Retail has returned, but what does the future hold?

Bookmakers received a shot in the arm when the UK government announced retail outlets could reopen on 15 June after Covid-19 caused months of uncertainty and financial turmoil throughout the sector. The UK’s biggest operators, including GVC Holdings and Flutter Entertainment, implemented intricate action plans following the announcement to ensure a return to retail was as safe as possible for staff and punters.

GVC – which boasts the UK’s largest retail portfolio following its acquisition of Ladbrokes Coral – relaunched 2,450 of its betting shops in England and the Channel Islands from 15 June, albeit with extraordinary health and safety measures in place.

The London-listed firm published a six-point mitigation plan to ensure all retail betting shops “met or exceeded” UK government and WHO safety guidelines as society began to re-emerge from the pandemic-induced lockdown. The overhaul includes the installation of physical ‘sneeze screens’ in store, while hand sanitiser is available to staff and customers, and betting terminals are now spaced two metres apart.

Each shop also has a maximum customer occupancy level determined by the layout of the venue, while customers are encouraged to use contactless payment methods and dispose of single-use pens.

Safety first

“Betting shops reopening was clearly great news for us, but also a real logistical challenge,” Bejay Patel, business development and strategy director for retail at GVC, tells EGR Intel.

“All shops have a bandit screen like the ones you find in a bank, and if they don’t have that, they are equipped with sneeze screens. To be crystal clear, we did not permit any shops to reopen in England unless they had that as a minimum requirement. We’ve also provided colleagues with the tools to keep them safe, like visors, masks and gloves.”

Social distancing at Coral

Bookmakers were desperate to reopen their estates due to the negative financial impact of Covid-19, as the venues shutdown combined with the global postponement of sport wielded a heavy double blow to the sector.

In March, Flutter published a financial update to suggest annual EBITDA would be reduced to the tune of £100m, although this estimate relied on business continuing as usual in the operator’s UK and Irish retail outlets. The closing of shops was confirmed soon after, adding a further £30m hit to EBITDA per month.

GVC took action in April to halve its monthly EBITDA losses after initial guidance suggested coronavirus would cost the operator £100m per month. The firm sought to reduce monthly EBITDA impact to £50m by using the UK government’s furlough scheme for retail colleagues, as well as applying for business rates relief.

William Hill’s latest trading update, issued on 17 June, revealed group revenue had halved in the six weeks up to 9 June as a result of Covid-19, with a 100% drop-off in retail as shops remained closed.

Worth the risk?

The reopening of retail on 15 June was signed off by the UK government and brought forward from 4 July, but it could not have come soon enough. Punters could be forgiven for showing trepidation about returning to the high street in the wake of a pandemic that has killed more than 40,000 people in the UK, so is it really safe for shops to make a comeback?

“Fundamentally, as an executive team, we challenged ourselves,” says Patel. “We wanted to be able to look colleagues and customers in the eye knowing that we’d done everything to keep them safe. That was our number one priority and looking back over the past few weeks, we are quite comfortable we’ve met that objective.”

Patel’s claim was backed up by Alan Pepperell, group director of retail at Racing Post parent company Spotlight Sports Group. As well as providing bookmakers with Britain’s only daily horseracing newspaper, Spotlight supports operators by providing betting shop displays and race coverage. These services have been tweaked for Covid-19 mitigation to duplicate race cards, allowing more than one showing of each race for customers to look at, while social distancing messaging has been incorporated on every display page.

“I think operators have done everything possible to make the shops safe,” says Pepperell. “But I don’t think anyone knows what can be considered absolutely safe at the moment. They’ve opened quicker than I expected, but we are all following government advice and each operator has followed a 36-page protocol. The operators couldn’t have done more to protect colleagues and customers, but I think the real question is how safe do customers feel about going back into shops?”

Precisely one day after betting shops in England reopened, the Gambling Related Harm All Party Parliamentary Group (APPG) offered a timely reminder that regulatory upheaval is always lurking just around the corner. The cross-party group, chaired by Welsh Labour deputy leader Carolyn Harris, kicked the industry while it was down by publishing a vast array of restrictive proposals ahead of the government’s review into the 2005 Gambling Act.

The APPG, which clashed with operator trade body the Betting and Gaming Council (BGC) throughout June, made 30 requests overall, including an end to online in-play sports betting and free spins on online casino, as well as an online stake limit of £2 and a blanket ban on advertising.

A £2 stake limit dramatically hampered retail revenue when it was implemented on FOBTs in 2019, leading to the closure of more than 1,000 shops. The group got a taste for victory on that occasion and will not relent until similar restrictions are passed into law for online.

That said, could reopening betting shops in the current circumstances serve to attract those who are most at risk of problem gambling? Casual bettors will be content online or on mobile, as most of the public make a tentative return to public life. But what about those who simply can’t stay away?

