Thanksgiving has become the busiest travel and shopping holiday of the year. It is a great time for retail sales and travel destinations, but it is not without its potential liabilities. In the long-term, those who benefit today may suffer and in the short-term other businesses are suffering now. Regardless of the implications, Thanksgiving has become a culture changing phenomenon. An estimated 54 million people left home during the Thanksgiving weekend to visit family, sight-see, shop or party. Las Vegas welcomed 300,000 visitors over the period; forecasts anticipated $226 million in spending by those visitors. As impressive as those numbers are, they are tiny in the national holiday picture.
For decades, Thanksgiving has been billed as the beginning of the Christmas shopping season, the most import retail period of the year. In recent years, the weekend has become known for its special shopping days; Black Friday, Small Business Saturday and Cyber Monday; more than 164 million Americans shopped during the four day period, 116 million, have said they intended to buy and browse on Black Friday. Master Card tracks the spending and says $23 billion were spent on Black Friday, a $2 billion increase over 2017, even though the number of actual shoppers was thought to be down by 9 percent. Small Business Saturday had a record $17.8 billion in sales, an increase of $5 billion with 104 million shoppers. The decrease in shoppers on Black Friday is in part the result of online shopping; on Black Friday $6.2 billion was spent buying online; that is a $1billion increase over last year. Cyber Monday is the busiest online shopping day of the year; 75 million people spent nearly $8 billion this year on Monday. The decrease in shoppers on Black Friday is also the result of increased shopping on Thanksgiving Day, Small Business Saturday and a continuation of Friday sales into Sunday. Black Friday used to be a singular event, now there are five major shopping days over the Thanksgiving weekend.
Black Friday is called black because for years it has been the day that brought retail sales out of the red and into the black. That one day and the next three weeks account for one fifth of all retail spending in the country. That percentage is certain to grow as more “big sales” days and events are added to the calendar. For the casino industry the expansion of Christmas shopping all through the Thanksgiving holiday will have a negative impact in the near future, if it has not already. It is the worst time of year for casinos and gaming in general as people only have so much disposable income.
The Christmas shopping season has always been hard on casinos. The more people spend shopping the less they will have for casinos. Revenue drops by as much as forty percent from the previous month during the shopping season that lasts from the day after Thanksgiving until the stores close on Christmas Eve. However, the best week of the year for casinos begins then; the week between Christmas Eve and New Years is the casino industry equivalent of Black Friday. Casinos hope for enough revenue to bring them into the black for the fourth quarter from that week. The huge increases in shopping over the Thanksgiving weekend only makes the week more critical for casinos.
As exciting as numbers from Black Friday, Small Business Saturday and Cyber Monday are, they also are indicators of sales and profit decreases at other times. A long time ago, a friend of mine was helping me develop methods for analyzing casino special events. Working at the Comstock Hotel I had learned to put all of the expenses, even the indirect ones into the equation, but I neglected the very important element of displacement. In my friend’s model, the trips a customer did not take because they had come to a special event had to be considered. Over the years, as the Comstock increased the number of its special events, a clear trend surfaced. The good customers waited for a special event to visit; gone were the spontaneous visits. The reason was simple; we offered a better experience at a discounted price. In the jargon of retail sales, our customers waited for sales.
Thanksgiving weekend and the next three weeks have become one gigantic sale. The sale not only moves a great deal of normal purchasing into that period of time, it teaches all buyers that if they wait, everything will be drastically reduced in price. The result is slower sales during the rest of the year and reduced profit margins during peak periods. Those were the lessons we learned at the Comstock; customers reduced the number of visits and we subsidized the trips they did take. We displaced much of our best customers’ playing time and discounted our services at the same time. Special events began as a great way to stimulate business in slow periods, but in time they became the predominant business model. It was not a successful model in the long term. I think that is one of the problems with bricks and mortar retail businesses; they have become special events, sales-driven businesses. Online retail sales have certainly contributed to the problems of traditional retail stores, but the sales-driven business model is also to blame for the demise of so many bricks and mortar retail outlets. And of course, it adds another level of competitive pressure to the casino industry.
