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Major announcement from ALNA following negotiations with Tabcorp

Mark Fletcher
March 12th, 2019 · 68 Comments

Here is the ALNA announcement in full:

A better deal for lottery retailers: New Tabcorp model
After years of negotiating, ALNA and LRA are pleased to have secured significant improvements for you.
Today the Lott has announced a positive new retail remuneration model that reduces costs, increases commissions, and opens the door for newsagents and lottery retailers to benefit from digital sales.

We know there was a need for change and ALNA and LRA have worked very hard for many years to conclude a lengthy negotiation on a raft of changes to address shop fit costs, remuneration challenges and the cultural divide created by being excluded from online. We have made numerous submissions and thirty recommendations, and we are pleased to see these being implemented in this comprehensive and positive new model that we have been able to negotiate with Tabcorp to benefit our members.

More details about the remuneration model are attached, with more information still to come. Here is a summary:

New model

  • Increased commissions: More than 10% increase in commissions* earned on lottery product sales for outlets who achieve nine criteria that are existing requirements (subject to appropriate regulatory approvals by state gaming authorities for price increases and commission adjustments).                                                                                            For example, for a business with an average of $22,000 a week in lottery sales, this represents $220 extra commission a week or over $11,000 per year. And a retailer with an average of $50,000 a week in lottery sales could earn an extra commission of $26,000* per year – and this does not include the commissions from digital sales and the refund of DigiPOS.         *Retailers that are fully compliant have the opportunity to receive more than 10% additional income from the sale of lottery products (compared with FY18)
  • Refund of DigiPOS: Along with other savings already achieved by ALNA and LRA on shop fits, this new model removes all DigiPOS fees, and on top of that you will receive a refund for already purchased DigiPOS screens. For example, a two-screen outlet who had installed DigiPOS already at a cost of $8000, will receive this back in full as a cash-in-hand refund. For stores that install DigiPOS in the future,  the Lott will now pay for the total cost of future DigiPOS screens and all reasonable maintenance costs, completely abolishing these costs for retailers. This change is worth $17million over five years to retailers.
  • Digital sales: Recognising that omni-channel customers are the most valuable, retailers will finally benefit from online sales through an opportunity to earn commission and bonuses from all digital lottery purchases by members you register and through registered omni-channel customers who buy online at least once per year.
  •  Free membership for customers: Free membership for all customers, win notifications and a digital wallet for prizes that can be used in retail stores for new lottery purchases with no merchant fees.
  •  Adjusted franchise fee: A 1% increase in franchise fees is overcompensated by the increase in commissions and a performance adjustment to this franchise fee, along with the other new benefits available from the remuneration model.

How do you access the new model?

  • Engage with site surveys and comply with your franchise agreement, including nine criteria that are existing requirements e.g. participating in free training. This is rewarded by eligibility for the new benefits.
  • Offer new free membership registration to customers from your lottery terminal to link their online lottery purchases with their in-store purchases so you can benefit. Data shows that customers prefer to use both channels (for example, in-store during opening hours and online outside business hours). These customers spend more overall than any other lottery customer. This results in bonuses and commissions paid to retailers from online sales.

We are here to help you:

  • Many of ALNA’s and LRA’s recommendations have been implemented to make this new model easier to use and achieve. And we will be actively providing you with support and advice to help you comply with and benefit from this new model.
  • ALNA and LRA will be providing you with site survey guides and a checklist to help you receive a Green Performance Rating, which gives you the highest commissions and benefits available in this model.
  • You will receive methods to provide feedback on the model and its ease of use to ALNA and LRA.
  • The new model is unable to be introduced in South Australia at this stage and we will be working hard with the South Australian Government, regulators and our retailers there to get agreement on an approach that will allow our retailers to benefit.

We appreciate the patience our members have shown during this lengthy, complex and at times very involved consultation process based on detailed analysis and collaboration. The result is a better deal for our members that addresses many of the challenges and that opens the door for an improved partnership.

We have prepared more information explaining the new retailer remuneration model for members HERE

ALNA’s CEO Ben Kearney spoke at the launch of the remuneration outcome today and you can read his speech HERE

You can also read ALNA’s media release on the outcome HERE

If you have any questions, please contact your State Manager, come to our roadshows in March and April or email feedback@alna.net.au.

For the ALNA Roadshow schedule, click HERE

28 likes

Category: Lotteries

68 responses so far ↓

  • 1 John // Mar 13, 2019 at 1:32 AM

    As a lotterywest agent can I ask what the new commission will be over east? Very interesting.

    0 likes

  • 2 Amanda // Mar 13, 2019 at 9:09 AM

    Its 8.3% with the potential to get up to 9.3%.

    How does this compare to the west John?

    0 likes

  • 3 John // Mar 13, 2019 at 9:41 AM

    They give us a commission and then charge us a percentage operating fee so it works out about 7.7% of a ticket value we receive for most lotto and 8% scratchies.

    0 likes

  • 4 Colin // Mar 13, 2019 at 11:05 AM

    “(subject to appropriate regulatory approvals by state gaming authorities for price increases and commission adjustments).” … could be a long wait in SA

    0 likes

  • 5 Colin // Mar 13, 2019 at 11:07 AM

    No profit warnings being announced … so safe bet that whatever they are giving with one hand they will take back with another. Somebody will pay.

    3 likes

  • 6 Mark Fletcher // Mar 13, 2019 at 11:17 AM

    I suspect the costs embedded in the announcement were taken into account during due diligence prior to the takeover by Tabcorp as the issues the changes address were well known.

    6 likes

  • 7 shane // Mar 13, 2019 at 2:30 PM

    Has any one had an official notification from Tatts. I know there was a live stream yesterday, other than that i have been told nothing.

