Further to my post yesterday about Tattersalls’ deal with 7-Eleven to sell lottery tickets, I have been to three 7-Eleven outlets this morning. I can see the appeal. In addition to usually being well located, these stores are open excellent hours, cover popular convenience focused product categories, are well lit, offer a cheerful service and are consistent across the stores. Hang on, some of these are our assets – good convenient location, cheerful service.
The folks behind 7-Eleven have done a good job driving discipline behind their brand. Suppliers like this. They like that they can sign one contract and have it apply to a network of stores. I have been told by three suppliers recently that this is what they like about 7-Eleven.
7-Eleven declared their intention against newsagents more than ten years ago in their successful efforts to break the ACCC authorisation for newsagents around newspaper and magazine overturned. Magazine publishers moved as did some of our customers.
We let 7-Eleven win ten years ago thanks to appalling leadership representing newsagents. That loss was compounded by their being no plan B.
The Tattersalls / 7-Eleven decision announced yesterday would not have been a surprise to those representing newsagents. I doung that they have a plan B – leaving newsagents to develop their own response.
Here are some ways newsagents could respond to this news:
- Fight for a fair magazine supply model. Publishers and distributors cannot give one retail channel more control over supply than another as is the case today. 7-Eleven has considerably more control over its magazine range than newsagents and they leverage this well. We need to set our terms and have the guts to adhere to these.
- Challenge Tattersalls over their dedicated area. I am not aware of any newsagent mounting a legal challenge on this. If we bound together and funded a well considered challenge maybe we could free up some of this golden mile real-estate in our stores for other products.
- Challenge Australia Post. Their government owned stores directly attack newsagents. If we do not fight they will get magazines and newspapers and, maybe, lotteries.
- Start making business decisions. Too often I see newsagents spending too much time reacting to supplier requests (demands). We need to spend more time being entrepreneurial. From product ranging to marketing more of us need to exert control over our businesses.
- Stand for something. The most successful newsagents I talk with are those who energetically pursue a point of difference for their business. It could be stationery, gifts, cards, ink, business services, flowers – just about anything. With so many retailers selling everything newsagents sell we have to create our own unique position.
- Compete. Take on 7-Eleven if you have one nearby. They do not have a monopoly on convenience retail. If Australian coffee shops can take on Starbucks and win newsagents can take on 7-Eleven.
- Lift our game. The worst looking newsagents pull us down. While we cannot strip them of their shingle we can separate them from us. This can be done by the marketing groups being stronger in their disciplines. Smart newsagents will join groups that are focused on discipline.
- Lift our game (part 2). This point is basic and practical and based on newsagencies I have seen in the last week: remove posters from the window, put working lights in the shop, un-clutter the counter, have good value impulse lines near the counter, get rid of stock which has not sold in six months and get staff looking decent. None of this should have to be pitched but it does.
There are plenty of other responses. This list is designed to prompt ideas. The key is that this announcement from Tattersalls must cause us to take some action. You can’t make money from being a passive victim.
Mark,i think there was an article last week reporting that the accc found no grounds for restricting and or prosecuting tatts re the restriction of counter space,do you recall seeing this i cant remember where it was i think it was last Monday or Tuesday,if this was the case there doesnt seem like theres much hope on that front does there?
Helen you are right. There was a report in The Age. While the ACCC may have this view, there is nothing stopping newsagents trying to gain control of their retail space. Mark
I think the franchise code of conduct that tatts are obligated to abide by may offer us some form of protection from such unscrupulous behaviour
I used to do Tattslotto every week, but now that it doesn’t seem as openly honest as it was, I have stopped participating. It used to be drawn with balls being dropped. Does this still happen, or is it all done by computers now ?
A email from LAAV:
Firstly, the move by Tattersall’s to introduce a limited offer in 7-11 stores is offensive to all of us particularly those loyal agents who are confronted by Tattersall’s demands as to shopfit, dedicated areas and so on.
It is most unfair that you are expected to payout 7-11 major prizes for no reward and no reciprocal service from 7-11 retailers. The Association was aware that the Lottery Licence allowed Tattersall’s to go into convenience stores but disappointingly was only advised of the decision at the same time as members learned the news. The Association is revisiting earlier legal advice concerning the obligation of franchisors to act in good faith, but it must be said that this is a very difficult legal issue.
We have demanded answers to a number of questions such as accreditation fees, training, dedicated areas, insurance, signage,approval of
7-11 franchisees, period of accreditation, probity checks and participation in the retail incentive scheme. Members will be advised of the answers through the next Newsletter.
I would have thought that any strong assosciation that truly represented its members no matter which group(vana anf laav etcetc) should have been able to demonstrate to Tatts on behalf of their members how to adopt a new retail model that rewarded their(tatts) existing network as well as a new player if thats the line they were going to take with 7/11..
One scenario that springs to mind could have been a 5% $4% split on the commission that 7/11 generate,sa 5% for them, as they currently earn that type of commission in recharge etc which is the model they are using and so should have and would have been attractive to them and say 4% to be held by tatts to distribute for the existing network, to be apportioned out according to your contribution to the total sales ie a %,that fairly represents your worth to the network,this way any negative impact from the new retailer could be offset, any gains could be shared and total growth shared between new and old…it just doesnt seem anyone wants to do the hard yards for their members any more..and why tatts would not want to help the outlets that built their business is beyond me,they also could have suggested this or a similar model so that everyone wins..and forms a basis for a mutually beneficial growth to the business..
