Tuesday, August 26, 2008

Toy Analysis

After a year of selling toys, here's my overall impression of the difference between selling toys and games, and why they can, but don't necessarily, work together.

Toys generally have a low value footprint. For the amount of space they take up, the value of a toy SKU is significantly lower than a game. The average toy value in our store is $7.72, compared to the average value of a game at $14.47. A toy takes up just as much space as the average game, if not more. This means, all things being equal, your sales per square foot is roughly half of what you would expect with games. With the high cost of real-estate in urban areas, it means toys under-perform games out of the gate.

The solution to the low value dilemma, is to stock deeper. Unlike games, it's common in the toy world to stock multiples of these low priced items. Suddenly that $7.72 puzzle isn't so resource intensive if it sits on a stack of 6 of them. Birthday parties often see parents buying multiple low value toys to be given as gifts. Siblings often require identical items in order to prevent rivalry. Retail game stores, however, do just fine with single game items. One copy of a board game is not uncommon in a game store, but for mass market shoppers, those who tend to buy toys (as they're not hobbyists), a single item on the shelf signifies a problem and possibly an inconvenience. Is it damaged? Unpopular? Why don't they believe in this product to order sufficient quantities? One item doesn't work for them, yet turn rates in a non-toy store don't justify more inventory. That brings us to the issue of volume.

To stock 6 deep of a toy, what would be an 18 months supply of a solid game, you need to have volume sales. This means you need to be in a location that has a lot of foot traffic, like in a mall. Again, you don't need to be a hobbyist to buy a toy, you just have to be young or have young ones in your life. High volume is the key, which means toys are a tricky add-on to game store accustomed to low volumes of customers. You can't make up that kind of volume by advertising without muddling your message that you're primarily a game store. If you do advertise extensively, you put yourself in direct competition with other toy stores, meaning toys are a much more prominent part of your business than say, carrying comic books, which has cross-over and a hobbyist clientele, rather than mass market appeal. How do you think you'll stack up to your toy competition? My guess is not very well.

The dilemma is for the game store that has everything, or believes they do. The question is: will the low value, low turn toys bring in enough new revenue in comparison to the fringe products of the game world. In other words, will top selling toys in a game store, outsell the lowest selling games? That's a question that we're still trying to answer, but part of that answer is focus. Would you rather run the game store that has everything or a really good game store that also sells toys? What do customers think?

There's the concept of "top of mind," in which you want your customers to think of your store first when they think of your product. Adding an unrelated department muddles "top of mind," diluting what you may be doing very well as your competency. On the other hand, as we've learned from experience, game customers tend to be very focused. All but the "alpha" gamers tend to stay in their departments. The miniature gamers don't tend to visit the board game section. The role-players don't care about the new collectible card game. Are they really confused, put out, or is their opinion of your store muddled, if there happens to be one more "unrelated" department that they don't visit?

Gamers generally aren't offended by a toy department, while a mass market toy customer can be scared away by specialty games. Walk around the average game store and count each time you see the word "war." Also remember, that hobby gamers are people too, meaning they're the general public and can find your toy section just as relevant as everyone else, provided they have a need to satisfy the demands of children.

I don't have an answer yet, but my tendency is to want to drop toys in favor of just about anything game related, even better displays.

1 comment:

  1. Hence the name: "Black Diamond Games"
    vs. "Black Diamond Games and Toys", or "Black Diamond Toys."

    I say stick with the games.