Monday, May 13, 2019

Insurance (Tradecraft)

A nuts and bolts post? Sure, why not.

A business requires insurance. At the minimum, you need liability insurance. There are other types of insurance though. I've got liability insurance, workers comp insurance, key man life insurance, and for years we had vehicle insurance on our van. Insurance is one of those things new store owners don't always think about.

My second year in business I went to a seminar where a store owner had someone drive through their front window into their store. Twice. He was the likely guy to give a presentation on business insurance and for many, needing such a thing was an eye opener. When I started I had a home and assets and made sure the store was incorporated and insured and far away from my personal life. For most young people without a pot to relieve themselves, that might not be a consideration. 

So how do you get insurance? Find a human. I'm not sure if you can get business liability insurance online, but if so, it's a bad idea. You want to talk to a human about your particular business needs and exactly what you do and where you do it. For example, my store went from a regular retail environment to an improved, two story monstrosity in need of rebuilding if it burned down. It probably wouldn't be rebuilt there, but they'll pay to rebuild it somewhere.  If I had just gotten regular liability insurance, I would be left with no protection and a ton of outstanding loans for a burnt out shell. 

Other considerations include insuring Magic singles. My policy has a "fine art" clause that includes those. What you don't want are surprises. Insurance companies are all about taking as much money from you as they can and paying out as little as possible. It's better to be up front, find angles to cover everything necessary, and avoid surprises. Look at your lease and see what you're responsible for.  Plate glass insurance is often inexpensive, but if someone breaks all your windows, you could be out thousands of dollars. Over time, revisit your policy and up your limits when you add inventory or fixtures.

Who is that human? I have a customer who jumps from job to job, and one of his latest was insurance agent. He was an agent for about four months before he moved on. Do not use a green agent. Find someone experienced. I had a new agent misclassify my company for my workers comp policy, thinking I didn't need to be covered as an owner, when in fact it was necessary. A company audit revealed the mistake, and rather than admitting their agent error, they charged me $3,500 in back premiums. Insurance companies exist to do two things: take as much money as possible while denying your claims. 

Personal insurance agents tend not to handle commercial insurance, so you probably won't be able to use your Aunt Kathy's agency to handle your commercial needs (my Aunt K does my personal insurance). Attempt to find a well regarded commercial agent who has been doing this for a while and lay all your cards on the table.

Classification is tricky as there is no "game store" category for liability insurance. You might be classified as a toy store, a book store, a hobby store, whatever is close, and the cost between agencies and within each agency could be enormous. As long as you don't get cute, something reasonable should be fine.

Avoid buying a policy based entirely on price. Ask what's not covered in your case. Have a good heart to heart with the agent. These policies are really cheap compared to what could happen. I once transitioned between agencies and in a 30 day overlap period, someone broke into my store, doing a lot of damage and stealing a lot of cash (foolish me).  I talked to my new agent who walked me through my old coverage, which sucked, and my new coverage, which was great. I filed a claim with the better coverage, and yeah, they canceled me exactly a year later, but I saved $900. 

Make sure you have extensive business interruption insurance, which is usually standard. Knowing that my store could burn down and I have months to find a new place while paying employees allows me to sleep at night. When you get bigger, losing all your employees can destroy your business as easily as fire. 

What's a Good Company? I don't know! They're all terrible! I can't even remember who I have now. Let me check: Travelers for liability, State Farm for key man life insurance, and AP Intego for workers compensation insurance (pay as you go). Farmers burned me on that workers comp policy I mentioned, so maybe avoid them. 

Friday, May 3, 2019

100 Item Challenge (Tradecraft)

I recently read the ebook Smarter Inventory Drives Sales. It was a standard inventory approach with a lot of complex terminology to describe simple things, but one thing stood out. Inventory accuracy reality and perception were vastly different. The article quoted an Auburn University study in which back in 2005, before many retailers had an online presence, most thought their inventory accuracy was far higher than it actually was:
Nearly all retailers truly believed that they were at 95% plus Inventory Accuracy, and why wouldn't they? Online customer visibility was in its infancy and the term omnichannel was barely invented.
Why mention online sales? It's a painful process to sell online only to give back money because a product doesn't exist on the shelf. Stores upped their inventory game tremendously when they began selling online. My store is in that situation a little bit with our Magic singles, Our singles inventory is weak, because we have weak tools and weak processes. The metrics associated with failure are hard. We regularly bribe customers when our inventory is off. Although we're at 99.4% positive feedback, we were told we couldn't sell internationally because the standard is 99.5%. Rather than the soft metrics of back peddling with a brick and mortar customer, when you're out online, it results in bad feedback and less sales in a more direct manner.

For those of us, like me, who don't do significant online sales, we're back in that pre 2005 study territory, thinking we have a high degree of accuracy (95%+) when in reality, the study finds, accuracy is much lower:
Accuracy is somewhere in the 65-75% range. A few still cling to the decade old belief that they have 85% or higher exact match Inventory Accuracy.
This means the value of a retail store should be considered lower by at least a third. If you were to buy a store or put yours up for sale, the assumption of inventory value would immediately start at 65% of whatever you think is there. I think adding even a modest online component may increase the value of the business, if for no other reason than it denotes a higher inventory accuracy of around a third. This assumes this is all understood by a buyer or broker. In any case, if I were buying a business, I would assume 35% of the stores stated inventory is smoke and mirrors.

Rather than claim high accuracy, test this yourself. Do an actual inventory with no excuses. Don't do a regular inventory, do a random check. There are a lot of excuses when you get down to business on why things are wrong. You may have known they were wrong in the back of your mind, like many things in a store that are out of place. It's just a database after all, why sweat accuracy? But remember, you pay taxes based on the accuracy of that data and customer satisfaction is tied to product availability.

Inventory 100 random items. Do a spot inventory. The way I did this was dumping my inventory from my POS to an Excel spreadsheet. In the column next to each item, generate a random number and copy that cell down through your entire inventory. This is the only way to really check, as a standard inventory process is too subjective. Here's an article on how to generate that random number. Now sort your inventory based on the random number column and inventory the first 100 items.

What did I get? Well, how do we measure? If we measure missing items, it's one number. If we measure incorrect entries, it's another. Both were pretty close for me at 85%. I was certainly in the camp claiming 95%+ accuracy before doing this. I already had what I thought was a robust inventory process in place, but I reiterated the need to get this work done to managers and staff and put a monthly 100 random item check reminder on my personal calendar.

This measurement of progress should help improve performance. Doing a regular inventory is clearly not good enough. Give it a try and let us know what you found. There's no shame in admitting you have a problem if you're going to fix it.

Sunday, April 21, 2019

The Nocturnal Financier

I may be a lot of things, but I'm essentially a Capitalist. A Capitalist believes in nocturnal finance. The way you retire is to have your money work for you while you sleep. For many, that's a 401K, but for the small business owner, it's the exploitation of labor, to quote Marx. Most small business owners have little in savings, and I'm ashamed to say, I'm not an exception.

To be a Capitalist is to put your eggs in the nest of others, hoping they'll warm and nurture them in exchange for payment. It's also to accept the rightness of your willingness to work for others back in your day as a nest warmer. That's the main difference between my nest egg and the nest egg of an employee. Rather than relying on the numerical supremacy of an index fund, I let some kid in their 20's, with little nest sitting experience, sit on my valuable eggs. Hopefully you discover the cracks early enough.

This Capitalist egg sitting may seem to fly in the face of the general social welfare, but I believe we can work towards a more equitable society while insisting people take the initiative to improve their individual situation. Only a cretin truly believes there's a level playing field. The game is rigged. Sometimes it's rigged in my favor but most of the time, not so much. I like the game, but it is a system designed by the winners to keep them winning. I know we can fix the game with a well thought out expansion (with a lot more players), rather than tossing the game (an egg toss).

I vacuumed my million square feet to get to my exalted seat known as "the middle." If I can keep the balls in the air long enough, I may slowly recede from my business while others do the heavy lifting. Because I have a bad back from that heavy lifting and no workers comp insurance. If I can raise up, mentor, or at least pay well my employees along the way, I consider that a double victory. One manages a game store now. Another is head buyer at a major distributor. I am a stepping stone, so I can't take credit for their victories, but I hope we came together to build something wonderful that positively impacted their future.