    0 likes

  • 8 Amanda // Mar 13, 2019 at 4:37 PM

    It raises a number of concerns:
    * subject to regulatory approvals by state gaming authorities
    * the whole return on digital sales is not clear or certain and does not provide a great deal of income to an individual outlet
    * their are a few time consuming changes being forced upon the retailer / franchisee
    * why have fees increased by 200%?
    * as the level of commission increase is solely performance based on quarterly inspection, the ability to appeal these decisions need to become quicker and perhaps an independent party reviews the appeal.
    * what increase in income has the assessment company received
    * what donations have been made by Tabcorp / NSW Lotteries /Tatts to ALNA during the current and previous couple of financial years?

    7 likes

  • 9 Graeme Day // Mar 13, 2019 at 8:50 PM

    Very good questions Amanda.
    fees though I think have been raised by 100% double in factfro 1% to 2 %.
    and yes how much in donations if any have been made to ALNA in the past. rumours are rife that it’s plenty.

    1 likes

  • 10 Colin // Mar 13, 2019 at 9:06 PM

    Regulators need to ask Tabcorp.

    So, if the Tabcorp are claiming agents are getting more commission, where does it come from?

    1.Punters, if so how ? Good luck with that.
    2.Tabcorp profits, if so how much ? Doubtful.

    Or it’s all smoke and mirrors and the agents will be worse or no better off.

    Tabcorp will not have devised a scheme that is not profit enhancing or profit neutral. Who pays? Do not be fooled.

    1 likes

  • 11 Mark Fletcher // Mar 14, 2019 at 6:39 AM

    Amanda, if you don’t like it, quit selling lotteries. Otherwise, get behind the body that has delivered this and embrace a positive step.

    6 likes

  • 12 Graeme Day // Mar 14, 2019 at 7:23 AM

    Colin,
    These are very good points. Smoke and mirrors after one does the sums seems very likely the outcome. Nothing of much tangible value to Bank here.
    Lots and lots of maybes if you are the best Boy Scout Girl Guide on the block. We’ll have to wait and see however fro starters 1% increase in commissions and doubling the expense charges to 2% nullifies the equation.

    1 likes

  • 13 Mark Fletcher // Mar 14, 2019 at 7:34 AM

    I disagree Graeme. The DigiPOS capex return is cash in the back. The increased commission for doin g what is in the franchise agreement today is cash in the back. The only unknown is commission from online sales. A version of this was in place thanks to the QNF years ago for Queensland agents. A lottery retailer today would have to look at the Tabcorp announcement on the online commission and say: okay, it looks like I will get revenue I do not have access to today so, yeah, I am better off.

    I think it is unhelpful to talk down what has been achieved. Maybe in six months you can once people have lived this experience rather than the announcement. As of right now, the announcement is good news. Lottery retailers have a better future today the earlier this week. The selfish dinosaurs at VANA and NANA may disagree but they are on the fringe and tainted by their Lottoland and similar arrangements.

    In terms of who pays, I suspect it will be the punters. However, the point is moot.

    The biggest single issue facing lottery retailers today is the migration online, that is continuing apace. That should be the only concern of retailers – not to ask Tabcorp to fix it, as they should not … but, rather, to look at their businesses are say what we are doing to buttress against the eventual impact, l because there will be an impact.
    That iceberg is immovable

    16 likes

  • 14 Kyle // Mar 14, 2019 at 11:10 AM

    Mark,

    I think your comments at post 11 are extremely unfair.

    Do you quit every category you post questions and comments about?

    1 likes

  • 15 Mark Fletcher // Mar 14, 2019 at 11:13 AM

    No, Kyle. On topic: Amanda has been on a mission against ALNA / ANF for years. Amanda can continue to disagree. However, doing so makes it look like that is all she has to offer, disagreement. At some point you need to act.

    7 likes

  • 16 Samantha // Mar 14, 2019 at 11:30 AM

    Amanda simply raised what look like legitimate concerns, and instead of addressing them calmly and professionally you simply dismiss her. It’s not just her that has these concerns (the comment has a few likes).
    Would ALNA still be in business if it wasn’t for payments from lotteries?? Why isn’t this transparent?? Seems to me there is a conflict of interest…

    1 likes

  • 17 Mark Fletcher // Mar 14, 2019 at 11:33 AM

    Taken in isolation, as one comment Samantha, sure. However, Amanda’s comments have a consistent theme, including speculative questions like you have asked in your comment. By all means do this. however, you must accept being called out.

    I have done some research, ALNA would still be in business if it did not receive funding from Tabcorp.

    ALNA publishes its accounts. If you are concerned, go to their AGM and raise questions. Baseless speculation feels like something else.

    9 likes

  • 18 Graeme Day // Mar 14, 2019 at 5:07 PM

    Mark,
    You have answered many things I have not mentioned. ALNA VANA NANA did not come into my comment. My comments are about what newsagents will receive from the announcement here in this Blog. the percentages of earning and expenses have absolutely nothing to do with rebates on capital expense such as screens, not now that they are rebated Before reabstes came from the NSW Govt. This will end and a new rebate for capex will begin, this time for screens of which the Lott will own. (and rightly so)
    Yes, it will all be known when newsagents put the “new” model into practice how the maths aren’t good with the actuals that we do know. The other percentages are of “this and that” “what” no constant here.
    It’s PROFIT that counts.
    Samantha, Amanda and Colin have made some very good points and like everybody else not everyone’s points are always agreeable to others however I am not putting Lotteries down just stating that it is at this stage “Smoke and Mirrors” or “Thimble and Pea” whatever I% on revenue equals 2% on expenses or is this wrong. The rest apart from the rebate is not explained at all in any monetary sense.

