Competition and Community Building

On the Game Industry Network we're discussing relationships with competitors. You would think that retail competition is fierce, dirty and mean, but it's rarely so. It's only when you've got too many competitors trying to eat each others lunch that you've got problems. For example, the Oakland-Berkeley area has some fierce competition. Games of Berkeley and Eudomonia have been feuding for years over Magic the Gathering. This has resulted in a price war that has soured other stores in the area on what should be a regular seller. We've even felt it effect our sales, 20 minutes away. Moreover, additional stores pop up in that area all the time, adding additional pressure.

The general rule of thumb is that specialty stores like ours are neighborhood stores. They compete in a roughly 10-12 minute drive-time area. Some things like tunnels and bridges form psychological barriers that will keep people from traveling, even if it's a few minutes away! There's special software that plots out this strange concept and it rarely looks like a circle.

Customers tend to be loyal to a store for personal reasons. Maybe they like the owner, or they've got a warm feeling about a game they bought their in their youth. Price, service and the usual criteria for a good store won't move a customer unless these factors are very much out of whack. For example, my local competitor prices games over MSRP and has some service issues, but there's little I can do to "woo" their customers away. You can do a LOT to lose your customers, but little to steal customers.

Likewise, when a store closes, competitors generally receive a small percentage of the old stores customer base. For example, the local Games Workshop store just closed. We received a BIG bump in GW sales with our new customers from that store, but it couldn't have been more than 10% of their base. Worse, many of those orphaned customers quit the hobby when their store closed, which is bad for everyone.

Overall, we have a very good relationship with our competitors. However, within the first few months of our initial opening, we were visited by two competitors. One said he was an ex-employee and made a Kruschev-like remark about this long-time store burying us. After all, they had been there for 20 years and the business was tough. Who were we? Another store owner would make quarterly visits for what I called the anti pep talk. He would talk about all the pitfalls of the industry, how poorly things were going, and would occasionally spread incorrect rumors about other stores. I learned to meet his negativity with glowing reports of growth and sales. It worked. He stopped.

The key to a good relationship is rarely the owner of other stores; they have far too little time to worry about other stores. It has been the employees of the other stores that have been key in forming a good relationship. The local comic book store is staffed by several avid gamers. They sell core D&D books, for example, and if people want more D&D, or other games, they sent customers our way.

The local Games Workshop store employees were big Warmachine players and they would send everyone not looking for GW to our store, even after we started carrying GW. Now those former employees are some of my biggest customers and often advise me on my GW stocking. If the management there hadn't turned them into such bad employees (they brag about it), I would probably hire them for their knowledge.

Our local game store competitor (we're down to one), the one with the Kruschev-like predictions, is staffed by minimum wage high school kids who know nothing about games and could care less about them. They have transformed their store primarily into a toy store. We still send people to them for things we don't carry, and once (only once) someone came in referred by them. A goal with the new store was to carry all those referral items. If you're going to expand, you might as well carry the items people have been bugging you about for years.

The key here is that you want to help customers. It's not just the right thing to do, but they remember that. They might go to your competitor because they sell those strange collectible quarter binders, but they'll remember that you sold other stuff and, most importantly, that you were helpful. It's stupid and delusional to think you can sell someone something they don't want, just because you don't carry what they do want.

Anyone beyond our geographic area, marked by the psychological barriers of the Benicia-Martinez Bridge and the Caldecott Tunnel (into Berkeley and Oakland), are not considered competitors. Cross-over is minimal, unless someone happens to work or live in that region. I regularly send people to Oakland or Berkeley for games we don't carry, a 15-20 minute drive. Most scoff at the concept. Suburbanites don't like cities and many find Oakland scary.

There is a subset of gamer that will travel from region to region to sample game stores. These tend to be the alpha gamers, the guy that will drive 30 miles because their primary store is out of a product. I was one of these guys. They have little store loyalty and want their stuff now. They're important customers, but you can't model your business around them or worry too much about their current predilections.

Less friendly competition can be found from big box stores and the Internet. We're somewhat powerless against these faceless competitors and I'm always wondering what percentage of games in general and my customers dollars in specific are going to these outlets. It can keep you up at night, if you let it. The theory you hear about online retailers and big box stores is that they don't grow the hobby and they harm local specialty stores. Players learn games from their friends, at conventions, and mostly from recommendations at stores. Most importantly, they need to actually play these games, so game space is now considered essential. Some old-timers in the industry disagree, but it has become painfully obvious to the rest of us.

This is a good theory, if your local store is growing the hobby by teaching games and providing game space. What I hear over and over from customers online is that their local store was nothing more than a warehouse for games, rather than a community center. These kinds of stores, the kind we've tried to transition from since we first opened, having gotten bad advice from old timers, are the ones that have tended to close recently and are the ones in trouble now. Game manufacturers now embrace this theory, and reward the type of store that fits the model.

For example, Games Workshop has a partner store program which requires game space and regular events with sales goals. They want you to stock their stuff, hold events, and understand how those events drive your sales. It's the closest thing I've seen to a franchise agreement in this industry. It's smart. Wizards of the Coast requires stores that want direct accounts to have game space, and rewards them based on their commitment to organized play (a bad program in practice, but a good theory). Other manufacturers do the same, attempting to mold game stores into the image they envision best sells their products. Many now use their marketing dollars on demo games and other incentives to get people to play their game in the store. I resented this when my business model didn't match their ideal, but I now see that the theory holds water and I embrace it.

I personally believe that "game store as community center" is the primary model for running a store now. If you're in a mall and you've got high foot traffic, you may try something else, but these are exceptions to the rule.

We could also discuss endlessly how manufacturers can be somewhat two-faced, forcing game stores into the community model while not doing anything to prevent Internet retailers and mass market from eroding specialty store market share. It's a bit like supplying arms to two sides of a conflict.