by Steve Feldman
How are many flooring retailers like Atlantic City? (Note: This is not a riddle; consider it summer school for those who did not pull at least a C in business over the last year.)
Retail has been a challenge for the past four-plus years. It’s the economy. It’s the enhanced competition from Empire, Lumber Liquidators, the Floor and Decors, Internet sellers and more. It’s the Best Buys of the world in the fight for what’s left of consumers’ disposable income.
Some flooring dealers have responded aggressively and creatively. Others have been ostrich-like or taken the Albert Einstein approach to insanity. Those are the retailers who will not be here tomorrow. Don’t take my word for it; just look at Atlantic City, where you can draw comparisons.
Four years ago, some Atlantic City casino customers were shelling out $1,000 for a brownie sprinkled with edible gold dust in a Baccarat crystal they could take home. Today, many of those same people wait until 11 p.m. to eat so they can get a steak dinner for $2.99. Those are your customers who now demand value or they shop elsewhere.
At the beginning of 2007, Atlantic City’s 11 casinos were at the top of a wave of prosperity. Starting with the 1978 opening of Resorts, the nation’s first casino outside Nevada, Atlantic City was for years the only place to play slots, blackjack, craps or roulette in the eastern half of the United States. The cash kept pouring in; the busloads of visitors kept coming.
Then they didn’t. Now, battered by busloads of competition and a tough economy, Atlantic City is fighting for its survival. More threats are coming from a possible expansion of casinos throughout New Jersey and a push for online gambling. I’m sure many retailers can relate.
So, intoxicated by years of success, Atlantic City chose to not diversify its offerings, widen its customer base and fend off competition that clearly was on its way 20 years ago. Why bother? There was never going to be an end to the good times, right?
Then, the recession stuck, along with competition in Pennsylvania, New York and Delaware. In four years, $1.5 billion vanished, along with thousands of jobs and customers. (See where I’m going?)
It all started in late 2006, when Pocono Downs, a harness racing track in Pennsylvania, added slot machines. Suddenly, people could drive 10 or 20 minutes to play the slots instead of making a three-hour round trip to Atlantic City. In less than four years, there would be 10 casinos in Pennsylvania, all of which now offer table games, too. They took in nearly $2.5 billion last year. Atlantic City didn’t anticipate this competition coming. Pocono Downs is your iFloor, which started a wave of Internet competition.
A look back at Atlantic City reveals many lost opportunities. The most obvious: a failure to reinvent the resort as a place to go for more than gambling. It belatedly jumped on the bandwagon, adding celebrity restaurants, spas, shop- ping and top-name entertainment. (Sort of like when some of you added window treatments, countertops and more, or TVs for the husbands to watch football on Sundays and cappuccino machines.)
Casino owners focused only on their own properties instead of the market as a whole. Now, they are banding together for joint marketing efforts. Three casinos are even thinking of jointly funding a new convention or trade show center to draw badly needed midweek business. (I know a bunch of retailers, particularly in the groups, who collectively buy advertising.)
Atlantic City is seeking to reinvent itself and become more relevant to today’s new world order. The city is thinking of a new slogan. Only problem: The effort has been going on for three years. I hope you move faster.