FORECAST : Quite a lotta short change

Newsagents and publicans beware the lottery, warns Ray Stone
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The Independent Online
Only five months old, the National Lottery is worth £3bn a year - equivalent to 0.5 per cent of the nation's disposable income, or 5 per cent of our combined personal savings. No single new product has ever had such dramatic success in so short a time. Yet have we even begun to understand the implications of this, the biggest economic event since decimalisation?

The results of the Henley Centre report on the impact of the lottery so far, published today, suggest that consumers haven't. Nor have many of the businesses which serve them. Partly this is because most seem to be doing rather well out of the lottery at the moment; the down side may become more apparent as time goes by.

Some of the 10,000 shops and garages with lottery terminals have seen sales rise by as much as 20 per cent since November. Food stores have doubled sales at their tobacco counters. And this is before you count the 5 per cent of pure profit that retailers keep from ticket sales. Yet this stampede to lottery retailers has not, so far, adversely affected their competitors without terminals. Because there are so many more of these latter, the shift in custom has had only a marginal effect on their individual turnovers.

From the other side of the counter are the 58 per cent of us who jangle our loose change at the lottery terminals every week, and part with in excess of £2 each. The lottery has created between 10 and 12 million new shopping trips a week. Most see it as a harmless flutter. Asked where the money came from, 95 per cent claim that they haven't cut back on anything in order to play.

But £60m a week is a lot of money to appear from nowhere. It is inevitable that the lottery will soon begin to have a major impact collectively upon other spending habits. As the multi-millionaire winners will tell you, all that loose change begins to mount up after a while.

The first commercial casualties are likely to be the little daily indulgences, such as sweets and chocolates, newspapers, magazines and soft drinks, which tend to be sold alongside the lottery tickets. Those companies reliant on consumer spending, from newspapers to pubs, will win only if they can respond creatively to this change in spending behaviour, and turn a threat into an opportunity. They also have to learn how to deal with the congestion that results from having 40 per cent of the adult population through their doors between Friday morning and Saturday night. A number of retailers, including Superdrug, are reportedly finding that they cannot cope, and contemplating pulling out of the lottery.

Pubs and restaurants could thrive by tapping into the excitement generated by the weekly draw. Otherwise, they are likely to see trade fall off, or at least shift around, as so many stay home later to watch the draw - early figures suggest there are up to 3 million extra Saturday-night TV viewers. Cinemas wanting to pack in audiences may have to reschedule the Saturday evening shows, or even perhaps announce the draw themselves.

We have only just begun to trace the economic and social effects of this £3bn business. Clearly, lottery mania is here to stay. Indeed, it is likely to grow steadily over the next few years, making ours the largest lottery in the world. It has flourished not despite, but because of the gloom still lingering from the recession of the early Nineties. It has provided the nation with a common experience and an apparently light-hearted way to experience the feel-good factor in a few brief moments every Saturday night. Businesses of all kinds and sizes which don't want to suffer a hangover of the morning after need to take a dose of the Spirit of the Lottery themselves.

`Lottery Fallout', by the Henley Centre and the GAH Partnership is published today at £1,250.