The half-year results from Tabcorp make interesting reading. Lottery retailers need to understand the results given that a core part of their business is reliant on revenue from Tabcorp products. Purchase through digital platforms grew by 20.9% over the previous period. This is excellent growth for Tabcorp.
Now, look at the percentage of lottery revenue from digital since 2016:
This is a graph from an investor advisory business.
The growth trajectory for the purchase of lottery products via digital platforms is set. Retailers need to take note, especially given the considerable capital and other assets Tabcorp requires them to invest.
Digital is growing faster than overall lottery revenue. Over the last six months, for example, lotteries revenue grew by 1.6% while the percentage of lotteries revenue purchased over digital platforms grew by 20.9%. That is the gap of concern for retailers.
If your shop is not experiencing a decline, others will be, they have to be on the Tabcorp results.
Personally, thinking of small business retailers, I would like to see Tabcorp reduce obligations on retailers in terms of the space in-store they demand, especially from entrance to the counter and at the counter itself. I would also reduce the visual noise from lottery products and free some of this space for retailers to be, hmm, retailers.
I would like to see Tabcorp enable retailers to make decisions that improve the viability of their businesses outside of lottery products. This could make the businesses stronger, which would be beneficial to Tabcorp.
I am not talking about tearing down signage or making retail lottery outlets look as dishevelled and inconsistent as what we see in the US. Rather, I am suggesting an easing of the space required in retail by Tabcorp and the barriers to other products being placed in the lotteries area. This could be done in a structured, co-operative way, a way that does not reduce lottery product sales in retail.
At the very least, Tabcorp could offer newsagents an easier retail model like they allow with On The Run.
Now, to those who will say here he goes, he hates Tabcorp blah, blah, blah. All very ho-hum. This post is acknowledging the evidence in Tabcorp’s numbers. If I had a product category in business over which I had control and which was experiencing this level of migration from over the counter to digital I would make a significant move to mitigate the impact of the trajectory before it actually cost me anything. That’s business.
Change is occurring. Smart retailers will move to minimise the impact on their business. Tabcorp is demonstrating its commercial preference.
Interesting impact on on-line gambling if credit cards are banned from being a payment method for gambling in general.
I have a feeling that on-line gambling will come under ever increasing scrutiny over time, particularly as it impacts young people. It is insidious and the level of promotion and advertising reminds me of tobacco advertising in the 60s and 70s.
Let alone the ridiculous shopfit burden.
It’s a big waste and irrelevant to kpi.
Now the wind has changed. The kiosk is dead and the good high street shop is king. We should be kowtowed instead.
James,
Credit cards where banned once for the purchase of Lotto products. Debit cards were allowed. Then when the NSW Liberal/National government decided to sell Lotto magically we were instructed we could accept these credit cards. Now a few years on the same Government is leading the charge against Crown and making mutterings about an Opal Card with off site preloaded money for all Poker Machines gambling in NSW (records must be kept of input and output).
Lotto though is preparing for this with its new direct wallet and an increasing desire for all bets to be registered. This is also far easier with online Lotto Gambling which they are also pushing for.
The wowsers have taken over in Macquarie Street and change is coming.
To think that franchisees like others and myself will be considered in this process is naught but horseshit. Just like the lack of respect we were shown in the sale process for having contributed and some would say driven the Network growth in the first place.
Mark’s concerns are spot on.
Peter ,
I think it was actually the Labor Govt of Premier Kristine Keneally and Treasure Eric Rosendale that had the law changed regarding credit card payments for lotteries (Remember Eddie’s girl). It it was done to make NSW Lotteries more appealing in the Tender process.
Well said Mark. I agree with what you suggest here: I am suggesting an easing of the space required in retail by Tabcorp and the barriers to other products being placed in the lotteries area. This could be done in a structured, co-operative way, a way that does not reduce lottery product sales in retail.
I used to think lotteries was my saviour. Now I know it is not. The last two years have shown me that i particular.
Thank you for writing about this and giving us a place to comment.
It was the Labor Government with Richard Face and after him Grant McBride were the State Ministers for Gaming and Racing in NSW. they mooted the package and I think Biard Government executed the Sale.