    1 likes

  • 19 Mark Fletcher // Mar 14, 2019 at 5:11 PM

    Graeme, I was not answering you. If I answer someone, I name them.

    This is not smoke and mirrors, The DigiPOS announcement is real and straightforward as if the commission change announcement. The only requirement is continued compliance.

    The online commission move could be classed as smoke and mirrors by those who want to jump at shadows or it could be considered as better than what retailers have today.

    Retailers need to understand that they are not entitled. Tabcorp is a business It’s prime obligation is to its shareholders.

    Are retailers better off today? Yes. Which association has been at the table all through this for retailers? ALNA? Those are the facts.

    11 likes

  • 20 Greg // Mar 14, 2019 at 6:01 PM

    I think there are a lot more facts that will come out in due course.

    0 likes

  • 21 Graeme Day // Mar 14, 2019 at 9:08 PM

    Mark, I refer you to post 13 if you are not referring to me Who is Graeme?
    Anyway this is not my point
    i was answering your point of view with an opinion that seems to be the same as others. Nothing more nothing less.
    Have a great evening.

    0 likes

  • 22 Mark Fletcher // Mar 14, 2019 at 9:14 PM

    Sorry, Graeme, I thought you meant another comment.

    Now that significant real progress has been announced, some want to talk this down and divert attention from the role ALNA has played.

    That is churlish in my view.

    0 likes

  • 23 theo mertzanidis // Mar 14, 2019 at 9:49 PM

    Those that are in the lotteries , some would have have received an email with a counter analytical assessment of the new renumeration for franchisee,
    let’s see how it goes for a cycle or four, to see who it benefits more the franchisee or Tabcorp .
    Ohh and I think the franchising inquiry report come out today
    cheers

    1 likes

  • 24 Amanda // Mar 14, 2019 at 10:39 PM

    Mark,

    Happy for you to call me out for asking questions.

    But its not going to stop me asking what are legitimate queries 1000’s of newsagents want answers to. Like Samantha mentioned above, we just want transparency and answers.

    So I’m not a newsXpress member and I don’t use Tower systems….. so any query I have must be ill-informed and wrong?

    In regards to your comments on Digipos I think you need to familiarise yourself with the franchising laws of this country. Your comments are incorrect.

    In my opinion, Tabcorp did there research and realised it was unlawful to charge franchisees for the Digipos equipment, furthermore making the DigiPos 0.05% fee also unlawful. If these actions were to continue in the current climate of Franchisors bullying unfair terms onto franchisees than perhaps this could have ended in a class-action win for franchisees and detrimental publicity to Australia’s “trusted” gambling company. It would have damaged the brands without a doubt.

    Better to get ahead of this now is what Tabcorp have decided and come out looking like the good guys throwing money around. They had inherited a mistake made by Tatts and have fixed this.

    Let’s be clear, this is not a windfall for franchisees, this is a return of what should never have been charged in the first place.

    The flip side is, IF newsagents ACTUALLY had a strong association representing it, then that association would have flagged this with a strong voice when it was initially started.

    Unfortunately ALNA did not.

    So there begs the question, why did ALNA not do anything. Were they aware it was not legal? If no, then why not?

    5 likes

  • 25 Mark Fletcher // Mar 14, 2019 at 10:44 PM

    Amanda, this post and none of my comments about abut newsXpress or Tower Systems. Your mentioning of them is nonsense.

    By all means ask any question and make any comment you want. As you see for yourself, there is no moderation. If I was the person you claim, you’d be moderated. You are not and never have been.

    What I called out is your relentless criticism of ALNA. You have done it for years. Which, of course, is your right. However, as I said, be a member, go to they AGM and do something other than caring from the sidelines, cause anyone can do that.

    How Tabcorp go to where they got to on DigiPOS is something you or I will never know. What we know is that ALNA has been relentless in pursuing this matter for newsagents. Yet here you are refusing to acknowledge that, which, as I have said, if your right … even there is no basis for you to do this.

    10 likes

  • 26 Graeme Day // Mar 15, 2019 at 7:20 AM

    Mark, that’s fine, my concern is not the politics it’s the everyday remuneration to cover the running costs of business today. Income is declining, cash flow is difficult, growth in services non existence and here we have an opportunity. I want that opportunity examines for what it is for there are out ther newsagents that are totally dependent on the services of origin Lotteries and Home Deliveries. Any increase (Imean “real” increase not an incentive scheme which by evrybody’s take is a non event in that as you say On Line is ineveitable so as it grows do we get less-let’s see) ) is paramount to survival.
    I totally agree with transition however a lot of newsagents cannot do this some for financial reasons and others because it doesn’t suit their area -maybe in the latter thay haven’t thought it through. either way they’re are not do it.

    0 likes

  • 27 Mark Fletcher // Mar 15, 2019 at 7:27 AM

    Graeme, there is a cohort of newsagents experiencing income growth outside of lotteries and others experiencing growth with lotteries. I don’t agree with your incentive scheme comment in that the non online revenue increase flows without any change to operational requirements.

    On the comment about transition, the is no regional / geographic barrier to transition anywhere.

    4 likes

  • 28 Graeme Day // Mar 15, 2019 at 12:20 PM

    Mark,
    This is virtually what I said some do -some don’t as for on line I am sying that it does and will have effect just by natural growth however when is the crucial point. we’ll have to wait and see.
    I will leave it alone you seem a bit testy for some reason and not much use in conflict for its own sake.

    0 likes

  • 29 Mark Fletcher // Mar 15, 2019 at 12:31 PM

    Not testy at all. On this issue, frustrated that some seek to distract from an announcement that is good news.

