If I told you luxury cars sales grow 10% every year, would you think it’d be a good business to be in?
Sure, there’s the usual costs involved. Facilities, staff, regular expenses.
But the profit margins are solid. The industry’s been around for ages. And the lifestyle’s nice.
Now, what if I told you half of the customers were in their 70s and probably about to buy their last luxury car?
You might think OK. I get it. But there’ll be other buyers.
Well, what if I then said around one third of those new cars get repossessed within a month of being bought?
And that young people really aren’t into buying luxury cars.
What do you think now?
I agree – it doesn’t look so good. Because it looks unsustainable.
But what if the players in this industry regulated their own behaviour?
What if they did things like not sell cars to people who couldn’t afford them? And performed to standards that would change the public’s view of them. And focussed on attracting new customers for the long-term.
Some of these retailers might say it’d hurt their profits. Some might think it wouldn’t be possible. Others would say it’s just a fanciful scenario.
Actually, they’re all wrong. This whole scenario and those three points – they’re all realistic. Not for luxury car sales. But for gaming and hospitality.
And it’s worth taking seriously. Because right now our industry’s driving down a rocky path.
But two things that’ll help steer us towards sustainable profits are effective self-regulation and the move to digital technologies.
It’s a vital shift.
Effective self-regulation and the right technologies won’t necessarily mean declining profits but instead more sustainable profits over time – and that equals value.
Because the value of a business isn’t measured by short term revenues or profit. It’s measured on the sustainability of predictable returns and growth.
The issue we face isn’t about capturing any profit opportunity that’s possible right now, but actively doing what we know needs to be done to help ensure a financially sustainable future – and we need to ask, what can we do right now to achieve it?
Answering this means first addressing what’s getting in the way.
There’s a persistent focus on short-term gains, mostly dependent on current long-term customer groups. This isn’t sustainable. Because these people will gradually stop being customers.
Then there’s the quiet reliance on over-spenders. You shouldn’t look to customers who might spend beyond their abilities because it causes a tonne of problems, most of them social, something the community and media keep making clear. It also generates compliance and licencing issues. And from the financial view of running a venue, it doesn’t work – especially in the long-term.
And then there’s the matter of future customers. Attracting our next generation of consumers is perhaps our biggest challenge – especially when you consider the role social responsibility plays in younger people’s choices and that they’ve grown up in the digital age.
But effective self-regulation and the right technologies can solve a lot of this.
Other industries show it’s achievable.
Investment funds that avoid businesses engaged in unethical and environmentally harmful practices can deliver solid returns.
Companies that no longer make or sell hazardous materials that used to be popular have continued to succeed.
The entire automotive industry’s well underway readying electric vehicles to meet strict new emissions rules in major markets like Europe. And they’ve long used recycled materials in their products and plants.
And none of this is about “reputation cleansing”; it’s about doing the right things and using the best practices to build sustainable profits.
For hospitality and gaming, now’s the time for effective self-regulation.
Putting in place measures that encourage customers to spend within their limits will help manage problem gambling.
Tight electronic payment processes will tackle AML/CTF.
Addressing just these two topics will help make revenues more predictable and sustainable over time. And they’ll change the public’s view of our industry, which means socially conscious younger generations might view our entertainment offers differently.
That’s what effective self-regulation can do.
And it’s achievable with the right tools.
I emphasise this point: the right tools. I’ve spent 25 years operating venues and supplying technologies to our industry. I know the challenges of integrating new tech solutions.
It’s why we built an industry-specific technology platform. It’s called Cherry Hub. It connects to any venue’s existing systems and it’s got the right tools to achieve what we need right now.
Cherry Hub’s adaptable. It works with different venue-based tech solutions. And it aligns with changes in your market and regulatory environment.
Most of all, it helps you manage all of those issues I mentioned earlier: problem gambling, AML/CTF, and attracting the next generation of customers.
You’ll see it makes self-regulation simpler. And it’ll get you on the road to sustainable profits.