Does not matter the article is about who shares what and basically there is the forecast of dimishing long term decline in the over the Counter sales that carries credit. The Graph and percentages are not clear as to what is what but who cares. For explanation I would like to know off what base on-line increased from and the same for over the counter sales. the comparisons here are a little vague as in 21% of what residual base? and the same as 1.6% of the much much bigger pie in sales for the latter.
B&M sales have increased pre COVID that is, the same for on- line 100% of $1 is $2 and 1% of $Im
is $10k there was no reference to base for these increases to be taken too seriously though they do illustrate a warning.
last Balance sheet from NSW Lotteries illustrated Growth in both sectors with the biggest outcome in profit in the Retail sector from a higher base. From the presentation Tabcorp placed far more attention on the on-line incremental sales by ignoring a focus in not referring to the B&M results.
It’s a bit like Retail and having your own bet each way however as a supplier you are competing with your bread and butter not the consumer.
there should be an enquirie into this cannibalism.
On another point altogether as far a actual space allocation of fixtures Lotteries return te best psm p.a.in the greater majority of newsagencys.
With the subsidies from the NSW State Government of $10k and the cost of providing for the Front Counter only (half in fact as the other is the newsagency half) ) and The Lott now paying for the screens, it is a cost effective situation bringing in around 20-30% minimum of Gross Profit with a space allocation of appox 10% of all fittings.
Who cares which politician did what. The real story here is what we can see in the graph.
Graeme the information you are asking for is in the Tabcorp annual reports.
The data is real the trajectory is concerning but not much for those of us who gave changed our business as Mark says.
Online is here to stay and will get bigger and bigger.
Bullshit Graeme. $250,000 in rent. The 25% of space demanded by Lotteries achieves a lower return on space than my gifts which are banging for me.
If you read the post and analysed the position you would see that I am NOT disagreeing with the pardigm shift just that it is NOT dire at the moment.The Graph did NOt give us a base level even though it gave a trading one therefore not comparable in actual profit.sales ratios.
Retailer. Great assumption from you. I say assumption for what measurement do you use for the space provided for Lotto? Floor space? Fixture space. Wall space. If you appley this to your occupancy cost $250k p.a the return per sq metre is different. The worst part of the Lotto performance is not the sq m. one it the labour cost.
You should be doing around $200k to $250k p.a. in commissions and on a Gross Profit Basis that would equate to $500k p.a. in gift sales after discount that is with a 50% G.P. margin.
lotto takes up about 50% -half of the front counter around 10-12 sm. of Fixture floor space the wall space is not and Occupancy cost in penalty for te area. Floor occupancey is evenly divided over the other reatil space and Occupancy is a sum total of ALL leased space.
Pleas don’t give me the B.S. crap on a one store assessment Yours. I have been doing Space Allocation Retail professionally for over 30 years ans curently would do 32 per month.
I was sharing not lecturing and Lotteries do not demand a percentage of space the smaller the store size the bigger is the percentage that is maths. and exactly what I was pointing out ith the graph example it’s mathematical but not profit as an example expansion.
Think about and give more detail than what you have done What is the size of your store overall not just Retail? How much is this PSM. p.a. what overheads psm apply? what is the Occuppancy Costs Sales versus G.P. as a percentage.
It’s a big ball park and isolating it is very nice discusion however makes good commentary.
So digital lotteries growth continues on its impressive trajectory whilst bricks and mortar lotteries sales remain flat. Meanwhile Tabcorp continues to weaken its retail network by taking on additional and unwarranted outlets in addition to imposing its onerous and punitive compliance requirements .Seems to me to be a real conflict of interest and bordering on anti competitive behaviour.
Yep would love them to reduce their onerous floor space requirements. Would especially like to see ownership of the digital and retail networks separated to avoid the conflict of interest perception.
Graeme you are correct Lotteries is still a very important segment of our channel. In my case it contributes approximately 17 per cent of my gross revenue and 1.64 times my annual rent. Whilst its contribution to GP is falling lotteries transactions would still represent 50 per cent of my labour costs.
