Tuesday, January 25, 2022

Has the CCG Market Collapsed?

Well, no.

We're seeing a couple problems.

Demand: Maybe your maskless rogue republic has strong event attendance, but a lot of stores see greatly reduced event attendance. You risk your life to experience organized play. Some of us have decided the risk is worth it. A lot of people have decided it's still too dangerous. After nearly two years, some of this behavioral change is permanent. We will need to rebuild those communities over time. There's a small chance the model is fundamentally broken or diminished in some way we haven't figured out yet. As I wrote recently, I'm personally getting back on that horse, running D&D games again at home. It's a risk I'm willing to take.

How are my sales though? Is this lack of events hurting sales? Oh my god no, the sales are stratospheric. My Magic sales have doubled from the year before the pandemic started. My Pokemon sales are six times higher. I put Pokemon on clearance the summer of 2019, right before I begged for anything with a Pikachu. 

CCG sales are so strong and so baked into my business model at this point, that I don't know what my store would look like if it went back to normal. I also doubled my inventory, so I can't parse what current sales level is CCG craziness and what part is having a fundamentally different store. 

Experiential retail, all service oriented experiences really, have taken a back seat to plain old product consumption. We are old fashioned stores once again. My guess is increased event attendance will be a leading indicator of slower retail sales to come. Meaning, once people are back to paying for experiences, retail sales will slump. In my personal quest to buy a travel trailer, the lots are filling up once again after two years of premium prices and zero supply. Retail sales of travel trailers will slump as people book their flights to new vacation destinations. Leading indicators.

Supply: There are two tiers of stores. Those who were able to navigate the supply chain and get the quantity of product they needed, and those who couldn't. Those who couldn't haven't seen much of this strong sales activity. They know it's there, but they haven't gotten a good taste. Heck, it took me nearly a year to dial in my supply issues. I've visited quite a few small stores recently who complained of being unable to acquire hot product, while I was worried about tremendous overstock of that product they wished they could get. Talking about this issue really depends on which camp you're in.

Supply of current product has finally caught up and completely overwhelmed any sense of reasonable demand. I have hundreds of boxes of overstock Pokemon, and prices have dropped to around $90-95 for the most overstocked sets. That's less than $5 over cost. This was the price we well organized stores knew we would have to pay when the music stopped. As a retailer friend recently said, relax, you will eventually sell it. But... Remember how my Pokemon sales are currently six times higher than normal? How much longer will that last? Is there a long tail for Pokemon product for me or am I sitting on tens of thousands of dollars of dead product? Time will tell. I've got the Pokemon profits to ride it out. I'll trust the friend for now.

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