Sharpening the Sword is a regular column by retailer John Riley of Grasshopper's Comics, a 1300 square foot comic and games store in Williston Park, New York. This week, Riley looks at the lessons we can learn from how the most successful Las Vegas casinos operate.
I'm somewhat fascinated by Las Vegas. Ever since first attending GAMA three years ago, the whole concept of how the city works intrigues me. And what really gets my mind racing is the comparisons between the various casinos in Vegas and comics and games retailers. I know you're thinking, 'comics and game stores are like casinos?' Well the similarities first struck me this past year when we went through the new Wynn Hotel.
For those who don't know, the Wynn is the newest major hotel on the Vegas Strip and has some very over the top amenities to gawk at, including a Ferrari dealership in the lobby. It gives the impression that you should really be a movie star to stay there. Yet move past the lobby and the concourse filled with Beverly Hills style stores into the casino itself and it could be virtually any casino on the strip. It's filled with the same Beverly Hillbillies slot machines and ten dollar blackjack tables as any other casino. And that's when it really struck me that we're really a lot alike. Each casino is basically 'selling' the same thing, what differentiates them is how they sell it.
We comic and game retailers essentially all have the same products, and we each try to differentiate ourselves through our services and environments so that we provide a positive experience for our customers. And like Vegas we have to justify that our form of entertainment is better than all the other options out there. Surely if Las Vegas can convince customers to get on a plane and fly out into the middle of the desert rather than just going to the local megaplex or playing World of Warcraft at home for entertainment, then we can obviously learn something from them.
In the newest issue of Business 2.0 there is an article on Gamal Aziz, the President of the MGM Grand. Aziz has reinvented Las Vegas' largest hotel with a 'radical new growth strategy' of tearing down successful elements of the hotel and replacing them with more successful elements. For example, he replaced the very successful Gatsby's Restaurant with the more successful Michael Mina's Nobhill Restaurant, resulting in a revenue increase of 209% and a profit increase of 191%. Aziz's management concept is to 'work backward'. According to the article, Aziz '...breaks down an operation into constituent parts, then calculates the maximum potential revenue that each business or space could generate in a perfect world, if every customer spent the most and traffic reached its physical limit. Aziz subtracts actual sales from that hypothetical number and calls the difference a loss, even if the venue is making money.' Aziz has done this throughout the entire resort and has literally reinvented it.
Similarly, I think comics and games retailers can benefit tremendously by adopting elements of this type of thinking. For example last year was probably our best year for back issue sales in almost a decade, but we still decided to eliminate 50% of our back issue space in favor of replacing it with a section dedicated to hardcover trade paperbacks. Although our back issue section had generated good sales in 2005, we believed that the same space dedicated to hardcovers in 2006 would do significantly better.
We've all been taught to try to eliminate and improve upon our weak areas, but sometimes the biggest advances might come from reinventing areas that we already deem successful. I know of one retailer outside my local market who specializes in one CCG. He's quite an expert at it and sells a huge amount of it. But year after year, even as his sales go up, his net profit goes down as he has to compete with the Internet and local flea markets. It's gotten to the point where his gross profit is down somewhere around 10%. Although I'm sure it feels great, and very successful, to be selling huge amounts of anything, I can't help but wonder if he might be better off putting that same energy in promoting a product line that he didn't have to deep discount. In essence, he might be better off by moving away from a very 'successful' line.
Aziz's strategy has gained the attention of virtually every major player on the Vegas strip who now looks at their operations much differently. If it teaches us anything, it's to not be complacent about our successes, but to continue to search out even bigger opportunities. Las Vegas has learned to continually reinvent itself, and it's a lesson we should all be practicing as well.
