There is the perception and certainly some anecdotal evidence that there's a correction taking place in the board game market. Publishers are feeling it and stores are certainly feeling it. It's not that there isn't a huge plethora of great games, because there is A HUGE PLETHORA OF GREAT GAMES. Oh dear lord are there an awful lot of great board games right now. The games are great, but there are simply too many. Or in economic terms, there is too much supply for the existing customer demand, with the modern caveat of from me, and at full price.
As retailers, we are always on the look out for great games and we are trained to order deeply when we find them. Otherwise, the game is gone in moments and those with the deepest pockets make the most money. Some would say this is the only way to make money selling board games. You buy deep or you go home. So we buy for the duration. How many titles do we buy? We buy the good ones. How many is not a question we normally ask.
There is no simple mechanism for managing inventory for a department, keeping it in its lane. I use and evangelize the retail tool, Open to Buy. I budget for the entire store with Open to Buy. The complexity of budgeting by department is something better handled by software. That's not to say I won't attempt to make such a spreadsheet, only that it's near impossible to get small hobby retailers to use a basic OTB spreadsheet and most are certainly not going to divide up purchasing by department. That's like preaching pivot tables to cave men (note I don't know how to use pivot tables).
That leaves us where we are now, with many retailers deeply overstocked on product that will never be bought at full price. How deep depends on the other thing I like to preach about, performance metrics. I am certainly one of those retailers beset by fantastic games nobody is buying, but my quarterly inventory performance analysis, usually related to turn rate metrics (or sales per square foot or GMROI), means my problem is a Q4 problem, rather than a 2018 problem. A lot of retailers are using Black Friday to exhaust port stuff I haven't seen in my store for many moons, and it's frankly too late. Good for them, but the crisis could be averted by a regular culling of the herd.
My point in all this is we have tools to keep our stores running smoothly in both the buying (Open to Buy) and inventory management (turn rate analysis). Now all you have to do is thread the needle and master the the rare independent game store skill.... selling. Buy smarter, manage better, sell the hell out of that cardboard.
Saturday, November 24, 2018
Sunday, November 18, 2018
5 Thoughts on Hiring
I'm pretty sure I've written an article similar to this before, but with the holidays coming, I've been involved in the hiring process of late. For the first time, I've used professional tools to seek candidates outside of our network of customers and fans, notably Zip Recruiter, which I recommend.
In plain talk, it means rather than trying to recruit gamers to be game store employees, I've sought out expertise with hopes of finding some hobby gaming experience. With hobby gaming permeating society as never before, some say at exponential rates, it doesn't take long before you find a regular joe or jane who doesn't consider themselves a gamer, but nevertheless knows a dozen different games.
This is one of those cases where store owners disagree, often strongly. Do you hire the gamer to retail or the retailer to sell games? You can't train for passion, but you can train a muggle to play games and talk competently about them. Some will argue that they still won't have authenticity, but I've given up on that concept, as a good number of men, sadly, will never accept that authenticity in half the population. You'll have to be content with stellar customer service and reasonable product knowledge.
On the other hand, there are many gamers who will never master the social skills and customer service necessary for zero tolerance retail, which is what we have nowadays, with toxic review culture. When stores get one star reviews over the type of greeting a customer gets when they enter the store, it changes my focus. You can't lose with either recruiting method, but at a certain point you tire of trying to turn partisans into ambassadors. A retail centric employee may not know how many spells a first level Wizard gets, but they sure as hell say "Hello" every time you walk in.
So that's my strategy for hiring right now. What I really wanted to write about is advice on how to interact with a potential employer as a candidate. Candidates in our scenario are often inexperienced in the hiring process, because of our bottom of the market pay rate (someone has to be at the bottom of the range, and that would be a game store). Either they're young or perhaps have moved up in the same company over the years. The job interview can seem confrontational, which is somewhat true, since both parties want to see if they can make a strange shaped piece fit a strange shaped hole.
Here's my advice for candidates. For the most part, consider an interview exploration. Do you really want to work for these people? Do they offer a work environment that will let you thrive? With unemployment at a historic low, there should be more give and take than desperation. So here's my list:
In plain talk, it means rather than trying to recruit gamers to be game store employees, I've sought out expertise with hopes of finding some hobby gaming experience. With hobby gaming permeating society as never before, some say at exponential rates, it doesn't take long before you find a regular joe or jane who doesn't consider themselves a gamer, but nevertheless knows a dozen different games.
