In their half year results, Tabcorp reports that online sales are up 39.8% to 26.7% of lottery revenue while retail is up 5.2% for the same period.
In their half year results, Tabcorp reports that online sales are up 39.8% to 26.7% of lottery revenue while retail is up 5.2% for the same period.
Mark this is a very interesting Report which I would like to comment on in depth as it’s more complex than is presented. I agree that there are divisions in our Industy between Services which are always temporary as technology finds new ways of accommodating them. then there is retail as like you I have passion for and I agree totally it is not easy, it is mistake ridden, and success driven.
The industry as it was is over with this division between services and retail so divided in a neighbourhood sense.
The twain shall never meet again however there is hope for a short and if successful a longer much longer chance of revival for the local neswagent without having to compete with the big Convenience store outlets. In fact they can be better than them for a 7-11 or example would not survive in a neighbourhood environment.
it is a great concept with International backing however needs individual committment i may be wrong but I think for those Newsies that can’t graduate to the Retail solution that you represent -which is great- there is some relief and at very little expense to go forward after all what have they to lose? they are community service operators as you have correctly acknowledged. this is not retail but a service to the community much better than closing the doors.
This result reinforces concerns that we had when they introduced putting the SMS for winners on the system. It was a blatant move to shift customers to online sales. We are seeing an increase in online winners. Furthermore we now get customers who want to talk to us about their online problems, they can’t seem to read my blank face.
The best result for Tabcorp is more people purchasing online, as I have noted here for years. This result is not unexpected.
Ian, the we need to understand and Mark is making the point, is that we, as retailers are in competition with online., especially in services. It’s quite reasonable to understand that services save enormous amount of money by buying direct It cuts out the middle man (you the retailer).
Respect your enemy and compete with them whilst you have that audience. They want to make their company more profitable and you yours. Nurturing our Lotto customers into other products is our only growth after all this is what they are doing to us It’s called competition.
Mark makes this point as I read it in a different way by saying don’t rely on services. I stated earlier about services.think Public service -Banking -Opal cards – Touch all olf this can be and is so easy to be accessed online It’s not like goods where you may like to “try the garment on’ or see the gift on line knowing the store product but not the full range and colour.
The calendar year 2019 has been the worst yet for those that have traded in comparison with the year before 2010 is only steady as she goes.
Anyway at least your on line player is playing with you as well for the positive is that the retail is up 26% from a high base -do what the Lott is doing spend the extra on converting the customer to other goods as well as making them welcome to “chat lotto”
Years ago when I cautioned about agency business I did not want to, years down the track, be saying: see, this is not unexpected. This Tabcorp result and others data indicate the end of the old agency model.
An online sale is more profitable for Tabcorp than a retail sale so its obvious they will do everything they can to increase the % of sales made online rather than at retail. Any retailer who sells Lotto products needs to understand that Tabcorp doesn’t care about them and only about what makes Tabcorp the highest profit (which is online)
Isn’t this the way in 2020 with all business me first may the best one win?
The attitude of some supplier competitors is “we maximize our income form on line because it’s our custiomerand we make more money this way” and we will do that until we meet the “demand” growth levels of both Retail and on line and those who survive profitably in Retail will remain.
Not sure if the 26.7% applies to SA. But consider this, there are 400 lottery outlets in SA and OTR now have 140 outlets. Rudimentary maths leads to one thinking these 2 entities have 60% of the market. Not quite true but the future is clear.
Hi Colin, excuse the ignorance in S.A. there are 400 outlets OTR now have 140 (what exactly is OTR?) and what are and who has the other outlets and which one has the 60% and the 40%? I take it, this a Geographical presence not a digital sales one of Retail versus online. More detail woould be great as to compare whith the Lotts results.
Graeme, OTR, On The Run are a chain of petrol station/ convenience outlets which have lotteries. My understanding is they have been given lotteries with a minimal to no investment – like Woolies Petrol in NSW. often OTR outlets are very close to existing lotteries outlets. I think Colin means that OTR and online sales would account for 60% of all lotteries turnover in SA
Shayne,
Not would but could. I doubt OTR’s service level will give them the market share their outlets suggest they should have.
Are you aware OTR are now actively seeking sites in NSW.
Welcome to the “we never close” model of fuel, convenience, fast food and lottery. 24 hours a day, 365 days a year.
Hi Colin and Shayne,
Thanks for enlightening me re S.A. now I get it.
NSW State Lotteries tried servo’s in NSW when I was CEO of NANA my argument to them at point in time was it won’t work. Reasons.