All of this could come crashing down with a couple bad months. Perhaps I injure myself. I have key man business insurance if I die, but a good maiming? Not covered. Perhaps a national tragedy keeps people at home. A major Bay Area earthquake, long overdue, could eliminate my entire community in a moment. There is no backup plan, no unemployment, no explaining the situation to the boss. The vast majority of my nocturnal capital is tied up in worthless cardboard. Does this instability and painful chance of failure make the true socialist feel any better about my exploitation? Doubtful, but there it is.

The restless sleep of the nocturnal financier means you're never quite rested. I taught my young nephew the phrase, "I'll sleep when I'm dead!" It angered his mother, but it should be the mantra of the small business owner. No safety net. No rest. No real time away. The boss is a jerk. The customers are unreasonable. The employees are stealing. Your partners carry knives for the inevitable stab to the back. I can't imagine life any other way, and if I had to have my labor exploited again, if I had to mind someone else's eggs, I would be longing for the sleepless nights of the nocturnal financier.

Monday, April 15, 2019

Game Store Tech

When I started in 2004, I was coming off an  IT career, so I wanted to be up to speed on retail tech. It was really the only useful skill I brought to the new business, that and the ability to research any project. 

I bought a new PC clone point of sale machine, custom made to handle the various peripherals. It was so complex, consultants were hired to work their black magic to get it all working. Could I have figured it out? Sure, but I respect expertise in IT and wanted to start out right. 

Setting up the POS required the consultants go through complex processes, hand written in notebooks. They were like a cabal of wizards, summoning profit into existence. While on vacation in France a year later (frequent flyer miles), the consultants came and fixed it when it corrupted itself during a power outage. I was troubleshooting the best I could from an Internet cafe in Paris. IT was inescapable.

In the back office, I had a Windows server running tape backups. I used a complex, Grandfather-Father-Son (GFS) tape rotation and took tapes home each night in a briefcase like some sort of spy. My laptop was a bulletproof IBM Thinkpad T30 from my days in IT. In the new store, I learned a lesson in security when a gold toothed homeless man walked into our Game Center and immediately went into the unlocked door to my office. I caught up with him as he was zipping up his jacket to leave, with my Thinkpad hidden within. I already had a new laptop on order that week, but it was still a painful lesson.

I should mention that before I started the business, I was running multiple Red Hat Linux servers at home. When the store opening became inevitable, I wiped them clean and installed Windows servers. Nobody has time for that crap.

15 years later, and a lot of things have changed, but a lot has stayed the same. Our POS is an iMac, not that different from my first computer, although most of my peers are moving to the cloud. I can’t imagine changing POS systems now and not moving to something cloud based. The innovation is happening with cloud based services, plus I can sleep at night knowing it’s all backed up offsite. The backup server in the office has been replaced by a (terrible) dinky Apple time capsule backup device and cloud streaming.

On the sales floor are four iPads. One iPad plays music through our Sonos system. Two iPads play board game demos which drives sales. The fourth iPad is locked down to allow customers to sign up for WPN events (a weird Premium store requirement). Nine staff members use smartphones capable of running transactions using either a plug in card reader or a new Bluetooth unit we just got in. I’m a bit uncomfortable expecting staff to use their personal phones to ring up sales in an emergency, but there’s always the junky iPad nearby as an alternative.

My goal is safe and ubiquitous computing. The thought of spending time fixing or upgrading a machine is irritating. We have a Windows laptop for events that reminds me of my old life, with its constant updates and problems finding printers. I'm not quite an Apple fan boy, but I appreciate the strong, Unix based underpinnings of their hardware and the extremely long product life cycle. My first laptop went six years before I replaced it, and we just resurrected it for my new manager. 

I can’t imagine spending time with some clunky tape rotation scheme. Still, when I go on vacation, I wonder if the consultants will come if the POS goes down in a power outage. They tend not to answer their phones. We spend a lot of time preparing for the reality the POS could fail at any moment. The cloud is definitely my future and I certainly don’t miss the chilly server rooms of IT.

Sunday, April 14, 2019

The Shiny Trashcan Effect

Greetings from debt purgatory!

We are half way through paying off our construction debt for our expansion project started in 2014. Do you remember 2014? Fantasy Flight Games was still an independent company, Magic was going strong and the big news story was the outbreak of Ebola. Good times. Our Kickstarter did fund successfully that year. We did complete the project, albeit two years late. We did send out all the rewards, and one refund to that jackass who likes to leave me (hidden) blog comments. That saga is a whole other story (it's in the book).

Customers occasionally come in, tell us how they're great supporters of ours, how they buy all their games from us and ... holy hell, you built a second floor!!! Yes, thank you, thank you. Mmm hmmm. I stopped mentioning it was years ago. Snark is not appreciated and we need all the customers we can get. Got debt to pay down.

So how are we doing? It's a bit of a struggle making loan payments and trying to grow during a period of industry transition. There are projects I would like to do. There's a white board in my office with $20,000 worth of stuff. Yet, we just improved the store in our bid to obtain Wizards of the Coast "premium" status, and we somehow came up with the thousands to do that.

Yes, thousands of dollars for a nebulous status. However, this is exactly what I had been asking for. Recognition of hard work and capital spent to improve a venue rather than shoeboxes of cardboard (even though the cardboard is more in line with success with the WOTC model). How could I not pursue this? When motivated, we can make things happen. In the future we shall refer to this as the Shiny Trashcan Effect.

Our sales necessary for growth, the needed engine to pay off our debt, have exceeded expectations. We saw a large jump when the space was complete, but it was a one time thing (about three times bigger than projected). We immediately went back to the grind. It brought home the fact that the space is really important to a small subset of customers (20%). That money spent on doubling inventory would have seen growth over years, but probably slower growth, rather than all at once. There's also the question of whether doing nothing at all would have led to the same growth rate, considering we struggled to focus the business in the Kickstarter and construction year. No, no, this will have longer term benefits, if we can leverage them.

Anyway, we're up 25% this year, due to a number of factors, so I'll continue to fantasize about that white board and work on projects that don't require intensive capital. And maybe we'll hit Premium status with WOTC and see some benefit there.

Wednesday, April 10, 2019

Finance and the Great Unknown (Tradecraft)

As my book was hitting the shelves, I had this sinking feeling as the store struggled. This would be my comeuppance, the game store owner who wrote a book and promptly went out of business. 2018 was the year we had an honest conversation about debt and finances and the various tricks used to get through a month. Cash flow in the beginning of 2018 was usually enough to cover a handful of days. Being a week behind on bills was normal. Worst of all, I didn't want to acknowledge it.

When our construction project was underway and the months slowly ticked by with its business disruption, I borrowed money to pay for the work, and the decline in business. Then I borrowed a little more. Then ... a little more. All in, it was over $100,000. Could I pay it back? There were no bank loan actuaries to put on the brakes and say I had enough debt. There was me, with a modest income projection, with a make or break project. If I stopped borrowing now, I would fail. There's not really a choice here. So I kept looking at the numbers I needed to achieve while in the back of my mind, laughing hysterically. Because I have a bit of imposter syndrome and part of that is never believing my own bullshit.

So in 2018, just a year ago, I took matters into my own hands and did what I said I would never do again, and took out a home equity loan. It's amazing anyone would give me one after flipping Citimortgage the bird, and re-negotiating my mortgage on my own terms, but it had been enough years, and all was forgiven. I refinanced one of my loans and infused extra cash into the business. The problems were finally acknowledged and as nobody else wanted to loan me money to do this thing, I did it myself, paying myself a reasonable interest rate, much to the chagrin of my investors.

I paid off a loan that had the most stringent terms, a security interest on my furniture, fixtures and equipment (which I am grateful for), with a loan from me, with the least stringent terms. Legally, as an owner, if the business fails, I am last in line to be paid. That's why my investors were reluctant to loan money. It's a crap position, as opposed to other personal lenders who took on senior positions, or security interests, or whatever made them comfortable.

