On The Run, owned by Peregrine Corporation, is a chain of convenience stores operating 24/7 across South Australia. The On The Run (OTR is how they refer to themselves) network is growing.
In an OTR store you will find all the usual convenience lines plus plenty more. The stores are modern, clean, well-laid out – best-practice convenience in my view.
Newspapers are accessible as is a good range of magazines. Where there is an OTR store, a high street newsagency is probably not needed for local destination newspaper and magazine purchases. Given the South Australian newsagency model it does not surprise me OTR has flourished there.
Now, we see OTR challenging established retail newsagents. New outlets opening close to newsagencies and challenging the newsagency businesses for everyday lines like newspapers, magazines and lotteries.
The lotteries offer is what concerns me as OTR appears to be operating under different rules to newsagents, more commercially beneficial rules.
SA Lotteries is now owned by Tatts. What happens is South Australia is interesting as it is a common testing ground for many businesses. News Corp. for example, has tested new approaches and offers in South Australia for many years. Partworks are often test released in SA.
I wonder if the Tatts / OTR relationship is a test or trial of what we will see elsewhere Tatts operates.
I was in several OTR stores in South Australia yesterday to see first-hand whether they operated under different rules. What I saw suggests to me that OTR is treated differently to newsagents when it comes to:
- Counter space required.
- Shopper requirement.
- Non Tatts products in Tatts space.
- Posters required.
- Multiple use of the writing desk requirement.
I went to several outlets to ensure I was not in one ‘rogue’ operation. There was consistency in terms of space allocation, Non tatts products placed in locations that Tatts would breach newsagents for and considerably less visual nice than newsagents are required to spend money on promoting Tatts brands and products.
It is clear Tatts is happy with OTR and why would;t they be? OTR offers consistency that can come from a central managed business operation. Consistency appears to be important to Tatts than personal, local, service.
Here is what I saw when entering one OTR outlet:
Here is a photo from approaching the counter inside the business:
Comparing the space allocation to what Tatts has recently required of newsagents, the OTR space requirement appears to be around two thirds less. This significantly alters the cost basis of offering Tatts products. The closer proximity of other supplier product to the Tatts terminal helps OTR drive a deeper basket from tatts purchases, again enhancing the financial value of Tatts sales.
Is the OTR model a model Tatts would like to see nationally? While you can ask the question, I doubt anyone at Tatts would say. Their answer would be about the importance of newsagents to the company and that the requirements they have for newsagents are for the good of newsagents.
Any newsagent concerned about the direction of Tatts outside the newsagency channel should look a OTR and consider what could happen to their business is similar occurred in their area.
FYI, here is the pitch OTR make from their website:
Now you can play your favourite SA Lotteries games at a number of OTR stores, including Saturday X Lotto, Monday and Wednesday X Lotto, Oz Lotto, Powerball, Keno, Instant Scratchies, Super 66 and The Pools. Playing the lottery is easy while you’re On The Run!
Woolworths Petrol Plus stores are the same in NSW Mark. Minimum fit out spend, NO DigiPos screens, minimal signage and writing bench off location in another location in-store.
Two different standards for the same commission…….
Within 10km’s of where I live, I’m surrounded by 7, OTR stores here in Adelaide. From talking to staff, since they introduced Tatts, none of them like it due to the delay in serving normal petrol customers.
OTR also have a wholesaling arm that sell to other retailers also. Their franchising agreements ensure they don’t adhere as strictly standalone stores be it Subway etc.
Having over 100 store’s in SA means they’re not entering into deep discounting in any way, on any product line. It’s a pick choose situation when they sign any agreement, blatantly one sided.
It’s amazing what their disgruntled staff will tell you…
OTR is a conundrum. Massive investment, convenience done very very well … they should be loved. But they are not, many people shop there as a last resort.
I don’t like double rules though and agree they appear not to be adhering to the same guidelines on merchandising or counter space. Still, it adds to the bad lottery experience at OTR.
I see many OTR lottery tickets for checking. Whilst I always try to pay out over $500 winners, even for neighbouring newsagencies, I have politely declined for OTR and suggested they return to the OTR seller. Good luck lol
Mark, I am concerned at the double standards and not just with Tatts and OTR. The annual Tatts audit report to SA Govt has prior to 2014 broken down the total number of lottery outlets by type … newsagency, petrol retailer, pubs etc. In the 2015 report, there is no breakdown and of more concern, no total number of outlets.
OTR are rapidly acquiring sites and updating existing sites to the full OTR format, including a 2nd within 400 metres of my store.. I have no doubt they have added to the total number of Tatts outlets in SA. But there appears to be an agreement not to publish the numbers.
