Flowing from the discussion yesterday about Tatts, I have been thinking overnight about calls by newsagents for the NSW government to protect them from the Coles and Woolworths supermarket duopoly when it comes to lottery products.
As I noted yesterday, I am against supermarkets and any business associated with supermarkets. getting access to the sale of lottery products. However, I am against it because they are already too big, not because of a desire for legislative protection for newsagents.
Businesses protected by legislation or government policy are lazy – look at the Australia Post government owned outlets for evidence of that.
We are in the middle of extraordinary change on several fronts in our businesses. Retail is changing at a faster pace than many of us realise. Print media is changing. Personal entertainment is changing. These and other changes are merging drive extraordinary challenges for our newsagency businesses and for the businesses of our suppliers.
The best way for us to have suppliers make decisions that serve us well is for us to be more valuable to them than other retailers they deal with.
I have heard newsagents recently say that a supplier should support newsagents because of the history. I don;t agree with that. I have also heard newsagents say there are thousands of our newsagency businesses and suppliers should respect that. I’d agree only in the thousands of newsagency businesses are serving the supplier well.
Whether we like it or not we are in a free market economy. if our channel wants a supplier to favour us ahead of any other retail channel then it needs to deliver to the supplier commercial outcomes that warrant such treatment.
3,500 (or whatever the number is) newsagents is irrelevant unless we are delivering a valuable commercial outcome.
So, if you are going to fight on the Tatts issue or any other issue, ask yourself what am I doing commercially to drive the outcome I want?
Back to the headline though – I think that more than one hundred years of protection set us up for non commercial behaviour. that suited many suppliers for many years. Today, however, it’s a new world and it is getting newer by the day.
With hindsight, dismantling deregulation in 1999 should have come with support for the proper commercialisation of newsagency businesses, to give them a better footing for a free market unregulated world.
Everything you say is correct in terms of agents expectations of government and suppliers. What is more distressing to me is the complete disregard Tatts has for the power of the brand they have built and the strength of the retail network they have leveraged off that brand over 40 years.
I would argue that the lotteries market is already oversupplied with outlets and customer access to the product is not the issue. Making it a supermarket commodity will not increase sales, it will simply weaken the brand and the retail network that goes with it. Every company that values its brand is now going the branded specialist store – Apple, Nike, Adidas, Peter Alexander, the list goes on – why is that?? Tatts think it would be better to go the other way.
To prove my point, there are 762 Tatts outlets in Victoria. After 1 year, Coles express fills 7 of the bottom 18 rankings, including 3 of the bottom 5. 5 of the 7 outlets have dropped places since last year.
ACCC have just approved Westfarmers (Coles) buying out the Pacific Brands Workwear division. King Gee, Hard Yakka, Stubbies et al. Don’t expect a Govt to help the small business sector against the duopoly.
What always concerns me with any of the issues is the lack of communication between Newsagents so as we are aware a National Group of what issues are happening and how we can all address these issues. We have no communication channel that we all communicate on a daily basis other than this Blog. ANF/ QNF do not have any such avenue set up and we are all left in the dark like mushrooms. While we fail to be a co-ordinated group we will be walked all over.
James,
I am in NSW. For a laugh I used to look at the ranking for 7-11 stores. It was easy. I used to scroll down to the very bottom of the rankings for all agents. Guess who used to fill out the bottom page or so ?
I wonder if the new pony tailed marketing Exec at Tatts will allow Lotto at Funeral Homes ? The Post office CEO must have an erection already (hence quiet from the Gvt) Florists ?
It will be handy tho for the punter to get his Lotto ticket at the Super, and also fill his script for hemerrhoid cream. Coming to your neighbourhood.
Regarding the ACCC allowing Wesfarmers to buy the brands in question, the ACCC determined that competition from other brands will constrain Wesfarmers from either charging too much for those products or from withholding those products from Wesfarmers competitors.
Brett – The ACCC had to look at the PAC Brands deal and say yes or no. There were no other offers and PAC Brands needed to offload that division. Why say no with little alternative. The ACCC are fighting the big boys more now than ever but hamstrung by unwilling or scared suppliers.
Niall you hit the nail on the head – in the absence of other offers deals like this go through.
Mark, I have to agree with the comments both you and James have made hear.
Unfortunately though, despite having market share in the sale of newspapers, magazines and Tatts, newsagent associations do NOT negotiate superior terms based on this market share.
I am a firm believer that associations are NOT true representatives of the industry and should therefore NOT be able to negotiate on behalf of newsagents.
Amanda, the challenge for any association is that the cannot actually negotiate commercial terms for newsagents as they have no mechanisms through which to give suppliers a benefit or behavioural commitment in return.
This is where marketing groups, franchises and others play a role but only for small groups of businesses in our channel.