Sunday, November 30, 2008
My next project is a gingerbread house....
Saturday, November 29, 2008
We were open from 7:30am to 11pm and we doubled our gross sales for the day compared to last year, informed 2,000 people of our existence and special sale, and hopefully created some new, long-term customers. People were walking in with flyers and buying up toys and puzzles, but there was also game sale cross-over, which was the bulk of our sales, and at full price. Some people came in after getting a flyer, with hopes we had games on sale too, and although some were disappointed a few became new game customers. We also had unusually high turnout from our regulars. The high level of game sales meant our cost of goods was still in the acceptable range, something Best Buy and Fry's can't claim from yesterday. But did we make money?
Kinda. The net profit for the day covered the cost of the promotion, which made it a cash flow win in the short term and hopefully a new customer win in the long term. If we weren't going to drop a lot of the toys we sold, it would have been a loser, since we're essentially spending a lot of money to make a very tiny profit. This is why I say it works for us in this instance, but I don't recommend this strategy to anyone else. Clearance sales are great, but sales on product you're going to re-order is pointless. Since we're not re-ordering a lot of the toys, mostly because we have them in quantity or they haven't sold, we can pocket a lot of our inventory dollars, mostly to pay for other product. We covered our costs in day one, so any follow-up sales resulting from the promotion should be profitable (it's a 3 day promotion).
Finally, if we gain just a single long-term customer from the promotion, it was worth it as an investment. Right now we're focused on the short term and investing is the last thing on my mind, but this is the real value of advertising, creating long term customers. In any case, the store's marketing budget was offset to cover this promotion, so rather than more TV spots, we tried something new, and I think it was a success. All my direct analysis of whether the promotion worked or not is kind of moot, since the money came out of a pot already accounted for in my cost-of-goods. We won't do this particular type of guerrilla marketing again, but we'll be trying other low cost methods to drum up business.
Friday, November 28, 2008
Nobody likes those car flyers, and you might vow never to shop at a store that puts one on your car. You know what? Those people weren't going to shop with us anyway. By offering them a targeted sale on the day they've gotten up early to get targeted sales, we're aligning ourselves as closely as possible with their interests: bargains. We'll have a legion of folks putting out those flyers in the surrounding area and if we get as little as a 3% response rate, I'll be pretty happy. Wish us luck!
The store should be open today by around 7am.
Thursday, November 27, 2008
Wednesday, November 26, 2008
Monday, November 24, 2008
Also, don't forget that if your friends or relatives bring in your wish list on our form, you'll get double the paladin club points through December 25th.
Sunday, November 23, 2008
Saturday, November 22, 2008
The WOTC CEO called buying the familiar a "Flight to Quality," which probably sounds great if you're WOTC but kind of snarky if you're not a top tier publisher. Games supposedly do pretty well in a recession. This will be my first one owning a store, so I'm taking that on faith. As a store owner, I can echo this flight to quality sentiment and tell you hobbyist customers are still buying, but their buying patterns changed virtually overnight.
Customers are taking fewer chances and are buying and playing sure bets. A sure bet in my store for RPGs is D&D or Shadowrun. My small and smaller press RPG sales have slowed, some disappearing entirely within several months. Large miniature battles games are being replaced by cheaper skirmish games. Card players are carefully buying boosters of the latest sets, leaving back list product to gather dust. Board gamers are carefully comparing gaming value for their dollars, with games over $50 slowing to a crawl. As a side note, if you sell a lot of your stuff direct AND through distribution, don't be surprised if game stores start losing critical mass locally and stop carrying your product due to your competing with them directly. We've seen this happen on several lines and have heard it reported from several stores.
As for viability in a down market, ask yourself, is this game product going to be played or just read? There's the perception that a large percentage of RPG products are purchased for casual reading instead of in-game play. If your game product isn't going to hit the table anytime soon, it's going to have a hard time getting bought during these hard times. Customers are cutting back on these products.
Also remember that you are marketing to the game store owners as well. In the description of your game, what tells me that existing customers will want to jump on this product? It needs to be a) interesting, b) instantly useful at the table and c) at a great price point. Fail at any of these criteria and it won't get into my store. As a store owner, I must envision in my head the faces of the people who will be buying your product. If I can't envision a sure thing, I won't buy it. This has changed from just a few months ago when a certain percentage of my budget was used to take chances on interesting products, a kind of community service.
