William Hill is known far and wide as being one of the biggest betting brands in existence. It comes as no surprise that the company has seen a swift recovery in terms of its revenues relating to the resumption of sports betting. However, despite this, the company recently announced that it will not re-open 119 of the land-based stores that were closed during the coronavirus lockdown. It was reported that the gambling firm’s revenue decreased by 57% in the seven weeks up to April 28. The choice not to re-open its land-based establishments even though their recovery has been highly positive may make little sense.
In total, William Hill has 1,500 shops across the United Kingdom. However, it said that it did not expect customers to return to betting in such numbers as those witnessed prior to lockdown. Alas, once the lockdown arrived, around 300 employees were affected, although many have been redeployed to other areas. Because of this, it says that it only expects 16 redundancies to occur as a result of the 119 stores not re-opening.
With the company confirming its post-lockdown recovery, it has also opted to repay a total of £24.5 million received in furlough funds. That money will go back to the government, as William Hill revealed profits of £141 million in the first six months of 2020. This was also possible due to a £200 million VAT refund as well.
This comes on the back of the announcement last year that Hill’s were to close 700 shops, at one stage the company owned nearly 2300 premises. Following the recent closure this will now drop to around 1380.
Was Lockdown The Cause Of The Shop Closures?
All land-based betting shops were forced to close their doors during the coronavirus lockdown period. Over 7,000 staff were furloughed by William Hill at the time, and obviously, with major sporting events not taking place, a large drop in betting activity was also recorded. The company’s revenue dropped by more than a half in the opening weeks of lockdown. Of course, revenue was assisted by the online operations of William Hill.
During the lockdown period, people continued gambling online and often did so more frequently. This was reported even though there was a lack of sporting fixtures during the timeframe. Yet, it was also suggested that the return of big sporting events more recently meant that much of the affected revenue was simply delayed, rather than completely lost. Many of William Hill’s betting shops re-opened in recent times as well, but with social distancing rules in place.
Of course, because staff have been redeployed to other areas of the William Hill brand, there is little need for the company to retain multiple betting stores, as it would mean them employing people once again. Plus, the company has had plans in place for quite the transformation to take place in a bid to overcome the issues surrounding the pandemic.
Of course other reasons play a part too and the lockdown situation has only served to speed up closures that would have been expected in the coming years anyway. The lowering of the minimum stake for FOBTs to £2 in 2019 has had a far bigger impact on retail betting and the effects will be felt for far longer. With William Hill moving into new markets, such as the US, it was only a matter of time before they refocused away from retail shops. It is highly likely more closures will be announced in the future as online revenues grow while revenue from shops declines alongside.
New Strategy to Make the Future Better
It was roughly one year ago that William Hill chose to implement its transitional journey after posting losses of £63 million. The company commented on numerous reasons being behind its losses, including the crackdown on problem gambling. Some brands believed they would have a bigger turnover than expected at the time, such as Ladbrokes, whose owner GVC Holdings claimed it would do better during this time period.
Clearly that wasn’t the case for William Hill, forcing it to take outright action. Now, one year later, William Hill Plc has praised its own execution of its strategy, which has helped it to sail the difficult waters brought on by the lockdown and other industry problems. Obviously, the disruptions to live sport were a big key factor in seeing the 32% decline in net revenues for the brand. This saw reductions in revenue from £811.7 million to £554.4 million. However, the bookmaker also noted that the decrease was offset partially “by favourable sports results and a resilient gaming performance”. Online gaming saw an increase in participation of 1%, and it is online activity that accounts for 67% of William Hill’s operations.
It’s the online sector that appears to have weathered the effects of the global pandemic, with international net revenues growing, despite staking levels declining due to the lack of live sport. In fact, William Hill said that 39% of its revenue was generated outside of the United Kingdom in comparison to 35% during the same period in the previous year.
Speaking of his company’s performance, CEO Ulrik Bengtsson spoke of being delighted with the result. He also mentioned that he is looking to continue with further growth for William Hill, particularly in the United States where sports betting is currently deregulated.
Bengtsson spoke of strong trading prior to COVID-19, also claiming that the company “controlled costs effectively during lockdown”. Yet, even before this, William Hill’s presence on the high street via its shops was on the decline. It was in 2019 that it announced the closure of 700 of its land-based stores following new regulations regarding fixed odds betting terminals coming into effect. And while this did turn a lot of customers to the online gambling world, William Hill needs to continue developing its technology platform and product offering “if it is to regain some of the los revenue from the past few months…”, said Julie Palmer, partner at Begbies Traynor.
A Continuing Trend
The fact of the matter is times are changing and the biggest betting companies are no longer the ones with the largest high street presence, as it was 20 or so years ago. If anything the opposite is now true as companies that run high street shops face higher costs and lower returns year on year. Having a retail presence is becoming a burden and the big bookies are set to continue to close shops into the future.
While shops are unlikely to disappear completely the retail sector will continue to shrink as online revenues grow, as is the case in most retail sectors now, not just gambling. With around 9000 bookies on the high street today this is expected to halve in the next ten years, leaving high streets further deserted with boarded up shops as it is hard to see what could replace bookie shops.
The biggest negative impact is on communities themselves as most of the shops that will close first will be suburban and rural shops where traffic is lower. This means the impact of these closures will be felt most by local communities where lower skilled jobs in shops will go to be replaced by more technical jobs often in offices based in cities.