There have been plenty of stories this week about looming sunset of the five year moratorium that protects lottery agents in NSW. Much has been written about the fear of Coles and Woolworths getting lottery products. Here are some of the stories:
- Click here to hear Ray Hadley on Radio 2UE yesterday.
- Click here for a report in The Daily Advertiser.
- Click here for a report in The Maitland Mercury.
- Click here for a report in The Land.
- Click here for the report in The Northern Star.
- Click here for a 9 News report.
While I applaud newsagents getting media coverage and fighting about this, I urge them to plan for a business with diminished lottery revenue as that is what will give them a better future.
As I have noted here already, sure Woolworths and Coles getting Tatts products would hurt, however – the migration of the regular lottery customer to online will hurt more. This is the big issue and there is nothing newsagents can do to stop that migration given the ease with which we can make online and mobile purchases of non physical product.
Online will take more lottery revenue out of the newsagency channel over the long term than Coles and Woolworths.
I am concerned that newsagents investing in the supermarket fight are not protecting their businesses from bigger and more challenging issue.
We have done what we can to broaden our portfolio of goods & services to reduce the importance of Lotto, particularly with high margin offers. Nevertheless, Lotto will remain a significant part of our mix, and the primary reason for customers to walk in the door.
I believe that Coles & Woolworths won’t get Lotto generally because…
– Tatts has been in many states for many years… in Victoria since 1972. They have yet to launch into mainstream Coles & Woolworths in any state. They’re trying Lotto in servos like Coles Express in Victoria. But, remember that they also tried unsuccessfully in 711 servos in NSW for 5+ years, pulling out because it wasn’t viable for either party. My local 711 manager confided to me that he was making $25 a week profit after all that time.
– Lotto controls 1,500 agents in NSW/ACT who salute when Lotto comes into the room. Coles and Woolworths rule their suppliers. Lotto won’t like or accept this.
– Lotto has become a very important part of most newsagencies’ total profit mix, averaging around 40%. It is the main drawcard to get “bums through the door”. And when a newsagent’s house is on the line, he’ll fight. Don’t underestimate the public support of the local newsagent, evidenced this week on several occasions in the Daily Telegraph and on Alan Jones’ radio show. A couple of examples are the deregulation threat of the mid-nineties and the News Ltd T2020 distribution-territory fiasco a couple of years ago.
– It is in Lotto’s financial interest to have economically viable agents. For this reason, it is very unlikely that they would introduce Lotto into a Coles or Woolworths within the same shopping centre where there was a viable Lotto agency and cause neither to have a profitable franchise.
In 2015 they will introduce scratchies (only) into a number of additional outlets, particularly convenience stores and servos. Scratchies represent less than 10% of our Lotto revenue; they are largely impulse items, and I believe that this strategy will not cause excessive cannibalisation of existing Lotto outlets.
It’s true that Tatts should have mitigated the bad news that everyone knew was coming 4+ years ago. Especially when they are about to launch their first new Lotto game for many years.
Tatts has obviously underestimated the commercial and political agenda of NANA (the Newsagents Association) and its CEO, but will make a public announcement in the next few days.
What we need is (1) Clarity for the future (2) Lotto to start working in partnership with their Agents.
But I can’t forecast either.
Cheers,
John Emmery
AK Newstalk Westpoint Blacktown & Riverstone News
John there is no up side in over the counter Lotto sales. For the future, focus on attracting shoppers for other items. There is no downside for you in doing this.
While the public will get on talkback radio and write on petitions about their support for newsagents, ask the now closed butchers, bakers, greengrocers and farmers about the public support of them versus Coles and Woolworths. Aussies shop for price and convenience despite what they say.
http://www.news.com.au/finance/business/coles-to-pay-1125m-in-fines-and-costs-over-bullying-suppliers/story-fnkgdftz-1227164122835
why would anyone want to deal with coles or woolworths????
The ACCC chairman, Rod Sims said
“Coles had engaged in illegal and unconscionable conduct in its dealings with suppliers, including demanding payments that it was not entitled to to fill its own profit gaps and threatening commercial consequences”
We could very easily use these same words to describe to the ACCC what the
trading terms, are, for newsagents with their suppliers (distributors).
Maybe while the iron is hot, the ANF could strike???????????
Our trading terms are outmoded, archaic, and penalize us by using our cashflow to support their (distributors) model.
With a 50-55% returns ratio over 40 years it is a clearcut case of deliberate oversupply to ensure their cashflow.
I don’t think I am alone here????
Subaru, the problem is they do. People say they care for farmers and prefer small business and then they tell us what they really think through where they spend their money.
June, the ANF is missing in action on this. They spent too much time and money chasing a parcel service when they should have been working on this issue. As they say, it’s an epic fail.
I’m starting to get a sense that Coles and woolies have gone too far in the eyes of the general public, they need to be very careful how they move forward, and I’m sure this is being discussed in board rooms at the moment. People have little choice but to shop with them as that’s all there is for most, but don’t discount people pressure on politicians to change some rules, social media could well start a wild fire that will have both the duopoly and the politicians running scared. Just read some of the comments whenever Coles or woolies have something running on Facebook, not too many kind words. It’s simmering away just waiting for a spark.
most of my customers are saying the same thing-
haven’t coles and woolworths destroyed enough small businesses? the butcher, the baker, the fruit and veg shop and so on? they already have newspapers magazines and cards, and now they want lotto as well? When is enough, enough for them?
In Philiip Adams column in teh Weekend Australian magazine dated 14th Dec, he lamented at not being able to get a toaster from anyone else except Coles and Woolworths in the town near his country property. I laughed out loud ! His own politics wanted this to happen – one department store for all equal people – “GUM” .Yes, we have “two” major retailers, but really, together they are “GUM”. Australians have voted with their feet.