These customer trends are effecting retailer purchases which will eventually trend to distributors. Distributors are the gate keepers of the gaming world. You'll need to sell them on these same values just to get picked up. Distributors work off pre-orders and I'll tell you that they're probably just now seeing this change in buying habits. As a retailer, this week was my first pre-order experience in a down economy. Product lines that have done especially well since the downturn included inexpensive supplements, like those from Goodman Games and Mongoose Publishing.
91.8% of Californians are employed.
If the media would stop banging the Great Depression drum for a minute, they would notice that this doesn't come close to the 25% unemployment of that period. Bush extended unemployment benefits this week, a rare change of heart.
Bay Area home sales are up 39%.
Yes, prices are in the toilet, and many of these sales are foreclosures, but this clears out old inventories and creates a floor for the housing market. Banks won't stop sliding until they know the extent of the damages. It also means people are getting loans. Seems like a great time to buy, if you ask me.
Mortgage rates continue to fall.
They weren't budging despite government efforts during the credit freeze. My home equity line of credit rates is tied to the fed rate, and that means more money in my pocket with falling rates.
The Dow closed 500 points higher on Friday.
Now that Wall Street has learned Obama isn't a socialist--thanks John (Al Qaida hates him too), their fears have been set aside.
Gas prices fell to a 3-year low of around $2/gallon (that's an extra $125 a month for me)
This has been called an "implied stimulus." Did you notice you have extra money in your pocket? This is better than a government check. Prices are half what they were from the Summer high.
Unlike Bush, Obama has a plan for job growth.
Whether it's a good plan or a bad plan is irrelevant right now. A good leader starts with taking a leadership position.
Black Friday (next week) will see excellent bargains at many stores, including 40% off toys at Black Diamond Games.
So most people have jobs, they have money in their pockets, they finally have a leader responding to their problems, and stores are bending over backwards to entice them to buy gifts during the holiday season. Heck, pirates are front page news for a change instead of the economy. The key is not to distract the public, it's to distract the irresponsible media. Did I mention newspaper sales hit record levels in October?
Friday, November 21, 2008
I'm not really expecting anything that bad. I'm expecting a reduction in sales of around 10% from the year before. It would be disappointing, of course, but not the end of the world. We're just working hard to capture more of the existing sales out there. The easiest thing to do is to attempt to get holiday list items bought from us moved higher up the list. Most parents, for example, don't walk into a store and ask for everything on a shopping list. They ask for a few items, usually based on price and list priority. Our shopping list program is an attempt to get more items on a list highlighted or even be the only shopping list (parents rarely go for that). A store holiday list with a bonus attached also emphasizes that a game should be purchased at our store, not just any store. I've had kids who think buying a game at a competing store is still a win for me, as if "games" is just one big company.
The other, much harder task is to bring in new customers. We're focusing on a toy sale, clearing out our toy section. Most game stores shouldn't do this, as it won't make them any money and they simply don't need to have a sale unless they want to dump product. For a normal marketing campaign, what has gelled in my mind is to emphasize to regular people, the great value in our games. A family board game, for example, is a traditional, social activity with far great value than other family activities, such as going to the movies, or even a video game. That's it in a nutshell, and it worked for Monopoly during the depression. If you're worried about price points of the typical $50 Euro game, remember that Monopoly was no bargain in the thirties. Remember that the big value competition with board games comes from television and games like the Wii. Stress the traditional and social elements to playing a board game.
Here's a list of those kinds of board games we've been playing in the store this Winter, created by Joe Baptist.
Tuesday, November 18, 2008
The good news is that the crisis appears to have run its course, ending at around midnight on November 5th, the day after the election. Things have appeared to have returned to a tentative normal, with sales rebounding instantly, although not quite up to normal levels. It took October for everyone to be shocked into acknowledging that we are, in fact, in a recession. Our regular customers have bounced back for the most part, but the muggles, the rest of the world, are still extremely cautious with their money. We'll be fighting for every dollar this holiday season.