Other larger stores in shopping centre locations have far higher lotteries commissions than me, however they have restrictive permitted use clauses in their leases and the contribution of lotteries to their annual rent cost is far lower than mine as a multiplier. Post Covid these stores are faced with declining foot traffic and greedy landlords. Lotteries need to pay their fair share of rental floor space and be less punitive in their approach to compliance.
The graph speaks to trajectory. It is clear. To me, to demonstrates that now is the time for Tabcorp to adjust its demands of detailers, out of fairness and in response to the data.
Steve and Mark I agree and would add that in my area TheLott has re-started enforcement of rules, often silly and selfish rules.
I too do well with lotteries but am working hard to not rely on it as much.
This is an important post that we lottery agents need to take note of. We need to stop being scared on Tabcorp and we need to be less reliant on them.
My sales are up 2% but my lease costs are up 5% and labour costs be 3% more this year. Gambling is not keeping up. So I need to invest less in space for it and make more from other products from gambling traffic. And I need Tabcorp to be okay with that.
Dinosaurs say convert the gambler to buy other things. There is no evidence in Australia this is cost effectively possible. So I need to reduce the cost of gambling to the business.
Peter, I don’t disagree with you and others re the Lott’s expectations in the “space” position within the store and as Amanda points out well in her statement
I don’t go there as it is a Franchise and it has all been signed by the Franchisee as is subject to appeal with the Franchising Council re teir code of practice.
the trajectory that Marks.s graph illustrates is also correct as is my objective comments with the comparisons.
Retailer’s insensitive and totally inaccurate aggressive statement gets me. It gets me when there is so much to be done constructively that “off the top remarks like this are made”
Since my reply I have looked over the Space Allocation Reports that I have physically conducted in store for owners and Landlords (Shopping Complex Owners for Rent reductions) as well as for the NAB Bank as a consultant over a ten year period.
Space allocation as with all percentages must related to “given” or fixed position such as 25% of what? the front Counter?-the total lettable floor space? – or the Retail dedicated area? Does this include and attribute an equal amount for aisle space per section or Department?
No such infomation was put forward with the statement to justify that my comment was Bullshit.
i can overlook his ignorance and lack of manners but the unfortunate reality is that he probably believes it is right. $5k a week space rented would be $1,666 psm. pa rent for 150 sm. $1,250 for 200 sm.
Front Counters take up (fittings only,including serving space behind the counter around 22 sm for a three terminal doing at least $2.5m TY/o p.a. or equaling close to $240k p.a close to $4,500 Gross Profit pw. as awell as this Lotto in these circumstances would occupy around 12 to 14 sm. of the total counter mostly utilised fully at peak times on Thurs or whenever there is a Jackpot exceeding $50m. To achieve the same G.P in Gifts which is Retailers comparison, one would have to dedictaed (again in Fixture- not floor space) at least 30sm. Now at whatever rate psm is paid it’s not hard to figure that it’s not the space it’s it’s the position in the Store (thanks Amanda) and the wages (costs of operation) that is excessive for we must have someone at the counter through “thickand thin” times during the day and week.
Newsagents have to acknowledge what is happenning and address their individual circumstance accordingly.
Yes the Lott have inspectioin they have a Franchise it has a code of conduct and newsagents have great representation through the Associations NANA Ltd in NSW and ALNA Nationally to address these matters they are full bottle on the code and have the respective State Government “ears” to take aggreviated cases to for representation where warranted.
I am not supporting any of these companies rather than trying to put in perspective what it means when every week I get ‘call requesting on how they can get the Lott franchise. These request come from Cafes, Tobacconists, and Landlords.
The old saying of be careful for what you wish for, for you just might get, may be self forthfilling.
Incidently three (3) newsagents I visited recently had their Lotto counter well inside the store at leadt 1/3 to half way inside Tthe store ranged from 300s.m. to 120 sm. These were the latest fitouts and approved by Tabcorp.
Things may be changing Let’s hope so.
It was sold by the Current Government. The rules on Credit Card usage were changed to facilitate its sale and increase Lotto’s value when sold. I remember commenting cynically on the change at the time as a part of the sale process. The rep pretended I had not spoken.
