Click here to see the letter NSW Lotteries (Tatts) send newsagents. It includes this paragraph relating to product distribution:
Distribution of lottery products
In terms of concerns about product distribution via supermarkets, Tatts Lotteries has been consistently open and transparent about the fact that a trial commenced in July 2013 selling lotto products in selected convenience fuel outlets in Victoria. The purpose of this trial is to thoroughly and carefully assess whether this new channel will provide an opportunity for Tatts Lotteries to capture incremental lottery sales. Results to date over an extended trial period of almost 18 months demonstrate this to be the case and accordingly the convenience fuel channel continues to be explored. However, we wish to reinforce that commentary by others that this trial indicates an intention to extend our retail reach to supermarkets, is an attempt to distort the reality and is not based on fact.
Further on the letter states:
As a consumer focused retail business, it is imperative that our products are conveniently available to our customers. As such NSW Lotteries must continue to respond to our customer’s needs, and it is in that context that we reiterate the value placed on newsagents facilitating this and that is why we are so committed to partnering with this retail channel going forward.
The letter also claims – NSW Lotteries focus has always been on driving growth for our partners.
As a public company, Tatts must put its shareholders above all others, they most do whatever is necessary to drive the share price. If this can be best achieved by growing the businesses of their partners like newsagents they will do it. But shareholders must come first.
The biggest concern arising from the new franchise agreements next year is the shopfits. NSW Lotteries are apparently insisting that the lotteries counter must be immediately inside the shop entrance on the left commencing with the customer bench followed by the curved lotto counter which will face the shop entrance. I’m told NSW lotteries are rigid in this requirement. This means that:
A) lotto customers wont have to take more than 2 steps inside the shop.
B) lotto customers will be queuing across the shop entrance
Good point Shayne and it’s the one issue that I’m more concerned about than anything else at this early stage.
I suspect that more thinking has gone into their Retail Image requirements than the balance of the agents shop. I understand that they are not flexible on this but a more balanced view would be appreciated. I don’t believe the new fit will suit most shops resulting in creation or or exacerbation of customer flow patterns in some shops. I get it that they want the ‘shop front’ look and the rest of the shop is our problem however I think it breaks most retail image protocols for balanced shop presentation and customer flow.
Im not sure what planet the Tatts correspondent is living on, but to describe the fuel convenience trial as capturing incremental sales is stretching the facts Id suggest.
Of the 760 Vic rankings, Coles Express outlets currently occupy positions 755, 756,757,and 759, and going backwards. The highest ranks at 742.
So Tatts has to decide whether they are a commodity product sold by anybody anywhere. Or whether they are a branded product sold by retail specialists with deep product offer and knowledge, sold from highly recognisable branded outlets, because you cant be both. And the 7/11 and now Coles Express experiments are living proof despite Tatts rosy outlook.
How much of their soul suppliers will sell to get into Coles and Woollies boggles the mind. Just ask Magazine and Newspaper publishers.
If I was a NSW agent and required to do a shop fit that was to harm my business I’d challenge it legally.
I witnessed Woolworths staff, on a daily basis, the ruthless practice of undercutting the adjacent green grocer in our shopping centre until in the end the poor guy raised his hands, gave up and left. (Did a midnight runner actually, much to the chagrin on Westfield management) Woolworths and Coles have this lotto market fair and square in their sights. (And it’s not going to be a pretty sight for newsagents)
Just can’t see woolies or Coles redesigning there supermarket entrances to fit tatts requirements. I would be holding off on my shop fit until that issue is clarified by tatts, it has to be same rules for everybody. Maybe they plan on rebranding the customer enquiry/cigarette counter as a lotto counter
There are another two issues beside the 25/35 k compulsory refit.
1. Your bank account be swept twice a week on Fridays and Tuesday instead of just Tuesday.
2. No exclusivity in the Franchise agreement. Tats can put who they like where they like to sell their product and the Franchise agreement is structured so Tats can do this.