This is one of those cases where store owners disagree, often strongly. Do you hire the gamer to retail or the retailer to sell games? You can't train for passion, but you can train a muggle to play games and talk competently about them. Some will argue that they still won't have authenticity, but I've given up on that concept, as a good number of men, sadly, will never accept that authenticity in half the population. You'll have to be content with stellar customer service and reasonable product knowledge.
On the other hand, there are many gamers who will never master the social skills and customer service necessary for zero tolerance retail, which is what we have nowadays, with toxic review culture. When stores get one star reviews over the type of greeting a customer gets when they enter the store, it changes my focus. You can't lose with either recruiting method, but at a certain point you tire of trying to turn partisans into ambassadors. A retail centric employee may not know how many spells a first level Wizard gets, but they sure as hell say "Hello" every time you walk in.
So that's my strategy for hiring right now. What I really wanted to write about is advice on how to interact with a potential employer as a candidate. Candidates in our scenario are often inexperienced in the hiring process, because of our bottom of the market pay rate (someone has to be at the bottom of the range, and that would be a game store). Either they're young or perhaps have moved up in the same company over the years. The job interview can seem confrontational, which is somewhat true, since both parties want to see if they can make a strange shaped piece fit a strange shaped hole.
Here's my advice for candidates. For the most part, consider an interview exploration. Do you really want to work for these people? Do they offer a work environment that will let you thrive? With unemployment at a historic low, there should be more give and take than desperation. So here's my list:
- Follow the Process. There are those who would tell you to skip to the head of the line by directly contacting the company, tracking down the hiring manager or otherwise not following directions. Or in one case, coming in with your parent. Although having an inside source is a great way to get a job, going around the process is a great way to irritate potential employers and possibly give away what might be a confidential process. Go through the process, be courteous, follow up, and go through the usual ritual. If you're interviewed, I think you're owed a follow up. Applying? Not so much.
- It's a Conversation. There's a lot of information exchange, but what we're really trying to do is determine if you can handle a customer facing position and express yourself coherently and succinctly. Even more important, we want to determine if you're the kind of person we want to spend a lot of time with. For some, this might seem like a trap, and the less said the better. Some people talk way too much. There is a middle ground.
- Trajectory. We're looking for a job trajectory that leads you to this point. Retail is one of those things a lot of people circle back to when they're unhappy in a new field. What we would rather see is an associate bottle washer promoted to an assistant manager of bottle washing to manager of sanitary containers. In the case of line employees, a job or two in retail directly leading to this point in time is ideal. If we're digging into a resume to find relevant experience, because you've moved on from retail, it's not a deal breaker, but it's not a good sign. It looks like a fall back plan. With wages rising, and college level positions at half the number of college graduates, retail is becoming a place where many people will spend a good part of their lives. I mean that's what we're signaling when we raise minimum wage 10% a year, right?
- Research the position. A notable candidate will demonstrate they've learned a little about the industry, how it functions and the role of the store within it. It's a good idea to do some company research that shows you're interested. This will not go unnoticed. Every company has a website or Facebook page nowadays, so spend some time learning about a future employer and their trade. Tradecraft is one of those things some employees will never get and is often not trained. Showing an interest in how the sausage is made, not just where you'll be standing when you turn the handle, impresses business owners.
- Be Honest. Be honest about the compensation, scheduling, or other areas that may not work for you. Sometimes there's wiggle room for the right candidate. I'm likewise up front about potential advancement, or lack thereof, and our ability to pay competitive wages and what skills I envision a candidate picking up in the future. Often the opportunity to learn new skills and build a resume is more valuable than the compensation. Often when people want more money in a job, they really just want more challenges and a chance to succeed at something new. Training and learning new skills that help the business are great ways to get past the fact that retail compensation, although rising quickly, will likely lag other opportunities.
Thanks! And please share if you thought this was helpful or have someone in mind this might benefit.
