Newsagents need to look at the growth of On The Run in South Australia when contemplating dual standards of Tatts Group
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!