Will the holiday season be a bloodbath for retailers, or will we see a decrease in sales in the single digits? That's what retailers are wondering. I've decided we're not stocking for the holidays. We'll treat it like a regular period, although we'll bring in key, low-cost holiday sellers in larger quantities. If there is a blood bath, retailers and manufacturers won't fully experience it until early 2009, when they feel the crawl of first quarter revenue and notice there's no cushion from their holiday sales. Some will fold then, while others will hunker down and simply stop spending on anything to get through it. This will create some clear winners and losers, as stronger companies gain market share and are better positioned to succeed. It would be a fantastic time to start a business, by the way, assuming you had capital and enough start up losses to get you through the year. Better yet, buy an existing distressed business. With crisis comes opportunity.
Sunday, November 16, 2008
The bigger problem with Wizkids was their relentless and ultimately unsuccessful struggle to replicate their successes. With such big hits, it's easy to forget the many dogs: MLB Sportsclix (both attempts), Toonclix, HorrorClix, Haloclix (can we just say *.clix?), the Battlestar Galactica card game, Star Wars Pocketmodel, NASCAR Race Day, Rocketman, and the board game called Oshi. I'm the owner of the wall that Wizkids threw crap against to see if it would stick. Nothing stuck and here we are.
That said, I'm a little disappointed to see the plug pulled this week by parent company, Topps. Pirates is a game that sells alright for us, and I'm still hoping to get some ship in the bottle product next month. Tsuro is a solid board game, although Oshi was not the hit followup they intended. I was especially indignant that the photo of the game on the box cover didn't match the product inside. Other than these, there's not much else that sells for us. Heroclix was never too strong for us, mostly because we were so close to Flying Colors at our last location, the excellent comic book store in Walnut Creek. We went from half a dozen cases of a new clix release, to two cases, to one case, and finally, with the latest release, four boosters. Why bother? Heroclix is an iconic brand that's hard to ignore. It would be like not carrying D&D. That said, I'm glad not to have to be a standard bearer for the dying brand.
The significance of the demise of WizKids, I think, is what it might mean for distributor exclusives. The big industry issue with this company is that they trail blazed the path for manufacturers to create exclusive deals with the industry distribution powerhouse, Alliance. You can only buy WizKids products through Alliance, which was a major blow for the other, smaller distributors, and an ominous sign for the industry. Alliance doesn't play nice, and as you might know, it's the tiny child company of the mindless monopolistic comic book distribution machine known as Diamond Comics. The last thing the industry needs is the Diamond of game distributors, which is what everyone feared Alliance would become in a monopoly position.
Everyone would like to claim a cause and effect relationship with WizKids demise after going exclusive with Alliance, but it's not there yet. However, you start to wonder, especially after companies like Days of Wonder go exclusive and then start farming out their games to other companies to produce. Is going exclusive an act of desperation? Sure, there's no proof of this, but if there's a growing perception that this is the case, many retailers will write off companies that make this move. Many stores already did this, which is a reason for the WizKids failure. How big a reason only Wizkids could tell you. Whether there is cause and effect for going exclusive, I think the idea of making the move to exclusivity is now fraught with more peril. I think that's as it should be.
On the other hand, you could argue that these exclusives are no threat to the game industry. Since Wizkids deal with Alliance, we've seen a lot of distributor growth in the industry, with ACD opening a new warehouse in Pennsylvania and another planned in The South, big expansion from GTS Distribution and various smaller distributors popping up all around the country. Game distribution seems fairly healthy, despite the developments of the last few years. In fact, there was so much talk about an impending distribution collapse in the industry after the WizKids move, I think there was a desire to see the growth of additional sales channels like we now have.
Saturday, November 15, 2008
Friday, November 14, 2008
- Warhammer 40K Baneblade (2). Despite the hardship in assembling and painting these, I want two more so I can field a "Steel Fury" Baneblade company.
- White Dwarf subscription. Yes, it's the mouth piece of Games Workshop, but I want to hear what they're saying. You can subscribe through the store and pick up your copy here, sent directly from GW with your name on it. Since I pick up a copy anyway, it makes more sense to subscribe. I also want a D&DI subscription, but we don't sell those.
- Warhammer 40K Apocalypse, Apocalypse Reloaded and Apoc Templates. I'm building a Baneblade, but I still don't own the rulebooks for Apocalypse.