The ironic thing is I get mail every day offering to loan me hundreds of thousands of dollars. None of my loans are on a credit report, they're all private. Sometimes I take the time to talk to lenders on the phone explaining, "Look, I don't need any more money. Money is cheap. I need revenue. Call me when you have a plan to increase my revenue." It amuses me because it's a large corporate position. Sears doesn't need another hundred million dollars, it needs a plan to be a better Sears. If you come up with one of those, well, you've got something they want to buy.

Coming up with a better Black Diamond Games is at the end of the day, my job. But for a while in 2018, I was looking around, hoping to maybe find someone who could take me up on that offer. The guy who wrote a book on starting a game store, looking for someone to do his job. That was 2018 in a nutshell. Thankfully, we're in much better shape in 2019, in all the ways possible. It's chaotic and stressful. Good material for a second book.

Thursday, March 28, 2019

Inclusivity and the Blue Hair (Tradecraft)

My store has a reputation for being an inclusive environment.

Much to my surprise.

You see, I haven't put up signs saying we're against hate or networked with the community to be more inclusive. I haven't sought out a more diverse staff or advertised in the Pink Pages. I don't have a particular store policy on inclusivity and I don't have any rules in my Game Center, as I think rules postings are only necessary when they're really, really necessary. History has shown only crazy people post rules (or make laws) when it's not necessary.

The reason why we have a reputation for inclusivity is we try really hard, now get your notebook out so you don't miss this, we try really hard not to be a dick.

When other people show intolerance, it's not a "he said, she said" issue. The intolerant person is shown the door. Because they're being a dick, not because of some political stance, rule or policy. Most of the time I'm not even there, as this activity happens in the evening hours during events. It's ingrained in the store culture, and staff are part of that culture. There's usually one trouble maker in every group (two in Magic).

As for hiring, I've realized inclusivity provides me a great opportunity to hire excellent people overlooked in a more conservative environment. I don't care about the color of your hair, your gender, your orientation, your identity, your race or even your politics, provided you can do the job well. I do want you to be clever, knowledgeable and customer service oriented. Because other hiring managers do care about all the superficial things, I often find diamonds in the rough. Note how selfish I am. Note that I am finding a competitive advantage and not making a political statement. I am not hiring lesser people to make a greater point. I am not being a good person, I'm just being self serving. Most importantly, I'm not being a dick. As with everything in the game trade, the bar is low.

I want to mention when I was doing research for my store in 2004, I visited the local comic shop, Flying Colors, with a friend. As we were leaving I mentioned, "Do I really want a life managing young people with blue hair?" That was what I saw at Flying Colors and being in the professional world, you would never see that. I had no experience with blue hair (my son later had blue hair for years) or really anyone who didn't file down their personality to fit into a corporate culture. I assumed blue hair meant trouble and weird problems and unpredictability, when in fact, blue hair meant opportunity. I really do want a life managing young people with blue hair.

This diversity grows the store and brings in a diverse crowd like I could not have imagined five to ten years ago. It's a hiring dividend, not the core value of the hire. The hobby has become mainstream. If you would have looked at my store a decade ago, it would have been the stereotypical "sausage fest" of all males, acting male, smelling male, being their stereotypical male selves and expressing their dumb ass stereotypical male opinions. I get it. You become so blinded by testosterone that you can't even smell the sweat or notice the pee on the seat. Testosterone in the air blurs the senses. That was the community, whether you liked the smell or not. For some stores that haven't adapted, this is still the community.

There was good and bad in that group, like any group, but it was an insular community, that repelled others, especially women. That is gone for the most part, or at least lessened. The hobby has spread rapidly and the customer base has expanded to all types of people and most importantly, we have been there with open arms. We didn't change, we just provided the open environment that allowed diversity to stream in, and the understanding that there will be no hostility or intolerance allowed.

Not everyone agreed. Not everyone went quietly. One edge lord threatened violence against me. As someone who's not a squishy liberal, and more libertarian (a liberal who returns fire), this had me a bit fired up. I will go down with the ship and take you with me. I bought a couple Louisville Sluggers, in case we wanted a little spontaneous staff batting practice. But like most cowards, they made a lot of threats, trolled me on the Internet for a while, and eventually disappeared.

In any case, there was no change needed for this transition, no Sluggers wielded, just an understanding we would make hard decisions to defend people who chose us as their home. If you're not a dick, how could you not? Embrace the blue hair. Blue hair is here to stay. If you really are a dick, embrace it anyway, for your bottom line. Fake it for the money.

Friday, March 8, 2019

The Game Trade Pivot

When a game hits peak popularity, it's not uncommon for it to be taken away from independent retailers in some form or another. It might be a retailer exclusive, or a publisher's attempt to spread the wealth (and power). If Target came to you after publishing a hot board game and offered you a bazillion dollars for an exclusive to the expansion, what would you say? It might kill your company, but you would have a bazillion dollars.

This morning I had two examples of pivot math, in which I needed to adjust expectations based on publisher removal of market demand. One is for Wizards of the Coast and the other for Ravensburger:

How many should I buy?
  • Saltmarsh: 30 days of Tomb of Annihilation sales (because those are my terms), with a 10% bump for growth, with this total divided in half because of removal of early release (it will be sold on Amazon the same day by idiot retailers).  I suspect Amazon gets half the D&D market. 
  • Villainous Expansion: Total sales of Villainous base game, divided by three, because it's an expansion, divided in half because of early Target release by months. Everyone who cares will already have it and coming out three quarters after our huge sales push means it will be cold.
A younger me might have decided to drop Villainous entirely and avoid it, especially after we sold 50 or so copies over the holidays as one of our top picks. That's a really small number for some larger stores, but out here in the burbs, we run shallow and wide. As for Saltmarsh, I might begin slimming down my D&D overall and start banging the drum for Pathfinder 2.0, which is coming soon. That's all counter productive though, so I just pivot and move on. I certainly won't push Villainous again or most Ravensburger games, nor will I be looking to invest time in jump starting Adventurer's League, which can't seem to gain a footing. I will cultivate my indifference. 

This gets to the problem of the game trade in general, without allies we have cold war enemies. Publishers want retailers to do some lifting for their product, but we have product PTSD. We're not willing to enter into new co-dependent relationship in which we're beaten in response to our love. So most retailers put minimum effort into promoting products and instead focus on well established events and reliable staples. It takes a tremendous amount of effort and tremendous love for these games to do otherwise. The key to success is a series of co-dependent relationships in which we don't get angry, we quietly pivot. But it wears you down, let me tell you.

Thursday, February 28, 2019

GMROI Application (Tradecraft)

This is a couple of posts from my Gary Ray, Author page on Facebook.  I've had this page for a couple years now and despite only a couple hundred people on it, there's far more engagement than this creaky old blog. I encourage you to follow me there, because there will come I time I give up on this medium.

Here are my posts, which I'll certainly use in inventory management or buying presentations in the future. It takes a rather arcane concept, Gross Margin Return on Investment, something I've talked about before, and uses it as a tool for ordering. Applying a tool, what a concept!

I don't want to spend much money this week on restocks. How many times have you been in that position, but you're not sure how to proceed?
I was in a seminar once and they suggested you work with your restock list with your distributor, going by code down the list, until you hit your purchasing budget. I found that astonishing.
Say you have $2,000 for purchasing and you really aren't sure where to spend it. This is where I was this morning and remembered GMROI, which I had just calculated for the store the day before. GMROI is Gross Margin Return on Investment.

For every dollar you spend, GMROI measures how much money you'll get back. Would you rather get $2 for your $1 investment or $1.50? You want the $2 of course, although you might decide you want to focus on short term velocity (turns) rather than long term return (GMROI). We have multiple tools in the tool box.
In my example below, I could spend my money on high turning card games for a short term gain, but the GMROI is just average. It's an average investment. If I need a snack run, I should probably do that order first, with its $2.06 return on every dollar I spend. Costco is my most profitable distributor, dollar for dollar.
What I used to do is place my Games Workshop order first, but now I see with GMROI that tactical miniature games are my lowest return. That's the last place I should spend my money, return wise. It also has a below average turn rate. It's marginal, but still worthwhile. It's certainly not my top priority.
So when I went through my orders this morning, I de-emphasized GW ($1.58 GMROI), made sure to re-stock every card supply option ($1.91 GMROI), and made sure my snacks were stocked (which I did on Friday), since it has the best GMROI of the bunch.
My store is healthy, but where you really see GMROI shine is with troubled stores or troubled departments. There have been departments where I've calculated sub $1 returns on my investment. In the GMROI example I'll link to, I was making 90 cents for every dollar invested in classic games. We shored that up, mostly by carrying far fewer of them.


