The Tabcorp 2018/19 Annual Report will be sobering reading for any lottery retailer for in that year, revenue from online lottery ticket purchases rose 39.8% from the previous year. For reference, online revenue grew 22.6% in the FY17/18 year over the FY16/17 year.
While the company refers to this shift in revenue source as part of its omnichannel, I see it as a migration from in-store purchase to online.
They have sought to support retailers with a modest increase in income, which has complex strings that keep retailers positioned more as servants than partners.
The size of the increase in Tabcorp’s own direct sales does not directly correlate with a decline in sales in-store. However, it is happening from what I can see at some stores. As a lottery customer, the benefits of online and in-app purchases far outweigh the in-store.
For its future, Tabcorp needs to continue to push growth in online purchases as they are, I suspect, more valuable to the company than in-store purchases. With retailers playing such an important part in brand awareness and facilitating access to online, the company needs to keep them in check.
I don’t have lotteries in the newsagency businesses I have today. I did have years ago, but not today.
At some point, decisions will be made by retailers along the lines of decisions some of made many years ago about our home delivery runs. There will be a point when the requirements, price retail space cost and all the hoop jumping is not financially worth it.
What can help retailers today with a decision they may wish to make in the future is success at attracting new shoppers for purposes other than to buy a lottery ticket.
Tabcorp’s latest results are to me a strong call to retailers to relentlessly pursue non lottery new traffic opportunities cities through their businesses. Lottery retailers who do not do this will see their business results perform in line with the results achieved by Tabcorp. If the company continues to successfully grow online purchases and if that is achieved at a cost to in-store purchases then lottery focussed retailers will lose revenue and business value.
To be clear – I am not criticising Tabcorp. If I was a shareholder, which I am not, I would applaud their strategy. My criticism, if there is one, would be at retailers who are not acting already to make their businesses more relevant outside of lotteries. This is mission critical in my view.
Note: the image is from the Tabcorp published investor presentation.
This growth will only continue with the insidious introduction of the sms notification campaign which will give greater access to an online portal. Currently for me having Lotto still guarantees footfall into the shop giving an opportunity to sell other lines so I am sticking with it.. (won’t publish my name in case of breach)
I found the Report encouraging to see that Retailers including Newsagents actually increased their turnover for the period ending July 2019 by 17.7% while active registered players 22.2% to 3.3. million in numbers. Digital Turnover represented 23.5% of total Lotteries turnover. It’s alittle vague when actual comparisons are reconciled however the good news is that most newsagents that we consult with are up ranging from minimum 13% through to a high of 36% in commission increases. The mean being 19% to19.5% of around $133,000k plus p.a. of commissions earned. This represented in most case more, much more than the Gross Rent paid p.a.
It may seem that Lotto is trying for more and more conversion from Retailers to on line however its great to see that meanwhile newsagents are sharing in the “Jackpot” boom type promotions. A much better result than it was with Tatts.
as AVFC states it brings in traffic and therefore a base for conversion to other product sales- Can’t complain about that as long as you make it work whilst it’s in growth phase.
Appease retailers with a small bone increase
Keep retailers positioned as servants.
Come on Mark, that’s nothing short of scathing criticism. You clearly dont believe in Lotteries and I get that, but this ongoing passive aggressive behaviour is a little unbecoming. Arguably all franchisees are servants to the franchisor.
You don’t have it in your stores, you don’t like it as a business stream, you seem to question Tabcorps motives. We get it.
Basically what the stats mean is that whilst On Line lotto is improving rapidly percentage wise it is off a low base making its current situation of around a third of retail sales in other words Retail sales a three times greater than those of on line and Online increased fom a low base 73.5% and Retail from 3 times its base increased by 17.7%.
This basically means that retail Sales are extremely important to Lotteries and like all our competition enmasse, online is the greatest competitor.
In summary Lotto Franchisor is not our competitor, they like everyone else will pitch for both consumers and may the best one win. Naturally they would prefer 100% online as the costs are sunstantially lower, however how can they ignore the massive Retail presence especially with the implulse purchaser component at Jackpot time the casual purchaser just passing by in store all of which online doesn’t provide.
Retail’s job, same as in every field of business, is to compete with the opposition, not to reject or punish the supplier.
Despite the online trend we have had positive growth over several years, and our business is now more than 50% bigger than it was in 2010. (which is much better that my Tabcorp shares have done)
In the last 6 months 2 stores in adjacent suburbs have both gone broke, so what do the representation experts at Tatts do ? They give some one a licence to open up in our suburb, even closer to us than the 2 have gone under. This would suggest to me that they aren’t working to any strategy but are managing their business very situationally.
Hi Withheld,
I am of the same belief and as their Franchise agreement states that the appointed franchises is not exclusive area wise -this is the same in most Franchises-in itself it emphasises tha Retail is a constant changing and therefore challenging environment which is recorded here and constantly reiterated.
The fading of priority purchase of newspapers from generato to generation caused by the variety and convenience of news from sources other than newsprint is message to this changing World, get with it or become a Dodo.