    4 likes

  • 30 Graeme Day // Mar 15, 2019 at 3:15 PM

    Mark,
    I believe that a lot of people are not sure yet that this is “goodnews’ as all parts of the deal are not clear to them. This Blog is a great medium for those to share and view their misgivings (for want of a better word) and seek others opinions.
    So much of this deal can’t be known until it has materialised in the market place.
    The proof of the pudding is in the eating …so to speak.

    0 likes

  • 31 Paul // Mar 15, 2019 at 3:33 PM

    We sell 20% Scratch Its and 80% Lotto.
    Weekly Franchise Fee on all Lottery Products increasing to 2 %. Does this include Scratch Its? As there is no increase in Commission on them will we be paying double fees for them for no increase?

    If is is correct I don’t see how the example Potential Net benefits quoted in the Info Pack add up.

    Can someone please clarify for me.

    2 likes

  • 32 theo // Mar 15, 2019 at 7:55 PM

    Hi Paul,
    login to retailers website, click in the main screen the icon for omni -channel button and download the retailer info pack , go to page 10 of 18 .It will confirm – no increase to the scratch it and the lucky lotteries commish.

    1 likes

  • 33 Graeme Day // Mar 15, 2019 at 8:28 PM

    Mark,
    My problem and what I read from this Blog is simply opacity. ‘ non transparity -the quality of being in obscure in meaning’ for those that don’t know the word. It is a noun. I am not insulting your intelligence for you well know this.
    This I believe people are expressing and saying exactly this.
    Please enlighten with your industry knowledge the factual understanding for the non informed.
    Let’s be open here. Loyalty to an organisation that you have opposed for so long is creating confusion, or unrest, take your pick, especially when opacityis so obvious.

    1 likes

  • 34 Jeff // Mar 15, 2019 at 8:46 PM

    For fuck sake Graeme Day.

    10 likes

  • 35 Colin // Mar 15, 2019 at 9:07 PM

    The point several of us have tried to make is that :

    1.Lottery sales,
    2. less tax
    3. less prizes
    4. less Tabcorp operating costs
    5. less commissions
    equals
    6. Tabcorp profits.

    1,2 and 3 are not under Tabcorp control.
    4. will already be under cost control.

    Tabcorp exists to maximise 6 and to do so can only manipulating 5, agent commissions, is the obvious taget. Hence the drive online to minimise commissions.

    So when extra commissions are claimed, the question is how is this possible.

    The conclusion many of are coming to is that it is all smoke and mirrors. Tabcorp will have devised a scheme to maximise 6, their profits. Agents will not be better off.

    Over to the regulators, they must probe Tabcorp’s claims and determine who is really better off.

    2 likes

  • 36 Graeme Day // Mar 16, 2019 at 7:25 AM

    Thank you Colin for the explanation in detail.

    0 likes

  • 37 Mark Fletcher // Mar 16, 2019 at 7:46 AM

    So many comments are speculation, and unhelpful. The facts pf the announcement from Tabcorp and highlighted by ALNA as a result of their direct representation of newsagents on this are the facts. Everything else is speculation. Now, y’all can speculate as much as you want. You can’t bank speculation.

    How newsagents with lotteries make money from lotteries has been as it is for decades. The percentage from purchase value has always been small and will always be small. People go into it knowing this.

    Too much time is being spent complaining about things newsagents have no control over and no enough is spent working on what newsagents do have control over.

    9 likes

  • 38 Graeme Day // Mar 16, 2019 at 7:57 AM

    Daah! Jeff 34. Great comment probably the best you can do. Thanks for the discussion.

    0 likes

  • 39 Paul // Mar 16, 2019 at 8:03 AM

    Hi Theo,
    Thanks for the reply.
    But what I’m trying to get at is,

    Is the Franchise fee going from 1% to 2% on the sale of Scratchies and Lucky Lotteries?.
    Because if it is and we will be behind because there is no increase in Commission on those 2 products.

    0 likes

  • 40 Michael // Mar 16, 2019 at 12:34 PM

    Paul #39. I do not believe the franchise fee is going to apply to lotteries and scratchies. Nor will the new commission.

    To weigh in on actual discussion about the processes and structure that has been reported out we have a few queries that will need to be addressed. One of them being is it even legal to have differing franchise fee’s based on a compliance structure.

    I would like to know more about the digital wallet implementation as they claim players will be able to use the funds in stores. How this works with Point of sale (If it is at all required) and accounting.

    I can imagine the target of 80% registered players will be a near impossible target. We are a larger lottery retailer and i can’t imagine getting that number above 60-65% even with free memberships.

    Size of jurisdictions as mentioned in digital sales % section of booklet is of interest. Our area contains 5-6 of the top 25 in NSW agents (Fluctuating rankings) Will this translate to digital income is an unproven figure and done in such a way that we are unlikely to see a substantial cash return.

    The 9 criteria for requirements are weird too. Site surveys we can be marked down on 1 item, pushing us to amber… But at Tatts discretion seemingly they can issue a breach on any issue they find in the survey, thus taking us from amber to red immediately.

    In my opinion we need more information regarding specifics, what constitutes a breach and not just a mark down in site surveys. Are there avenues we can take if we feel hard done by in a survey. This is of vital importance now that we are talking about a financial cost to what can sometimes be an interpretation of a rule incorrectly. Of just plain out spite from a surveyor having a bad day.

    6 likes

  • 41 Paul // Mar 16, 2019 at 3:34 PM

    I have never liked the Site Surveys,always feels like you are getting an annual performance review but 3 times a year.

    Getting marked down for having an empty Scratch it pocket and missing a result slip resulting in a mark of 92% and major improvement needed immediately! What a joke. Instead of Hey your sales have improved by 4% well done!

    We have all had good reviewers and bad reviewers but whatever up till now it didn’t matter too much. Now a bad mark by a bad reviewer can result in loss of commission of thousands of dollars. Who checks the checker? What comebacks do we have?
    What’s to stop Tatts tightening up the Surveys, it’s in their interest to do so.