I know from GMROI what department comprises my worst investment, but why is it my worst investment? Why are tactical miniature games my worst performing department when it comes to investing money?
The vast majority of that department is comprised of Games Workshop. I can see my COGS percentage number is far too high, 63%, when my average is 57%. What makes my margin so poor with GW? It turns out to be a lot of factors:

1. The base margin for most GW products is 45%, which is lower than many lines. 

2. Direct order products from GW are 35%, even worse.

3. My store offers a 10% discount for pre-orders, which brings a lot of product down to that 35%.

4. The splash nature of GW releases means I attempt to funnel as many sales through special orders as possible, at 35%, hurting my margin.

5. The splash nature of GW means I order heavily in hopes to avoid outages. This results in overstock, which is then clearanced at a discount.

6. The enforced once a work ordering AND the one week ship time for us means I can't rely on just-in-time ordering, like I do with the rest of the store, so I order deeper, taking more risks.

7. My 45 day terms with GW means I push my luck even further, which means when I lose, I lose bigger. 

8. My prize support tends to exceed my allowance of free product, to some extent, which is really a marketing expense, but it increases cost of goods.

So for that reason, tactical miniature games are my worst performing department. However, there are other considerations:

1. 4.1 turns is nothing to sneeze at. This is solid inventory performance, and if there was a worse performing department (there isn't), it might make sense to take advantage of this.

2. Metrics don't measure volume or profit, so Magazines might have better metrics, but I sell 30 times more miniatures making a much larger profit.

3. Tactical Miniature Games drives sales of paint and miniature cases, which are also weaker departments, but together make up even more sales.

4. Pre-orders and low margin special orders are risk free. It's low performing money, but it's free money.

5. The clearancing of product is painful, but GW products have brand value protection, so you'll always sell all of it, over cost, eventually, without a lot of work.
So what we see is tactical miniature games for my store should be of least priority, but they're a big enough draw to maintain, provided they're propped up by more profitable departments. It's not an area in which I should look to expand, unless I've exhausted all other options.
That's why when I had a little extra money from clearancing my last miniature game, I did the wise thing. I invested in ice cream.

Wednesday, February 27, 2019

Diversifying When the Show is S&#$ (Tradecraft)

The game trade has recently become, what's the technical term? Right, a shit show. So you naturally want to diversify into new product lines. I highly recommend this, provided you can find the right mix. Most veteran store owners will tell you, that mix is a struggle. It's not that we can't sell comics, toys, pop culture, or pop tarts, it's that getting those new lines to reasonable performance levels can be difficult.

Diversification depends on the kind of store you run. If the word "gamer" appears in your store title, we can assume you're likely to run a business that appeals primarily to hardcore hobbyists. However, if you've spent the extra money to build a store that appeals to the general public, you've got more options.

Even with a family friendly specialty shop, there is still the issue of location. My store is family friendly, but I have close to zero foot traffic. There are reasons to go there, as in it's a destination store with geeky stuff nearby, but there's nobody walking by.

I spent $20,000 on toys when I moved to my larger location because my competitor had a lot of toys and I needed new, diversified inventory when I doubled my retail space. Toys seemed safe. Boy was I wrong. This was a disaster, not because toys were bad, but because I had no foot traffic. My selection was just alright, not enough for my business to become a toy destination, especially when there were plenty of better options. I also misunderstood the nature of the toy market, which relies on a lot of volume to move low cost items, often stocked in depth. I would have a wall of board games in single quantities next to a wall of toys that only made sense stocked six deep. Toys were not for my store. Neither were comics, and a bunch of other things I tried.

Sending back a pallet of Melissa and Doug
What worked for me was gradually trying new lines, more in the category of gamer adjacent. What do my existing customers want to buy? What do they already buy from other people? What adds value to their lives rather than just idiotic add on purchases like wax candy lips? We dabbled a bit with Funko Pops. We tried pop culture items from distributors with limited success. We tried novelty candy and glow in the dark pirate figures. Eventually we found a few companies that made pop culture items, often things I would never have considered. For example, as our store has become more diverse, we've found success selling pop culture purses, scarves, jewelry and the like. Women were rare in the store, ten years ago, but the hobby has changed as has our store. I delegate these new categories to younger managers who know what's going on.

You want to ease into new waters, testing them out, learning what people want and adjusting to new problems, like loss control. We had homeless people who would wander into the store and flat out steal things, just walking away with pop culture wallets and hats. A lot of things we've learned need to go in display cases, for example. Suddenly we have things everyone wants, stuff that will sell on a blanket in front of a train station. It's a weird feeling.

The easiest form of diversification by far, is diversification of supplier. We make a point of backing a variety of Kickstarter games with retailer tiers. These games differentiate the store and although it took years to dial in what works and what doesn't, they've tended to be profitable. Likewise, there are many direct only publishers and suppliers that are worth pursuing, many of whom will be at the GAMA Trade Show in a couple weeks. We order direct for dice, dice bags, classic games, jigsaw puzzles, marbles, and even ice cream.  Hasbro mass market games sell well when we can get them. They didn't sell ten years ago, but with the demise of Toys R Us and a larger segment of the population playing games, there's newfound crossover back to the games of our youth.

Some diversification advice:
  1. Examine your specific set of circumstances rather than following what others do.
  2. Avoid declining markets (comics, Funko POPs, for example).
  3. Find things that add value for your existing customers.
  4. Ask around to see what people are interested in. Frisbee golf? Airsoft? 
  5. Look for gamer adjacent products before striking out into new areas.
  6. Find publishers who don't directly compete with you. I backed a Kickstarter today that offered me exclusive sale of their game!*  *except at conventions, on their website, in contests, at the BGG store...
  7. Look for favorable terms, margins, or net priced items with flexibility.
  8. Test the waters with minimum orders but remember to follow up quickly so you don't lose momentum.
  9. Test the limits of your concessions with additional snacks, coolers full of drinks, and potentially hot food options.
  10. Consider a long term investment, like diversifying into a coffee bar or real estate or anything else. 

Saturday, February 23, 2019


SNAFU: Situation Normal, All Fucked Up

I just wrote about having time away from the business. There are various approaches to freeing up time, and I wanted to mention what I think is the wrong way and of course, what I think is the right way.

The wrong way is streamlining. The book The 4-Hour Work Week sounds an awful lot like how I described my extended vacations. It's a New York Times bestseller that my own book will certainly never live up to. I can take months at a time off with 3-4 hours a week of actual work, but it has nothing to do with streamlining. I tried streamlining after reading this book and it was a short lived disaster. This book is about creating a turn key business, a machine really, that shaves off all the hard edges so you can spend as little time as possible running your business. I've mentioned it before, but this is not a hobby game store road map for more time. We thrive on exceptions and hard edges.

There is a lot to learn from business process books about creating processes and procedures, but in general, more and better customer service, more and better options, are the answer, rather than streamlining and offering less. I think doing one thing well is the key, but offering everything possible within that one thing with stellar service is why customers choose you. It's your Unique Value Proposition. Once a framework of processes and procedures was in place, I then empowered managers to create their own policies and procedures, sometimes with a few tweaks from me. It requires they understand the philosophy of the company. Overall though, it's not unusual for me to stumble on a new policy or procedure in my own business that I've never heard of. That's exactly what I want.

Policies and procedures to me are about how we can regularly hit high performance goals doing our one thing. If I can't do something repeatedly with high levels of success, I don't want to do it at all. For example, people ask me occasionally to ship them a game. We don't ship. If I made an exception, we would be in new territory and we would most certainly screw it up. If I'm going to ship, I'm going to ship a lot and I'm going to do it right, with a plan. Policies and procedures created by staff are often ones I might have shaved off, 4-Hour Work Week style, but their desire to serve the customer has lead them to create new systems to make customers happy.

