The problem is not that game stores are impossible to run, it's that running one, or any small specialty store, is so financially un-rewarding that few people smart enough to do it are willing. If you do the math and figure out the investment, it gets all wonky. Like many wonky professions, it's only when you can't imagine yourself doing anything else that you should really move forward.
This post is about macro game store economics, the big money needed to make it work. It's a post I posted on the GIN recently. At the time I was exasperated with the numbers game, but the post doesn't seem to reflect my frustration. I've edited it for clarity. It started with a quote from a game store owner who was throwing in the towel:
"The retail model is inherently unsustainable."
Getting beyond this has been my focus lately. I've been working for the past three years in an attempt to obtain a salary that allows for a sustainable life in the SF Bay Area. Let's call that $65,000 [the average salary of people living in Oakland]. That's coincidentally the amount I was making in the year 2000 when I qualified to buy the house I currently live in. The buy in would probably be higher now. If say, I have a $30k game store manager salary, that means I need to make $35k in profit to continue to own my modest home.
If successful stores supposedly make around 8% profit, that means my store must have annual sales of $440,000. This assumes I don't have investors that take a cut (I do). How many stores do you know like that? What percentile would that store be in? Probably the top 5%. Who has the $110,000 plus furniture, fixtures and equipment expenses to build such a monster?
Because of this, I see three types of game store owners in my area:
- Gamer monastics: They work long hours, make below minimum wage, do it out of devotion, and if they're lucky they've got a wife with the real income and benefits.
- Hobbyists: Their daily break-even is $300. Their store is three miles north of nowhere. They do it because they need a place to play. They would be insulted if they could afford an Internet connection and read this. Windex is a capital expense.
- Enterprises: Those who have been doing this long enough or those who can come up with the cash are running large, long-term stores, almost always diversified into toys or related items. These people are long-term because back in the day it made sense. Now the proposition is not nearly as rosy. Many are leaving. Many will close when they retire. Those in my area are dropping like flies.
My best hope is to turn myself from a gamer monastic to the owner of an enterprise.