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ALNA lobbies Tabcorp on behalf of lottery retailers on COVID-19

Mark Fletcher
March 18th, 2020 · 4 Comments

ALNA CEO Ben Kearney sent out this newsflash this afternoon:

Australian Lottery and Newsagents Association (ALNA) calls on Tabcorp to take decisive steps to protect and support their retailers in navigating the COVID-19 pandemic
As I am sure our members will agree, these are unprecedented and very challenging times and the adverse effects of the COVID-19 pandemic are being felt in every aspect of our lives and critically in the retail network.

Above all else we are encouraging our members to please stay calm, as your teams, suppliers and customers will all appreciate this as we are all working hard to navigate the same challenges.

As you would be aware the Federal and State Governments are taking extraordinary steps to stay ahead of the curve with this pandemic and many large businesses are stepping up to do their share of the heavy lifting. Simple measures like ensuring continuity of wages or sick leave for casual employees that may need to self-isolate are helping. Big business has much greater capacity to absorb these shocks than small business operators do and Tabcorp is in a strong position to help.

ALNA is already working with government on ways to help retailers through the crisis and of course in recovery on the other side. This is a great opportunity for ALNA and Tabcorp to work together on this issue with government, as they (the issuers of licences) are significant stakeholders and will ultimately feel the shocks to the retail network over time with a loss of tax revenue, etc.

The fear and panic this pandemic have caused is unparalleled and Tabcorp’s retailers are not immune.

ALNA is making available as much information and support to members during these uncertain and extraordinary times.

As this crisis unfolds ALNA is fielding lots of calls from genuinely concerned members who are already feeling the impacts and are asking if Tabcorp has a plan to support and protect their retail network.

Retailers concerns are wide ranging and start with smaller more immediate concerns i.e. what will happen if the shopping centre closes and I am left with a large amount of unsold syndicate shares, to bigger concerns around what will happen if the shopping centre is forced to close and I have no income for several weeks, or on high streets if players stay home and self-isolate.

The biggest concern of many retailers is the potential for a rapid transfer or dislocation of retail sales over to online as the crisis worsens and more self-isolation measures are adopted or imposed. The new remuneration/omni-channel model does include retailers in omni-channel sales and revenue, but it is not geared to fairly support retailers if an unprecedented and rapid dislocation occurs like this and retailers are left with no mechanisms to sell lottery products to regular customers.

Retailers already report customers are opting to stay at home to avoid the risk of infection. This will potentially be catastrophic for retailers if this escalates through fear or by additional government restrictions on public gatherings and self-isolation, etc. As Tabcorp and many other employers are encouraging and facilitating staff to work from home where possible. This will add to the reduction in retail traffic our members are already reporting.

As you know the new remuneration model has a significant portion of revenue contingent on some performance and compliance outcomes and this is unfortunately adding to the uncertainty and anxiety about cashflow for retailers which is so important to their livelihood at this difficult time. Small business ‘lives and dies’ on cashflow. The failure of cashflow is the single biggest cause of small business closure and consequent loss of employment.

Yesterday, Australian Lottery and Newsagents Association (ALNA) has written to Tabcorp’s Managing Director and called on them to take decisive steps to protect and support their retailers.

ALNA has recommended the following practical measures that will deliver immediate and direct support to their retailers, but importantly they will provide surety and would clearly demonstrate Tabcorp’s support for their retail network in this incredibly challenging and unique time. These will relieve some of the stress and concern being felt by retailers and demonstrate that the whole business is working to resiliently move through this together. They would set a great precedent too for other franchise systems in Australia to follow.

Suspend scoring of the Omni-channel Program for this cycle – immediately (for this Cycle 02/03/2020 – 28/06/2020) suspend scoring the omni-channel program requirements and rate all retailers Green for the Cycle. This will guarantee the commissions from the remaining or available sales are not further eroded and immediately relieve heightened anxiety of retailers.

Support Retailers Revenue – in the event a rapid retail sales decline, business interruption (i.e. shopping centre closures), or the effects of any other forced social distancing measures imposed or being felt in centres and high streets occurs, or where customers simply disengage completely due to illness, Tabcorp should consider temporarily removing ongoing franchise and terminal fees etc. and guarantee retailer’s revenue/commissions for any period the retailers are unable to trade or feel the disproportionate effects of this crisis. This would provide surety and help retailers to maintain quality well trained staff who will be so critical in the rebound phase.