The LAAV has failed Victorian newsagents for a couple of years now. On Bill Express and lotteries VANA has failed too. Quitting membership is the best way to express displeasure when they refuse to listen. mark
I note that VANA has sent out a bulletin today on this. A pathetic response really. They should have outlines business responses – along the lines of those covered in the post above. mark
Being in Qld, we are not yet affected by this issue, but that certainly does not mean that we are not concerned that we will face the same problems in the future. The Qld equivalent of the LAAV, in my opinion, is as equally out of the loop as the LAAV, just as the ‘industry representative groups’ are (and I use that term loosely, especially since we are not members of ANY ‘industry representative group’).
In Qld the 7/11 thing can’t happen just yet as the law still forbids anyone other than a small business owning a lotto outlet. However that restriction is no doubt subject to constant daily lobbying.
tatts owns golden casket in qld – paid $750,000,000 for it – do you think they may want a return on their investment
Sure they will -read my post carefully
Has anyone owning a Tattersall’s outlet ever been told either verbally or in writing by Tattersall’s the minimum benchmark level of sales required to maintain your licence?
Guys,
I would have thought that tatts in qld would have shelled out the money for the license after doing due diligence. And as i am sure this was the case, then they would already be getting a return on their capital outlay. Correct!
Therefore any future increase from a larger distribution would only be the icing on the cake for them.
Absolutely, there is no doubt Tatts is getting their return on investment. It’s just a matter of time before they have the opportunity to branch out. Make no mistake, there will be no ‘fairness’ to newsagents when it comes to expanding their horizons. We just have to prepare for it as best we can, by firstly garnering customer loyalty and, secondly, keeping our eye on what is happening in Vic (thanks to info provided here and in other places).
I certainly would be vigilant on the Queensland Issue of Daily Lobbying for changing / amending a Law such in this case to let Tatts expand into other entities to the detriment of say Newsagents.
Nearly finishing the story of Brian Burke the former premier of Western Australia. Gives a great insight on how lobbyist work. However I am sure the Queensland Newsagent federation has already started corresspondence with the Government asking them to be kept informed of any current or future projects being considered that will affect the Newsagency Channel and use the FOI act to try to understand any reasoning why this law would be considered for change or amending.
I just dropped a line to the Minister on this very topic, just to be informed. Did you notice that there is no Minister for small business in Qld? I don’t know why that surprised me.
Brett- Would be interested on how much depth is in the reply you receive.
Derek,
I’d be shocked if I got anything intelligent.
(note: didn’t read the whole post or comments but…)
“these stores are open excellent hours, cover popular convenience focused product categories, are well lit, offer a cheerful service and are consistent across the stores”
they’re open 24 hours, usually overpriced, the bright lighting probably does take affect after a while on staff. maybe during the day the staff are cheerful, but at night a majority look paranoid and suspicious of anyone coming in. although that is understandable i guess.
in addition to the above post:
“consistent across the stores” – try finding the right flavour slurpee when they only offer 4 at a time, usually with one broken or runny. and the ones with taurine are foul.
i can see scratchies working better at a 7-eleven than the tatts games. not sure why though. i just think it fits in with the ‘get in-buy-get out’ idea i have of 7-elevens.
Aahh 7 elevens, a bunch of——.
There was a trial through shell outlets several years ago, with a purpose built kiosk smack bang in the middle of these stores. Guess what? it failed misrebably. Phone lotto was pushed hard by tatts, gusess what? it failed misrebably.
It is obvious that Gary Carter was peeved at the failure of Bill Xpress so he had to pursue an alternative. Bingo 7 eleven.
Tatts may be trying to get the upper hand on intralot, who have also wanted to distribute through convenience stores.
I agree with the above who stated that their assoc. is and should lobby hard the govern of QLD to not allow tatts to do the same.
These gambling giants are only fearful of governments, who give them oxygen. If you can control the oxygen then you can determine how far these gambling giants can run.
It is a bit like death and taxes. Some day we will have to face lottery products in other outlets at some stage. Qld will a does have some protection but as somone stated, that is for today. People now hate standing in line waiting for someone to have a bunch of tickets checked, games adjusted, looking for change in a purse and not correctly filling in a coupon. Will 7-11 have more than 1 staff member on at the counter to get through the people? Where is the branding room coming from at the counter? Don’t know if you have looked lately but the counter at most shops is covered in impulse lines and any flat surface has posters of slushies etc.
7-11 already have some government support as they have been listed as preferred distributor for Go card. There are some newsagencies but very few.
I notice that VANA is busy trying to catch up on this issue. Their approach does not seem strategic. Maybe if they have engaged Tattersalls in a more professional and firm way when the company was busy breaching newsagents over the introduction of Intralot they could have a better base of off which to work here.
We need to prepare our businesses for a completely open lottery sales market.
Mark
I dont see why we have to meekly just lie down in the face of these,in my opinion ,illegal tactics to significantly impact our businesses.In tatts’ press release about the 7/11 deal,they say they have been looking at different ways of distributing their products for some time,it then was a legal requirement for them to disclose this to their franchisees in the disclosure document we all recieve which they didnt do…definite case of a breach of the act,lets see if the laav or vana or anyone has the guts to properly represent their members…
Just noticed 7/11 already selling quickpicks,how can they get through both probity and tattts compliance in a week when it takes us 3-6 months to buy or sell,when did they do their two weeks compulsory training,obviously they have rules for them and rules for us,what a jok..when is someone preferably the laav start to rattle the govt ,the accc,the gaming authority ,anyone for that matters chain about the big “shit sandwich”we are getting served from lottery operators generally..
Maybe more thought has to be put into the disclosure statement provided by tatts to its franchisees. If they knew that they would roll out another 12o sites then franchisees should have been told.
Another one for the lawyers!!!