Public Gaming International • July/August 2014
14
ucts. They point out that all their other products carry a higher mar-
gin and are easier to sell. We may tell them how Lottery generates
store traffic that buys other products and insist that the calculus for
the profit generated by Lottery should include all those factors. But
we don’t have the concrete data to support those claims. We know
it’s true, and the retailers may even observe that it’s true, but they
are used to analyzing hard sales data, with detailed analyses that
profile and segment the product preference of different consumer
groups, to guide their decision-making and merchandising tactics.
And they need hard data from us to inform those decisions. Other
CPG suppliers provide retailers with copious amount of research
and data to support their claims that their product should be given
top-shelf treatment. We need to do the same to get proper consid-
eration for lottery products. Just putting bar codes on our tickets
would be a good start in the effort to capture the data we need.
And we need to give retailers longer lead-times. We have got to
re-engineer our back-end IT and marketing processes to meet even
the basic expectations of our retail partners.
On building standardizing report formatting
and longer lead-times for our Retail Part-
ners to better engage with Lottery’s promo-
tional action-plans
Mark Hagen:
I realize that the exact product mix and other
aspects of the business vary from lottery to lottery. But there is no
reason you could not standardize at least some of the formatting
and speak with a single voice. If you do that, we can apply our
resources to crunch the data, integrate it with our own data, and
share the results back with you. The benefit to lottery in terms of
enabling us to collaborate with you on the mission of selling more
lottery tickets is huge.
To put it bluntly, pushing these reporting issues over the goal
line is a top priority for us. We need to get that done. Data needs to
be organized for it to be useful and actionable. We have a standard
way of doing business with every other product category. It just
doesn’t make sense, for Lottery or for us, for you to be producing
reports in thirty-three different formats. For one thing, it requires
us to have sixteen accountants just to keep up with it in the most
basic fashion, which makes it un-actionable. But I am encouraged.
There is an XML standard that was developed through NASPL.
May Scheve and NASPL and others are meeting with me to adopt
that standard. I hope you will all support this effort and move this
initiative forward.
Realize too that at the end of the day, I’m here because we support
the lottery category. It’s important to us. The question is how we
can do more business together. We share data with all of our major
suppliers, and I can tell you that it helps to drive sales. Help us get
a clearer idea on what products are selling, what promotions are
working, how performance of each product varies by store and con-
sumer profile, etc. For instance, if you run a buy six get a $2 quick-
pick ticket, we can tell you where it’s working and where it’s not.
On why the lines of communication require
such a long lead-time
May Scheve Reardon, Executive Director, Missouri
Lottery:
Lottery is a multi-billion dollar business. We need to act
like one. Mark, did you say the big CPG suppliers give you an
annual plan, that you know everything, or most of what they are
going to do, a year in advance?
Mark Hagen:
We always start out with an annual plan. And
we are always given at least six months for new product launches,
promotions, and other communiqués that store managers need to
know about.
May Scheve:
Talk about the chain of communication, and why
you can’t just send e-mail circulars to your stores advising them of
the current product launches and promotions?
Mark Hagen:
7-Eleven just does not operate that way. We
couldn’t operate that way. Think about it. My own world may
be lottery centered, but that’s definitely not the case for all of
7-Eleven. Each store has over 2,500 products and there are over
50,000 stores world-wide. We have a whole internal communica-
tions department which sorts out the huge volumes of marketing
and promotional information and consolidates it into a form that
is actionable for our stores. That is then communicated to the field
consultants who in turn instruct the store managers on what to fo-
cus on during that particular week. That’s why we have such a long
planning cycle and such rigorous gate keeping. Our CPG suppliers
work with a minimum of six-month lead-times. If Lottery could
get into that cycle, then the process takes care of itself and we have
very effective communication. If we try and work around the pro-
cess by accommodating a shorter lead-time, then it unfortunately
doesn’t work well.
It’s definitely a missed opportunity. Last year, we worked closely
with California when Powerball launched. 7-Eleven has 1,500 stores
in California. We started working on that launch several months
ahead of time. If they had come to me the week before it was launch-
ing and said, hey, by the way we’re turning Powerball on, I would
have had to say “Well have fun. Hope it works out for you.”
Kevin Gass:
Clearly we need to meet these needs. If we as an
industry want to be taken seriously and be given the same consid-
eration as the Cokes and the Pepsis and the other 2,500 products
that are being sold in the store, we have to change our model to
work within that system that Mark has just outlined. If we don’t,
we’ll get the” best of luck to you guys” response.
Could the request for standardized report-
ing formats turn into a requirement?
Paul Jason, Chief Executive Officer, PGRI, Inc.:
Is there a
point at which your requests for things like a longer lead-time could
turn into a required condition for doing business with 7-Eleven?
Mark Hagen:
The answer is ‘not yet.’ But stay tuned. We’re
trying to be kind and gentle and work cooperatively to get every-
one on board. But if that doesn’t happen there may come a day
where the dialog will change, and we’ll need to institute more
uncompromising systems and requirements. For instance, I also
