Tuesday, February 11, 2014

ACD Games Day (Tradecraft)

I've agreed to do a presentation at ACD Games Day in May. It's in Madison, Wisconsin, one of my favorite cities. My initial plan was to move to Madison and start a store, so strangely, I spent more time in Madison in my research than I did in California. When I started a new job, they even sent me to Madison for training. That's where (and when) I wrote my business plan.

I highly recommend you go to this show, especially if you've got a new store and you're local, like within a half day's drive. It's a mini Gama Trade Show, with presentations and vendors. I haven't entirely nailed down the topic, but I'll most likely talk about inventory management and open to buy.  I did a presentation at ACD Games Day in 2008 where half of it, the half people found most useful (the dozen people who came), was on this topic.  So why inventory management? It's where the money is.

I've discovered something interesting by going to trade shows and talking to other store owners. Those of us who made the decision (sometimes referred to as a mistake) to not have game space in our stores early on have a firmer understanding of inventory management. What else were we going to do? Your store is a traditional retail store with eight hour days, without the circus that's organized play. Without OP, we had far flatter sales patterns, so when everything is selling about equal, you're constantly tweaking and adjusting your mix, as opposed to a modern store, where a lot of effort goes into promotion (events). It's far more product focused. Heck, it's exclusively product focused.

Don't get me wrong, OP is amazing for a store, boosting our sales by 60% when we added it overnight. At the same time it supports and builds the community, allowing for far more rapid growth than a product only store (which is a completely viable, if less compelling business model). But OP is a messy, hard to quantify, often volunteer driven, subjective morass. I wouldn't give it up, but life was far simpler without it. The thought of it, and nothing else, keeps me from wanting a second store. I'll just grow the one I have. So those of us who didn't have to be the circus master seem to have a better grasp of many business fundamentals. That's my little narrative on why.

My understanding of the fundamentals has changed over the years. It's more nuanced, and many of the tools I intend to talk about aren't used as much as they used to be. I used to use the tools all the time, because my business wasn't working properly. If you saw me back then, you saw me with a tool in my hand and you may have winced, because all I ever talked about were tools. Tools kept my business alive. We spent the first five or six years in rapid growth mode, and growth can be painful. We were swinging for the fences. Every time we reinvested, it took a couple years to stabilize. We're about to do it again.

So I have the tools in my toolbox and they're not always in my hand now. I'm talking about sales per square foot analysis, turn rate analysis, and maximizing sales through various inventory means. These are all ways to take what little money you have in inventory and grow your business far more than should be expected. That's the thing. Efficient inventory is a miracle worker, creating wealth far beyond your peers and competitors. It requires you regulate the inflow of goods, measure the outflow of goods, and tweak, tweak, tweak. Or not.

A nuanced approach accepts that you grow your sales not just by numbers, but by psychology. You may focus on a best of breed in each department, completely carrying the full line, despite the metrics. This can also be termed a "top of mind" strategy, where the customer thinks of you first when they think of a product line. We do this with Pathfinder, carrying every single thing available. You have to consider a minimum quantity of items to maintain cohesion. You have to consider collections, accepting that a small subset may have tremendous sales, bolstered by slow sellers, because of the illusion of choice. Things I no longer believe include the "merchandising expense" of slow selling categories, designed to signal you're legitimate. If chess sets don't sell, and you haven't violated the other principles, dump chess sets.

If you've got questions about the topic that you want me to address, I"m happy to consider inclusion in the presentation. If you're there, I'm happy to talk to you about your problems with inventory management. Remember I'm just a guy who does a thing his way, so there are many ways to do inventory management. I happen to think there's only one reasonable way, but that's because nobody has shown me a rational system.


  1. Hi Gary. I've love for you to visit my store while you are in the area. It's about 4 minutes from ACD's sweet new warehouse. We're a bit of a "bizzaro" store compared to the typical gamer den, with an emphasis on board gaming. I did a presentation at ACD Game Day past year about drawing "everyone else" to your store that was very highly received. Regardless, I'll see you at the show!
    Bryan Winter
    I'm Board! Games & Family Fun

  2. Thanks Bryan. I'll try to stop by.

  3. If you want to test run the presentation, I'll be happy to make the drive to Black Diamond.

    Seriously, I'm debating which retail "con" I want to go to this year. I haven't done the distributor game days before, and I think GTS is out this year due to family things. Think it's worth a fellow Californian making the journey to Wisconsin?

  4. Having done it a few times from California, I would say no. It's two full days of travel.

  5. I'd love to hear about the research you did in Madison. I'm a local gamer here, and we've had two stores recently decide to move locations and become more web focused, which has led to some intense debates between my friends and I as to how we'd go about opening a store in Madison to fill the gap. Purely hypothetically of course.

  6. This was Madison of 10 years ago, so things have probably changed a lot. I was thinking about partnering with another store or perhaps just building a big one from scratch. I would have been moving at the height of the housing market, would have bought a house with cash and started a store with a big budget, again with cash. Lots of illusionary money back then.

  7. I'm spending my whole week on this blog, and you have so many good numbers in here! I'm not in a major metro area like you are, so I'm not going to hit your upper numbers, but I still want to ask you so many questions.

    We have an interesting dilemma. We've found this amazing space. High foot traffic, high visibility from freeway, the space inside looks like a pub Gandalf would visit. (Including a gas brick fireplace.) The owner is retiring, his wife has a bead business with these amazing tables that he will throw in for free (think steampunk wrought iron bottoms and heavy wood tops.) Everything is perfect, but the space is TOO BIG. So, I see you expanding your store (in fact, your expansion looks an awful lot like this 6k square foot space we're looking at, with the upper mezzanine, except ours is a 100 year old building with architectural details, etc.)

    I guess it comes down to, how much do we want to diversify (by offering a dining experience, seems to be likely for the extra space) or do we just settle on a smaller spot with less traffic? Arrgh. I just want my hand held as I work through all these probabilities.

  8. We had the same problem in our current location, although not quite THAT big. We ended up taking a space that was probably 1K or so square feet more than I wanted (perhaps a third bigger than we hoped for), and that couple thousand dollars a month of rent for years was a real drag on becoming profitable in the new location.

    Now it's paying off, as we expand our gaming space and lose about 10% of our retail space, everything will be about right. Our retail space is still flexible enough to add a ton of inventory, eventually, so we're good for years to come.

    Your space sounds amazing. I can't even imagine 6K square feet in our area, it would be $15,000/month, in a marginal location.

    If you've got the kind of business that would benefit from more traffic, as in a clean, well lit, place with matching fixtures that might be confused for a corporate retail outlet, then it sounds spot on. If you've got more of a destination store, you probably don't need to pay for higher traffic.

    As for the dining experience, I'm assuming you already have a retail store? Or maybe restaurant experience? I would be open to tackling one of those two, but both together, without experience, sounds pretty tough.

    So I would consider the restaurant if I had a retail store already and wanted to diversify, or I would plan for a 6K square foot game space but not in a high traffic (expensive) area. Just some thoughts. It's hard without the details. That's definitely exciting and you should be thinking sales per square foot with such a massive place. Don't pay for space you don't need.