    It would be interesting to know what forecast was given to the Board on overall expected Adjusted Franchise Fees after 12 mths. You can bet your last Lotto dollar it wasn’t 1%. More likely closer to 0.5%

    0 likes

  • 42 Shayne // Mar 16, 2019 at 3:39 PM

    Paul, this is my only concern on what is otherwise a very positive outcome. The site surveys are not a level playing field. We have the same surveyor every time and every time he likes to hang around like a bad smell until a gap appears in the scratchie bay so he can fail us. Our sales this FY are up 19% on last year but we are doomed to be penalised financially in the future

    4 likes

  • 43 James // Mar 16, 2019 at 4:20 PM

    Wow, even good news in this industry is howled down as bad news.

    Its simple, comply with the requirements of your franchise and you will get a 1% net lift in commission which in real terms is a 10% uplift on top of a network wide uplift of 12% this year as a result of the new Powerball. Add to that a share of online commissions and a trailing commission on new Omnichannel membership sign ups.

    Tatts data shows that Online lotto sales are growing but not at the expense of in store purchases. Canabalisation is a myth – at least for now. And this new system provides a buffer against that anyway. Lottoland is back in its box for now as well.

    In my opinion Tatts is back as a desirable business to own.

    7 likes

  • 44 Graeme Day // Mar 16, 2019 at 10:01 PM

    I have accessed a SETTLEMENT REPORT for a full 12 months from a newsagent concerned re the unknown.

    The outlet achieves $1,250,000. pa (rounded) Sales.

    The sales include $125,000 in instants.thus making the new commission applicable to the net sales of 1% increase of $1,100,000. $11,000. or 10.3% is $113,300 full commission p,a

    The confusion is the 1% addition in charges.
    If you include the total amount of all sales in this case it would be an extra $12,500 resulting, if this is the case in a nett Loss of $1,500 p.a. or thereabouts depending upon the mix when rolled out and fully explained.
    That is if fees are raised 100% to 2% I assume this is including instants in the equation of expenses.

    The statement “The new retailer model increases the commission on the Sale of Lottery products to 10.3%”
    Fine with this clear as a bell. Here is the confusion. maybe.
    “There will be 1% increase in weekly franchise fees” etc.
    On the surface it appears that the increase is to 2% therefore double the current fee. There are no quals explaining whether it is all sales or only on the Lottery Sales as in the Commission statement which cleary does not include the Instants.
    Have a bo- peep at your own Settlement statement for a 12 months period and do some sums.
    it all comes to whether the percentages are on the commissions earned of 10% increase. plus the 1% on the expenses currently shown
    or whether they are both applicable to Sales at 10.3% lottery only and Expenses on all Sales at 2% .

    1 likes

  • 45 Amanda // Mar 16, 2019 at 11:51 PM

    Mark,

    As you have mentioned I have followed the blog for several years.

    As I have mentioned multiple times over those years is I find the blog informative and you have a good knowledge of the industry, without a doubt.

    But if there is one thing I think any regular visitor to your page has realised, is that you quite often have an agenda.

    Even more importantly if someone has an extremely valid query or statement about the industry that may differ from your own point of view than you quite simply become an arrogant and dismissive personality and this is expressed through the emotion in your posts. Otherwise known in NSW as Phil Gouldism or more commonly known throughout the world as Donald Trumpism.

    Dismiss my comments as you wish, but the fact is most agents have scepticism in the lack of detail presented. The deal is not that great.

    8 likes

  • 46 Mark Fletcher // Mar 17, 2019 at 11:38 AM

    Amanda, you don’t know me. I do not have an agenda, especially not one this topic. While it is easy for you to accuse, you have no evidence to support your claim.

    You mislabel me disagreeing with you as arrogance and dismissiveness. It is neither. I simply disagree with you.

    On this issue I do disagree with you. I also note that when it comes to ALNA, you have one view. You’re entitled to that as I am I to your blindness.

    You could accuse me of dismissing your comments if that is what I have done. I have not. My ‘fault’ is that I have said you are wrong.

    As for the announcement from Tabcorp: they are the supplier, some newsagents are their customers. Tabcorp has one core obligation, to shareholders. The announcement reflects an improvement for retailers. The quantum is not relevant. It is interesting that some here struggle to acknowledge any improvement.

    13 likes

  • 47 James // Mar 17, 2019 at 1:50 PM

    As I read it, if you maintain a Green rating, your new franchise fee of 2% will be reduced by 1%, thus locking in your commission gain. Amber reduce by .5%. Yes, if you’re poor at franchise compliance and you rate red, you’ll cop the full 2% and you’re commission gain will be lost.

    And no one is talking the Powerball gain this year which has been a 12% free kick.

    Right now, of the retail business options out there, there’s not many offering an income increase of over 20% in 2 years for simply doing what you’re supposed to.

    On the evidence to date, my prediction is that Powerball will jackpot up to 200mil sometime in the next 3 to 4 years and the buzz from that alone will be with being involved in.

    I admit it, after being off it for a while, I’m back on the Tatts train.

    7 likes

  • 48 Graeme Day // Mar 17, 2019 at 2:01 PM

    Thanks James,
    These missing bits are steps of encouragement for participators. That’s all they can ask.
    it is a Franchise and Franchises have rules which when utilised properly attract people’s respect and people’s interest in the industry.
    The press release to the industry could have been a bit more educational and a lot of cause would have been redirected into something positive.

