BuSiNeSS PlAN - California Lottery

Fig. 5.15 Sales per RetailerFigure 4.15 – Sales per RetailerFiscal Year 2005–06 Comparison of Ten Most Populous StatesFiscal Year 2005–06 Comparison of Ten Most Populous States$400,000$350,000$300,000$250,000$200,000$150,000$100,000$50,000$0NY NJ GA PA FL OH IL* TX MI CA* Previous fiscal year dataSource: La Fleur’s 2007 World Lottery AlmanacAlthough California has fewer retailers per thousand of population thaneach of the other large states, it also has the lowest sales per retailer.While it may appear that sales may be increased simply by increasingthe number of retailers, this would be effective only if demand for lotteryproducts was sufficient to justify additional outlets. However, the datapresented in figures 4.14 and 4.15 suggest that demand for lottery productsin California is much lower than in the other states. Accordingly, additionalretail outlets may simply cannibalize existing sales rather than increaseoverall sales. The CSL has conducted several studies to determine theimpact of higher retailer saturation levels on net sales and profits, withinconclusive results. The CSL plans to continue studying this issue andconducting further tests. However, it is clear that the CSL must activelypursue trade styles that reflect consumer shopping trends.4.6 Efforts to Improvethe Business ModelThe CSL has been locked into the same basic business model sinceits inception. A major limitation with this model is that, in the absence ofself-service equipment, selling lottery products is labor intensive, and manyretailers and retail chains question the value of carrying lottery products.One of the most taxing aspects of being a lottery retailer is the requirementto carry and market 20 or more different Scratchers games at any giventime. Currently, there are no automated systems to track and documentCalifornia Lottery 2007–2010 Business Plan – 57 –