Greetings from the Consumer Electronics Show in Las Vegas. It has been a year since I was here last, and much has changed here as everywhere.
Las Vegas looks the same in many aspects. The hotels are still of a scale that defies description. They're so big that even though a particular hotel seems close, in reality, it's a good half mile away. The lights still burn brightly, and CES still creates a very long cab line at the airport.
However, the cab line didn't take an hour this year as it has in years past. It took half that long. The casinos have many, many empty tables and not just at 3 pm. There are few lines at the restaurants. When I asked a doorman at the Venetian where a restaurant was, he told me he needed a break and would walk me there. While we walked, I asked him if the Venetian was feeling the recession. He told me they had laid off 250 people! The place you really see the difference is in the Casinos' malls.
If you really want to go to Ground Zero of what's going on in our economy, check out retail. Steve Wynn figured out that people enjoy shopping and being entertained when on vacation, and he aimed to please. These ideas took hold, and every casino built enormous malls. The high-end properties have high-end malls, and each property shares many of the same stores. It's not quite like having a Starbucks on every street corner, but how many Chanel stores, Jimmy Choo stores or similar does two square miles need?
In previous years, the stores were busy. This year? I bought a tee shirt at Banana Republic and could have gone bowling in the enormous store; it was that empty. As I paid for my shirt, the cashier asked, "Did anyone help you today?" I asked, "Is there anyone here other than you?" Many stores display sale signs, and when I asked what "sale" meant, most people told me "70%". The NYT and others have reported that large chains, notably Saks, started this trend of 70-75% off before Christmas. The small, luxury boutiques are following.
Why does this matter? If consumers, who make up 2/3 of GDP, aren't spending, then every business and everyone suffers. Apple sells fewer iPods, chip manufacturers sell few chips to Apple, IT suppliers sell less gear and software to the chip manufacturers and to Apple, everyone does less advertising and on and on. I'm not biased about tech here. The same value chain can be put together for any product that consumers buy. The net-net is that I think we will be here, skating along the bottom, for awhile.