on-line store that sells merchandise from and about the Kansas City region. Value proposition: Newspaper stores Our experience in operating our own on-line newspaper stores, and the order-taking and fulfillment infrastructure we have in place, allows us to leverage these abilities by managing on-line stores for other newspapers. Value proposition: Info Store The Kansas City Star’s newspaper content is intrinsically valuable beyond the newspaper itself. That content can be repackaged and sold for commemorative, display and marketing purposes. Value proposition: Kansas City Star Quilts The Kansas City Star holds the largest single collection of historic quilt patterns in the world. The Star has not just a business opportunity but a responsibility to nurture that heritage. Where the expenses are February 7, 2011 Kansas City Star Quilts An overview One full timer

Approx. 5 key players at The Star



Approx. 20 freelancers The staff: Approx. 40 authors The books 1999 - Year first book was published 112 - Total number of published books 27 - Average number of books we plan to publish per year Additional products - Patterns, calendars,
notecards, DVD, t-shirts The numbers: A tall order! Since 1999, we have sold 351,634 books On average, each book is .25 inches thick Therefore, we have sold 1,828 total feet of books Or... Equal to three St. Louis Arches Here's what we want you
to be thinking about How do we manage faster growth?

How might we extend the brand?

What other questions should we be asking? Example: Is our marketing budget large enough? Sales Total quilts revenue since 1999: $4.3 million In 2010, we are budgeted to grow revenue 25% vs. 2009, or $185,000. To date, we are ahead of budget by $60,000, although the budget is very aggressive in the last six months. Customer Demographics 98% female 76% aged 45+ 18% aged 25 - 44 (within in the industry, this is a growing
market that we need to tap into) As our number of titles increases, so do our sales... But it's unrealistic to keep publishing more titles
in order to increase revenue. Before we start ... ... why this group? The mission: Get to know our business.
Help problem-solve.
Discuss growth prospects.
Eat lunch. Let's zoom in on two of the segments as case studies First up ... Product => Promotion => The Sale => Fulfillment The players ... Web hosting Book printing Warehousing, fulfillment Where our customers are (quilters) The competition Our marketing budget ... $40,000

That's about 4% of revenue.

Pretty small, but that's okay. COMPANY

C&T Publishing
Martingale
American Quilters Society
Leisure Arts
Krause Publications
THE KANSAS CITY STAR
Quilt in a Day
Landauer TITLES

208
182
112
93
79
64
40
21 Where our customers are (quilt shops) Marketing Plan for Each Title Promote on blog Promote on consumer site Promote on Facebook and Twitter Email campaigns to consumer, shop lists
Postcard mailings
Catalog distribution
Advertise in quilting magazines
Press releases to magazines and blogs
Trade show participation So with all of that being said...

Questions?

And back to our three questions:

1. How do we manage faster growth?

2. How might we extend the brand?

3. What other questions should we be asking? Average monthly expenses

Inventory
Compensation
Postage/freight
Royalties
Warehousing
Computer
Misc.
Credit cards
Office supplies
Business travel
Film
Bad debt 44.18%
23.67%
7.63%
7.14%
6.95%
3.27%
3.21%
1.41%
1.25%
0.57%
0.48%
0.25% Direct sales - 7%
Shops - 14%
Autoship Shops - 28.5%
Distributors - 50.5% Who We Sell To The Star has operated the Plaza store for just over a year. We pay Highwood Properties 8.5% of revenue as rent; the lease is month-to-month. The property faces Brush Creek and is just east of Wornall Road. Two stores: On the Country Club Plaza ... ... and at the National Archives near Union Station The Star has operated the National Archives store since May 2009 upon the opening of the new office for the regional National Archives. The space is rent-free, with GSA paying for all fixtures. In exchange, we help promote exhibits. Plaza revenue: $293,000 in first year Trend is up slightly.
Avg. monthly revenue: $19,400.
December 2009 revenue: $76,005. Archives revenue: $53,208 in first year Trend also is up slightly.
Avg. monthly revenue: $3,865.
December 2009 revenue: $10,701. On-line store: TheKansasCityStore.com The Star has operated an on-line store since it began publishing books in 2001. Over time, the store has proved a model for other newspapers seeking to open branded on-line stores. But there are challenges. On-line revenue: $161,170 in last 12 months Dining Club Card program helps in October,November.
Avg. monthly revenue (less DC and Xmas): $4,887.
Collegiate sales are critical. The merchandise mix Kansas City Star-published books.
Regional books from other publishers.
Local food, music, apparel.
Other gift items. Pushed emails to list of 30,000.
Ads in the newpaper.
Facebook (Kansas City Star Books fan page).
Twitter.
Events (book signings, exhibits). How we market the stores A quilts update Sales are running $112,000 over budget ... a 21% increase and a 28% jump vs. last year.
Revenue almost doubled in July vs. last year.
But huge targets ahead. Successes at the Plaza Store ... Revenue is growing.
A strong tourist draw ... the only such store on the Plaza.
Complements our on-line efforts.
Complements our book publishing with author events, etc. Challenges at the Plaza Store ... Not as many local shoppers vs. our Prairie Village Store. About 80% are tourists.
Staffing ... only time we have is to run the store, not find new opportunities.
Month-to-month lease poses a risk. Stronger numbers would help secure a permanent lease. Successes at the Archives Store ... Revenue is growing.
Leverages exhibits and events hosted by the National Archives.
Can staff by moving manager's office there.
Complements our book publishing with author events, etc. Challenges at the Archives Store ... Basically one big one ... need to get revenue higher ... need higher foot traffic.
Backup staffing, though, is an issue. Inventory challenges as well ... It's critical that we keep inventories tight.
We face the usual retail problem of moving out slow-selling merchandise.
So we need to be creative - and effective - in how we do it. So where does that leave us? These key questions: Where are the key opportunities for growth? Additional stores, for example?
What marketing opportunities are we missing?
Is there additional partnering that we can do?
Where are we missing on-line opportunities?
Are there other ways t0 leverage our connection to The Star that we're missing? First ... a quilts update Email list is tired ... need to refresh it.
Small number of Facebook fans.
Twitter also limited.
New products would spark a fresh look, but worried about inventory. But we have marketing challenges as well Next up: 4th-quarter 2010 discussion: Book publishing (non-quilts)

1st-quarter 2011 discussion: InfoStore (repurposing Kansas City Star content) Next up ... our retail business, The Kansas City Store The problem Newpaper revenues have declined. Niche categories include: Narrowly targeted magazines.
Micro newsprint products.
Niche on-line sites.
Targeted mobile delivery.
Community events.
Repurposing content.
Book publishing and retail merchandising.
Full transcript