Thursday, August 13, 2015

The Tension

Tomorrow I'll be visiting Sentry Box in Calgary, the biggest game store in the world, but today I wanted to re-visit something I found on my store tour, which I'm referring to as The Tension. The Tension is the desire to run a profitable, professional business versus the desire to please customers.

Nobody opens a Subway franchise because they love sandwiches. Their passion for the Monterrey Chicken Melt didn't lead them down the path to small business ownership. Game store owners are, for the most part, not this way. They go freakin' nuts over their metaphorical Monterrey Chicken Melt and would like nothing more than to sell a store full of chicken melts to just chicken melt lovers, if such a thing was possible. Passion comes first in game retail and the ability to survive slinging chicken is something that's often picked up later, if at all.

First, let me say, there is no wrong answer, if you're keeping the doors open. There are no metrics that apply to you if you're doing what you love and satisfying customers. Ignore guys like me. Sell just Magic or every miniature game in existence, even at one turn a year, if that's what you want to do. Just know that as a business, this way is probably not the most profitable and is fragile and inflexible when times are hard.  This is an example of the tension, giving into your or customer wants at the expense of the profitability of the business.

When I walk into a store, I know. When I walk into Mox Boarding House, as a retailer, I can sense the store is managing inventory well, is diversified and isn't sitting on dead product and lines to satisfy customers. I question a few things, certainly, but there are always regional variations in demand or the conceit of an owner or manager who likes a game or is trying to build it up.

Likewise, when I walk into an Imperial Hobbies, with its "shock and awe" decades of product, from three industries, stacked eight feet high, I know I'm seeing something special that would not work in the US market. However, when I see shock and awe in the US market, I know the owner is likely taking one for the team. There is no money made there.

From a purely analytical perspective, we have only so much money for product, our economic engine, and so many turns you can squeeze out of it, how often that inventory sells each year. When you work your inventory, you decide how fast, how efficient, how much money you want to make with your investment. Every store makes this decision, works this tension between satisfying customers and making money.

My own store runs far too lean, with turns well beyond what's healthy (3-4) to satisfy customers. Our turn rate of 9+ means sales being lost, products not given a fair chance, and it requires a full embrace of the Cult of the New. Old stuff is moved out when it loses momentum, and new stuff is brought in sparingly with great care, whereas a more balanced rate would order in depth. I still sell chess sets and jigsaw puzzles with abysmal turns, and I'm still suckered into the Miniature of the Month club, but weeding out dead wood is essential for our current model. We're trying to make money to expand and pay our construction loan, so there's not a lot of wiggle room for artistic flourishes. You come to us because we have new things, not because you're looking for that older, out of print game.

In contrast, I know of regional stores in the 1+ turn rate category that never really get rid of anything. The Imperial Hobbies of the world are amazing, and customers love them, but if you're not in a market that supports that (Canada), it means a choice of less profit (or none) in exchange for customer satisfaction. As Monterrey Chicken Melt lovers, game store owners love visiting these stores, but we don't want to own one. In fact, we often wonder how it's possible. It's more a thing that happens to you than is actually planned.

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