What you won't find in a 4-Hour Work Week scenario is the huge amount of variability and passion required to run a store like this. It's complete, but bounded, chaos. A primary goal for us is to create a wide range of possibilities with policies and procedures addressing each, along with boundaries that limit customer demands. There is always that guy (or girl), who wants it one way, but it's the other. That's unfortunate for them.

We saw this with our recent ding & dent sale, amazing deals with long lines. There was the person who complained bitterly about waiting outside, even though we had little control or ability to let hundreds of people in early. There was the customer who wanted an even larger discount because the box was damaged! People will always want more and ironically, the closer you get to free, the more of your time people will consume. Post a photo of free stuff on a table to your Facebook page and watch your time evaporate as you answer endless questions.

There's a Zen saying, "If you want to control your cow, give it a wide pasture." This is a reference to your mind. If you want to control chaos, give it wide boundaries. Let chaos roam about and eventually it will get tired and take a nap. Some employees will not like this, as the chaos is hard to wrap their head around. It's why it takes six weeks for new employees to gain basic competence. Some customers will attempt to game the system or call out inconsistencies in the chaos. That's all part of roaming the pasture. Bounded chaos is the strategy.

With our wide boundaries, we can have strong customer service ... with hard limits. It's a chaotic environment with many variables, but employees are empowered to make important decisions, with leadership being fairly flat so most everyone is empowered. Leadership has to back employees for this to work, so rather than the customer is always right, the philosophy is employees first. It's common with some big businesses like the Virgin company. Am I the best boss? Heck no, but I'll always back an employee if they're following policies and delivering great service.

Do I fire customers? Yes, but very, very rarely. We have half a dozen permanently banned individuals in year 15: the double dealer, the white supremacist, the homophobe, the serial shoplifter; you get the picture. I recently fielded the question, "Where in your book does it say I should go fuck myself?" Grab me a pen, my friend. There's always room for another chapter.

This all works because I have really, really good staff, especially managers. I support them and let them run with the vision. All the credit goes to them.

Friday, February 22, 2019

A Week In The Life

My weekly scheduled as a hobby game store owner is based on the needs of my business, my personal needs and desires, along with financial considerations. I could afford right now to not work at all, to not go into the store. However, I have the same problem as every semi-retired person. If you don't go to work, then what?

That does not mean I'm financially independent, only that I've created a system that works independent of my continual input. As I don't have a better use of my time, it is best spent maximizing the value of the business until I have my 'then what" answer. That answer might be a second business, a second location, or who knows, I might buy a boat and sail off into the sunset and work remotely. I spent a bunch of time writing a book in 2017, so there are answers to these "then what" questions.

Do you dread going to work on Mondays? So do I! So I don't go. I work from home Mondays, placing orders online from about 7am to 1pm. That's a decent day of work for me, but to be entirely honest, I could send off this entire workload to distributors to do this job. Many store owners do this, and when I'm on vacation, I do it as well. However, I think manually ordering every single item ties me into the store "hive mind." I may not play as many games as I would like, but I know what's hot, what's available, what isn't and why. I know things.

Tuesday is shipment and meeting day. The vast majority of the stuff I ordered on Monday shows up on Tuesday. Having next day arrival means we can rely on just-in-time delivery -- probably a little too heavily. I would like to have about 20% more inventory in the store and we could probably double the inventory, if we had the money. As we're paying down debt, we run lean. We only stock best sellers and we drop the bottom 20% to make room for what's hot. There is always a bottom 20%. The store makes over seven figures in revenue, despite only stocking the best of the best.

On Tuesday, I help receive all those things I ordered, another way I feel connected to the store when I'm essentially off the sales floor most of the time. I learn what each thing is, get an idea of the value proposition now that it's in my hand, and get a chance to see where it fits in the store. Later on I go to lunch with my manager. We have an agenda of items we go over as part of our process improvement plan. I'm usually responsible for about 20% of those items and the rest go to the manager and staff. My job is to remove obstacles and occasionally take over thorny issues. We make a point of doing this every week and the goal is to constantly "fill the hopper" with new issues. It's a process I learned from Dave Wallace.

Wednesdays and Thursdays are slower days and I'm there with just my assistant manager. The idea is I do mostly office work during these days, along with covering for him and helping customers. As we grow larger, I expect I'll have extra coverage these days, freeing me up to do more officey things, whatever those may be. Thursdays are also order days, but as I may get pulled away from those if it gets busy, I often spend Wednesday night placing my orders for a couple hours. In fact, if I'm home at all, I'm often logged into the point of sale making adjustments and tweaks pretty much all the time.

Fridays are another receiving day, like Tuesdays, but not nearly as heavy. Before construction, I used to take half the day off and go to the gym and the range, but the financial burden after construction meant I dropped those activities. I'll usually do a little office work, help with receiving, work with customers and if it's slow, take off a little early. I'm not really needed, which was great today (Friday), because I'm home sick (I was sick yesterday, but had to go to work anyway).

Saturdays are a big day for the store. In year four, I got weekends off and one of the goals of the manager was to keep me away from weekends. That was by design. Saturday morning I'll get an email from my main distributor of all the new items that week. I'll spend a couple hours researching each one and send that in. I do not look at email solicitations, the "dailies" restock listings, or other day to day buying related communications. I pre order absolutely everything for my store so I can free myself from the daily burden. If I look at a daily, I'll buy stupid crap, guaranteed. If I talk to you on the phone, I will likewise make bad buying decisions. I need to research at home, in a calm manner, with my POS history open, over a long period of time.

Sundays are off, right? It depends. During the holidays, while traveling, of if I know I won't be in any condition to place a Monday order, I might spend my ordering hours on Sunday instead of Monday. I will also be checking the POS constantly to see what's going on, making sure events are firing, items are selling, and checking performance metrics on sold items. I don't really need to do this, but it's part of my taking the pulse of the business.

Could I save money? My manager and I just talked about coming in Mondays to save money, but having that one day off is both a luxury and a bit of a necessity. I get a lot of work done at home that day.

Could I work less? You bet. I went on vacation for two months. I delegated my buying job to my manager and spent about three hours a week managing the business. Most of that included my finance work, making sure we were paying bills and had enough money in the bank.

My time on-site is pretty low, about 20 hours a week, maybe 30 when it gets busy (like last week with our ding & dent sale). My time running the business, if I'm focused on that, is probably a full 40 hours a week, with a lot of time spent on the laptop at home. That's sub optimal work, as I can see when I'm on vacation. While on vacation, a few hours a week course corrects, but it would be foolish to think I could do that all the time. How much time could I spend away before it all began to break down? That's an interesting question I may one day answer. This may all sound rather lazy, but the less reliant the business is on my being there, the more value it possesses. So my goal is to maximize value in a fashion that's independent of me. I wish to be highly effective while also being dispensable.

I've got a job I enjoy with an environment I've crafted, with a management team I've selected. I can take trips when I want of just about any length, provided I can afford them. There's not much better than that when it comes to actual work.

Monday, February 18, 2019

A Tale of Two Publishers (Tradecraft)

When I was building my Jeep, I was pricing bumpers when I noticed some companies, like Smittybilt were priced all over the map. Buying anything from that company made me feel bad. I always felt there was a better deal somewhere out there I wasn't aware of. Their products were middle of the road, with some very good and some very bad. I would buy things from them, use them for a while, and quietly take them off. Their reputation was ... mixed. Their shotgun approach to sales and quality are infamous.

Meanwhile there was AEV, American Expedition Vehicles, a high end company started by Jeep engineers that sold a narrow range of products, all highly engineered, and never more than a dollar or two difference between suppliers. One customer complained in an online review about how retailer prices were so similar. A retailer explained if they were to sell AEV products for a dollar less than their agreement, AEV would cut them off. So at the most competitive level, all product was sold at nearly an identical price. That's the difference between no brand value protection and brand value protection.