Increase Share of Online/Digital Sales – if there is a rapid and en masse transfer or dislocation of retail sales to online due to mass self-isolations, for Tabcorp to implement temporary measures or mechanisms to re-allocate revenue back to retailers to more fairly share digital revenue during this period which will provide critical and direct financial support to retailers.
Furthermore, ALNA has signalled our desire to work together on what plans or strategies can be prepared now for the retail network when the crisis has passed, and we move into a recovery phase. What marketing, promotional or other initiatives can we plan now for implementation post the virus to help drive customers back into retail.

Importantly, as part of the recovery, ALNA believes we need to consider any permanent market changes that occur as a results of this crisis i.e. if the transfer or dislocation of retail sales to online is sustained past the crisis, the omni-channel model will need to be reviewed and transformed to cater for this new trading environment and to ensure retailers are fairly considered.

We will keep members updated on constructive dialogue and solutions.

4 likes

Category: Newsagent representation

4 responses so far ↓

  • 1 James // Mar 19, 2020 at 11:14 AM

    After all, Tatts Franchisees are simply gambling tax collectors for the various state governments.

    There’s some potential government assistance capacity right there.

    Might just be a good time to be working for the “guvnment”.

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  • 2 Graeme Day // Mar 19, 2020 at 11:44 AM

    James.
    I get your thread however Lotteries when owned by the respective State Govt’s one clould class the gambling as “voluntary taxation”
    The Tatts Group bought this from the Sate Govts therefore the money went to them and from this Tabcorp bought the Lease from Tatts.
    Tabcorp is a Public Company which means the profits go to their shareholders.
    Theri shares are currently -this minute $2.51 from a peak within the past 12 months of $4.95.
    Could be a good buy? leave it to you.

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  • 3 James // Mar 19, 2020 at 12:01 PM

    I think you will find the States still “own” the rights to run Lotteries and have simply contracted Tabcorp to manage the function on their behalf. WA excepted of course where they still operate it themselves.
    As such a fixed percentage of each ticket sold is passed straight through to the State Govt as gambling tax and Tabcorp clips the ticket for a percentage on the way through, reimbursing agents for their share of the clip. Similarly, the State Governments pay out a fixed percentage of their tax take as prizes. In other words the prizes come out of the State Govts pocket, not Tabcorps. They reclaim the prize to Treasury if its not claimed within six months and then the winnings have to be claimed from them direct.
    That’s why they don’t allow payouts of tickets from other states. Nothing to do with Tabcorp. All about retaining tax revenue inside the state that collected it.
    Tabcorp’s financial performance is directly linked to the overall performance of Lottery Sales and their Clip of the total.
    There is no reason that the States could not divert a portion of their tax take to Franchisees for a limited period of time to assist them through this period.

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  • 4 Graeme Day // Mar 19, 2020 at 4:18 PM

    Your absolutely correct in your statement re prizes paid for purchases interstate etc. and the Onwership of State Lotteries I mentioned this with regard in an ALNA post recently re National Bodies representing State body arrangements etc. comparing it with our Authorization in 1980 which was State by State etc.
    The State Govt. leased the rights of NSW Lotteries (as each other State has done all as you say W.A). and they approved the change over or the purchase of the lease to Tabcorp
    The State Govt has alway had the option to assist Newsagents or Lottery Franchisees if they wish to and they have done so with “Fit Out” contributions etc which now of course with TABCorp reimbursement it will most likely cease if it hasn’t already.
    I think you will find that TABCorp’s lease is subject to rulkes and behavior statuatoryguidlines and if broken the licence can be revoken. None the less at this point in time te profits are all TabCorps -the conditions -the Omni Channel etc is all TabCorp and as a Public Listed Company I believe the onus would be on TabCorp to make the decision of any compensation as it is they that recieve the profits the “tax” I believe is a Licence Fee not unlike a rent lease and I hardly believe that the Govt would use that fee It may however help newsagents from a SME point with a special package from a policy point of view as is the Federal Govt’s doing.
    That’s my take on it as I know it.

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