- D&D Forgotten Realms Players Guide. I don't play in Forgotten Realms, but I like the addition of the Swordmage and Genasi. Drow are verboten as PC's in my games.
- D&D Special Edition Player's Handbook. The price is too high on this item, but I can't resist having the errata-ed version of the PHB. We're offering $10 off the price on trade-ins of 4E PHB's for this item, and I'll eventually take advantage of that myself.
- D&D Adventure: Pyramid of Shadows. I'm really enjoying reading Thunderspire Labyrinth, so I'm thinking Pyramid of Shadows will eventually make it to the table. My group starts Thunderspire on Sunday.
- Game Mastery Flip Mats. Any and all of them. Now that my D&D campaign has gone to ground (rather than being in the planes), I find the need for things like mountain passes, keeps, and other fantasy staples.
- Battlestar Galactica: The Boardgame. My friends outside the store rarely play board games, but this is one I think they could get into. Plus I think the series is phenomenally good and would enjoy a little BSG immersion without having to play a RPG.
- Double Shutter. We've got one of these Shut the Box variants on the counter at the store and I'm addicted.
- A Game of Thrones: The Card Game (box set). I love the novels and I'm curious how this almost out-of-print card game could be so popular among the gamers I respect. I want to give it a try, something I haven't honestly attempted since giving up Magic.
Wizards has recently been talking about a renewed focus on its core brands, Magic and D&D. Those are both longstanding brands, which some might even call mature. Can you talk about how you can grow sales for those brands, and whether that involves finding new customers, creating more products through line extensions, or both?
Both. We have an array of initiatives and product releases that will get current gamers more involved with our core brands as well as bring new people in. Particularly in tough economic times, customers will gravitate towards established brands that they trust and have proven play value -- a "flight to quality." Then the critical mass effect occurs -- more players means more interest by others in playing…and so on.
Wednesday, November 12, 2008
The evergreen dilemma is what I call the purchasing problem related to this essentials-only buying pattern. Evergreen is a retail term defined by reliable products that will always sell and never go stale: D&D Player's Handbooks, most Space Marines for 40K, and games like Munchkin. These are products you always want in the store and you can't buy too many. They're safe gaming entertainment bets and safe retailer profits bets. Most stores try to retain these products, while cycling out dead inventory and rotating good games that are not quite Evergreen material.
White you always want evergreen products on the shelf, stock rotation allows you to let things go for a while, but bring them back in occasionally, kind of like the McDonald's McRib sandwich. It generates interest and excitement, but you don't have to deal with the hassle (and expense) all the time. Most importantly, rotation allows you to bring in a wider breadth of games throughout the year, rather than continually re-stocking the same old so-so titles. With my all or nothing personality I find this strategy very difficult. The important thing to remember here is that new products are bought with money recovered from products that will no longer be purchased. Sometimes this comes from magazines, or overstock of new stuff, but mostly it comes from products that will no longer be carried in the store through a natural product life cycle.
The dilemma is that if customers cut out the fat in their gaming diet, and only buy evergreen product, there is no money in the purchasing budget to buy new product. The product life cycle is cut short as marginal games begin gathering dust. There is no fat in the purchasing budget to cut out. What happens is the good "rotated" product gets sacrificed for the new, questionable product. This is risky and can dilute your store in the long run if the new stuff is not popular. The new buying pattern reinforces the problem, as people are only buying tried and true evergreen product. They're far more resistant to buying new games. The end result is a store either blows their purchasing budget, or they stop buying new stock, both of which are long term recipes for failure.
The first retail instinct is to have an old fashioned sale to recover the money in the dead product. Sales of listless product can be a purchasing lubricant which can allow a store to continue making new purchases. Unfortunately, sales work best when people have money. A sale when customers are poor results in their spending what little money they have on stuff that makes you no profit. This is why you'll sometimes see record sales figures at large stores but with an ominous profit warning for the future; they had a huge sale and made no money! If you have $50 to spend, am I better off if you spent it on a $50 game at full price or on a $100 game at 5o% off? The store is always better off with the first option, assuming the plan is to put the cost of goods back into purchasing. That $50 no profit game means I can't pay employees or the landlord. The other option is the inventory death spiral, where a store liquidates product to pay the bills, putting all the money into expenses. Small stores tend to make this mistake more often. Anyway, the sales dilemma is just as vexing as the evergreen dilemma and it's not a solution. What's the solution? Beats me, which is why retail is in so much trouble right now.