“I don’t think there is anything to suggest that,” says GVC’s head of CSR and corporate communications Jay Dossetter. “Our focus throughout this lockdown has been to put in additional measures to make sure those isolated at home didn’t suddenly turn to gambling, especially if they were just bored or in a position of financial distress.”

GVC added extra measures to its markers of harm algorithm throughout lockdown and increased responsible gambling messaging. It was also instrumental in the BGC’s decision to halt above-the-line marketing during the pandemic. “We’re comfortable that we’ve been really proactive in ensuring that we look after players,” Dossetter adds.

“That is true online, and it is equally true in the retail estate, where our colleagues will be looking out for people. I saw the document around the reopening and a significant chunk was on how colleagues should identify and talk to those considered to be at risk. We’re not complacent whatsoever, but I don’t think there’s any reason to believe there will be a cohort of vulnerable people coming into shops,” he says.

A blow to all sectors

Pepperell of Spotlight agrees. His company was not immune to the downturn caused by Covid-19. The Racing Post suspended its print newspaper in March, leaving journalists stood down after the pandemic cancelled the racing calendar. News coverage continued online, but members of staff were furloughed as the business utilised the government’s Coronavirus Job Retention Scheme.

“What you might see is a transition of customers who traditionally have used adult gaming centres or gone to pubs,” Pepperell tells EGR Intel. “They could come into shops because B2B games are available and the other gaming centres aren’t open yet. I don’t think betting shops opening is going to have a dramatic effect on increasing vulnerable people gambling. I think the measures employed in retail, along with taxation on machines, means anyone entering a shop will be treated in good faith and looked after to the best effect.”

Punters analyse the Racing Post

Back in business

Bookmakers could hardly have asked for a better week to reopen. While the Monday was quiet, Royal Ascot began on the Tuesday and the Premier League returned on the Wednesday. Monitoring betting shop volume will be key for operators over the coming months as they seek to soak up lost revenue from lockdown and a three-month sports blackout.

“Monday was quiet before Ascot but it really stepped up over the first three days,” says Pepperell, who works closely with Spotlight’s operator partners. “Speaking to clients, they’ve been pleasantly surprised with business levels. They are in line or slightly ahead of expectations.”

He adds: “I know machine play is encouraging and they are pleased with the numbers, especially as there wasn’t much publicity around the reopening. All the messaging on the windows is thanking the NHS, rather than the usual odds and offers.”

Betting activity on Royal Ascot appears to have confirmed one major hypothesis – that the Covid-19 retail shutdown has only accelerated the transition to online. While shops remained closed, old school retail punters were dragged into the 21st century by downloading apps and verifying web accounts.

Oddschecker’s Royal Ascot data reported a 70% annual increase in online bookmaker customer sign-ups, while Brendan Tinnelly of Facebook’s real money gaming team revealed on Twitter that Betfred and Coral ranked second and third for betting app downloads the weekend prior, behind unwavering market leader bet365.

Betfred and Coral boast two of the biggest retail betting estates in England, providing further evidence of an online shift. “There’s a definite and pronounced shift from retail,” Tinnelly tweeted. “Betfred and Coral were second and third for betting app downloads, which is highly unusual,” he added.

Bookmakers, though, will not be so quick to write off retail, even if Covid-19 has inadvertently driven consumers towards online betting and gaming. If the brick-and-mortar betting sector survived FOBT stake cuts, it should also be able to withstand temporary closure. High street outlets could also prove a competitive advantage in the advertising arena, where harsher restrictions will be imposed imminently. So, is retail a lost cause?

GVC’s Patel doesn’t think so, although he admits operators will be reluctant to make any large-scale investments over the next six months as they analyse how events pan out on the shop floor. “I absolutely think there is a role for retail on the high street but in what form or guise will be decided over a longer duration than just the next few weeks,” he says.

Future proof

Ladbrokes Coral has been at the forefront of retail innovation since GVC acquired the business in 2018. Last year, the operator opened two concept stores in Birmingham and London in order to demonstrate the future of gambling on the high street.

The outlets were modernised for a digital experience and combined social elements with cutting-edge tech. The modernisation of retail betting in the UK is long overdue, and the market would do well to learn from America’s betting venues, which appear more like sports bars to the naked eye.

Pepperell believes the betting industry is suffering from the same hangover as the rest of the commercial retail sector. How can you bring people back to the high street when everything is quicker and easier online?

The Covid-19 pandemic has taken a huge toll on high street trade

“Innovation is the key. How do you make a betting shop a destination? I think the high street has real challenges about how you can invigorate it. Retail bookmaking must innovate. There is still a stigma around betting shops based on what it was like in the 80s. People imagine a smoky environment behind faded windows that you can’t see through. It’s a real challenge,” he adds.

Operators endured a mammoth task to safeguard their retail estates in line with government advice on Covid-19. If and when this horrid pandemic recedes, they will face another more abstract test. How can bookmakers innovate to future-proof the ancient art of retail betting if more customers migrate online and regulations tighten? And which bookmakers will be up to the challenge?