Fionnuala Carolan concedes that while there is indeed truth in the 'footfall argument', that no one should be expected to work on behalf of another company for free
May 15 2012
The privatisation of the National Lottery later this year is of serious concern for Irish retailers due to the threat of reduced margins. While it stands at 6% and is of considerable value to a small retailer, the government is currently debating a reduction on this margin (more page 6).
When new shops open they always speak of the urgency to get their Lotto machine installed because it makes such a huge difference to their bottom line. A Co Meath retailer explained to ShelfLife that a reduction in the Lotto commission could result in having to reduce a staff member as the 3,800 National Lottery agents nationwide receive €45.6 million in commission a year. Having the Lottery means that you get increased traffic, twice a week to your store. And people would without doubt go somewhere else if this wasn’t available.
This brings us back to the age-old argument about margins versus footfall. Products like the National Lottery, mobile phone top-up, toll charges and bill pay requires a considerable amount of labour from the retailer which is supposed to be made worthwhile by the return they receive.
This issue of ShelfLife features an interview with the head of sales for Payzone, Barry Keegan (page 22). He is quick to point out that the company is aware of retailers’ discontentment over reduced margins and says the company is warning the operators that any further reductions won’t be tolerated. However he also spoke of the benefits to a retailer when they have these services in their stores. The company carried out research through Red C to prove that having its products is indeed a footfall driver. The results showed that one out of four customers who come in to a store to use a Payzone service, buy something they hadn’t intended on buying.
So although we mightn’t like to admit the footfall argument, there is truth in it. However with this in mind, no one should be expected to carry out work on behalf of another company for free. Additional purchases made by customers when using payment services or the Lotto should be a bonus for a retailer but not its sole basis for providing it. The money that is collected for these services needs to be counted, stored and lodged in the bank with the retailer covering the bank charges, and there needs to be a decent monetary gain for doing so. Let’s just hope the government considers this when negotiating the new Lotto margins.
Summer is upon us although you’d be forgiven for doubting this considering the shambolic weather situation at present, but we live in hope that it will improve. It’s going to be a busy summer of sport creating plenty of key occasions for retailers. Our summer drinks (page 34) and barbecue (page 58) features can give you a guide to the kinds of products you should have in stock to make it a profitable season.