THE BACK PAGE: The new abnormal
The new normal took a hit last month when American consumers shelled out 16.4 percent more money on Black Friday than in 2010.
They came armed not just with pepper spray and guns from coast-to-coast, but with purchasing power. Or maybe it was just demand waiting to be sated after all these many months of self-denial. You can only keep the Desire Beast down for so long, especially with so many tempting offers on the table.
According to a National Retailers Federation (NRF) survey, a record 226 million shoppers visited stores and Web sites over Black Friday weekend, up from 212 million last year. The average holiday shopper spent $398.62, up from $365.34 last year. Total spending reached an estimated $52.4 billion. Shoppers were also very active online, spending an average of $150.53 on the Web-37.8 percent of their total weekend spending.
“Stuffed to the brim from their holiday meals and eager to shop, more consumers than ever turned out for retailers’ Black Friday promotions, a promising sign for the economic recovery,” said an ebullient NRF President and CEO Matthew Shay. “After an historic holiday weekend, retailers know the holiday season is far from over and will continue to look for ways to excite holiday shoppers and build on the momentum we’ve seen thus far.”
I don’t know. Could it really be that with unemployment stuck at 9 percent, one-third of the country’s homes under water and incomes mostly stagnant outside of a few favored industries like health care and higher education, that consumers are finally ready to kick-start the recovery? Is this really the beginning of the end of the great recession or just the end of the beginning of the great reorientation toward selective splurging followed by long periods of tight-fistedness and continued low growth?
Whatever your view, demand has been promotion-sensitive all through the post-2008 period, and marketers are getting better at working the angles all the time.
“Consumers are clearly demonstrating their desire to spend this holiday season, but are far from throwing caution to the wind when it comes to how much they will spend on gifts,” said Phil Rist, executive vice president, BIGresearch, which conducted the NRF survey. “Retailers will have to stick to an aggressive holiday promotion schedule to keep consumers interested.”
Substitute “gamers” for “retailers” and delete “holiday,” and you’ve got an apt description for the U.S. casino business currently and for as far as the eye can see.
Give the U.S. casino industry credit: It has stayed mostly healthy not just during a tough economic time, but during a period when supply steadily and sometimes dramatically increased in many markets because of states’ continued hunger for the politically acceptable form of voluntary taxation that gaming offers. At the ground-level, this has required property reinvestment and hand-to-hand marketing combat where every Friday resembles Black Friday from a promotional standpoint, a fact that governments need to continuously take into account as they depend more and more on the gaming industry.
Take Louisiana, which will see very significant additions of new supply in the next couple of years (see story on page 20). Per Wade Duty, the executive director of the Louisiana Casino Association, the state’s licensed riverboat operators tried unsuccessfully in 2008 and 2009 for promotional tax credit offsets and will likely revisit the issue again next year.
“When we send out marketing dollars that really don’t exist and then they are redeemed, we are taxed on those presently,” said Duty. “We tried to demonstrate to the Legislature for two years in a row that if you allow us to be taxed not on the marketing dollars that are sent out but on what the new revenue that the player brings to the casino, we make more money and so do you. There was no appetite for that because some of them interpreted it as a tax break for casinos and this was at the height of the recession. Our argument was if we send out $10 and he comes in and plays $10, we’re not in the business of re-circulating that $10. We hopefully are smart enough to get players who bring in $10 and he brings back $20 to the facility, then go ahead and tax the heck out of that $20, but the state doesn’t see it that way.”
Here’s hoping they do in the coming year, not just in Louisiana, but in every state where there’s a similarly sensible request on the table.