Amid sluggish sales, officials hope to beef up the number of outlets
Griswold's Family Produce sells honeydew and dreams.
The combination produce stand and old country store south of Monroe sells apples to zucchini, homemade ice cream and, now, N.C. lottery tickets. Pick up a bag of golden delicious and a chance to become a millionaire.
Griswold's is one of the newest, and less typical, retail outlets for Powerball or scratch-and-win tickets. It's also the sort of high-traffic, well-located outlet that lottery officials are seeking in a new push to sign up more ticket sellers who can help boost sluggish sales.
North Carolina had 1 lottery retailer for about every 1,500 residents at the end of June, proportionally fewer outlets than most neighboring states and fewer than the average for North American lotteries.
The average among U.S. and Canadian lotteries was about one outlet for every 1,300 people, and across the state line, there was one retailer for every 1,200 South Carolinians, according to the North American Association of State and Provincial Lotteries.
Also, the N.C. lottery's base of retailers has dipped in recent months. The game started with about 5,000 locations, peaked at about 5,900 and now has some 5,750, according to lottery officials.
Lottery leaders launched a recruitment drive in September, redirecting their sales staff to focus more on bringing additional retailers into the game's network.
Tom Shaheen, the lottery's executive director, wants to expand to 6,200 retailers by next summer.
"It's something you have to grow," Shaheen said, adding that the N.C. game is young compared to neighboring states. "I'm comfortable where we are at this moment. Would I be comfortable (with the same numbers) down the road? No."
The need for more retailers helps explain the overall sales difficulties the lottery is enduring. Instant, or scratch-and-win, ticket sales have declined, although they generally drive the growth in lotteries nationally.
The lottery raised $313 million for education in the fiscal year that ended June 30, compared to the $425 million that the General Assembly budgeted. Shaheen warned early on, though, that the legislature's figure was too high.
Recruiting more retailers
Twenty months after the lottery's launch, lottery executives say the retailers who signed up at the beginning have grown comfortable with the system and require less attention from the lottery's sales representatives. That frees up the sales staff to find new outlets."The first year and a half, our focus was on our base (of retailers)," said Barry Shead, the lottery's director of field sales, working in the Charlotte area last week. "We had to train our retailers, teach them how to sell this stuff. (Now) we have to move more into really recruiting more retailers."
The retailer roundup follows more than a year of overall decline in lottery sales, mostly among scratch tickets, which account for a majority of sales. Lottery executives are pumping more prize money into the scratch games to help rub away the reputation the lottery has gained for selling fewer winning tickets than its neighbors.
Boosting the number of lottery outlets could only help, but the growth isn't obvious yet. The 161 new retailers recruited between July 1 and mid-November works out to slightly fewer per month than the 227 who came on board during the first half of the year.
The lottery team didn't recruit retailers during the game's start-up. They had their hands full with the applications that poured in. Some of those outlets have since bailed out, while new ones have signed up.
Location, location, location
Some retailers decide lottery sales don't generate enough business. Sometimes those outlets are in locations that are not visible enough or don't get enough traffic passing by, lottery executives said.
Lottery retailers get a 7 percent commission, which is slightly higher than many states, but there are no bonuses for selling winning tickets.
Of the 1,441 outlets whose lottery contracts have been terminated, more than two-thirds were because the business changed owners. The lottery requires new owners to apply to sell, and nearly all do. Among the terminations since the lottery started in March of last year, 404 were at the owner's request. Those retailers consistently said they weren't turning the profit they hoped for.
"We weren't making enough off of it to spend that kind of time" on selling tickets and keeping the books, said Joyce Crisson, an owner of Saunders Furniture Mart, east of Lincolnton.
Donna Greene, owner of Key Largo No. 2 convenience store in Mooresboro, said ticket sales took up time, counter space and customers' money that might be spent on other goods in the store.
"It's very distracting for the employees who have to work it," Greene said. "It takes away from our merchandise."
Greene, who stopped selling tickets about a month ago, said lottery officials had lived up to everything they were supposed to do.
"It just wasn't profitable enough for us," she said.
Shaheen said lotteries generate a normal churn of retailers.
"You sign them up, and then you lose some," Shaheen said. "What happens is people find the lottery is not conducive to their store environment. Maybe there's not enough (customer traffic)."
Shaheen said he talked to an auto parts store owner in the northeast part of the state who was disappointed that he wasn't selling more tickets, but then explained that most of his parts customers order by phone. They don't come into the store and see the lottery tickets.
Or sometimes there's too much of the wrong kind of traffic.
"People would come in with 15 tickets and want you to scan them (to see if they were winners). It was just bottlenecking my store," said Mike Thrift, owner of the Skyline Village Inn in McDowell County, who stopped selling. "And it's just not that much money. It just wasn't worth it to me."
Part of the ongoing recruitment is to find new retailers in prime locations. Shead said his sales staff sometimes has to overcome hesitation by some businesses. The retailers think lottery sales are just for convenience stores, when a gift shop or restaurant, for example, can sell just as successfully.
Griswold's Family Produce fits that profile. The store sells its veggies, fancy jellies and other gifts from its perch on U.S. 601 between Monroe and the S.C. state line, the path to Myrtle Beach. The store started selling lottery tickets late last summer.
"We catch a lot of out-of-state travelers," said Christy Griswold, one of the store's owners. She also noted that regular customers had encouraged her to sell tickets.
How are lottery sales? "It's holding its own," she said.
Handicapping the numbers
Two restrictions included in the legislation creating the lottery hinder retailer recruitment, according to Shaheen.
No bonus to retailers for selling a winning ticket is one of them.
"You can go across the (S.C.) state line and they'll pay you a percentage" for selling a winner, said Gale Garrett, manager of Jack's Jewelry & Loan, in Kings Mountain, who recently stopped selling lottery tickets.
Second, the lottery can provide only so much advertising, such as signs, for retailers because the lottery is limited to 1 percent of sales revenue on all advertising.
"It's sometimes more difficult to reach out to potential players," Shaheen said.
The General Assembly would have to endorse any changes in incentives or advertising when it convenes in May, but there is little indication that either is in the works.