The Dream Machine The lottery operator has set the balls rolling for the next seven years and come up with plenty of ideas to hlep retailers hit the jackpot. Anne Bruce reports As Camelot prepares for a second seven year stint in office, its retailers have given it an overwhelming vote of confidence through independent research conducted by The Grocer this month. With only one exception they agree they are satisfied with Camelot, and a big majority says the National Lottery has become essential to the financial welfare of their business. More than 85% of the 103 retailers said the draws were vital to profitability, not only for the revenue of 5% commission they bring in, but also for the add-on sales the increased footfall generates. Camelot may have to call in some of that retailer goodwill as it faces the mammoth task of getting strategy and sales back on track by February after last year's pantomime of a High Court battle for the new franchise. It announced this week that overall lottery sales for the last financial year had dived 2.1% to £4.9bn, and blamed the drop on the disruption caused to the business by the franchise bidding process. Profit before tax was £49.1m, compared with £56m the previous year and Camelot puts this down to the long wait for the Lottery Commission to decide on the franchise. However, it is still on track to return £10.5bn to good causes by September. Camelot chairman Sir George Russell said: "This year has been very turbulent for Camelot and its staff. Despite that, we have already hit £10bn, against our original commitment of £9bn. We will continue to support a range of new and exciting games through significant marketing investment during this fiscal year as well as throughout the second licence." And for now Camelot chief executive Dianne Thompson wants that one retailer in The Grocer survey who is unhappy with its service to come forward so she can make a start on her "new franchise resolution" of challenging any negative public perception of Camelot. She says: "We do try very hard to give good service, because at the end of the day that is what we are, a customer service company. We don't manufacture anything apart from dreams. Our retailers are critically important, because they are the face to face contact with our players. If they do a good job, lottery sales stay really strong." And as part of her ongoing pledge to keep retailers onside, Thompson has given The Grocer the lowdown on what is in store now that it has put paid to Richard Branson's rival the People's Lottery. First, Camelot has promised the Lottery Commission that it will install new lottery terminals throughout its estate for the next licence period. That condition was placed on all bidders for the franchise in January 2000. Some of the replacement terminals have now gone into test mode, but the bulk of the £65m order is still being assembled because Camelot did not want to risk placing the order before it was certain it had succeeded in vanquishing the People's Lottery. The new look terminals run from the same electronic system and the physical changeover will take only seven minutes: it's a question of unplug and plug, followed by a few minutes staff training. But task of bringing the project in on time is overwhelming because of the sheer volume of work. Camelot is playing catch-up after losing three months through the prolonged franchise process. It has also agreed to do its best to avoid the Christmas rush, and not to call on its 25,000 retailers during peak hours, such as 7pm on a Saturday. The country has been divided into regional blocks for the operation, which will peak at 3,500 changeovers a week in late summer. December and January will be spent picking up retailers missed on the first visit. Camelot has undertaken to give retailers at least two or three days' notice of impending installation, probably making phone calls for the working week ahead on a Friday. Camelot will be burdened with heavy financial penalties if it fails to complete installation by the time its new licence starts in February. And since the company is already on the financial back foot, it is determined that will not happen. Sales of tickets have been dropping over the last four years, in keeping with other lotteries across the world, and it plans to stem the loss with a raft of profitability initiatives to which retailers will make the critical contribution. On the issue of poor performing retailers, Camelot has pledged to weed out them out during the forthcoming licence period. Those who fail to promote the lottery, or keep noticeboards up to date, could be in danger of being axed when their contract expires. Camelot estimates 500 retailers a year will go, although the planned number of replacements is expected to yield a net gain. All retailers in our survey were questioned in confidence and every one said they were promoting their lottery service. Of the lottery pound, 50p goes to prizes, 41p to good causes and 5p to the retailer. Camelot is left with about 3.5p to run the lottery and make its profit. The commission to lottery retailers for selling tickets will remain unchanged at 5% during the franchise period and Camelot will peg its take at about 3.5p from each sale. It is also hoping to encourage retailers to actively sell the lottery rather than continue in a "service" mode. It is considering offering salespeople cash or other prizes if inspectors find them taking steps to sell extra tickets or other products such as scratchcards to customers. Thompson says: "We have to find other ways to incentivise our retailers, we want to get them to start selling. Sadly most of our retailers don't ask for the sale or add-on sale. "Most serve rather than sell. If you go into any of the big multiples, no-one sells to you, you are self service most of the way. "No-one is actually saying oyez oyez'­" Camelot will maintain its policy on underage sales, in spite of pressure from the Lottery Commission to tighten up. Retailers will continue to lose their licence if its inspectors find sales being made to under-16s on three consecutive visits. It is committed to making 10,000 inspections a year, picking at random. The retailer's slate is wiped clean if the inspector sees anyone under age refused a sale. England's local authority trading standards departments have the power to prosecute if they catch one illegal sale. One-off and themed draws are being considered for the new licence period, but a regular additional lottery slot has been ruled out. These draws will be themed around national sporting events as long as they don't take place on a Saturday or a Wednesday to detract from the regular lottery slots. With the introduction of e-commerce, Camelot plans to add a further 25% to lottery tickets sales through that route in the course of the next licence. These will be incremental sales, and Camelot intends to protect the status quo for retailers. A scheme to register players with their local store before going online is on the cards and that should help to control underage sales. One thousand rural terminals have been ringfenced by Camelot. Even though they fail to make a profit they are considered vital links to the local community and will be protected. On opening hours, Camelot recognises that where retailers serve a local catchment area, the community knows what opening hours to expect, and impulse buys would not justify extended opening. So, although it prefers its local stores to be open until 7.30pm to pick up last minute sales for weekly draws, it is not making extended opening hours a licence condition. And after the recent furore over claims made by winners who have lost their ticket, Camelot is considering changing the rules to an uncompromising no ticket no win'. Finally, Thompson is determined to gain positive publicity for the charitable side of the nation's favourite flutter. Here, she believes retailers can play a crucial role in highlighting where lottery grants are being made in their local community and the introduction of community noticeboards is under active consideration. Thompson says the public is largely unaware of the many smaller and purely local projects that qualify for lottery cash. She points out that every UK postal area has had an average of 19 grants, but only 20% of the community are aware of even one of those in their area. {{FEATURES }}