Tuesday, November 11, 2008
I acquired a beta copy of the D&D Character Builder yesterday (I'm not a beta tester). It's a closed beta, which is a shame, since it would make the D&D Insider program worth the money. Playing around with it this morning, I was able to make a character in about ten minutes. The program is well laid out, with a full description of every power in the exact format as it appears in the Player's Handbook. It's intuitive as well, probably an evolutionary step beyond the character builder from Lone Wolf, and far better than E-tools (and don't get me started on the collaborative disaster that is PC-Gen). For example, whenever you select a potential power, it gives you your overall combat bonuses with that ability on the bottom right. This is what a lot of us want to know, and I know from experience, I used to do a lot of clicking back and forth to see the end result with past programs.
Installation of the program took a while, as it had to install the dot-net framework on my Vista machine (something I avoid). It's a full, stand alone application, not a web based program. It worked fine after the reboot from the installation and didn't require any fiddling with additional files. The program is PC only, which is a reason why I got to take a look. The rightful beta tester had a Mac and wanted to see it in action.
The program features content from the Player's Handbook, along with options to play a limited number of races described in the Monster Manual as potential PC races. It also included content from Dragon magazine, including an interesting option for bonus skills based on character backgrounds. Like past programs of its type, you can choose to de-select source materials to limit your options. There is a section for adding house rules, but it appeared to be an import function. I'm not sure how that works. The program in its current form only goes up to 3rd level. The character sheet output appears to be the same as the standard D&D character sheets, which is somewhat important. Output is where a lot of these programs fall on their faces.
What I'm waiting for now is an encounter design tool. I created my first encounter for D&D 4 last week and it was painful. It involved doing the math first, to get the right mix, then coming up with the right combination. Following this, if I wanted an NPC with powers, I had to make some guesses on what was appropriate, as NPCs are not guys with PC classes anymore. Once I selected what was appropriate, a guess for the most part, according to the DMG, I ended up photocopying various pages of powers and feats out of the PHB, so I could have them handy. What would have been a two page encounter in a D&D adventure was a seven page booklet. Lets hope that tool eventually makes it into the D&D Insider program. Better yet, find a way to integrate NPC design into this tool. Anyway, I would gladly pay the subscription fee when the character builder is available.
Sunday, November 9, 2008
I grew up with this ethic, my father insisting that I get a job as soon as I was old enough. He rarely missed a days work, unless he was deathly ill. Even when he was in cancer treatment a few years ago, he didn't miss work. He would get up early to get his treatment, driving in the dark in the wee hours of the morning, and then going to work on time, every day. That's dedication, not to the company, but to his own sense of pride and work ethic. I can't say I'm as dedicated. Having spent most of my adult life in IT, I saw that there was value in being a fickle mercenary. You could blow into town like the new sheriff, fix all the problems, and then move on to the next town with a substantial bump in pay, and usually in short order. Work ethic? Working harder was for fools; yes you needed to work hard, but working smarter was where it was at in a knowledge economy. The guys in IT who were always busy never seemed to get anything accomplished. Get in, fill your brain, get trained, add value for your employer, and move up. For this I was rewarded handsomely with a 20% pay jump every couple of years.
Starting my own business was the hardest I've ever worked. We're talking real sweat, no days off, old fashioned getting it done. Work is a funny thing when you have an employer. You think in terms of your hourly wage. Wash my car myself? Heck, it would take me an hour and at my high rate of pay, I should have someone else doing it. This assumes you have someone paying you and that your labor is limited. Business owners can't place an hourly rate to their time, and as for limits, they have until the job is done, whether it's 40 hours a week or 80. The work ethic for small business owners expects you to work hard, forever, for the freedom of not having a boss.
Yet, there's something funny there too. Small business owners are also part of that "ownership society." As business owners, you've got a foot in the world of finance, of the rich and wealthy. You may not be one of them, but there's this idea that you could be, if you could only stop working. Yes, not work harder, but not work at all. The flip side of working insanely hard, is the idea that you if you worked smarter, you wouldn't need to work. This is a kind of "franchise" model of your business, creating processes so that you can hand off the labor to someone else. If you're not used to this kind of talk, it kind of messes with your head.
