Sunday, December 21, 2014

How We Can Have Nice Things (Tradecraft)

When I opened a game store, the number one criteria was working in an environment that I enjoyed. That included clean floors, nice music and lots of warm wood in the form of matching store fixtures of high quality. It was a decidedly upscale environment in comparison to many game stores.

An upscale environment is a form of product branding. I didn't know this at the time, I just wanted a nice place where I was surrounded by cool things and people while I watched my house appreciate into the sky. Your product branding sends a message to your customers, and along with your own messaging, AKA advertising, it sets a tone for your business. In this case, the branding is premium, as opposed to conventional or luxury. I'm no marketing expert, by the way, but I think we've nailed premium pretty well.

Premium branding, as the article linked above describes, is open to anyone who wants to be a member, albeit at a price slightly higher. In the case of the game trade, we don't generally charge over MSRP (which is its limiting nature), we simply hold the line. In a world of crappy discount game stores that look like your basement, holding the line is what goes for baseline premium pricing.

Premium means building faith in your brand (your store, not your products), having the things people want, when they want them, and generally providing a level of service above average. It's also about having some class and promoting your brand and the hobby accordingly. If you can do this, and the best game stores do, you will be in the top 10% of stores in the country. The bar is low, but I'll admit it's wickedly hard to get all the pieces in place.

In the game trade, part of premium branding is a bit like running a church. Many customers will tell you to your face that they could have bought their game online for less (prayed at home), but they wanted to support you, the local guy who helps keep the congregation going. About 20% of our customers use our game space, but a much larger percentage, probably around 50% support our store because we have these facilities. They've told us as much.

The other half of our customers just like shopping at our store. Key point: less than 10% of US commerce happens online and it's a percentage that is not growing. Oh, and there will be those who don't like our tone, who want to game in a dingy basement while swearing up a storm and reeking of low grade marijuana. They'll choose a different denomination. Go in peace my son.

When it comes to premium branding, you have to continually uphold your side of the bargain. You have to maintain high quality standards both in staff training and with facilities. I've written before about how you might start with the best of everything, but if your store isn't as successful as you might like, over the years it all breaks down and you can't afford to maintain quality. I'm talking primarily about furniture, fixtures and equipment, the dreaded "FFE," but it also includes staff quality.

When you're not making money, it's demoralizing and the staff work ethic can fall and managing them seems rather pointless. You also have to keep your evangelizing going, meaning you might want to only run the most profitable events (CCGs), but part of your premium mission is to promote a wide array of games. Role playing games and RPG events, for example, are a labor of love that could be dropped entirely from the store from a purely business perspective. They're not just a labor of love, but also part of the mission.

I don't want to make this sound easy. It first starts with a level of business capitalization that is unreasonable. To have a beautiful store with high standards requires more money than is reasonable to invest in a trade that has very little profit. It requires more work and constant improvement than is warranted by the reward. However, if you happen to be that dedicated, foolish or stubborn, you might just have what's necessary to pull off a premium game store.

Sunday, December 7, 2014

About Looting (Tradecraft)

Happy holidays! Isn't this an exciting time of the year? Oh right, I was going to talk about looting. It happened last night in Berkeley and tends to be a regular occurrence both there and in Oakland. It's a wretched Bay Area tradition that brings in people from neighboring communities.

As business owners, we want to protect our property, and that includes damage and theft from rioting. The good news is most business insurance policies cover rioting. Call your agent to make sure though.

I am assuming you have business insurance. I was shocked to learn when I first started my business that quite a few game stores didn't have it. The guy giving the lecture on business insurance at my first trade show learned the hard way, when a car barreled through his plate glass windows and into his store. Twice. We must submit proof of insurance to our property management company annually. So looting is covered under most insurance policies.

When it comes to physically protecting your property, well, don't. I am not a lawyer, but the law is not on your side if you shoot a looter. Unless you're in Texas, which has the ever so helpful "He needed shootin'" defense that I sometimes wish we all had, especially during Yugioh tournaments. I kid! Don't shoot looters. Standing in your entryway with a shotgun might sound like a romantic and natural thing to do, but spend that shotgun money on a good security camera system instead. Make sure you can export that file and post it publicly for easy looter identification. It works.

That said, nobody ever gets prosecuted for shooting looters, except police. In fact, the real danger of being out during a riot or natural disaster is something called elite panic. In a real emergency, people come together to help their neighbors and recreational looting is rare. In anything but the End Times, you can expect generally helpful people. It's something I learned in my recent Community Emergency Response Team (CERT) training. I highly recommend training so you can help your community in a disaster. It's also a great antidote for fear and paranoia.