The advantage to the retailer is clear. If I'm selling a bumper, I would rather sell the premium product for $1,400 rather than the squirrelly discount product for $700, or $600 or whatever the market will bear that day. The manufacturer of the high end product is partnering with me. The higher priced manufacturer is maintaining value in their supply chain, maintaining a strong reputation, and thus selling to a well heeled clientele rather than a bunch of mud boggers looking for the lowest price. They make more money, which allows them to engineer quality, and the cycle continues. As a retailer I can decide what products to sell based on where I place my store in the marketplace. I can build a high end store and sell high end products at higher prices or I can sell everything, good or bad, and be the Smittybilt of retailers.*

Wizards of the Coast just dropped their MSRP on all their products going forward. If there is no price, there is no need for price protection. Ironically, this is exactly what I've called for many times in this blog, yet I'm disappointed and a little worried. What I was hoping for was possibly a bit utopian. I want to run a retail environment where price is inviolate and off the table, where I can focus on customer service, and events, all the various joy producing activities with the assumption customers will judge me based on my joy production, rather than my prices.

I would rather sell packs of stuff at a price than a shiny piece of card stock of subjective quality at a constantly fluctuating price. Yet the ability to sell the packs has fallen while the sales of the variable shiny has risen. It requires expertise and a fiddly system to sell variable shiny while it's much easier to sell new packs at a set price through my retail operation. And because it's so much easier, absolutely everyone can do it and I'm losing that battle. One reason stores close we don't discuss is they can't run the kind of store they want, and this is one example. They want it one way, but it's the other.

Asmodee has brand value protection as does Games Workshop. They're still competitors with retailers, but there are price floors that help me sell their goods. My initial reaction is to shun Wizards of the Coast and embrace Asmodee and Games Workshop as best I can. Their strategies are retailer friendly, while Wizards of the Coast feels predatory, the game trade equivalent of the soy bean king, selling their products as commodities. I have heard the next step may be dropping pre releases, and that right there is an exit strategy for quite a few stores that aren't Magic centric. We run events to get the cool stuff. Butts in seats! If you're going to drop events, you've removed our golden handcuffs. Don't get me wrong, I like gold, but the disconnect between "go buy on Amazon, but play at your FLGS" really pisses me off. Watching it all burn has great appeal.

This is all overly dramatic. The reality is nothing will really change. The offroad store will happily sell me that $700 low end bumper or the $1,400 high end bumper and they'll happily agree with me when I mention the value of the low end product or the superior engineering of the high end product. There are few retailers who get to truly pick their market position. Likewise, I'm not going to shun Wizards of the Coast any more than I'm going to turn my game store into AsmodeeLand. I will serve up both to the best of my ability. I will do my best to attract the Asmodee customers but I won't turn away Magic money probably ever. Taking stands is for politicians and priests. I have no such requirements for ideological purity.**

In the end, there's a lot more going on than my own needs. These brand value protection schemes are delicate flowers. Hasbro just discovered this when they were sued for instituting brand value protection in Europe. The larger the company, the harder it will be to institute brand value protection policies, as they conflict not only with international law, but laws between states. There is also the problem of brand value protection schemes holding independent retailers to a higher standard than mass market retailers, which is inherently unfair, even if we do cause most of our own problems. It's no surprise the consensus at WOTC was to have a consistent message on pricing. Do what you want.

*This is the same argument I've made for industry wide net pricing, by the way.
**But if you gave me a bucket of money, I would diversify away from the game trade.

Thursday, February 14, 2019

13 Bits of Advice for the GAMA Trade Show (Tradecraft)

Are you going to the GAMA Trade Show this year? I'm skipping this year for various reasons, but I've been many times. As an introvert, it's difficult to fully experience these shows, but I have learned how to get the most out of them. Here is my advice.

  1. Occasional Attendance. You don't need to go every year, so don't feel obligated. I think every other year is fine, and for my managers, I really want them to go at least once. One time is the best bang for your buck, and for many retailers, once is all they'll ever do.
  2. Stay at the Show Hotel. Some retailers are cheap by nature and take great pride in saving a small amount of money by staying offsite. When the hotels were connected, like with Ballys, staying at Paris was a nice upgrade with a reasonable walk. You'll be commuting if you do this in Reno, and that's a waste of time. Plus Peppermill is a nice hotel, so just enjoy it. Heck, when was the last time you've been on vacation? Consider a room upgrade.
  3. Leave the Family. This might feel like a working vacation, but it's not. Wheeling around your baby stroller on the show floor is just unprofessional and bad form. When the show was in Vegas, it made some sense to bring the family and let them entertain themselves during the day, but Reno? Maybe if your spouse likes snow boarding and strip clubs. You'll also feel obligated to spend time with them in the evening, and there are better uses of your evening time.
  4. Go to the Retail Seminars. A lot of brainy retailers have poured their knowledge into teaching the intricacies of the trade through seminars. I can credit these seminars for my initial survival, and a chunk of my own seminars are distilled and modified versions of seminars I've attended. There is powerful institutional knowledge out there and this is your chance to tap it. I go to seminars as much as I can, even after many years of this. Network and try to find out which are the best. The best for a first time show attendee is unlikely to be the best one for me (thus you can go multiple times and gain value).
  5. Pick Publisher Seminars Carefully. You deserve to hear from a human with compelling and interesting information along with the ability to ask questions to someone who knows things, not a website rehash from a powerless intern. That might sound harsh, but some publisher seminars are worthless and some are fantastic and helpful. I once went to a one hour Wizards of the Coast meet and greet. How exciting! There was juice on the back table and we were instructed to talk amongst ourselves. That was the whole seminar. Ask around and figure out which seminars are valuable, and don't be tied into a waste of an hour of your time for the promise of a free googaa. After going to many of these shows, I tend to skip about 90% of publisher seminars. Publishers need to figure out what critical bit of themselves they can transmit in a seminar and focus on that. Some are so afraid of giving out confidential information, they provide no useful content.
  6. Network Network Network. Go to the meals if this is your first time. Go out to dinner with like minded people, if you can't handle one more cold cut sandwich. Go to the after hours gaming events and learn new games and meet new people. Find the smart people. These relationships will grease the wheels and help you form community, things you'll appreciate when you're back home in your Fortress of Solitude. This is also a good time to develop relationships with publishers and distributors, so break out of your retailer bubble.
  7. Bring Extra Socks and Good Shoes. This is an old convention trick, but along with comfortable shoes, bring an extra pair of socks and when you're getting tired walking the trade show floor, change them. It's better than a Red Bull. Under packing is generally a good thing for these shows. Speaking of packing, vendors will wish to burden you with flyers, samples, and a lot of useless junk. If you don't want these things, politely decline. 
  8. Trust Your Instincts. This is hard, but I generally know if a new game is something I want or if it's a turd. I've always known, really, and my buying expertise has mostly been about trusting that knowledge and removing my own ego and interests from the mix. Trust your gut. Also avoid back filling, as this is the time of year your purchasing budget may be flush. This is a forward looking, "front list" industry. Look for things coming out, unless you're hoping to diversify into a new department. 
  9. Ask What's Hot This Year. Talk with other retailers, because you've been networking, and get a consensus about what's hot at the show. Touch and experience that game or item and see what your instincts say. The herd is generally right. Sometimes there's nothing hot, and that's alright too. Last year nothing was hot. When I look back at the items I discovered at the show, their profit always equals or exceeds my costs for attending the show.
  10. Don't Be Afraid to Buy. GAMA used to ban writing orders at this show but that rule is gone. If you see something you like, buy it. The big publishers won't do this, but smaller publishers will be happy to take your money, although for some you'll need to twist their arm. If they say they don't know how, task them with finding out and come back the next day. I've gone to many shows, found things I've wanted to buy, and have been unable to acquire them later. It's ridiculous, but give them a credit card number at the show, and your chances of getting that stuff go up tremendously. Good examples? Everything you see at the Chessex booth, giant dice, tiny dice, weird dice, stuff distributors won't carry, are available to order -- and it all sells.
  11. Open Distribution Accounts. It takes almost no time, but be prepared with your own information handy to start new distribution accounts. Fill out the form on the show floor so you don't forget. It costs nothing and opens you up to a better fill rate and possibly better terms. I resurrected a distribution account this year I hadn't used in ages and now do an order a week with them because of their better prices (Magazine Exchange).
  12. Be Firm But Polite. You want it one way, but it's the other. Too bad. When dealing with publishers in seminars, it's fine to discuss broader issues and insist they act consistently and professionally (cough, Pokemon USA), but nobody needs to hear your personal anecdotes. Nobody cares. We all have stores and problems and unless your issue relates to a large number of us, share it later, one on one. Also, there are no participation points. You don't need to add your story to our pool of misery. Listen and learn. Everyone is a petty king of a tiny kingdom, used to giving orders and running their domain with an iron fist. Together we can solve problems, but as individuals, retailers have a reputation for being rude and provincial. Use your listening ears.
  13. Have a Good Time! You're in Reno. Grab a steak. Take a walk outside and get some fresh air (there's still some cigarette smoke). Caffeinate at Cafe Espresso. Eat at the surprisingly good Flavors of India, which looks like the house restaurant for an Econo Lodge. Enjoy! 