SA Tatts lottery sales are marginally up in the last 3 years. Online is certainly up and now we have more outlets. It all adds up to a smaller slice of the cake for the traditional outlets. Which is fine, if Tatts wants to operate like that. But I don’t like the secrecy with outlet numbers, it smacks of connivance, underhand dealing. Publish the numbers Tatts and then justify why I am to get yet another direct competitor.
Colin,
ANF gone missing again.
Where is the representation
Colin, yes – get yet another competitor who has rules that give them a competitive advantage over you.
Mark
Another competitor getting an edge on Newsagents. Page 30 of the Woolworths catalogue in NSW, buy any 2 mags for $7 Women’s Day, NW or OK! save a $1.80. This is really starting to piss me right off that Newsagents
are not given the same deal.
Gregg do you want the same deal. Typically, the newsagent deal will be you, the newsagent, carries the cost of the deal whereas I suspect with Woolworths they are permitted the GP of the usual full cover price.
Colin, you can see how many outlets Tatts has in S.A . log on to Tatts hit view “performance report” then “rankings report” you will see every outlet and there ranking.
Make no mistake OTR have their set on taking business from Newsagents and Tatts Brauer and News Corp are helping to facilitate it
Newsagents set up costs ie Lotteries counter and writing bench cost $20,000 -$30,000
OTR’s Lotto setup costs = Not much
Tatts in SA are strictly enforcing compliance 4 audits per year if you fail Tatts then charge the agent for a re-audit I think the cost is $230.00
Part of the compliance is no other product on the counter.
OTR are exempt from having product on the lotteries counter as they don’t have one and on their writing bench they have product, usually bottled water at either end
Audits are conducted by a company contracted by Tatts, but the follow up audits which attract a $230.00 charge are only conducted by Tatts representatives.
Interesting to note, even the auditors who we have spoken to on these issues, think its grossly unfair.
Brauer supply directly (now via Gotch) to OTR stores including ACP titles , even though those stores on their own would never qualify for direct supply , If you look on the Gotch web site you will see Perrigrine Titles, that is OTR
Many Newsagents cannot get supply of ACP titles and have been reduced to sub agency status
How Brauer can justify this in the face of falling magazine sales is hard to comprehend
News Corp here in SA set the supply for OTR stores, OTR seems to rarely run out of papers ,Newsagents have always struggled to have a adequate supply of Newspapers
It concerns me that east coast newsagents will only worry about this when they see it on the scale and to the professionalism of OTR – something they are not seeing on the east coast yet.
I believe Peregrine owns a roadhouse at Bordertown, lookout they are heading east!
There will be an OTR on a corner near you very soon, they are spreading like the plague
Mark,
I don’t see OTR as a direct competitor. Sure they sell mags, papers and lottery. But the customer service is nil, they do not compete on gifts or cards.
But I fear for the IGA, the mainstay of my shopping centre. The IGAs are ill prepared for the looming pincer attack of Aldi/Coles/Woolworths slugging it out for the main shopper, and the likes of OTR on the top up/convenience shopper.
It is this indirect threat and the resulting fall in foot traffic that concerns me.
Shane …thanks … I will
I think its foolish not to see OTR as a competitor they have taken the place of many high street Newsagencies. We have seen already numerous closures .
Lotteries and magazines ,particularly ACP titles are the drivers of our foot traffic.
Conveniance is OTRs advantage and most consumers are prepared to pay for that , whilst they are not into greeting cards yet whos to say they won’t be
I agree Mark. Their model is evolving. Papers, magazines, tobacco and lotteries. Four traffic drivers for many newsagency businesses. OTR is better at this than any other c-store group I have seen in Australia a the moment.
Disagree. I am not in the convenience or 24 hour market. I am in quality , service and shopping experience market. I have 2 OTRs within 400 metres and pay no attention to them. I am however watching the new gift shop a similar distance away.
Hi Colin, If OTR have any products that are exactly the same or product replacements that can be used instead of products in your shop then by definition they are competitors. Every competitor should be treated warily and we should also have a risk management strategy for unseen competitors entering the market or current competitors evolving their business.
Chris, by your definition the local pub selling lottery is also a direct competitor. As is the local Mitre 10 selling cards. Technically true, but only at the margin.
My focus is on the local competitors threatening the main profit lines of my business … they are gifts, cards, books, wrap and stationery. None of which OTR stocks.
Focus needs to be on the real threats, not the whole market.
I hear OTR has branched out and purchased Arndale shopping centre, with Coles, Big W around 50 shops and a soon to be Aldi.