Thursday, November 8, 2018
Mistakes and Intent
For two hours this week on the day it was announced, I sold the new Ultimate Masters Magic set for a ridiculously low price of $225. There were a few reasons. This set was initially greeted that day with profound indifference. When I queried my staff, they told me it appealed to the grinder crowd, which has nothing to do with gay sex, I'm told, and everything to do with wheeling and dealing Magic cards as commodities. That is certainly not our crowd, as we cater to the more casual player. My sales rep threw up his hands with a big "who knows" when I asked if he thought it would be hot. The biggest reason I low balled it was the release date, December 7th.
Why is that important? Like 90% of game store owners (I took a poll), I use the fiscal calendar year. In the United States, if my inventory value was X on January 1st of this year, I am taxed on the amount over X on December 31st. It's taxable income hidden in inventory. Canada doesn't have this, which is why you can see glorious "museum" stores there with vast inventories. Also, in case you're wondering about changing a fiscal calendar year, small corporations like mine need permission from the federal government. Their response is "get bent, you made your choice."
A Magic release in December, although likely profitable, is not welcome. It will mean holding extra, inactive stock of this product in exchange for strong turning stock that is actively making money. Long story short, the correct amount of Ultimate Masters to buy on December 7th is 24 days worth. When I buy a Magic set, it might last a weekend or it might last three months. So Ultimate Masters was ultimately dangerous, especially at a price point of $336 per box. Blowing it out is a reasonable fiscal decision.
So that night I mangled a flyer to read $225 to attract customers I wouldn't normally have, for a product I didn't want, that I necessarily needed to blow out in 24 days. I posted it in our private Magic forum on Facebook, hoping we might get a few pre orders in the next few weeks. Then the calls began. My manager texted me, asking if I was sure that was the price I wanted. Store owners from 200 miles away called to make sure my head was on straight, because their customers were about to jump in their cars and drive to my store. Then I checked my distributor's website, because remember, Wizards of the Coast just stopped selling direct to game stores. Oh boy. I had made a big mistake.
Our distributor Magic prices are going up significantly starting January 1st, because Wizards of the Coast is reducing our margin significantly without raising the MSRP. That January 1st price change date assumed there were no other Magic releases for the rest of the year. This surprise release caught everyone by surprise, so those January 1st margins? They went into effect starting in November with Ultimate Masters. Not January, right now. What was going to be a modest profit on this release, was now going to be $10 of gross profit, which is a bit of a disaster. So now what?
I did what any retailer would do, I made a course correction and increased our box prices to $250, which was still $50 less than any online price that evening (putting it at $250). The two people who bought boxes at $225 got to keep their orders intact, of course. I didn't suddenly demand an extra $25 from them. One person who wanted a bunch at $225 but couldn't pay that evening was angry and threatened me, but we eventually came to a resolution that made us both not homicidal. Here's where it got a little dodgy ethically though.
My crazy price had spread far and wide. There was a Reddit post. Reddit is an Internet bulletin board system I'm told. The resulting buzz for $225 per box brought in many customers, who ultimately shrugged and paid $250 a box, because it was still the best deal out there. I sold a couple dozen boxes, where most of my store owner friends sold a couple. The question you should ask: Was this Bait and Switch?
Bait and Switch is where you advertise one low price to get customers in your store, only for them to discover a higher price when they arrive. There's a good article on this here. Retailers make mistakes, and I clearly had made a big mistake with this one. The difference between bait and switch and an honest mistake is intention. Did I intend to advertise for two hours my $225 price so I could raise it when customers called in later? If so, that's illegal bait and switch. Was it an honest mistake? The same actions, even though they resulted in the same phenomenal sales that would have occurred with illegal and unethical bait and switch, are just a mistake, if it wasn't your intention.
Eyebrows were raised, and what I want to say is good. Eyebrows should have been raised. It's a shady and illegal tactic if done intentionally, and the only way to know for sure is to get into my head. That's worth an eyebrow raise. I also want to say sorry, I made a mistake. I apologize for that. I paid the rent on Ultimate Masters, so I'm glad this happened, but I also acknowledge I burned a lot of social capital to do it. I certainly won't make that mistake twice, if I can help it.