Friday, February 8, 2019

West Marches Style D&D

I was in Mexico on vacation thinking about retirement and realized what I really wanted was to step up my Dungeons & Dragons game a couple notches. I've been running at home for my regular group for years, but I needed more. That's when I discovered the West Marches style online. It seemed to be exactly what I was looking for, as it requires the players to bring the motivation to explore your world. This was also while I was studying Matthew Colville videos, so sharpening up my GMing skills seemed to be a good fit with this style of gaming.

The problem with running a game for years for the same group, is they get fatigued with your schtick. They're excited at first, but after a few months, they show up to the game to be entertained. They show up because Sunday is game day. You as GM are therefore in this position of needing to provide continual, free entertainment to a group of individuals, pretty much in perpetuity. This is why GM burn out is a real thing, which for someone who considers this their primary hobby, feels like a terrible sports injury ... of the brain. Before this campaign idea, I built an entire world, wrote a player's guide, got player buy-in, and trashed the whole thing. The campaign setting was not the problem, it was the format of play.

So I moved forward with West Marches at the store, while running the same campaign at home in the usual format. As a store owner, I have a pool of players to draw upon, thankfully, so I queried our RPG Facebook group and started a West Marches style group. I needed at least 10 players to ensure it didn't fall back into a standard campaign format. Up to five players form an intention to explore something in my world, they query me about my schedule availability, and we do it. Five is the perfect number, because we can still play with four, yet six is too big. Group fault tolerance.

We're on the second session of this campaign, where there are now two groups exploring the same world. Somewhat in parallel with my home group . My home group is an elusive group that are never quite around. So really there are two player groups of adventurers and essentially an NPC group of adventurers (my home group). This creates yet another layer of verisimilitude. The world is very much alive and doesn't owe you an explanation. Things happen, get on it.

I'm thinking I would like a few more people in the pool, because my biggest concern is one group falters and we end up running a conventional campaign at a set time, which is fine but ends up with the same motivational pitfalls that West Marches attempts to overcome. The first session adventurers gave themselves a name, and I'll need to talk to them about not doing that. The large group are on the same mission. They are required to share information, including a magical map, and are not intended to be competitive or even separate. There should be flow between groups, with no individualized "groups" to speak of, although scheduling might result in this, as most players seem to want a set night. Perhaps when they're motivated to go on a specific adventure, they'll be willing to change their personal schedules to come on an off night.

So what am I running? The Colville style would be to have a large sandbox with some preset towns and adventures out there, often of the store bought variety across every edition. I will do that one day. Instead, I've got a hex crawl where most adventures are short and either home made or modified from one shot adventures. I have a lot of experience with hex crawls and understand their pitfalls and limitations, and so far it's going well. My concern with long adventures is groups go down rabbit holes and now they're by default a member of a separate group, as they're out of commission for weeks of real time.  My hex crawls tend to be intricate webs of interconnected groups, all of whom think they're the hero of the story, yet none are very heroic. There's a lot of politics interspersed with monsters and treasure. This grayness means picking sides is not so easy, and defeating one enemy is to by default choose to side with another.

The campaign goal is to colonize a region inhabited by indigenous peoples, bandits, and monsters, at which time they'll use Colville's Strongholds and Followers to hopefully defend themselves from an angry empire from which their new colony is seceding. All of this implies a timeline of various political actors and it will be interesting to see how that interacts with the various adventurers who are often doing different activities at different times. In my (second) session this evening, there will be fallout for a new group of recruits based on actions of the last group of adventurers, which may be directly related to their actions or just a timeline event based on their just existing in the world for a period of time. Meanwhile, my home group moves forward, leaving echoes of their activity in the world. Who are those guys!?

Another down side I see with West Marches is the campaign isn't tailored to the characters as I would do (and am doing) with a home campaign. There are eleven players with eleven backgrounds and I honestly can't put a lot of that information into what's essentially a pick up campaign. What I need to do, and I haven't expressed enough I think, is attempt to get them to align their characters with the world, rather than the world somehow serving their back stories. If your back story doesn't match the world, perhaps it's not a good back story? Or as Colville would recommend, keep character back stories light and be on the look out for a concept or issue to glom onto as your motivation. It's much easier to decide you're a revolutionary with the colonists than insisting the DM allow you to find your missing sister, kidnapped by hobgoblins.

Wish me luck! There is plenty of time for this to go off the rails.

Thursday, February 7, 2019

WizKids D&D Miniatures

As a store owner, I'm always curious to see what D&D miniature customers are buying. Are female miniatures languishing on the shelves? Are there races rarely played? Nobody really knows for sure who is playing what, and the manufacturer was polling retailers after the first print run trying to get a grasp on what was actually selling. So just for fun, here are my numbers.

These are in percentages to avoid the inevitable measuring of our retailer prowesses. It only includes the character models, of which we have every one. We have been good about keeping these in stock too, often ordering multiples to avoid outages. I can't say that about Reaper Bones, which I'm less excited about. Overall, in the last year, we've sold about 800 character models. Here's how it breaks down.

With an almost even split, I think this represents a change not seen in previous years, many more women playing Dungeons & Dragons. 

The human centric party is no surprise here, as we see them take top billing in the rules. I'm a little surprised to see Dragonborn so high up. Half elves can pass for elf or human, so it's no indication of a class choice to see them last.

The wizard edges out the fighter, and the rogue is up there, but where is the cleric? I had to go through the data a couple times to be certain the cleric was a poor seller. The four archetypes certainly aren't reflected in sales by class. The arcane spell cards sell twice as many as the cleric, by the way.

Wednesday, February 6, 2019

Teeter Totter

There is an odd balancing act specific to game stores in which customer satisfaction vies with retailer profitability. This is unlike other retailer relationships because game trade retailers often see product as a function of service. Most game trade retailers know nothing about retail and a tremendous amount about event management. They are party planners with gift shops for the most part. When Wizards of the Coast marketing asks us about our customers, they say players, because to them, we are in the business of "butts in seats."

This model is a teeter totter, in which retailer profitability decreases as we give in to perverse pressures demanding customer satisfaction. A great store will have strong customer satisfaction and profitability, and we're not talking about that. This is a model of a broken store and in many cases a broken community, where selling things profitably and running events is simply not enough for the customer base. They demand more, be it even lower prices or free or close to free events. Let's take a look at each side.

On the retailer profitability side, the downward pressures on top result in decisions leading to higher profitability. Rising costs often result in higher prices or at least holding the line on prices. Labor, for example, is rising in many states with increased minimum wage and the decrease in Magic margins results in many stores increasing box prices and event prices (you would hope). These things are seen as greed to customers, thus the same activity in green for retailers is seen differently, in red, by customers. If you ever hear a customer talking about prices over MSRP, it's likely they are comparing online.

On the bottom of that retailer model are reasons why profitability declines because of retailer decisions, often with the goal of increasing customer satisfaction. There is a certain level of holding the line or even reducing costs to attempt to delight customers. Most weekly Magic events, I guarantee you, are poor margin events designed more as customer appreciation than profitable endeavors. That these weekly events have been declining in many markets means even this is not enough. Our Friday Night Magic is in the 25% range and even that decrease in margin isn't enough to attract large crowds anymore. I know there are areas of my store where I keep prices low to attract customers, such as card supplies. Some of these customers I know only buy supplies from me and buy their main game online, so I want something from them.

