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TheLott (Tabcorp) adding former Woolworths fuel outlets

Mark Fletcher
July 26th, 2020 · 22 Comments

I’m told that Woolworths has sold fuel outlets and that in NSW there between 15 and 20 of these that are applying for the right to represent The Lott.

From a Tabcorp notice I have been provided, I can confirm that the company behind the multiple sites for which lottery applications have been lodged is Euro Garages, an international company with more than 5,900 outlets worldwide. This, from their website:

Founded in 2001 by the Issa family, United Kingdom based EG Group is a leading independent global “C-Store” operator serving seventeen million customers worldwide each week.

We operate approximately 5,900 sites spread across three continents, which we believe will make us the third largest independent C-Store operator in the world, the largest independent C-Store operator in Europe and the fifth largest independent C-Store operator in the United States, in each case based on numbers of sites.

Our global operations span six of the ten largest fuel markets in Europe by fuel volumes sold, namely Belgium, France, Germany, Italy, the Netherlands and the United Kingdom, all six states in Australia and thirty-one states across the United States.

We seek to deliver a modern and convenient customer retail experience by providing a “one stop” shop retail destination that offers a broad range of products and services to address evolving customer needs. For the twelve months ended June 30, 2019, we generated pro forma revenue of €22.6 billion, Pro Forma Adjusted EBITDA of €1.1 billion and Pro Forma Run-Rate Adjusted EBITDA of €1.4 billion.

I am sure the folks at Tabcorp have done their research as to the applicant.

Some of the outlets are as close a 2 minutes from an existing newsagent lottery outlet.

It shocks me that Tabcorp would consider approving a new outlet in the middle of the coronavirus pandemic.

The only party to be adversely affected by approving such new outlets would be the independent small retail businesses that already serve TheLott locally.

My view is that Tabcorp proceeding would be socially irresponsible, harmful to small business, harmful to local communities.

Unfortunately, there is little evidence that any objection process plays in favour of the incumbent local retailer.

Some the objection grounds I would focus on include:

  1. The community is already well served.
  2. Approving the application would harm my business.
  3. Approving the application would reduce the return I achieve on my already substantial investment in The Lott products.
  4. The applicant is a multi national business, not a small business, not local.
  5. The applicant would, in all likelihood be given a franchise arrangement with different terms and conditions to existing franchisees.

My suggestions are:

  1. Object to TheLott.
  2. Object to Fair Trading.
  3. Write to your state local lower house and upper house member.
  4. Write to your local councillor.
  5. Write to the ACCC as your TheLott relationship is a franchise.

The alternative is to complain to any who listen but actually do nothing and that will only make you feel worse.

6 likes

Category: Ethics · Lotteries · Social responsibility

22 responses so far ↓

  • 1 ken // Jul 26, 2020 at 7:33 AM

    in brisbane they approved a 3rd outlet with close to 2 other outlets.so you can imagine how 2 outlet owners are feeling. i always thaught newsagent without lotto would be much better to move on. no pressure of reps comming n taking photos.

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  • 2 Graeme Day // Jul 26, 2020 at 7:57 AM

    The only objection made here that we can wirte about is that the Lott is a Franchise and not for conglomorates. However this also will depend upon who buys the former Woolworths outlet.
    We need to bare in mind that the Lott is deemed by legislation an essential service (same as newsagents)
    Most -the greater mnajority of Servo ouitlets do not cut the mustard in Lotto sales.
    It is a proven failure.
    Ken’s point is however the same and suits your comments and is threatening to other established the Lott Franchises.

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  • 3 Colin // Jul 26, 2020 at 8:32 AM

    I live in Belair. The local OTR servo has the lottery and on the opposite of the road to the long serving “newsagency” ( more cafe than newsagent) outlet. They are 50 metres apart. Similar situations are repeated across SA.

    Servos do have traction in lottery sales.

    Wake up and smell the coffee. Its all part of a grand plan.

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  • 4 Mark Fletcher // Jul 26, 2020 at 8:46 AM

    I have had a chance to undertake further research and have updated the post accordingly, with specific details about the applicant.

    My advice to affected retailers is to object early and object often.

