ETD: 837 Gambling on Retail; Year-End Planning for Small
Businesses; Gifts & Dec Tidbits
E-Tailer's Digest
etd_post at gapent.com
Tue Nov 23 11:35:19 GMT 2004
E-Tailer's Digest --- Everything for the Retailer
Issue #0837 November 23, 2004
George Matyjewicz, Moderator mailto:georgem at gapent.com
Published by: GAP Enterprises, Ltd. http://www.etailersdigest.com
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CONTENTS
[1] Greetings
[2] Gambling on Retail
[3] Year-End Planning for Small Businesses
[4] Gifts & Dec Tidbits: Positive Signs for Holiday Shopping Reported;
Sourcing Conference Set for May 2005
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[1] Greetings.
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Hi All:
We will not be publishing this Thursday - Thanksgiving here in the U.S. I
remember Thanksgiving when we were in Tortola. While they didn't celebrate
that holiday, the ex-pats did. So it was kind of neat.
Of course, we want to know how you do on Friday - the best shopping day of
the year, and the day that makes or breaks retailers (hence "Black Friday").
Interesting to note how Harrah's are using tactics at their casinos that
smart retailers use to increase business. No longer do they focus on high
rollers. Rather they analyze databases and actually use telemarketing and
merchandising tactics. It's a good read, and nice to see how some people
think outside the box.
Have you started your year end planning yet? If not, contact your
accountant or tax advisor and start planning, before it's too late.
We have some interesting tidbits from Gifts & Dec editors today. Positive
Signs for Holiday Shopping Reported and Sourcing Conference Set for May 2005.
How are you doing this holiday season? 32 days until Christmas - less
than 5 weeks! And 3 days until Black Friday. Are you ready? What are you
doing this year to increase business?
Tell us about your business which will remain for posterity at
our "Members: Who Are You?" site. Anything to do with the retail world,
i.e., supplier, retailer, consulting,
etc. http://etailersdigest.com/resources/members/index.htm And we have a
form there for you to tell us about you. As I said when I first proposed
this idea, we have "known" each other for a long time, yet we often don't
know anything about each other. So, tell us who you are and what you do.
Now, let's get to everything for the retailer.
Sincerely
George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, Ltd.
mailto:georgem at gapent.com
http://www.etailersdigest.com
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[2] Gambling on Retail
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Interesting article in WSJ on Monday. Seems Harrah's is taking cues from
successful retailers and are using that knowledge as a scientific approach
to gambling.
The casino business for years has tried to lure wealthy tourists and high
rollers to Las Vegas with the offer of swank hotel rooms and lavish
entertainment. Harrah's has turned itself into one of the biggest
operators in the industry with an entirely different approach: Borrowing
tricks from big retailers, the entertainment giant has amassed a staggering
array of data about its customers. With the help of math and statistics
graduates, it now uses numbers to make decisions that in other parts of the
casino world have traditionally come from the gut.
Harrah's made $1 billion in revenue last year -- one quarter of its total
-- from such "cross market" players, i.e., players they cross sell to
attract them to other casinos in the Harrah's network. This is up from
about $200,000 a decade earlier. Harrah's can also trace 75.6% of its
gambling revenue back to specific customers.
Behind Harrah's strategy is Chief Executive Gary Loveman, a Massachusetts
Institute of Technology-trained economist and former Harvard Business
School professor. Mr. Loveman's unusual approach to the gaming business
extends to his living arrangements. Unlike the casino barons of yesterday,
he doesn't even live in Las Vegas, preferring to commute from his family's
home in Cambridge, Mass.
The company plans to dangle Caesars' iconic casinos, such as Caesars Palace
and the Paris, before its 25 million gamblers in the heartland and try
running those establishments with the same efficiency that made Harrah's a
success in places like Shreveport, La., and East Chicago. The East Chicago
property is a typical Harrah's casino, appealing to an elderly population
of largely working-class patrons who arrive by bus and car. Harrah's has
used the profitable casino as a laboratory for customer-tracking
innovations but recently agreed to sell it to meet Indiana regulations in
the wake of the deal to acquire Caesars. It is now rolling out many of East
Chicago's innovations across the country.
Harrah's style sets it apart from other big gambling operators. Over the
past decade, casino moguls such as Steve Wynn and Kirk Kerkorian built
glamorous resorts in Las Vegas that depend on tourists -- especially high
rollers who make big bets. Harrah's thinks those consumers aren't as
profitable as regular gamblers because it costs more to lure them to the
casino.
The Harrah's in East Chicago, a blue collar Indiana town scrunched between
Chicago and Gary, Ind., can be found on a four-deck riverboat docked on the
shore of Lake Michigan. It sits next to one of the steel mills for which
the region is famous. Harrah's recently agreed to sell the property to
investment fund Colony Capital LLC as part of the Caesars deal, in
accordance with an Indiana law limiting how many casinos an operator can
own. East Chicago's middle-American patrons and central location have made
it a choice place for Harrah's to test new programs such as computer
systems to track, in real time, how much gamblers are winning or losing,
and ways to send hostesses to intervene with technical help or goodies.
