Sunday, September 29, 2013

Gaming Conventions

Local gaming conventions are fun gatherings of gamers for the purpose of getting together and playing games, often those that aren't being played elsewhere, but also the hot game of the moment. Conventions owners run a company, just like a game store, and they have their own objectives. Game store owners are often invited to conventions to sell their wares in a  dealer's room, where the convention owners will rent you tables, usually for a couple hundred dollars each. This is the intersection of game store owner and convention owner, and many game store owners wonder if it's worth it.  First, lets look at the needs of the convention owner.

Understanding the convention owner is important. Most are not aware, nor do they care about the meticulous calculations you may have performed to determine how to make a profit at their convention. In fact, with multiple game stores in attendance, they might even prefer to give your space to someone else, like someone who makes funny hats, or sells ceramic unicorns. Some yearn for respectability and would really like to see publishers and manufacturers in their dealer's room, no matter how small or obscure. Publish a couple PDF's for Pathfinder, and you just might qualify. You are lowest priority in many cases. The convention owners care more about variety than your business needs, although representing the local community is often a priority (and helps with their marketing efforts as they hit up game stores with flyers).

Some convention owners have other objectives as well, like wishing to see their "deep pocket" game store owners provide them prize support, at your expense of course. Or perhaps they want you to run events at their convention. Many times they'll request sponsorship of a type of event by asking you to pay the costs of a guest of honor or advertising on the back of their convention badges. Most of these requests are on the side and are not required, while some convention owners might simply "not have space" if you don't step up and read their minds.

Whether you should engage in any of these side deals is up to you. In the past we've sponsored Dave Arneson, co-creator of Dungeons & Dragons and board game designer Richard Borg. Getting a gaming celebrity to sign product at your table is a nice sales draw and does support the hobby. We've been "major show sponsor" at various events and have done the badge thing. We've provided tournament prize support for games like Flames of War and given out coupons to Pathfinder Society players.

Should you go? If you're running a new store, you should most definitely attempt to go. It's one of the rare cases when I approve of a business activity as a "marketing expense." Certainly sell things, but your main priority should be getting the word out of your existence. That means having a banner, bringing business cards, and putting flyers on your table with your store information and directions, especially directions from the convention to your store. I don't normally approve of coupons, but you might include one, good when presented with a convention badges for a limited amount of time, like a month. Get them at least thinking about coming to your store.

Your table should include a representative selection of what you sell in your store. While our veteran convention efforts are all about what sells at a con, a new store should have a wider variety. You probably won't know what sells anyway. Cutting edge product lines are especially nice to showcase in such a situation, like small press RPGs and niche miniature games. The assumption is if you have the edgier items, you're probably well stocked on the mainstream.

Spending time in the dealer's room is a research opportunity as well. Watch what people are selling and what customers are buying. Talk some shop and compare notes with other store owners. Build bridges with competitors and make friends. Customers in a convention setting are ruthless, generally know and care nothing about your business, and are therefore shockingly honest (some might say rude). Listen to what they're saying, as you might learn more than when you're behind the counter in your ivory tower.

Take some risks, move things around on your table and attempt to see what attracts people. For example, we learned that if you put all of your RPG books spine out in your displays, customers will quickly glance at them and move on. Put the books face out and they have to flip through them, creating an investment of time, which more often results in a sale. Common sense and things you know to be true in your store might not apply at a convention. Conventions make you think differently.

Established stores should carefully consider the numbers. The biggest cost for conventions, after the fees, is travel, especially if it involves lodging or long distances. If it's just you going, heck, call it a vacation. I used to use my frequent flyer miles for convention hotel rooms and not add that into my calculations. If you're new, definitely consider that, but if you're an established store and paying other people, most longer distance conventions are probably not worth the effort.

So how do the numbers break down? Here's an example from Dundracon, one of our favorite conventions and the closest. We're local to it, so it's the lower cost example:

3 Tables ($200 for the first, $250 for two and three. As you can see, they prefer small vendors)

Labor (Two people to set up, break down, after con work for 4 hours, and one person with 18.5 hours of selling time. Rate: $10/hour)

Mileage (back and forth each day, 18 miles @ 56.5 cents a mile using standard reimbursement)

Office Supplies and miscellaneous expenses

Total:  $1,061

So how much do you need to sell for this convention to be profitable? That depends on what you're selling. If you sell standard, new games, right off your store shelf, you're going to have a gross profit margin of around 45%. That means you'll need $2,360 in gross sales to break even. The question then is whether this convention can support that number. Is there enough attendance? Do conventioneers maintain margins or are dealers comprised of (bottom feeder) discounters? How many other game stores are you competing with? When they all have the same product, it's hard to make a sale and even harder to maintain margin.

In the case of Dundracon, yes, we will make that $2,360 in gross sales, with the added "marketing" benefits of being there. But what if we didn't? Conventions before the recession were far more profitable than they are today. Sales have probably dropped 30-40%. So if a convention is kind of on the edge of profitability, one option, other than not going, is to sell higher margin items, the best example being used games. We regularly sell ding & dent and used product at conventions because it has a margin of around 65%. So now we only have to sell $1,630 before we drift into profitability. The reality is more a hybrid of the two.

I won't break down the higher cost example, but imagine a convention that's 60 miles away. Suddenly my costs go way up. Mileage goes up a couple hundred dollars or you may consider rooms. If you have rooms, you probably have meal expenses. That $1061 starts looking more like $1300-$1500 and your sales nut to crack jumps to over $3,300. Some conventions can get that number, but most can't, at least not without those higher margin items.

There may be other costs to going to conventions. If you have to close your store to go, a really dumb idea in most cases, factor that in. If you're taking all the product in your store to sell at the convention, you're not only going to lose sales, but you'll alienate customers. In rare cases, we've done well with consignment product, but that was in the pre-recession convention heydays.  With a more profitable store with deeper stock and business intelligence on what sells at a convention, we tend to order stock specifically for convention and just put it on the shelf if it doesn't sell.

Finally, as much as a pain in the ass they can all be, I want to thank the convention organizers. It's a brutally difficult job, one that encompasses everything I'm bad at, and I'm guessing it's rather thankless. Thank you. I've said it many times, but during the first few years of business, conventions were sometimes the difference between profit and loss. They literally kept me afloat during some rough times. I recall several months looking at the current state of the books and the upcoming rent expense and breathing a sigh of relief that a game convention stood between them. Now they're just nice to go to, with some added income and an outlet for many products at the end of our inventory cycle, but back in the day.... Thank you.

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