Friday, January 25, 2008

Defining the Debate

The local public radio station had an interesting program this morning about the newspaper business. Newspapers have been on the ropes, due to declining ad revenue. About half their ads come from classifieds, which now go on places like Craigslist and Monster. What I found interesting was that one of the guests talked about defining the debate.

Rather than constantly being defeatist about the industry, which is the attitude of most in the newspaper business, the guest argued that the industry needs to ask a fundamental question: Is the industry in transition or is it in decline? If it's in decline, there's no need for capital investment and there's not a lot you can do to make it better. If it's in transition, then you've got more options, you can attempt to define what you need to become and adapt. That's what I gathered from his comments and it obviously resonates with me in regards to the game trade, especially the constant Chicken Little routine from many store owners.

Is the game trade in transition or is it in decline? Many would say it's in decline. Customers who only buy online argue that they get little value from their LGS (local game store, which used to be referred to as the FLGS, friendly local game store). They feel that the LGS sells games at a "premium" defined as not the "true" MSRP of what you can buy it for online. Sell something for 30% off long enough, and that's the perceived price. Without added value, they have no use for a game store.

Game store owners, especially older ones, lament as well. If you've been running your store like a supermarket, expecting people to come in, pick up their product and get the hell out, you've likely seen a decline in sales, as you add no value. In fact, the experience of shopping in such stores is often negative. Everyone has stories about the grumpy old veteran store owner in their area or the jaded, over-pierced clerk with Technicolor hair who laughs at your game while the owner works a real job elsewhere.

These retailers were once able to buy cars and houses with cash on profits from games like Pokemon and Magic. They could sell pallets of product, rather than just a few boxes on release. This was before the Internet started filling that need at a steep discount. Others argue that the game store is dead, and we should start selling used movies and video games to survive, or transition into comics or toys for diversification. Most long timers, including many industry leaders, have a secret or not-so-secret online presence as well, making up for their sagging retail sales by joining the Internet discounter crowd. They pontificate about how to run a store while flipping cases of product on their websites. They run their stores mostly the same, but make up for it with online revenue. They consider the need for game space a debate, rather than a necessity.

I think, not surprisingly, that the industry is in transition and not in decline. There are many ways to make a store work, but the key in our urban area with expensive real estate and lots of retail choices is not diversification as much as it is the concept of a "third space."The combination game store-pet store might be a clever idea in some small, podunk town without a good game store or a good pet store, but it won't fly in an urban area with many retail choices.

As for the third space, it works like this: There's your home, there's work, and then there's the concept that your store should be that third place where people spend time. Starbucks and Barnes & Noble do this with their lounges, Internet access and snacks. The key for us in this transition is to become the third place where gamers spend time. It supports the hobby for one, and shows that you're a game community member, rather than an evil retailer, getting rich on their game purchases (as if).

Being the third place also works well with an important principle of retail: The more time people spend in a retail store, the more they spend. You can play videos, provide them food and comfy chairs, create intriguing displays, and in the case of a game store, offer a place to play for a few hours. The old timers will attempt to perform a cost-benefit analysis on that game space, but that's missing the point. The entire justification for a stores existence, with this model, is it's identity as a third place.

I guess my point is that by defining the debate, we can cut put our emotional energy into figuring out what needs to be done to transition, rather than how to plug holes in the crumbling wall. You can explore solutions rather than re-hashing the same problems.


  1. It sounds like you may have been following a couple of the same recent threads on BGG that I was following until I picked up a 3 day posting suspension for breaking an asinine rule that I wasn't aware of :-P

    Lots of debate as to what it would take to make someone shop at their LGS if they don't already do so, along with some discussion as to what happens if the LGS model is actually obsolete and disappears entirely.

    Aside from those who suggest that price is all that matters to them, the most common responses to what would get them to shop at an LGS mirror what you do at BDG: friendly and knowledgeable staff, play space, organized play (boardgame night), selection, social networking.

    There were a few ideas that were interesting but problematical, like secure gaming storage. I considered the idea when you were planning the new store, but dismissed it before even suggesting it because of the liability issues.

    I hope that you'll forgive me this digression since I can't post it on BGG: A lot of people seem to have difficulty understanding the acronym 'FLGS' there's lots of statements like "My FLGS has rude employeees!" Um, then it's an LGS not an FLGS. Also, "My FLGS is an hour away!" Ok, maybe it's Friendly, but it ain't Local! On a similar note I see a lot of "My local FLGS..." comments. Please see the department of redundancy department.

    One final irony is that the whole current round of debate was started when someone started a thread saying they could no longer afford to support their FLGS. That someone also had a microbadge that identified them as an iPhone user...

    Ok, rant done :-P

  2. The issue of online customers is a curious one. It's not obvious that there is a clear distinction between online and B&M customers. There are those who ONLY buy online, possibly to save money, they're too far from a store, or they shop online out of protest. There are those who clearly buy their accessories in store, but make their major game purchases online. I can see their patterns; the magazine and glue buyers who come often, but don't ever seem to buy anything substantial. There are those that are pretty indiscriminate between the two categories - I used to be like that myself. Of course, there are also those who ONLY buy at their FLGS, for various reasons. I don't have a clue what the ratios are.

    As for the online shoppers, the mantra in the trade is "they're not your customers." It's a mantra repeated by those same retailers who have developed an online presence. Perhaps they're not my customers because they're *their* customers!

    Nobody really knows the numbers. They don't know ANY of the numbers. The trade doesn't know how many game stores there are, and can't even decide on a definition of what a game store looks like.

    Nobody knows what percentage of product is sold online, and in the case of RPG books, illegally downloaded. The big publishers might have a clue, as would the main distributors, but that's closely held proprietary data.

    I noticed that online sales for the holidays, overall, were flat. That number is in single digits as a percentage of overall sales, according to the reports from credit card companies like Visa and Mastercard. Many think that online game sales are much higher as an overall percentage, but again, we don't know.

    Finally, as a store owner, I really don't want to feel like my customers are doing me a special favor shopping at my store. I want them to feel that we're a good resource, but the idea of pity sales is kind of revolting. Independent bookstores face the same issue.

  3. I tend to agree with the idea that the customers that are only looking for the best price aren't your customers if you, as a businessman, are interested in doing more than selling for the lowest price.

    I learned that from my dad who wasn't concerned with losing the occasional job because he wasn't the lowest bidder. He also wasn't afraid of 'firing' a customer that was more trouble than they were worth, although I think he only did it once or twice.

    In the games business those customers seem to be the online only purchasers.

    Personally, I don't think there are very many lost sales from books downloaded illegally. There are some, certainly, but I think the vast majority of illegally acquired material is material that would never have been acquired in any manner had the downloader been required to pay for it.

    I can't back it up with numbers, but I have a feeling that the number of actual lost sales from illegal downloading is significantly countered by people buying a product that they wouldn't have otherwise bought after downloading a copy.