I don’t see any reduction in the challenges for lottery retailers from a change of ownership of Tatts Group.
While the company is clearly in play with reports last week about Kohlberg Kravis Roberts restating their desire for the company and the on-going pursuit by Tabcorp, I don’t see how an acquisition can improve the lot of retailers.
Let’s think this through. The successful suitor will need to demonstrate prospects for a good return for their share price to benefit … and driving share price is the single most important goal of any public company.
To drive share price they have to pursue value. Value is driven by efficient, friction-less, customer engagement. Efficient, friction-less, customer engagement for lottery purchases is about online, mobile to be more specific.
That game of in-store lottery purchase versus online is over. Online has won. Those who disagree don’t realise yet that online has won.
You only have to look at what people are purchasing online, how and when they purchase and the purchase volume.
That I can purchase lottery tickets in seconds and easily sign up for a subscription is what I as a shopper want. I am sure it is what many shoppers want. It is also what I would want to see from tatts if I was a shareholder.
Sure, there are plenty who like the trek to the shop, the banter at the counter, the manual ticket check and the re check in your shop. I think those people are diminishing in number.
Based on their tech investment, tatts thinks this too. So does Tabcorp based o their online and mobile tech investments.
The only thing that may change user a new owner is the capex requirement around in-store infrastructure. However they play it, it won’t be good news for retailers.
If you have lotteries i your shop and are hoping for a new owner to make things easier for you, I suggest you don’t wait. Rather, work today to make your business strong and diverse so it has a future without lotteries.
Tatts is talking down online at their current round of retailer briefings. They say online has plateaued.
Here is the evidence on which Tatts relies to say online has plateaued. It is wrong to make the claim based on such limited data. You need to see the numbers a year and two years out. You also need deeper analysis of the data and not just the topline numbers they have released.