However the real issue is not to rely on it for any income other than that as a short term contributor. This is clearly demonstrated by Marks graph. We are what is referred to as an unnecessary overhead which can be eliminated with online gambling with the further benefit of records kept on Individuals Input and Output answering issues of money laundering. This answers some of the issues raised by wowsers but not the issue of excessive gambling by addicts who can not afford it.
As a retirement town where I am based Lotto’s changes will be slower in my Demographic but it will still inevitably occur. As they say there is nothing surer than death or taxes unfortunately
Peter R
Correction, We are referred by them to as a “necessary” overhead until such time as their on line facility renders the shop front francise un -profitable therefore redundent ”
i am under no disillusion in this regard it is what the on- line competition -versus bricks and mortar is all about – Market forces-get wise,and use what you have to achieve your own future. You won’t make it better by complaining or cutting back in spite where there is a gain to be made from its existence. If they are using you then it’s a two way street.
Graeme taking a longer term view we are an unnecessary Overhead. However in the short term we do have a role to play if one chooses to do so and if that is case one must treat it in a serious manner as you state. However ones eyes must be open to what is occurring. Semantics is a lovely thing sometimes.
Too true i meant the you to be “one” does xepect it wasn’t personal. however call me cynical about how we are used for it’s the two way street you agree with.
If people come in to buy lottery tickets primarily – do they buy other products as well? I am interested to know if service stations implements lottery, will other items like fuel, bread, coffee etc increase as well?
thank you
Hey Margaret … Sales basket data indicate most lottery purchases are just that. But, that may not be the full story as it depends on retail store configuration – some have lottery specific counters.
Looking at it overall, and from hundreds of retailers, my view is lottery products are less basket-efficient than, say, greeting cards, and gifts. Lottery sales are as inefficient as newspapers, with 75% and more single category purchases.
In petrol and convenience, I suspect the opportunity for impulse lottery purchase, especially at jackpot time, is greater.
I sold my newsagency with golden casket years ago, moved interstate and bought a newsagency without lotteries. The difference financially and for my mental health not having lotteries is huge, good. I will never own a shop with lotteries again. My life means more to me than that.
Like Mark shows in the graph, the trajectory is clear. No upside for lottery retailers. I don’t see Tabcorp management making things any easier for retailers as a result.
the over concern with lotto howver is not universal with newsagents or the propective buyers of such. For the latter it is a no on to even contemplate a purchase without lotteries..
Banks consider them our only intrinsic value.
In recent figures provided to us retail Lottery sales maintained and in many case grew their figures..
I guess the problem would be if the trajectory was sliding as a percentage of te amounts of yesterday in retail versus the the frowth to on line and then further comparison of the growth if any in the size of the pie.
As for they don’t (lottery retailers) buy much of anything else well this may well be the fault of a slack retailer -for all people have relatives, freinds and wants and needs -they have birtdays to celebrate and occaisons as well.
Marketing to them is no different than marketing to any consumer. it’s about focus. Many newsagents could open without lotteries and further to that a lot of newsagents that closed their doors sold lotto off as a host franchise’ a most welcome acquisition to a separate business wiythin their community.
Yes, for some it has its drawbacks however it is overwhelmingly good for a lot of our businesses and as an industry a huge plus.
It is disappointing to read opinion that the retailer may to blame for lottery customers not purchasing anything else. That’s the argument I have heard from some Tatts and then Tabcorp folks. The evidence is the evidence.
I have looked at this ion best-practice stores in terms of lotteries and gifts. Across many jackpot situations when lottery shopper traffic increases, those shoppers purchasing other items is rare as is a stickiness for return lottery ticket purchases.
I bought my most recent newsagency in December last year. It does not have lotteries. I would not purchase a business with lotteries as I want control over what I sell. Tabcorp, in its franchise agreement, exerts too much control for retailers keen for control over their business. But, there are plenty of retailers who appreciate that control.
Graeme whilst I still see a place for lotteries in our channel I think it is really important that new entrants realise that it is a low margin labour intensive product. I agree with Mark very few lotteries shoppers add anything else to their basket. Unfortunately most lotteries shoppers have blinkers on and head straight to the lotteries counter . Non lotteries shoppers are far more valuable to the bottom line. All our marketing efforts are focused on these folks.