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  • 5 Shayne // Jul 26, 2020 at 9:11 AM

    Is there any way we can find out if our local woolies petrol is one of the ones applying for lotteries?

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  • 6 Peter // Jul 26, 2020 at 9:22 AM

    If there are much higher compliance requirements for the newsagent over the service station, this would be particularly galling. Dispassionately, I would suggest the Lott are trying to align themselves with a high traffic flow business with the belief that newsagents are a dying business. The twin thrust of their business plan would be to significantly grow online purchases and supplement these with sales and visibility in businesses with very large traffic flow. Are the sales in the affected newsagents declining or flatlining?

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  • 7 Steve // Jul 26, 2020 at 9:46 AM

    I know of a long standing, high ranking lotteries franchise in my own local area where the Lott approved a rival instants franchise within 100 metres. Such approval decisions and cannalbilising of existing sales are disrespectful and will only hurt Tabcorp long term. These decisions should attract a class action funded by our industry associations.

    Peter the long standing newsagency was not in decline with their lottery sales. I agree with Graeme the lotteries model does not work successfully in other channels .

    Shareholders of Tabcorp should hold management to account for their dumb decisions.

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  • 8 Mark Fletcher // Jul 26, 2020 at 10:03 AM

    In WA, the lottery model works. Lottery retailers there tell me that. It remains government owned, which I suspect is key.

    2 likes

  • 9 Graeme Day // Jul 26, 2020 at 10:08 AM

    Thanks Mark for the broader information re the new ownership.
    It is a conglomerate, one that could be argued as no more a threat than IGA where many a newsagent has sold their thge Lott Franchise to.IGA is also a Franchise.
    I do agree that we need to protest however a single minded protest with some substance is needed.
    We have a National Committee at the moment focused on the survival of family small businesses.
    This is well documented and I would support your suggestion in protesting re this unecessary competition especially with larger conglomerates such as the Servo Conceneience chain.
    As well I think Steve’s suggestion of having all Associations (and I am sure they are at it already) lodge on behalf of their members and all newsagents in total a Bloc concern.
    It is becoming blatantly obvious that this industry needs a “new” Business Model one that our suppliers will fight for toi belong to rather than move away creating our demise.
    It’s really up to us. The writing is on the wall.

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  • 10 Jenny // Jul 26, 2020 at 2:55 PM

    Shayne we received an email from The Lott to say one in Moss Vale has requested an All Products Outlet, we are 18k from there with another town between us.

    There are 7 newsagencies in the Southern Highlands including a large one in Moss Vale, who is the strongest for Lottery sales in our area, so we are well covered for lotteries.

    The area rep said there are requests for 14 petrol stations in her area which is south west Sydney.

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  • 11 colin // Jul 26, 2020 at 5:48 PM

    I received the same letter ,i am in a semi rural area been servicing the local population for a long time. There are another five Lottery agencies within about six kilometer radius the population is adequately services with the current outlets. The Manager at the local Woolworths outlet said that he was running another Woolworths outlet previously. He done a detailed report on the lottery product return, which showed that they made no profit after allowing for cost of wages etc.His recomendation to head office was to get rid of the agency as another product would be more profitable.I have also had customers complaining that the person behind the counter said he was too busy to check his tickets and told him to go away.Cannibalization of the customer base will only leave current outlets vulnerable and if you consider the loss of income from papers together with this bright idea will result in outlets closing down.

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  • 12 Graeme Day // Jul 26, 2020 at 8:20 PM

    Jenny, I think the answer is to contact your local member re the conglomorate situation versus SME’s especially newsagents -local and involved.
    Mark could do this for you and his other NewsXpress members as well as the Associations. Nextra with their members and GNS the Newspower
    This really is a situation of “creeping” a situation that goes unnoticed by he community until it happens -then they say oh! what ever happened to the newsagency?
    More than ever we are on notice- We have lost the retail / distribution newsagency shackle-no Agency there and now by default we are watching the rest slowly slip away
    We need some positive action from all participants.
    Regards to Craig

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  • 13 Steve // Jul 26, 2020 at 9:08 PM

    Graeme speaking to my local member recently I believe that there may be some appetite for this argument at the moment. Remember the NSW government have provided Tabcorp with some tax relief on the proviso that they supported non executive staff. Cannibalising your existing franchisees does not sit well with this mantra. We need our industry associations to lobby hard on this issue and we all can play a role in contacting our local MPs in regards to the same.