There are some who will be angry and suspicious regardless of what I say, and to them, sorry, I can't help you. For the rest of you, I think this is an interesting parsing of a mistake and what this means ethically and legally. We make so very many mistakes in small business and most of the time they cost vast amounts of capital and time. It's not entirely terrible when one works in your favor. Now I just hope my allocation is big enough to cover my pre-orders. Whee!
Why is that important? Like 90% of game store owners (I took a poll), I use the fiscal calendar year. In the United States, if my inventory value was X on January 1st of this year, I am taxed on the amount over X on December 31st. It's taxable income hidden in inventory. Canada doesn't have this, which is why you can see glorious "museum" stores there with vast inventories. Also, in case you're wondering about changing a fiscal calendar year, small corporations like mine need permission from the federal government. Their response is "get bent, you made your choice."
A Magic release in December, although likely profitable, is not welcome. It will mean holding extra, inactive stock of this product in exchange for strong turning stock that is actively making money. Long story short, the correct amount of Ultimate Masters to buy on December 7th is 24 days worth. When I buy a Magic set, it might last a weekend or it might last three months. So Ultimate Masters was ultimately dangerous, especially at a price point of $336 per box. Blowing it out is a reasonable fiscal decision.
So that night I mangled a flyer to read $225 to attract customers I wouldn't normally have, for a product I didn't want, that I necessarily needed to blow out in 24 days. I posted it in our private Magic forum on Facebook, hoping we might get a few pre orders in the next few weeks. Then the calls began. My manager texted me, asking if I was sure that was the price I wanted. Store owners from 200 miles away called to make sure my head was on straight, because their customers were about to jump in their cars and drive to my store. Then I checked my distributor's website, because remember, Wizards of the Coast just stopped selling direct to game stores. Oh boy. I had made a big mistake.
Our distributor Magic prices are going up significantly starting January 1st, because Wizards of the Coast is reducing our margin significantly without raising the MSRP. That January 1st price change date assumed there were no other Magic releases for the rest of the year. This surprise release caught everyone by surprise, so those January 1st margins? They went into effect starting in November with Ultimate Masters. Not January, right now. What was going to be a modest profit on this release, was now going to be $10 of gross profit, which is a bit of a disaster. So now what?
I did what any retailer would do, I made a course correction and increased our box prices to $250, which was still $50 less than any online price that evening (putting it at $250). The two people who bought boxes at $225 got to keep their orders intact, of course. I didn't suddenly demand an extra $25 from them. One person who wanted a bunch at $225 but couldn't pay that evening was angry and threatened me, but we eventually came to a resolution that made us both not homicidal. Here's where it got a little dodgy ethically though.
My crazy price had spread far and wide. There was a Reddit post. Reddit is an Internet bulletin board system I'm told. The resulting buzz for $225 per box brought in many customers, who ultimately shrugged and paid $250 a box, because it was still the best deal out there. I sold a couple dozen boxes, where most of my store owner friends sold a couple. The question you should ask: Was this Bait and Switch?
Bait and Switch is where you advertise one low price to get customers in your store, only for them to discover a higher price when they arrive. There's a good article on this here. Retailers make mistakes, and I clearly had made a big mistake with this one. The difference between bait and switch and an honest mistake is intention. Did I intend to advertise for two hours my $225 price so I could raise it when customers called in later? If so, that's illegal bait and switch. Was it an honest mistake? The same actions, even though they resulted in the same phenomenal sales that would have occurred with illegal and unethical bait and switch, are just a mistake, if it wasn't your intention.
Eyebrows were raised, and what I want to say is good. Eyebrows should have been raised. It's a shady and illegal tactic if done intentionally, and the only way to know for sure is to get into my head. That's worth an eyebrow raise. I also want to say sorry, I made a mistake. I apologize for that. I paid the rent on Ultimate Masters, so I'm glad this happened, but I also acknowledge I burned a lot of social capital to do it. I certainly won't make that mistake twice, if I can help it.
There are some who will be angry and suspicious regardless of what I say, and to them, sorry, I can't help you. For the rest of you, I think this is an interesting parsing of a mistake and what this means ethically and legally. We make so very many mistakes in small business and most of the time they cost vast amounts of capital and time. It's not entirely terrible when one works in your favor. Now I just hope my allocation is big enough to cover my pre-orders. Whee!