    0 likes

  • 49 Gary // Mar 17, 2019 at 4:53 PM

    Commission increase? I don’t think so. What we have is an incentive scheme dressed up like a commission increase. As I read it, the year is divided into four cycles, each of about three months. There are nine “hurdles” to jump over each cycle. The “hurdles” arn’t overly high, just high enough to trip those less focused. If you get over all nine “hurdles” in a cycle you will be rewarded with a bonus (no increase in fees and a one percent increase in commission) at the end of the cycle. Trip at any of the “hurdles” and lose your bonus. You can stumble and and still get half a percent bonus, but don’t trip.
    There are an array of questions that need to be answered to perpare us for what is coming. I guess it’s “ welcome to the real world of franchises”.

    2 likes

  • 50 Amanda Black // Mar 17, 2019 at 6:41 PM

    Gary spot on. The devil is in the details, for which there unfortunately has not been enough supplied. The grey areas are numerous.

    The current system to appeal or get retracted a breach is too long. Under the current process you will lose your “bonus commission” for a year. One minor breach will result in no extra commission, yet the workload has increased for a franchisee to attempt to reach the “green” level. The nine “hurdles” are time consuming.

    And throughout this whole announcement focusing on the “Omni Channel” there has been no announcements on how Tabcorp are going to direct consumers into store where we as franchisees make more money from the customer than if we have moved them to an online player.

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  • 51 Mark Fletcher // Mar 17, 2019 at 7:22 PM

    If I was a Tabcorp shareholder I would not want Tabcorp to “direct” shoppers to physical retail as I suspect the return for the public company is better for online purchases.

    Tabcorp’s primary obligation is to its share price.

    The shift in lottery product purchase to online is not new, nor should it surprise anyone. Further, Tabcorp is not to blame. This disruption is happening in many business sectors.

    Smart newsagents will be advanced in their businesses to deal with migration of revenue out of the shop, to online. This is not coming by the way. It is here.

    The migration of lotteries online is one of simultaneous traffic and revenue challenges for the channel. In times like these, action is key.

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  • 52 Graeme Day // Mar 17, 2019 at 7:30 PM

    I haven’t received the FULL release only the figures from ALNA released. I have commented on those. i couldn’t believe the penalties that apply after reading them here. It’s fair to say that that this is only an incentive program and not a commission grant because of an overdue increase.
    Amanda, you are so right ‘the devil is in the detail” and i believe this is what most people attending the issue on this Blog are after-detail. would you mind forwarding to me the full release. I would appreciate the total picture.

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  • 53 shane // Mar 18, 2019 at 10:48 AM

    Do I read this right, we only share in 2% of the commission for driving our customers online , where in store we receive 10.3%.

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  • 54 Amanda // Mar 21, 2019 at 12:06 AM

    Mark,

    Let’s be real here. There has been no increase in commission for 7years, yet wages have increased 20%, electricity 60% in NSW, rent and most other costs such as insurances etc have increased according to ALNA by approximately 17%.

    The problem for this industry is it has been so long since an increase in commission was achieved by ALNA that every franchisee is desperate to get anything no matter how poor the actual remuneration package is. We are forgetting that in that 7years there was NO increase.

    Yet during that time, Tatts /Tabcorp have increased fees for new outlets by $5,000. Application fees and relocation fees have also increased. They introduced a DigiPos fee which costs some outlets over $2,000 annually, not to mention the unlawful forcing of costs of DigiPos onto franchisees. Its against the Franchise Code and should never have been allowed, hence why Tabcorp have been quick to remove it….

    There has been no announcements to combat the rising merchant costs of a cashless society.

    There has been no announcement for regular reviews or built-in increases to the remuneration, or fees.

    There has been NO announcement to drive consumers instore. No new initiatives and no new advertising campaigns. In fact ALL the announcements are about franchisees HELPING to move customers online.

    In 2014 Tatts chief Robbie Cooke announced “there will be marketing and investment initiatives to drive online sales.” Subsequently online sales have moved 5% in 2011 to 21.5% in 2019. Tatts / Tabcorp have fully committed to moving customers online and all their staff remuneration packages and bonuses are directly related to the migration of customers from retail to online:
    Tatts CE Robbie Cooke had an increase in his remuneration package of 20.25% to $4,673,818 in 2018 v 2017
    Tabcorp’s David Attenborough had an increase in his remuneration package of 41% to $4,028,000 in 2018 v 2017
    The heads of these companies and many of the staff labelled as our partners receive big bonus remuneration packages to take customers from our stores to purchase online.

    So forgive me if I think a POTENTIAL 1% increase to the level of commission is a good result from ALNA.

    3 likes

  • 55 Amanda // Mar 21, 2019 at 12:10 AM

    Graeme some examples of the devil being in the detail:

    As of NSW site survey – FY 2019 Cycle 1 the following results can be depicted :
    * 61% of outlets achieved “green” status
    * 21% of outlets achieved “amber” status
    * 18% of outlets achieved “red” status.

    Those outlets in the “Red Status” will be receive less income according to the figures currently provided by Tabcorp, as they are not entitled to any increased commission, but they also lose the commission they once had for signing up players to the Players Club card.

    So almost 2 in ten outlets will be worse off.

    Under the new performance requirements you are required to access weekly both the Retailers Web and also separately measured “what’s Hot at the Lott”. If a store was without the internet due to a stuff up from the NBN or their provider for a period of approximately a month, that store would need to acquire means to access these platforms externally at their own expense. If you do not meet these measurements you drop to the Amber or possibly Red status.

    If you receive a breach you drop automatically to the Red status. Why not just appeal the decision? There is explicit inadequacies in the dispute resolution process with the current agreements and the franchisor (Tabcorp) having far greater power, intimidating to be accurate. This is extremely important considering the levels of compliance needed to achieve the Green and Amber status levels. There has been no announcement from Tabcorp to amend the current agreement to reflect better and more fair practices.

    So, lets hope that 2 in 10 figure doesn’t grow to 3 in 10.