With elite panic, government freaks out during these troubled times and overreacts. The elites panic. You're far more likely to get shot on sight by a cop or soldier with shoot to kill orders than you are of defending your business. It's one reason why CERT members wear green, fluorescent vests and helmets.
Elites tend to believe in a venal, selfish, and essentially monstrous version of human nature, which I sometimes think is their own human nature. I mean, people don't become incredibly wealthy and powerful by being angelic, necessarily. They believe that only their power keeps the rest of us in line and that when it somehow shrinks away our seething violence will rise to the surface...  source.
So get business insurance, invest in a camera system and stay home.

Wednesday, November 26, 2014

The Dreaded Friday the Black (Tradecraft)

A lot of what we do in our specialty retail business has little resemblance to mass market retail. Black Friday is an example of that. The term was originally coined to describe dense traffic in the downtown Philadelphia streets the day after Thanksgiving. However, we know it more for the popular folklore of retailers finally getting out of the red from flagging sales January through November, and breaking into the black (profitability).

This may have been true at one time, especially with the ascendancy of mall stores (which are now mostly sad tombs to consumerism), but for most specialty retailers, the holidays are big, but aren't critical. Our season is Summer, while the month of December is our best month, one that usually erases past or future sins (like the tax bill or the store fixture tab). Stores in college towns see a reverse pattern, but this is generally true. So what about this dreaded Black Friday?

30% of people will be done with their holiday shopping by the end of this weekend. Some will be done before Thanksgiving and the rest will be done shortly thereafter. I just finished mine, since as a retailer, I have no time for retail shenanigans, and thankfully, many Black Friday sales start the week of Thanksgiving.

So what are our options with this 30%? We can be above it all, and turn our noses up at nearly a third of American consumers, who will do all their shopping, before you can finish digesting your turkey, or we can find a way to engage.

Engaging, first of all, needs to be respectful of our employees and their families.  We're closed Thanksgiving. We've been hungry enough, desperate enough, in the past to be open Thanksgiving Day. But maybe we're just more mature now as a business. No working on Thanksgiving.

As for Black Friday, it's a wretched day to visit our store. There are two days you shouldn't come: Black Friday and the Saturday before Christmas. Our location has spectacularly good parking, except for those two days. You will be disappointed. Nevertheless, there's that 30% who very much want an excuse to visit us, or they'll visit someone else.

For them, I would first encourage them to visit us on the much less hectic Small Business Saturday. There's parking, there are fewer annoying muggles looking to kill time, and our Black Friday Sale will continue through Saturday.

Anyway, this is what we do, cater to customers, with the goods they want, at the time they want them. You have sales when people are spending money, and this is a prime example.

This is also a period where well meaning folks, usually professionals who earn a living at a desk, will preach about the evils of consumerism and encourage people not to shop. You do what ya gotta do with your bad self. We'll be here for you on Black Friday, Small Business Saturday, or later on at a more leisurely December pace.

Our Black Friday sales this year:

  • Buy one Get one free on all Ding+Dent
  • All Clearance and Used RPGS are Buy One, Get One free.
  • Buy a regular priced RPG Hardcover, receive a free set of Chessex dice.
  • Buy a Tactical Miniature Starter Box, receive a free set of Chessex dice.
  • Buy a Booster Box of your favorite TCG, receive a free playmat! (while supplies last)

Thanks for your support!

Wednesday, November 19, 2014

Mass Marketization of the Game Trade (Tradecreaft)

The trending topic in my brain is whether the game trade is going mainstream, if it has grown enough in the past several years, to exceed the capacities and opportunities of the traditional morass. If so, what will it mean for specialty retail?

Why would I think this? We've got Magic: The Gathering and geek centric board games making appearances on South Park. We've got mergers and acquisitions galore, including NECA/Wiz Kids buying the regional retail chain, Hastings. But what really got my attention was the acquisition of Fantasy Flight Games by Asmodee. Asmodee is owned by the 5.5 billion dollar a year French investment group, Eurazeo. Eurazeo is not not some geeky game company, it's a long term investment group that buys things like hotel chains and parking lots. Some thought went into this.

Through Asmodee, they also bought Days of Wonder last year. The Asmodee, Days of Wonder, Fantasy Flight Games trifecta now accounts for 25% of my board game sales. This company IS board games in my store. There's now no company or segment bigger than Asmodee in my store, other than Wizards of the Coast with Magic: The Gathering. WOTC Is owned by a similarly large giant, Hasbro, with their 4 billion dollars a year annual revenue.