Going into year five, this is the fence I'm straddling. Do I want to give into my inner Protestant work ethic? Do I want to work the counter, greet the customers, and do the thing, or do I want to step back, manage processes, and think big picture? This assumes I have something better to do with my time. That's the first step; figuring out what that is.
Saturday, November 8, 2008
So what was the result of the test? First, whoops, wrong color. Checking with the existing models, it should have been scab red (redder) rather than blood red (more orange). That was a close call. Also, because I didn't have enough scab red for a proper test, I couldn't get the right consistency. So far, it's too watery. I'll have to try it straight out of the bottle. Lack of the right color paint and the need for more propellant means I'll try again another day. I'm still hoping to hunt down tips on how to use standard paints in the gun. I know I needed to adjust the spray gun levels to get today's paint to work.
SATELLITE RECEIVER: The satellite radio receiver in the store died, only a year after getting it. I called XM and they informed me I would need to buy another one. I informed them that having to buy a $125 receiver every year doubles the cost of their service, so they should cancel it. I was forwarded to the closer. The closer is the person who talks you into staying with the service. They offered me a new receiver for $10. It's just like dealing with the credit card people.
Friday, November 7, 2008
I'm personally not willing to think too hard about my place in the economy right now, especially the long term prospects of my own situation after having all of my paper wealth vanish over the last year. You can justify an awful lot in your life when your assets appreciate faster than your savings. Introspection will be saved for the slow, dark months of Winter. For now, it's about survival and maximizing the holidays for the store.
Thursday, November 6, 2008
Wednesday, November 5, 2008
Lenina Huxley: So, now all restaurants are Taco Bell.
Those publishers with the strongest web sales presence make the books that many of us are dropping. They are bypassing the middle man, aka retailers, in hopes of gaining additional profit as well as solving the problem of the dwindling numbers of game stores. I can lose half my D&D sales to Amazon and still happily sell the game, but if I lose half my White Wolf or GURPS customers, it may drop my sales below a sustainable threshhold. I'll buy anything if I can guarantee one sale; GURPS and several White Wolf systems are now below that threshhold, so they won't get ordered any longer. Some publishers sell direct out of desperation, so perhaps it's not surprising that their books aren't doing well. As a retailer, however, I take this personally and it gives me additional incentive to drop them. To give you another useless sci fi quote: "'Bout 50% of the human race is middlemen, and they don't take kindly to being eliminated."
It might be unfair to revisit RPG market share in a new D&D version year, but what I'm finding is an increasing percentage of RPG sales going to Dungeons & Dragons. I've visited this topic before, and I've explained the long tail and the advantages and disadvantages of this kind of consolidation, but I think we'll be seeing more publishers fall by the wayside in this economy and more market share owned by D&D. What I see in each major, established game department is the leader taking about 50% of market share, with the rest divided among everyone else. Magic: The Gathering does this, as does Warhammer 40K. D&D did this until the last year. This year, sales for other systems began evaporating and 4E brought a lot of people on board, including a lot of dirty hippy gamers (DHG's). The restrictive D&D license should see some consolidation of D&D purchases towards WOTC as well, but that's an entirely different argument.
The Election: Like the stock market, I'm glad that to have one less unknown variable floating around out there, despite evidence that things are definitely not good.
Sunday, November 2, 2008
Again, effortless 15 minutes of work with the brush, and no mishaps with shaking the paint. I went to celebrate my good fortune with an afternoon cup of joe at my local coffee shop. As I was sitting down, I bumped my head on a small halogen track light. I carefully avoided spilling my coffee, but the bulb fell out of the light fixture and, you guessed it, plunked right into my cup, splashing coffee across the table and onto the floor. Hole in one. I highly recommend this place, despite the funky fixtures. So yeah, if I can use an airbrush, anyone can.
Saturday, November 1, 2008
October is not a good retail month for us normally, it's a transition month between Summer and the holiday season. There's a lot of quiet time to embrace those bad feelings, if you allow yourself to indulge. In the end we were profitable and did significantly better than last year, but it felt hard earned. It wasn't really, it just felt that way.