'Party Pit'
Based on the data churned out by this system, Harrah's redid the layout of
the East Chicago casino's slot machines, using lessons learned from
drugstore chains such as Walgreens and CVS. For example, the casino moved
popular slots such as Wheel of Fortune to hard-to-reach areas, betting
customers would seek them out just as they find the pharmacist in the rear
of a store. That created more space in well-trafficked areas for other games.
To generate excitement, Harrah's placed a "party pit" with blackjack and
roulette games in a central location and staffed it with dealers trained to
break into song. Around the pit, the casino replaced nickel slots with $5
Double Diamond and Hot Pepper games previously cloistered on an upper deck
for high rollers, hoping low rollers would turn from the tables and take a
flier on their way out. "This is the candy bars by the cash register," says
David Patent, vice president of casino operations.
The theory worked. The average amount spent on a single bet on these
machines soared to $10, compared with $2 in the casino overall, because new
gamblers were drawn to high-denomination slots. Overall, the casino's
profit margins rose to 15% in the third quarter, compared with 12% in the
busy first quarter when that casino usually expects to earn its highest
margins, Mr. Patent says.
That suggests more people are losing more money. To keep them from
noticing, Harrah's has been researching ways to make people feel lucky even
as they lose.
In one effort rolled out first in East Chicago this fall, Harrah's
dispatches "luck ambassadors" to give nominal gifts to big losers -- people
who are losing more than expected as tracked by the boat's central computer
system and Harrah's loyalty cards. Harrah's has learned that gamblers are
more likely to play longer and make a return trip if they receive a small
goody.
Harrah's patrons can apply for a Total Rewards loyalty card and receive
points toward anything from a hotel stay to catalog gifts; the more they
gamble, the better the perks become. Each cardholder is assigned a
"customer value" based on the theoretical revenue they will generate.
Customers with higher values get quicker responses from Harrah's phone
systems. When a gambler dials Harrah's toll-free reservation line, the
computer bounces the number off its database and places the caller in the
appropriate service queue.
Through the Nose
Unlike rivals such as MGM Mirage, Harrah's tries hard to keep less
profitable nongambling customers out of its hotels by calculating their
customer value and making them pay through the nose. In October, a room at
the aging Harrah's Las Vegas was quoted to a caller at a nightly rate of
$199, only $14 cheaper than a super-luxury room at Bellagio.
A frequent gambler could be charged anything from nothing to $199 at the
Harrah's casino, the company says. The price is based on a complex
mathematical formula that takes into account how long the customer
typically stays and what games he or she plays, among other details.
Details at...
http://online.wsj.com/article/0,,SB110107789091980299,00.html?mod=todays_us_page_one
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[3] Year-End Planning for Small Businesses
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It's time to see your financial and tax advisor for year-end planning. You
must do so on a timely basis to assure yourself that you are planning
wisely. The benefits of so doing can be tremendous.
This is the time of year when the small-business owner has to start
thinking of year-end strategies for his/her company. Because tax strategies
have a large, yet controllable, influence on your business, they should be
your main focus as a business owner.
The business owner's tax decisions depend on, among other things, whether
or not income is recognized based upon the cash basis or the accrual basis
of accounting. Cash basis means you recognize sales and expenses when
paid. Accrual means you accrue sales and post expenses to accounts payable
when you incur the expenses.
How does this affect you? If on a cash basis, and you need to reduce
profit, you can pay for goods and services ahead of time, i.e., on the 31st
of December, pay bills due the first part of January. If you need to
increase sales, call customers who owe you money and make a deal to get
payments in.
Obviously there are a lot of ways to save, and your financial/tax advisor
is best qualified to help you. So, set up a meeting now!
George
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[4] Gifts & Dec Tidbits
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Positive Signs for Holiday Shopping Reported
New York — Three organizations that compile this kind of information report
positive signs for invigorated holiday sales this year. Visa USA reports a
17.7 percent increase in spending on home and garden during the second week
of November over the same period the year before. “The strong growth
continues to support our optimistic holiday outlook,” said Visa’s Wayne
Best. Online wholesaler DollarDays International’s survey of small
businesses showed one-third expecting to surpass their holiday sales
records this year, and one-third stocking more seasonal merchandise than
last year. After a drop in luxury spending during the third quarter, Unity
Marketing predicts a bounce back in the fourth quarter due to a rapid rise
in the stock market following the election.
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Sourcing Conference Set for May 2005
White Plains, NY — George Little Management (GLM), partnering with Aid to
Artisans (ATA) and the Fashion Institute of Technology (FIT), will present
a sourcing conference during the GLM trade show Sources, May 1518, 2005,
at New York’s Pier 94. The four-part program, May 1516, will focus on all
facets of overseas sourcing and importing. Subjects to be covered include
duty, customs, and tariff classifications; foundations of buyer
relationships; and lifestyle trends and target marketing. ATA and FIT will
present a conference preview at the New York International Gift Fair,
Saturday, January 29, and Monday, January 31, 2005, at the Javits
Convention Center.
Quinn Halford, Editor In Chief
Matthew Kalash, Managing Editor
Gift & Dec Direct
www.giftanddec.com.
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