So is there cause for alarm? I'm going to say no, for one simple fact that recently dawned on me. Geeks are a massive pain in the ass. To put it in more technical term, they (we) are focused on, and dedicated to, minutiae, fiddly details. Dude, I have a masters degree in fiddly details, on the quantity of angels that can dance on the head of a pin, the 108 thises and the 16,000 thats. I totally relate to this, but there is no way the mass market wants to wade in. Sure, they'll own it from afar, as long as it's profitable, but at the tail end? No way.

And you can't franchise specialty retail. Oh, you can try, and several have, but the fiddly nature of specialty retail with persnickety customers makes this an impossibility to scale. I talk daily with many retailers. We have solutions for everything, but it's a bit like the rabbi joke. If you get two in a room, you'll get three opinions. Nobody is wrong. Everybody is right. And there may be a better third way, because we're never quite sure. Doubt keeps us going.

There are games and game system I sell to customers I can count on one hand. Half of what I order is a single copy that never returns after its sold. In store debates rage about the smallest details of army builds and book art. We not only debate it, we identify with the choices. As one excellent article puts it:
...The defensiveness oozes over onto everything: Tau aren’t simply a valid army she doesn’t play, they must be written off as Imperial Guard with a duller paint job. GURPS isn’t a system with flaws, it’s the fools choice. Nothing is a matter of taste: if it was a legitimate choice then they’d be making it. 
My point is, mega corps are willing to sit up top and reap the rewards, but the actual work? The farm like labor of hand selling one item at a time to an incredibly finicky and fickly class of customer? No way. They're happy to let us hoe that row all day long.

Monday, November 10, 2014

Shop Early (Shop Often)

It's early November and I'm sitting on $20,000 more inventory than I normally would at this time of the year. My store is relatively full, and other than releases between now and the holidays, and some specialty orders, I'm pretty much done stocking up. If you're a consumer, or a store owner for that matter, you should shop early too, and I'll tell you why.

Port Delays. There's a three week delay at West Coast ports that will throw the game trade out of whack for the holidays. Since a lot of what we sell comes from Asia, port delays will be a holiday wild card for product availability. New products may not make it in time. Older product is likely to be in short supply.

Poor Forecasting. Game publishers have been just, absolutely, terrible this year in forecasting demand. I don't know what black magic they use for forecasting, but their mojo has eluded them in 2014. A third of our best sellers are just gone right now. Upcoming games for Tabletop Season 3 are spotty at best. Whenever I see board game holiday articles in the making, I try to insert the availability of the games being suggested. That availability is poor. The worst offenders are game companies with exclusives, but that's for another article and consumers hardly know who they are (nor should they care).

Increased Demand. The game trade is not going mainstream, despite the fears that specialty retail will soon be invaded by mass market Mongols. However, there is certainly increased demand in board games that is driving sales quite nicely. This increased demand will exacerbate our other problems. A lot of board games are made in Asia, and board games, at least for my store, are where we see really strong holidays sales. Our board game sales in December are often double a normal month, while other departments only go up 10% or so.

Online Won't Help. Internet retailers like Amazon, as well as smaller online venues get their product from the same well. Although there is talk about distributors having private reserves for some of these big online discounters, don't expect online sellers to be holding product come December. They will run out too. Our brick and mortar store has been the "last man standing" on many products this year, according to people who only buy online who don't mind mentioning we were their last resort.

So there you have it. No bitching and complaining come mid December for things you could buy now. Also, if something is coming out between now and Christmas, pre-order with a local retailer. Yes, I'm biased, but a local retailer will get at least some product, and if you pre-order, which is still pretty rare for brick and mortar, you're practically guaranteed a copy. The "Amazon screwed me on my pre-order" complaint is common during these periods with both customers as well as publishers.

Monday, November 3, 2014

10 Year Anniversary

Ten years ago today I opened my store, gleefully ignorant of the game trade and just about every aspect of retail. I learned though, because that's what I do. I came from a career in information technology where it was assumed you didn't know many things, but you learned and moved forward. I have many veteran retailers to thank for helping me move forward, and quite a few books and articles. I'm starting to write my own.

The spreadsheet that I've lived by every day, for ten years now, says we made $95.02 in sales on our first day. Despite the common retail story, I never did a day without a sale, although that following Sunday came close at $8.49. I don't recall, but it may have been a pity sale. Sales for the entire month of November 2004 would add up to an average Saturday in the current store.