Petrol in those days and today is not a loyalty purchase -a convenience and not regulary-especially at the same outlet therefore they a random purchase and a lot were/are paid for by company credit card. or business cards that don’t want to show gaming etc.
NSW State lotteries shut down any expansion some years late. I might add not becasue of what I said because they tried it and failed.
a lot of new people in corporate life want to reinvent the wheel so they can prove themselves -they don’t have a historical record or they just don’t care after all it will work for them.
These people come and go and no doubt they do damage along the way and newcomers repeat the same failures. Woolworths -Coles do it all the time and maybe our publisher principals have just done the same.
lotto’s biggest threat to retail is sledging the customer bias their way by offering a discount once we have registered the consumer, to shop directly with them. The newspaper companies are doing the same with News Corp in NSW Sydney Metro area taking back the whole Distribution system.
Well we can cry, yell foul or accept and move on after all we handed back runs which in turn forced them to look at their model and they’ve acted.
Mark with Tower must feel the closures with NewXpress for thos that want participate he has offered alternatives but at the end of the day it’s up to te newsagent to get up and look around their area and go for the community they used to represent.
Getting back to lotto I believe we will have a Franchise as long as it reaches a certain point of sales minus expenses for them -sure would be interesting to know that algorism so we could apply it and yet we should ignore the threat -make hay while the sun shines by building our busienss as well after all this is what everybody else is doing to us. Regulation is well and truly over it’s now dog eat dog We need to get out there barking.
OTR has a separate lotteries agreement as I understand it. More flexible. I expect similar with TSG and any other tobacco / convenience group Tabcorp does business with.
Convenience retail is where lotteries play overseas. However, convenience retail is not performing well for magazines and newspapers according to some I listen to.
There is just no doubt, and history would support this, that when a retailer goes for an “omnichannel” model, lower performing bricks and mortar stores close.
Lotteries and Tattersalls will be no different.
And pumping more outlets in at the bottom end is more about The Lott getting Franchise Fees than it is about gaining any meaningful revenue gains or I suspect the retailer actually making any money.
Woolies Petrol would certainly fit that bill.
James.
i understand your Omni Channel comparison though I don’t have anything to prove its correctness however I don’t believe your assumption that tey would create a new account (an un profitable one at that) just for any intial or on going Franchise fee.
personally my previous experiance shows that Service Station outlets in particular, have never proven profitable and as for convenience store, I suspect but have no proof of the same.
Getting back to Franchise fees -these amount to double the first 3 years expenses payable weekly on the run for newly established Franchise in the Newsagency B&M Field The same for Tobacconists-Pharmacies and other retailers. Not sure about Servos and/or Convenience stores as some have a different model to that of the previously mentioned. It is less I believe.
The amount payable per transfer is 11% ex GST or very close to this. it can vary but not more than .05%-
This means to rely on this sum alone the Lott is losing the Plot and Lot for the Lott.
Gaming is a numbers business and I believe Tabcorp know their numbers
As for the smaller outlers suffering by taking on board the Omni channel this would surely depend upon their individual realtioship with their clientele most of which is very good as the smaller agent has much more affinity with their customer than most.
Lower Bricks and mortar Sales in the Lotto usually rely on Lotto sales to stay open it’s the product sales, the ones in decline that are casusing the closures along with Debt and the lack of Capex to regenerate their businesses.
I would be enlightened with any evidence you could provide ‘casue mine is frighteningly different.
Graeme I think you are a little naive in what has been occurring in recent times.
As Mark mentioned, the Lott is continuing to do deals with smaller National chains particularly in Tobacco chains such as CTC, Cignall, TSG. OTR in SA was flagged by Mark years ago and look at it now.
James’ post raises a valid point. The Lott BDM’s have KPI’s to get new business, which are possibly remuneration based rewarded. If 100 new outlets open across the country each year that’s an easy $2.75M plus the additional income they take over 3years.
I urge you to look at NSW Towns such as Rutherford, Kempsey and Coffs Harbour to name a few.
CTC is spreading like wildfire with very minimal start-up costs. There is no reason whatsoever that a CTC in exactly the same location should be permitted to have a different fit out than the Newsagent retailer next door.
In the suburb of Rutherford take a look at Rutherford Marketplace. A shopping centre with 24 stores. A CTC has been given a franchise, with one store separating it from an established newsagency. Where is the business model. There will be absolutely NO incremental sales, sales will be taken from the established outlet.
Yet this is what is happening.
SA should be the example for all other states to panic and say…we don’t want that to happen here.
If OTR and CTC can negotiate better deals for it’s members…why haven’t ALNA, Newspower, newsXpress or Nextra.???
Amanda, TSG too, growing rapidly.