Hi Steve,
Your figures are obviosly store centric which I can understand given COVID etc. however the growth in Lottery Sales Retail increased overall commission paid to Retailers were greater than the previous year.
The facts are whilst online represents 32% of sales the remaining 68% is from retail.
The size of the pie is larger than before, suggesting a growth of gaming sales overall.
This is good for the industry and Tabcorp knows this and also recognize the added sales (impulse through sight connection at retail outlets) such as scratchies do not happen on line.
Just a thought as to our importance re involvement.
Apart from this Lotto customers really do but other products.
What utter codswallop Graeme. Are you on their payroll? After what Mark wrote about the basket and what shoppers buy I looked at my data and eighty percent of lotteries sales are that and nothing and yes it is growing which is good but the rest of my business is growing much much more. I am at over a hundred thousand in gifts and more than fifty thousand in books. But it is Lotteries that causes me the most frustration with space demands. You talk about what is good for the industry. I think what is good for the industry is more of us relying on being retailers and not servants for products that are dying or moving to online purchase.
Gee Amanda your self analysis is centric to your business and what Mark wrote. Please do some of your own home work get some facts look at the actuals and whilst you have excellent peformance in high profit margins and decry the performance of lotto in your store …you still keep it ..says something all by itself.
I look a a cross section of newsagencies quite a few doing $6k a week Gifts ^a week Cards and $5k a week Lotto commissions. Others are in the bracket (many of these) that the Lotto commissions pays the rent and all the staff before any other income from the rest of the store.
As for the “are you on the payroll?” comment about any connection I may have with Lotteries confirms your ignorance in spades and displays your true form.
Graeme I keep Lotteries because I think thats what buyers will want when they look at my shop, not because of the money it makes. Your constant support for it suggests you have a connection. In my next newsagent I won’t have Lotteries. I know that right now. There are shops doing very well without it. I notice you did not clearly respond about the payroll comment.
Amanda your comments are insulting inaccurate and slanderous any more of it with your inference and I will take refer it to legals to sort for it is your intention to damage my reputtation or so it seems loud and clear. For your information-
I am not on the payroll or take from anyone or body I work for myself and again my opinions are based on core facts. I take offence by such low form comments.
Statistics such as produced in part are not necessarily the whole picture I stated this cleary yet with with deliberate ignorance you chose not to acknowledge this.
As an industry, retailers last year (includinng newsagents) the commission earned from the sale of these products were up on the previous year.
The “pie” grew and the so did on line sales. from a low base. This is well documented.
In June this year TAB Corp will demerge- Lottery Corporation as a seperate retail/online operation This will possibly be a public floated company.
Yes I am interested in all of the goings on in this industry and my personal gain is the knowledge I share with the involvement I now and always have had.
It is objective and factual based on true data -Not rampid emotion or centric statements.
So please argue sensibly without slanging others to win points by trying to fit unkind and slanderous thoughts their way.
The maybe with proper presentation -you could be taken seriously.
reputtation
rampid
Graeme you once again make your case for Lotteries and dismiss valid opinions of others.
just with that graph it says sales do you have one with the volume or dollar value, as if its like thats good if you want to sell the business but from below there should be a dip,, looked this up anyway we do the heavy lifting.
Roy Morgan)
In three years running up to 2018, the number of Australians who purchased a lottery or scratch ticket held steady at 8.6 million. This number is now down to 8.4 million, which still means 42% of adult Australians bought some kind of gambling ticket.
Lotto statistics up to June 2018 reveal that 7.7 million Australians bought a lottery ticket of some kind, such as Monday/Wednesday/Saturday Lotto, Powerball, Oz Lotto, or other lottery tickets, down from the 7.9 million sold in previous years. Scratchie sales also dropped to 3 million from 3.2 million in 2015.
And for the 1st half 2024 is 39.6% I dont think we can see much TheLott kiosk in next 5-10 years. For now mainly online players are 35-45 years old; and now if we check TheLott app its so easy to buy a ticket + syndicate. I think when TheLott go completely online (when we dont see TheLott retailers- franchise), the product itself will change completely- it would change from physicaly to “cloud” thing: when ” physically dream ticket” will become purely online casino numbers gamble.