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  • 56 Mark Fletcher // Mar 21, 2019 at 7:40 AM

    Amanda, go ahead and complain all you like. It means nothing unless you actually get involved.

    Tabcorp is a public company as was Tatts. Their obligation is to their shareholders.

    You signed an agreement knowing the terms and conditions.

    In my view and based on front line research, ALNA has done a good job here. It is better the what you had, considerably better.

    If you think you can do better, stand for the board, get elected and have a seat at the table.

    I have no vested interest in that I don’t have lotteries in my own businesses, I am not a soon sot of ALNA, I have no shares in Tabcorp.

    For what its worth, you could focus your anger and energy on new traffic and better margin opportunities as that is vital for the long term health of any newsagency.

    1 likes

  • 57 Gary Carr. // Mar 21, 2019 at 11:04 AM

    Have to agree with Mark with this one. It was good to see Mark at our ALNA meeting in Cairns on Monday night. Sorry about the weather Mark. IMO ALNA did the best they could. Tabcorp hold all the aces. You also have to appreciate how heavily regulated the lotto industry is. With the Powerball restructure and promotions we are all better off this year. If we get something out of the commission increase then this is a bonus. Don’t worry, be happy.

    1 likes

  • 58 Mark Fletcher // Mar 21, 2019 at 9:52 PM

    Gary the weather was a shocker! I’m glad you made the ALNA meeting. Were you happy with the Q&A time for the lotteries topic? It did seem like everyone who wanted to ask a question got to.

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  • 59 Gary // Mar 22, 2019 at 8:02 PM

    Ben seemed to be able to answer most of the questions but I got the feeling that there is lot to be sorted out yet. He is putting a lot of faith in TABCORP and their ability to do the right thing. I’m hoping that history will say that his faith was well founded.
    More concerning, from a newsagents point of view, was the attendance of IGA people. Apparently they were invited by ALNA, not saying they should not have been there. Finding it difficult to come to terms with the fact that we are going to share our organization with a menagerie of retailers. Just wondering how long the “N” will stay in ALNA. I suspect not too much longer. We’ve lost four newsagencies in South Cairns in the last twelve months.

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  • 60 Mark Fletcher // Mar 23, 2019 at 7:17 AM

    Gary the newsagency channel lost 475 retailers last year. Just as newsagents have to diversify to have viable businesses in changing circumstances, so must any association.

    ALNA brought in lottery retailers as it was a natural fit for the work they do.

    I am not apologising for them no am I representing them.

    In my own case, my software company primarily served newsagents for years. Then, in 2000, I diversified because I knew I needed a more diversified, but still specialised, customer base.

    Newsagents are doing this themselves in categories such as collectibles, pop culture, toys, games, homewares, personal pampering, cuteness and more.

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  • 61 Colin // Mar 24, 2019 at 8:30 AM

    Mark,

    You previously quoted 2017 closures at between 425 and 450. Now 475 for 2018.

    When added to the newsagencies that successfully diverge from newsagency, yes there are many but difficult to quantify, it means the channel will have lost well over 1,000 outlets in just 24 months.

    These are stratospheric numbers. The distribution systems that serve newsagencies must surely be under immense pain.

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  • 62 Graeme Day // Mar 24, 2019 at 10:05 AM

    I would love to see a break up of these closures, whether they are predominately High St. Shopping Centres. Malls etc plus the main reason if there is one.
    I am certainly not disputing the numbers. Iam dealing with it everyday and have my own conclusions, although accross the Board they are individual in many cases.
    Mark mentions repeatedly that the lack of transition -the do nothing syndrome-help is there etc He is quite right in all of this and whilst peole will disagree with commentary from time to time there are many extensions of help offered by him on this blog.
    What then is the reason for these closures. I can name many and prioritise them of which some would disagree -on the priority of course for they will relate it to themselves when basically we are trying and so are purchasers to relate this major occurrenct of closure to an industry.
    I am going with Mark in saying that there is evidence of success in “moving forward” transitioning, some retailers, Colin for example is doing this I say ‘doing’ because retail is ongoing and perhaps this is one of the major facors contributing to the failure, that purchasers bought “safety” or security which is not a given in antything, it has to be earned. It’s early days however consistancy will prevail the business footprint is still very sound and has great foundations to build upon.

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  • 63 Graeme Day // Mar 24, 2019 at 10:45 AM

    Amanda, 55.
    Thak you for your post of information sought. I too have delved deeper.
    First I need to say that yesterday is “Dead and Gone and Tommorrow’s out of Sight” and today we need to understand (ref.Dolly Parton Willie Nelson) help us make it through the whatever”
    TABCORP is the “New Franchisor” they bought Tatts and Tatts have not reviewed our situation for the years you mentioned.
    We are all aware there has been many Institutions underscrutiny by Government from Banking to Franchising.
    May 4 2018 Tabcorp Holdings Limited submitted their thoughts , challenges and acceptances to Franchising Code of Conduct
    their Submision 30. explains a lot
    Anyone that is afranchisee of -the Lott – it is a must read.
    Tabcorp explain that their particualr Franchise is “hosted” by other businesses (Newsagencies, Pharmacies IGA’s etc) of which they have no control over , yet they are expected to control under the Fanchising code the particular area that is exclusive to the area alloted.
    All full Franchises have discipline, codes of cunduct, dress and presenation and Rule and Regulations. Problems arise when the Host Business owners haven’t abided by the standards set, the rules so to speak.
    Tabcorp has overhauled the total agreement betweeen Tatts and Newsagents.
    they have addresed some wrongs made them right (it wasn’t of their doing) ten they have offered a very “new” arrangement, yet to be played out.
    It’s today. I beleive we have the choice of embracing it and seeing whether we can live in a franchise world and make the money they say by complying or move on without it.
    For my money, I don’t know where itwill end however it offers a new transition opportunity to increase profit or to nuture a new future with or without.
    There is, to make the song complete the prefix
    ‘I don’t care who’s right or wrong Help me make it through the (night) unknown the next step.

