2010 was the year of the expansion. It was a timid approach to an uncertain economy and there were few blockbuster hits in any department. I expected this of 2009, but I was hoping for more risk taking in 2010. I know I started looking towards the future rather than hunkering down. Then I wondered if perhaps I was missing something. I hadn't gone to a trade show in a few years, although I felt pretty plugged in online. One investment I'm making for 2011 is my first trade show in three years. I have to at least confirm that the game trade is doing what I think it's doing.
The numbers seem to hold a story. During the holiday season I had this distinct feeling that something wasn't quite right. There were no big hits and nothing terribly exciting. For sure there were good games and a ton of new expansions for great games, but it seemed like we were spinning our wheels to some degree. When I looked at the numbers, I found something surprising. We were selling 15% more stuff, yet our sales weren't going up compared to the year before. Our sales were flat, but we were working harder.
Why? The average price of what we were selling had declined by about 10%. This isn't the price of an individual item, there's no deflation here, but instead an average price across a department. This came from a changed marketplace. Not only did game expansions play a bigger role, which are lower priced, but the best selling games in general were less expensive. For example, the San Francisco Chronicle does an annual board game gift guide and their family game recommendations dropped from an average price of $34 in 2009 to $26 in 2010. I wonder if that was intentional. I know there were comments about the "high" prices of their recommended games on their website in past years. Then I looked at the larger picture.
Our average price per item sold overall dropped 10-15% each year for the past two years. That's a cumulative drop, so that the average price of an item sold in 2008 was 25% higher than 2010. It wasn't just board games. Miniature games declined, role-playing games declined, even classic games like chess sets. What else went up? Our used games were bought at higher prices year over year, probably as trade-downs from new games. Some things didn't go up, like items that had price increases and no in-store alternatives, such as paint, dice and magazines.
Don't get me wrong, our sales each of these years went up and we haven't had a down sales year, it's just that we're selling more stuff at a lower price. It feels a bit like a receding tide, as we only have so many customers and if they don't buy more to make up for their lower priced purchases, it leaves us in a bind. If D&D Essentials knocks the average price of a D&D book from $35 to $20, store owners need to find a way to get that customer to buy twice as many books or they need to find twice as many customers. I hate to say it, but those new customers don't exist. Granted, perhaps more people will buy the books at $20 than $35, but I'll tell you that hasn't happened. D&D sales in 2010 were the worst ever for us, yet I don't feel people are abandoning the game.
This is what instinctively leads me to search for what's next. What else can I sell? Are there untapped markets? So what's on my mind? It's not more 40K and D&D, because there are only so many customers for those, it's things like Legos and coffee bars. It's basically a lack of confidence in the industry to provide. It's the retailers bind. We're middle men after all and only have control over how we sell what we're offered. I've made enough mistakes to know not to buy deep into Legos or build a coffee bar, but in my fantasies these alternatives are more confidence inspiring than yet another miniature game.
Why has this happened? Here's where you can speculate endlessly. The Internet has certainly wreaked havoc in devaluing game products. If you wonder why we don't stock that $70 high end strategy board game (especially war games), it's because many of your peers buy the higher end stuff online and buy the low end stuff from us. We still have over 1,000 board and card games in stock, but we're especially careful at the high price points because of Internet poaching. So the Internet has done some of this. Overall this means we'll stock fewer of those games, and since brick and mortar is still the lions share of retail, it sends a message back to manufacturers to make fewer of these types of products, both in breadth and in quantity printed. Meanwhile, frustrated publishers blame us and attempt to sell direct.
The economy is a big part of it too. Entertainment budgets shrink as income is reduced or appears uncertain. $35 D&D books are a tougher sell and we've seen big declines over the years. Also, with a decline of D&D and a move to Pathfinder in our store, a fun supplement book moves from a $35 D&D hardcover to a $20 Pathfinder softcover. You're not going to switch because of price, but it's reflected in our overall sales. In our miniature ranges, those on limited budgets are less inclined to buy the cooler troop choice in metal when a perfectly adequate one is available in cheaper plastic. I've heard many a conversation over the last couple of years about how to build the cheapest army of a particular type. Junior can play with a less expensive chess set until he shows he's both committed to the game and responsible with his things. I had that conversation half a dozen times this holiday season as parents balked at a nicer, more expensive chess set.
Lower price points are great for the consumer, to be sure. However, it's only a boon for the store owner if it means customers have more money to spend on other hobby games, rather than a new iPad or rent. Sometimes that happens (overall it did), but sometimes it doesn't (look at D&D). Again, my sales are up year over year, so I can't complain -- only worry and ruminate.
Finally, is there an upside? Is there a price barrier that keeps people out of the hobby that's being broken down? You tell me.
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