I've learned a lot in the last decade, seven years of which you can see if you go back in the blog posts.  I've considered deleting them, but I keep them up so new store owners can watch the process. Understanding did not come easy.

What I didn't expect, what I couldn't expect, where the life changes that happened during that time, often in spite of the store. My son was born and adopted by us six months after the store opened. I recall getting the call that we needed to go pick him up, 400 miles away, right now. I was working the counter that afternoon.

My wife fought and beat cancer, nearly by herself, as I worked 60 hour weeks trying to pay the bills. Not being around enough is a point of friction that's still there. My current goals are college funds, retirement plans, out earning the cost of increasing health care expenses and timing vehicles so we have no more than one car payment at a time. And I always make time for that little boy, regardless of everything else. Vacations? We'll do one again ... one year soon I'm sure. Our passports are expired.

If it sounds a lot like my goals are financial, you're not wrong. Another issue with ten years building a business is you're reluctant to aspire towards risky endeavors. It's why small companies can compete against big companies. Small companies can move fast and out maneuver the risk averse. Avoiding risk as a small business owner is perhaps the biggest risk.

My ten year lesson is once you're successful after a decade, it's unlikely you'll define success the same way as when you started. That $95.02 was a big success in 2004, when I didn't even know my break even point had another $500 to go. It's nearly impossible to think down the road that far, about the kids and the mortgage and your health, which is likely less robust than when you started. If my life had shifted just a couple years to a small child underfoot and a sick wife, I'm sure I would never have taken the plunge.

The good news is happiness. Hard work and long hours is taught to be a grueling, aging, eventually debilitating and self defeating experience ... when you work for someone else. When you work hard for yourself, you become younger. You thrive. My masseuse recently told me on my 47th birthday that I had the body of a 42 year old. I'll be basking in that faint glow for weeks to come. Happiness, for me at least, means being the master of my own destiny ... with work at least.

You have to like doing this, of course. You have to not mind being in a constant state of interruption. You have to trust people, employees to take care of your baby, and maybe even open up to them as friends and colleagues, despite the risk of betrayal. The customers are wonderful too. You're job is to make them happy, to make them smile. We do this! Working everyday with people who are happy to see you is a special blessing. I've enjoyed watching kids grow up before my eyes and employees developing into capable professionals. I give these people the credit for my missing five years, because it sure wasn't diet and exercise.

Please join us for our anniversary part on November 9th, if you're in the area.

Wednesday, October 29, 2014

The Shrinking Middle (Tradecraft)

Wizards of the Coast announced something today that Magic players will likely never hear about. On December 29th, they'll reduce the discount for Magic product by 2%, increasing our costs by 4%. They're not raising prices, they're just reducing the discount, meaning retailers will pay more, but will sell for the same price. How much more? I estimate $3,000-$8,000 a year, from each store, will just evaporate from retailer coffers. WOTC costs have been steadily rising for us in the form of shipping surcharges, but this is the first time the discount has been changed since 2009.

The reasons for shrinking margins is the usual stated added increases in costs of doing business that every reduced margin publisher provides us, be it Wiz Kids, Paizo or the myriad of others. Often those programs disappear or are entirely forgotten, while the shrunken margin remains. Even when they still exist, what other industry adds the cost of their doing business to their retailers?

In the case of Wizards, they have not raised prices on Magic since 2006, when packs went from $3.69 to $3.99. Using an inflation calculator, the price for a Magic booster, keeping up with inflation, should be $4.71 right now. So why not raise the MSRP?

It doesn't need to go up a buck, but even a quarter is well within what they need to cover their increased costs. More than likely, this is because Wizards of the Coast doesn't want to risk upsetting their customer base. When you've got a golden goose, you don't change its feed. But retailers? Whadda they gonna do about it? Nothing, that's what. We lack our own trade organization and an after hours email saying you've just lost $2,000-$8,000 next year is not an unusual occurrence.

As I've mentioned many times, with both an MSRP system and a discount structure, there is no way for game stores to cope with rising costs. When our costs go up, we can't raise prices, so we find a way to eat it, and that way is usually less staff, poorer infrastructure, and cost cuts in uncomfortable areas, from toilet paper quality to how often we clean the carpets. It makes the game trade a backwater, an inflexible business model that is inherently down market. Publishers then scoff at us and our operation, a model of their own making. It would be nice if the 500 pound gorilla in the industry was at least more understanding of our plight.