Time to get back in the game?

Sales of the National Lottery are back in growth, up £26.4m on last year – but that growth is coming exclusively from digital sales as retail sales continue to fall, so is it time retailers got back in the game?

by Antony Begley

For the last few years it has looked increasingly like the national love affair with the National Lottery was cooling. Sales fell by 8.8% in 2016/17 and grumbles in the retailing community were getting louder and louder, as they will tend to do when sales volumes start sinking – so it’s welcome news for the entire local retailing industry that sales of the National Lottery are firmly back in growth.

But there’s a catch: that growth was driven by digital sales. In fact, while total National lottery sales grew, sales through retail actually fell by almost £104m and almost a quarter of all National Lottery sales are now digital. So is this a worrying trend, or merely a reflection of the fact that digital is simply the way that many shoppers now engage with the world?

According to National Lottery operator Camelot’s latest results, total sales for the 2017/18 financial year were up £26.4m on the previous year, taking total sales to £6,951.7m. Even Camelot CEO Nigel Railton admitted that he had “anticipated a further sales decline this year” so it appears that the major strategic review that the company undertook not long ago has gone far better than even Camelot had dare hope.

Camelot Retail Director Duncan Malyon told SLR: “It’s fair to say that sales benefited from a nice run of luck – particularly on EuroMillions with some incredible jackpots – but the strong foundations and new initiatives that we are putting in place have also started to play a part.”

Growth is clearly good but worryingly for local retailers, the sales increase over the last year was due principally to record digital sales of £1,652.2m, representing almost a quarter of total sales. Camelot also reported the best-ever ‘eperformance’ by its range of online Instant Win Games and mobile sales also grew to an all-time high of £700.6m. Sales through smartphones and tablets now account for well over 40% of all digital sales.

Sales through the official National Lottery apps for iPhone and Android also set new records.

So with digital driving all the growth, is it time retailers upped their Lottery game? Kirkcaldy Premier retailer Faraz Iqbal thinks so: “A year or so ago, sales were falling and I think retailers were losing interest a little bit, partly because I think there were just too many terminals out there now and the loyalty that existed between retailers and Camelot had been eroded a bit. But over the last year Camelot has done a good job of re-engaging with retailers and getting them excited about the Lottery again which means they put more of their focus back onto driving sales in-store.”

Faraz’s experience over the last year tells him that growing sales of the National Lottery and Scratchcards in-store is certainly achievable if retailers devote some time and effort to the category.

He says: “It makes sense that digital sales are growing because that’s just the world we live in today – but it doesn’t necessarily mean that retail sales need to fall. We’ve worked hard at the Lottery over the last year at getting all the basics right then adding on top of that lots of social media around the big rollovers and lots of in-store upselling which can be as simple as just asking customers at the till if they fancy buying a ticket. We’ve seen our sales transformed – so it’s definitely possible to grow sales if you really want to.”

Camelot, for its part, has made big commitments to the local retailing community in recent times, ploughing in millions and doubling the size of its sales force. Malyon comments: “As a result of the strategic review, the company is investing over £20m in initiatives to boost engagement and improve in-store display, merchandising and game availability – and so support our retailers. We have also doubled the size of our sales force to better serve our 45,000 retail partners – resulting in around 5,000 retail visits per week, compared with around 2,000 at the same time last year. With sales of £5,299.5m, retail remains the largest National Lottery sales channel – with over 75% of total sales coming through in-store terminals.”

Camelot’s strategic review also highlighted a number of other areas where they saw further opportunities to support retailers, including bringing the Saturday National Lottery draw back onto a primetime TV slot during some of ITV’s most popular shows.

“It’s clearly a concern to us that retail sales are falling but we have put a clear plan in place and we are confident that the work we are doing with retailers will deliver sales growth for them,” says Malyon. “It’s still relatively early days but we are already seeing signs of progress. Sales in the second half of the last calendar year were higher than in the first half and the signs so far in this financial year are also very encouraging, so we’re positive but not complacent.”

Malyon is calling on retailers to get behind the company’s Site Stock Sell initiative. He comments: “We know from in-depth research that stores that follow our 10-point Site, Stock, Sell plan generate increased sales. Following the plan can add thousands to retailers’ takings in a year and all from carrying out some very simple activities in-store.”

Inverurie retailer Scott Graham of McLeish’s also highlighted a concern over the number of younger customers buying National Lottery products: “Our sales have been trending slightly down on last year but we’re doing ok. One thing I have noticed however is that we’re not seeing so many younger people playing and I don’t know whether that’s because they’re not as interested or it’s because they’re playing online. Either way, it’s a concern for the future.”

There’s no question that the last few years have been challenging across the board for retailers and that will undoubtedly have impacted upon sales of the National Lottery but with new trials scheduled for terminals in the discounters and digital only likely to keep growing, the time is now for retailers to redouble their efforts in the category to ensure that the National Lottery remains a significant contributor of footfall, sales and profits long into the future.

Malyon concludes: “We’re in this together and only by working together with retailers will we deliver the sales growth we all want to see that will allow us to keep supporting Good Causes in Scotland and the rest of the UK.”