    Tabcorp need to be accountable for any decision to open new franchises in direct competition to existing franchisees. Should they do so I question whether their decision is part of a longer term strategy to decrease in store customer service and drive online sales?

    The WA model may also be attractive to our state government in this new world of plummeting state government revenues. Would certainly allay any concerns with anti competitive behaviour.

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  • 14 PJ // Jul 27, 2020 at 2:12 AM

    Franchisee fee cash grab. Considering the push for online sales it’s counterintuitive to create new outlets. It’s doubtful the new outlets would generate more sales, just stealing sales from existing outlets. So the only real gain for Tabcorp is new franchisee fees.

    1 likes

  • 15 Mark Fletcher // Jul 27, 2020 at 6:45 AM

    PJ, If I was an existing lottery retailer and if I was impacted by this move, I’d be trying hard to get the terms of any agreement or application between the franchisee and Tabcorp disclosed. I’d be wondering if there is not a franchise fee per location.

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  • 16 Graeme Day // Jul 27, 2020 at 11:12 AM

    There is a Franchise fee per each new location. it is tranparent

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  • 17 Mark Fletcher // Jul 27, 2020 at 11:14 AM

    Graeme there is in the franchise agreements of which we are aware. I have not seen the agreement for these types of fuel outlets.

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  • 18 James // Jul 27, 2020 at 12:42 PM

    Its a fee grab from Tatts and a visible gesture from the Tabcorp CEO to the stock market that they are increasing coverage.

    There are already 25 Eurogarage (ex Wollies Petrol) Tatts sites in Victoria.

    Of the 789 active Tatts franchises in Victoria as at 30 Jun 20, Eurogarage filled rankings between 725 and 787.

    Its a failed model that flopped previously with Coles Express and 7/11.

    Its a fee generator for Tabcorp, nothing more, nothing less.

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  • 19 Graeme Day // Jul 27, 2020 at 1:21 PM

    Mark I understand what you are saying and it is a great concern I am not sure that the Servo and C store appointments are under the same agreement as ours. In fact I believe they are not, yet I have not seen any confirmation otherwise.
    the fact that these and other out;lets don’t have the same visual compliance indicates that they have a different grading
    We can debate this here until the cows come home and as you say affirmative action is needed. I have made my thoughts on this in previous postings.

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  • 20 Mark Fletcher // Jul 27, 2020 at 1:24 PM

    Yes, Graeme, I have noted that previously. I was advised a while ago by a Tatts representative that there is a different agreement in place. I suspect that there is not a franchise fee per location for some outlets like these.

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  • 21 Graeme Day // Jul 27, 2020 at 5:26 PM

    Surely then we can obtain an agreement form someone so we know what we are up against
    To put a case to ACCCwe will need this information otherwise……

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  • 22 Amanda // Jul 28, 2020 at 8:16 AM

    The biggest problem with these outlets is the transparency of whether or not they are established under the same rules, fees and obligations as the competing newsagency.

    In NSW this is not only a major problem with fuel outlets, but with tobacco chains such as CTC and Cignal which are located sometimes within one hundred metres of already established outlets.

    I have noticed that three CTC outlets are claimed to be in the same suburb (location) yet are 100’s of kms apart, which is also suspicious.

    These outlets are not required to :
    * have the lotteries counter at front of store
    * install the same level of fitout and signage requirements as the competing newsagent
    * there is no clear indication what franchise fees the outlet is forced to pay in regards to setting up the franchise
    * there is no transparency in regards to the outlet having to pay the 3year new outlet fees.
    * there is no indication these outlets are required to undertake the same level of training.
    * furthermore, the business model does not stack up in setting up these new outlets if the establishment costs of these new franchisees mirrors those of the newsagency.

    I have asked these questions of my the LOTT BDM who has replied that these outlets operate under seperate contracts which are confidential.

    She did however reveal that it is part of her KPI to establish new outlets in her area, and that they are rarely refused but in some case are approved as an “instant only outlet”

    2 likes

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