    I hope, it helps you, as it did for me, after reading the Submission see where they are coming from. It takes some of the who ha and emotion out of who did what, for who and place it into perspective. Yesterday is Dead and GONE Today’s the Day.
    Best of assessed luck with your choice and thanks for the info I have looked at it thoroughly and I’d give it all and see just what it does for me.

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  • 64 Colin // Mar 24, 2019 at 2:02 PM

    Graeme,

    You say “the business footprint is still very sound and has great foundations to build upon.”

    What about the number of closures. 300 plus in 2016, 425-450 in 2017, 475 in 2018. These are increasing numbers from a smaller base. The annual number closing is increasing exponentially.

    The numbers feed back on themselves. Newsagents who might renew leases are deterred, buyers become scarce, finance becomes unobtainable, landlords become prejudiced.

    I would prefer sounder foundations.

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  • 65 Mark Fletcher // Mar 24, 2019 at 3:16 PM

    Colin there are sound foundations for today, which will evolve further tomorrow. This is where it gets somewhat commercial though as deeper insights into sound foundations are IP because of the cost of discovering, testing and further developing them.

    The factors challenging newsagency businesses are various and complex, and evolving.

    1 likes

  • 66 Graeme Day // Mar 24, 2019 at 4:38 PM

    Thanks Colin for your challenge.
    It certainly is not a ‘throw way line” of rah rah enthusiasm for the masses. the very base for conversion and success is the groundswell numbers patronising the newsagency.
    I specifically mentioned “lI would ove to see a break up etc” I also said I am NOT disputing the numbers. Yes, they do feed back on themeselves for they become self phrophetic ask the people in the street and they’ll tell you “yesterday’s news” it’s what they are. rubbish-all failed business are yesterday’s news. Failed footballer’s the same-Film stars-failure is yesterday. it’s gone.
    sounder foundations? you call for.
    What could be sounder than demographic data pertaining to your area and store?
    This is available in abundance
    Govt Statistics, census, P.O.S. data yes, the business may now be failing however it was once good enough to buy it an at a leveraged price.
    The latter is part of the problem-De regulation and especially internet destroyed exclusivety which was the outstanding intrinsic value of our channel.
    Don’t let your opposition in_ Golden rule- maybe we didn’t but they sure got in-Did we challenge them enough to survive?
    Some did some are still doing it -some obvously didn’t –
    The latter is your focus that is the numbers of failures-fair enough-why do some fail and some don’t?
    Financially strapped and need capital to improve to stop the rot. Hanging in there for price to bail out the debt load when it’s too late for the tide had already receeded still going on.
    It’s only human nature to want back what we paid for something. Look at Housing for comparison.
    The foundation is the solid part of the business that one already has. the Lott -dare I say it. Newspapers-although declining -dare I say it-Stationery, once our bread and butter, some are doing really great figures with stationery -yes they have website prescence and compete on line- who doesn’t?) Greeting Cards- we, our channel is still the largest seller of ‘ranged’ Greeting cards- from Birth to Grave. Heaps of data available here introducing enormous growth fro targetted Social Expression. Gifts just a part of this.
    Colin, there is more foundation, in spades actually, in our retail stores, than other people who risk their savings in start ups would know exists.
    Think about, it’s there, you probably use it all the time, knowing that this is working and that is not so I try this and not that etc. though from your posts I give you mre credit than that.
    Mark said and it is a statement we should respect, I could give you chapter and verse but 30 years of putting together, discovery, foundations testing and finding some work with some people etc etc and with others they don’t- is it personalities or something else
    This data is out there this what is called IP and rightly so although there are some that are definitavely Branded and therfore recognised as such.
    The unbranded, what cowboys called mavericks, unles well bred and performing exceptionally by demonstrating that performance – don’t attract many buyers or big prices as they don’t have the intrinsic value of yesterday’s Brand -Newsagent.
    However some of the basics such as the Profit and Loss Statements aren’t helping they need focus as there is much to be desired in these. It may be nice to minimise tax, but unless this is transparent it does not attract Goodwill.
    In the 60’s and 70’s McDonalds came along and took the Milk Bar’s hamburger away, slowly, slowly then suddenly all gone -last one standing that I know last year Strathfield 50 odd years later Gone.
    The replacement is now obvious-the Cafe and now after recognition that they are it -they have the biggest start up and closure rate of any.
    Business is a cycle and we still have the footprint-foundation call it what you like to change for the better.
    Sorry for the length of explanation without example and detail however Mark and others know it exists and this is why he brings so much example of this to newagents.

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  • 67 Mark Fletcher // Mar 25, 2019 at 3:41 AM

    Colin, to your core point, the numbers do feed back on themselves.

    For what it is worth, I think the newsagency channel, as a channel, is over. In its place I see a diverse group of businesses connected in myriad ways, some in multiple categories and others connected by a single category: lotteries, papers, magazines, stationery, cards. Add to these ‘new’ categories such as homewares, books, collectibles, pop culture, jewellery, maker and more and you can see connections to channels with we have not been connected in the past.

    It is in these areas where we can see foundations.

    Whereas our channel was started with one foundation and over the next few decades was boosted by some additional foundations to a max of, I’d say, five, today we have more foundations, a greater spread, but with the same result of solid foundations – for those who engage and build their businesses that way.

    1 likes

  • 68 Graeme Day // Mar 25, 2019 at 7:50 AM

    If you have foot traffic you have opportunity.
    Newsagencies have plenty of foot traffic. Foundation solid.

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