Also on the bottom tier are the monastic sycophants, the retailers who claim they are there to serve the community, like some monk choosing a vow of poverty, so some 20 year old dude can have a place to play Magic the Gathering. We are about the people man! I know I won't be insulting them because they're off on a Magic blog learning about some new mechanic and could care less about business.

On the customer side, on the top, we have pressures that push down profitability in exchange for customer satisfaction. Unrealistic expectations are what we get with the likes of Amazon, which has a net profit margin of around 2%, when it makes any money at all. Take your current personal income and divide it by three and ask yourself if you would still go to work today. That's how much you're asking retailers to earn in their business, selling games and running events for customers.

Customers come in truly believing and spouting their truth that the Amazon price is the price. Retailers may not set their prices at this unrealistic level, but the pressure means they're certainly not likely to exceed it. Thus happiness is decreased and retailers look for other ways to make customers happy, like low margin Magic events and a store clogged with D&D customers who buy their books on Amazon at wholesale. Retailers are increasingly looking for ways to turn their retail environments into service environments due to this pressure and many of my retailer friends can't move to this model quick enough.

Retailers call most behaviors related to unrealistic expectations entitlement, but as capitalists we see this for what it is. A large, multinational corporation is using retail as a loss leader to dominate market share while propping it up with outside services all backed by Wall Street against Main Street. Brilliant! Unbeatable! Customers on that march care nothing about the realities of rising wages and decreasing margins. When your store closes as you accept their entitlement, they'll rattle the door once or twice and drive across town. Your store closing will be the topic of conversation at the pauper event, for at least five minutes. For the entitled, the struggle about income inequality, higher wages and a strong middle class is a personal challenge, not something out there.

It took a couple minutes to think of examples in which customers improve store profitability through their actions, but they exist. Only 20% of our customers use our very expensive game space, but when I polled customers, 80% of them buy in our store because we support the gaming community by having space. I was blunt in these conversations and many said they wouldn't shop if we didn't have it, even though it didn't benefit them directly. Community support is a very real, and irritatingly intangible force, keeping stores in business. It lives in a strange psychological limbo where "word of mouth" and the shifting demands of tween girls resides.

Blind loyalty is on the dark side of community support. These customers will support a store because Bob is really trying. Loyalists spread their money around to every store in town because they want a vibrant, diverse community, rather than voting with their wallet for the best store. As store owners, we're in this death match of competition, working hard to delight customers in the face of rising costs, yet there are customers who won't reward our efforts, embracing a kind of game store socialism. The blind loyalists are a small crowd that can't be cracked, although I certainly try.

Thursday, January 31, 2019

Carrying Kobold Press 5E (Tradecraft)

I sell a lot of Dungeons & Dragons but I also DM 5E Dungeons & Dragons as well. Running my style of game has informed what I carry in the store. I obviously carry everything from Wizards of the Coast, but I honestly find many of their products lacking. That's where third party publishers come into play. 5E third party products were slow to get off the ground, due to confusion over the 5E open gaming license, and the vast majority have decided to forgo print and stick with PDFs online. Kobold Press stands out as a high quality publisher with print products that can sit comfortably next to a Wizards of the Coast product. This equivalent level of quality leads to stronger sales than other publishers, especially the occasional 5E Kickstarter items we bring in.

To understand where Kobold Press fits into your sales strategy, you need to look at the strengths and weaknesses of Wizards of the Coast (WOTC). WOTC is strong in rules, as in they have avoided rules glut. Past editions of D&D, every one, has seen the publishers reach exceed its grasp. Here's where I get a bit opinionated. I think every edition has gone too far in expanding their rules and they end up breaking the game. Unearthed Arcana, Skills & Powers, Book of Nine Swords, Essentials, all represent the point at which the game designers went too far and broke their games with dodgy content. The D&D 5th Edition designers have realized they need a slow roll on game mechanics or they'll otherwise kill their golden goose. We're in year five of D&D 5th Edition, and it still feels new and fresh, with only the most minor, mostly balanced upgrades for characters and crazy stuff tested online and only slowly released in print, if it works.

Therefore, nobody needs or wants a third party coming in and offering rulebooks of character offerings. Kobold has several books that do that, but only to add races and backgrounds to fit their Midgard Setting. Midgard Heroes, Unlikely Heroes and Southland Heroes add races and backgrounds that can fit in many D&D game, and they're balanced enough that many DMs consider them. For example, the races in Midgard Heroes include: centaurs, dragonkin, gearforged, kobolds, ravenfolk, shadow fey, and trollkin. I recently ran a campaign with ravenfolk and trollkin and players enjoyed trying something different. They sell well enough to keep one on the shelf, although we sold over a dozen Midgard Heroes last year. 

Where Wizards of the Coast is weak, is adventures. This is not new for this company. Although they have some classic adventures that are worth seeking out in PDF nowadays, it wasn't unusual to have the back bench work on adventures, or in the case of 5E, outsource them completely. In fact, Kobold wrote Hoard of the Dragon Queen, an official 5E adventure from WOTC. I've found the hardcover adventure path approach to be a little bewildering, hard to grasp, and well, creatively lacking, and I'm honestly surprised D&D is so popular right now with such impenetrable offerings in the adventure department. Thankfully the starter box and the Internet with programs like Critical Role have come to the rescue. 

I've personally bought both Storm King's Thunder and Tomb of Annihilation, read them and made notes, only to put them down and run my own thing instead. I do enjoy Tales From the Yawning Portal, which often gets savaged in reviews, but there are gems in there, faithfully translated from previous editions. In any case, if you want to run a "module" adventure, rather than a full adventure path in the high fantasy world of Forgotten Realms (no thank you) you can grab something from Tales From The Yawning Portal, or you can look at what Kobold is offering. 

Kobold excels in the "roll your own" department, as in DMs who wish to create their own campaigns or run shorter adventures. They're perfect for an evening of play, or if you're into sandbox style gaming, where it's your world with adventures mostly off the shelf with serial numbers scrubbed. You've got a few options in this department. First off are modules. If you've been running a store for long enough, you know modules historically sell poorly, and these are no exception. I try to keep one of each Kobold adventure on the shelf, but modules are not their strengths. I've found them a little wonky with occasional unbalanced encounters, meaning you need to pay attention closely as a DM. My group had a bad case of the crabs that killed a party member in Sanctuary of Belches, for example. Where Kobold really excels are books of one shot adventures. 

There are two types of one shot books, those dependent on a monster book from Kobold and those that aren't. The independent books of one shots include Eldritch Lairs, Prepared, Prepared 2, and the new 12 Peculiar Towers. These sell very well as any DM can grab a mini adventure to insert in their campaign. The Prepared books are more outlines of adventures and often take a little bit of work, but it hasn't stopped them from selling well for us.

Before I get into this other type of adventure books, let me say the other area where there's room for growth is monster books. From WOTC, we have the Monster Manual, Volo, and Mordenkainen from which to choose monsters, and this honestly feels like a fairly complete set of options. However, you really can't have too many monster books, unlike player rulebooks. Kobold has two very good monster books, Tome of Beasts and Creature Codex. I've used each of these books for a while now, with Creature Codex being a more recent release. 

Adding different monsters is a great way to add flavor to a game, especially with jaded veteran players. These books sell fantastic, along with their cardboard pawns. Even better, there are adventure books that leverage monsters from these tomes that sell well, although they require the DM to own the monster book. These are The Book of Lairs, which requires Tome of Beasts, which I find to be the best adventure resource from Kobold and Creature Codex Lairs, which is fine, but hasn't sparked my interest as well as Lairs. 

The vast majority of my Kobold Press sales are these two hardcover monster books, their supporting adventure resources, and the stand alone one shot adventure resources. The best way to get this stuff is to order direct from Kobold Press, as distributors rarely have this stuff in stock. Minimum orders are small for free shipping, margins are very good, and they promptly ship. 

My current sandbox campaign has 199 planned encounters, with 73% using the core monster books from Wizards of the Coast. I think this indicates those books are likely enough for most customers. But those books for the other 27% might just be worth carrying, if you're seeing stratospheric sales of the WOTC monster tomes. Here's my break down of what I ended up using, with all the resources at hand, including the very good Tome of Horrors from Frog God Games: