Sunday, August 12, 2018

Age and D&D

In 1977, a 39 year old game designer, a previous insurance underwriter, published Advanced Dungeons & Dragons. I mention some of these details, because this is about age and D&D. The target market of this game was likely the men (and occasionally women) who played similar games at the time. That's what I surmise from this early photo.
Lifted from Wired Magazine, from Gail Gygax

At age 11, I was clearly not the target market, but this game still fascinated me, and by the time I was 13, myself and friends would try to out geek each other by quoting the rules. We only had three books, the holy trinity, and they were so well used, you could run your hand across them with eyes closed and instantly find various sections, like combat tables and treasure charts.

This was our game, and on page 12 of the super secret Dungeon Master's Guide, that everyone owned because everyone eventually DMed, it spoke in great detail about aging. As an adult, I can't help wonder if this brilliant insurance underwriter used actuarial tables or other data to come up with this clever bit of game mechanics. I note that 40 is the cut off age before you become a decrepit, middle aged human, losing a point of Strength and Constitution, but gaining a point of Intelligence and Wisdom. Gygax was likely thinking about this at 39 when he wrote it. Because first, who wouldn't at age 39, and second, he was in insurance, where mortality and risk was the business. Was it data, the desire not to feel old, or something else that created these brackets? We'll probably never know. Here's the chart for age categories (photographed out of my taped up DMG):



Codification of adult life in very serious table format had the effect of making this seem authentic to a young teenager. Tables were something we had just learned about. Tables were magical devices used by adults to display huge amounts of information in visual format. I wouldn't see an actual actuarial table until I was in college, and that also blew my mind. Statistically knowing the likelihood you'll die at a certain time by gender and age was straight out of the DMG.

As a young teen, this stuff was magical, and the message was clear, being young was heroic and good. We were young. Our characters were young. Getting old was bad and it ruined your plans, so this table tended to be used in only the most dire circumstances, like getting touched by a ghost. Poor fighter is now a wretched 50 year old (like me now).

Nobody actually used this section on character creation. In theory, if you read this section, you could roll up a character who accidentally fell into Young Adult status against your own designs. The DM could penalize your Wisdom and add a point of Constitution. For example, if you roll a 1 or a 2 on a D4 for your Cleric's age (18+1d4), you'll start at 19 or 20 and fall into Young Adult status, ruining your character plans. We saved this section for ghosts and haste spells.

It wasn't until we were adults that we started playing with this table to gain an advantage. My friend Jay would play an elderly wizard and tweak his character for some extra Intelligence points, in exchange for feebleness, something we would have never considered as teens. We've min-maxed the heck out of the aging rules, going so far as having people who couldn't even walk for the sake of brain power. That's adults realizing the power of the mind over the body. As kids, anyone over 30 was elderly, and when we played other games, like Top Secret, 30 seemed like a prime age. Most of my characters started at 30.

I didn't give this stuff much thought until we started getting older, but kept playing, adding younger players. We've got my 13 year old son, players in their 20's, those around 30 and quite a few of us in our 40's and now 50s. We're all at the same table, playing the same game by the same rules. If you want to keep the 13 year old from walking into the meat grinder because of his real world low wisdom, that's the parties business, not mine as the 50 year old DM. Generational D&D is something we're learning as we go. I no longer consider 30 the pinnacle of character perfection. In fact, if I think about it, it's probably the waning days of physical prowess without the benefit of experience (wisdom).

While walking down a wet street in Guanajuato, Mexico last month, right after a big monsoon storm, I slipped on a ramp and fell hard. I knew I was falling and from years in martial arts, just let it happen, rather than struggle and smash my head. I cut up my arm a bit, but it occurred to me our more adventurous travel days may be fine for this middle aged 50 year old, but might be a bit too much for an "old" 61 year old. Gary Gygax might have had that part right. That's my 1 extra point of middle aged Intelligence and Wisdom talking. 61 year old me might have a different idea about that though, much like 50 year old me doesn't feel as decrepit as the DMG would suggest.

Oh, and thanks Wizards of the Coast for D&D 5th editions complete omission of aging rules. I hope to still be playing your games when I'm Venerable.

Saturday, August 11, 2018

So You Say (Personal Weird Stuff)

You can skip this one, it's more personal than tradecraft. I lasted about two months between my declaration of political neutrality and calling the Trump administration evil (they started it), so lets delve into philosophy for a moment. Maybe we'll talk about sex next (the third rail of gamer discussions).

When I first opened, I had a philosophical attitude. A Zen attitude, if you will. I was inspired by one of my favorite stories, that of Zen master Hakuin. That's what this post is about, if you want to bail now. I've written about Hakuin before, but this is in more detail.

There was once a Zen master named Hakuin Ekaku. He lived next to a couple and their daughter, and when the daughter got pregnant, she panicked and named Hakuin as the father. His response?

 "So you say."

When the baby was born, Hakuin was given the baby and he took care of it, raising it, feeding it, loving it. Then the real father was discovered, a local fish monger (evil merchants), and the family demanded the baby back. Hakuin's response?

"So you say."

Hakuin's mind was not troubled by the cares of the world, the whirlwind of distress in the mind of others. Take care of and love a baby? Sure. Give up that child you love? Sure. In the face of chaos, Hakuin's mind was calm. He was also brave in the face of adversity, while the silly common people were fearful leading to deceit.

That was my initial attitude in running my store. Unfortunately, I am no Hakuin. I have no doubt an untroubled mind could deal with the chaos of a store, but that's not me. I don't have the spiritual cajones to back up my "so you say" with appropriate action in the face of chaos.

One of my favorite Tibetan texts talks about evil merchants. The most scorching of commentary is reserved for these folks who are in the thick of the day-to-day world. They are accused of all kinds of cheating and skulduggery. You'll hear better talk of prostitutes than merchants. It's like a merchant shortchanged them on the monastery robe order and boy are they getting an earful now.

My philosophical attitude in the face of the general public changed quite a bit. I still cultivated "so you say," but I did so with an every growing framework of what was appropriate, what I would tolerate, what I would and would not discuss. "Action through non action," the Taoist approach of Wei Wu Wei was not an option. People would get hurt. The worldliness of running an establishment would regularly challenge my "so you say" attitude, while I tried very hard not to be the kind of wretched merchant I was warned about by angry teachers.

The truth is there are few profession that are incompatible with "so you say," the pursuit of a spiritual path. All professions that aren't harming others are compatible. Some, like the game trade offer more grist for the mill. I think it's much harder to follow that path when your peers are so very far from the road, and your customers are looking for distractions. But we do bring happiness to others, albeit momentarily, so we've got that. I've reconciled this, that what we do is a positive in the world. I am no Hakuin, and with long hours and a chaotic life, I wasn't getting much closer to being one.

If you harden your heart and start wielding the sword of discernment without compassion, which this trade seems to demand, you'll become jaded and you'll be stuck down a mental cul de sac. You might end up with a great business, but an empty heart. I was warned by others to get out before I lose my soul, and this is what that's about. Opening your heart without that sword in hand leads to being taken advantage of instantly in this public facing trade. There are those who are unsuited for this trade, people pleasers who can't handle complainers and those who desperately desire to satisfy customers who don't fit their business model. Finding that balance is incredibly elusive, compassion and wisdom in equal measure. Taking victories and defeats with equanimity, your words each night simply being, "So you say."


Thursday, August 9, 2018

Sick Retail

I just got back from a couple months touring Mexico and Central America and one thing that struck me was the robust nature of their retail. In big cities, malls were packed with people and storefronts were filled to capacity. American stores that had died in the US were thriving and I visited Sears, Radio Shack and if I had wanted to, Thrifty Drug Store, where I had spent many allowances as a kid on plastic model kits. Retail was strong, and aligned to the needs of the community. Amazon was weak or nonexistent. It reminded me of touring stores in Canada and seeing so many strong retailers there. It is the US that is suffering, overstored by a factor of ten and beset by brutal online competition. US retail needs an unwinding and it won't be fast or pretty.

It got me thinking about hedges, notably the game store cafe model. I realized American retailers are contorting their stores to fight the drag of brick and mortar retail circling the drain. Again, not just game trade retail, but all retail. Brick and mortar retail won't disappear into the vortex, but it will need to be re-aligned, with perhaps 30-40% of stores closing, and a quarter of malls re-aligning. We could really do with a lot more closings, but Americans seem to think they can buck the trend.  The cafe model is used by stores to stand above their peers while the market re-aligns. However, a secret nobody will tell you is it's actually a model that doesn't follow through on its economic promises.

Those successful with the cafe model only do a relatively small fraction of their business with their cafes. They make a huge investment, go through tremendous training, and for what? Granted, any profitable element grafted onto a successful game store is a win, but it's not like you'll double your revenue by adding a cafe. Most are more in line with 15-25%, with only the rarest of stores hitting 50% and usually with professional food services staff. The Fantasy Flight Event Center comes to mind.

So stores spend a small fortune on build outs, hire additional trained staff at higher wages, and for their efforts get a relatively small sales boost, enough to raise them into safe competitive territory with a Unique Value Proposition, but nothing like what you would hope with such a large investment. In fact, I often wonder why spend $50K-100K for such a small boost when I could open a business for regular people who would actually utilize my services. How about a standard coffee shop, for example? It's because these hybrid store owners are retailers who love games and gamers and want to solidify their place in an unsteady marketplace. They have great stores first, and cafe whatever a distant second.

I mention this because store owners believe this hybrid model or some hybrid model is the only way to succeed nowadays. It's certainly one way. It's certainly not a way for those without experience in either retail or food services. It's definitely a good idea in a failed regional market where all stores are terrible and another one is about to open at any moment. In my own sheltered market in the SF Bay Area, selling games and holding events is still a useful value proposition, albeit one that is no longer unique and one where the cracks are beginning to show. In the rest of the country, where retail is circling the drain, I can't imagine opening a retail store without something pretty darn unique up my sleeve. If that's slinging coffee, then so be it. Just don't expect to get full value from your investment. It has always been the case that a pure play is more profitable than a hybrid, whether it's comics and games or games and coffee. That hasn't changed.


Monday, August 6, 2018

Punching Nazis

I understand the desire to punch a nazi. These people call for violence against others. They have a historical precedent for fascism that resulted in the death of millions of innocents. Seeing them come out of the woodwork like cockroaches engenders a response. We naturally want to crush them, and like the fascination with zombies, many see them as less than human, an excuse to bring violence to bear. Captain America punched Hitler, right?

We are told a third of the German population was responsible for nazi atrocities, while a third were indifferent, and another third opposed the nazis but were unable to do anything by the time they gained power. It sounds a lot like our current political break down. The parallels are weak but they're easy to manipulate to prove a point or create a meme. Nobody wants to be powerless or indifferent in the face of such horror. We have movies about going back in time and killing Hitler. We are so obsessed with this historical mistake, it's its own fantasy genre. Now seems to be time to act in the very real threat of the rise of fascism and American nazis.

However, this is not Nazi Germany. We have a sickening administration in power, but it's not an administration that has turned its back (entirely) on the rule of law. We still live in a country where we can vote politicians out of office. Although our government treats immigrant children with disdain, ripping them from their parents, drugging and imprisoning them, we still don't have cattle cars full of the political opposition. They are cruel, but they aren't at the level of Nazi Germany cruel.

The Trump administration is vile, but there's a political remedy to stopping their agenda in just a few months. If you turn your back on the rule of law by resorting to violence, you turn your back entirely on the political system, and admit civil war is the solution to this countries problems. Civil war is what this countries enemies would like most, resulting in the death of millions. I think it says how bought, corrupt and ineffective the federal government has become that we feel the need to solve national problems through physical violence. I have to ask everyone to just have a little more faith in what's left. I spent the last couple months traveling through Mexico and Central America saying, "I could live here." I understand the loss of faith in the American system.

Beating children does not make them better adults, only more violent ones. Smacking your spouse is not an effective method for marital bliss. Punching a nazi won't make them less of an asshole. In all these cases we perpetuate violence. We make the world a more violent place when what we really want is harmony. Worst of all, you plant these seeds of hate and violence in your mind, damaging your own psyche on this quest to murder the future Hitler before millions are killed. This makes you a more violent person, a less rational individual. Don't be helpless. Don't be indifferent. Find a way to stop fascism through the least violent means. Right now those means are at the ballot box. Fuck nazis, do it for your own mental health.

Wednesday, July 18, 2018

Working Kids

I'm in Guatemala right now, where young children work alongside their parents selling brooms, hoping to earn enough for a meal by the end of the day. My son is with me. He's a little sad because we've just extended the trip an extra few days and he won't get to work at the store at all this summer. He has his heart set on the next Fallout game, which he would earn with his money.

My boy wakes up in nice hotels each morning in gorgeous Central America, which was kind enough to skip the rainy season for us this year. An impossible number of maids scurry around the hallways, waiting for us to depart so they can expertly clean our room. They avert their eyes when I give them a "buenos dias." There's a free breakfast waiting in the lobby, so I'm pushing him a bit to get up. He declares "I hate my life." It's all a matter of perspective I guess.

He's 13 and when he works for me, he's working under a school sanctioned work permit. If I was a sole proprietorship, we wouldn't need such a thing, but as the store is a corporation, we play by corporate rules. As an official employee of the corporation, and not some slave labor of my proprietorship, he's on payroll and makes minimum wage. This is not charity. I can't afford a wink and a nudge child employee. I need minimum wage work from this kid to afford to have him on.

He does not report to me, which I think is important. He reports to my manager, who provides him tasks appropriate for his age and abilities and the need to get solid work done. He often sorts cards, cleans bathrooms and the game center. During the last shift he worked, he discovered how to use the point of sale machine. You see, there's a chair at the point of sale machine, and if you're the cashier, you can sit in it while everyone else scurries around working. This laziness introduced him to the knowledge economy.

He gets a formal paycheck with direct deposit. The money goes into an account with his name, but it's really a sub account of my personal checking. From there, he gets to keep half, which goes to things like Fallout video games. He should really be taught to save a percentage, but we'll get to that later.

The other half of his paycheck is taken by me and put in his 529 college savings plan. I contribute a modest amount to his 529 plan each month but even a little bit of work by him turbo charges this account. As he gets older and works more, I expect that to accelerate. It's too bad he can't work more as a small child and less as he approaches adulthood, the compound interest would be fantastic.

Will he one day run my store? Why would I want to entangle my loved ones in such a mess. I've got plans in place so if I die, the store isn't a burden, so why would I want to burden them while I'm alive? If he comes to enjoy the work during his teenage years, reaches his potential in school and elsewhere, and gravitates back towards the store, then sure, why not. Parents just want their kids to be happy, generally within the framework they believe happiness arises. If that means running a game store, well I think you might be a fool, but I'm not going to deny your happiness kid.

Tuesday, July 10, 2018

Vacation Essentials and the Shiny Bucket (Tradecraft)

I've been on vacation for nearly a month now, exploring Mexico and Guatemala and later this week, Honduras. Along the way I'm visiting game stores, which in Mexico has meant stores that specialize in Magic: The Gathering almost exclusively, but with some green shoots in other categories, like board games and D&D. I'm documenting some of this on my author Facebook page. Having an interpreter with me has been essential in understanding where game stores fit in the local culture. It's fascinating stuff.

This trip will span nearly two months and is a test of my stores policies and procedures. A month long trip is a great test, and I did that last year, but two months spans my normal billing cycle. It forces me to create procedures for posting bills while I'm on the road. It even resulted in my finally adopting online banking. When I crossed the country last year, I brought my printed checks with me and mailed them along the way. Old ways are good ways. Of course this is only possible with a great manager, so if you're unclear where to begin, look there.

New product is a concern. Because I pre order absolutely every new product that enters my store, new items arrive with my managers restocks. She does this using Open to Buy, so although I haven't trained her on turn rates and culling inventory, the budget dictates the restock. Everything else is details. This is the first time I've given up ordering, and last year I spent many hours while on vacation restocking the store.

I never really looked at it too closely, but there's about a 90 day lead time on new product solicitations, with Games Workshop being the infuriating exception, with every new release being a surprise. While on the road I continue to pre order product for the future, with some concerns I'm not doing enough research. However, something has to give if you ever want a vacation. Since 80% of my sales come from 30 companies, it's the fringe stuff that will be taking a hit about 90 days from now. That may be a lesson in personal time management.

I've got a list of about $20,000 worth of upgrades my store needs. This trip has emphasized what I really need, especially if I want a stress free vacation: a shiny bucket of money. Managing cash flow on the road is no fun, with regular reviews, contingency plans and transfers when things get slow. This is mostly because of debt from our big construction project, but also because I'm constantly eying that $20K list of stuff we need and checking them off. That shiny bucket of money would provide some vacation peace of mind about now. If you handed me $20,000 in a shiny bucket, I could easily see putting it on a shelf and just leaving it there. Veterans will confirm keeping the shiny bucket is the best bucket strategy.

Resting on the throne outside the Cosmovitral in Toluca, Mexico



Monday, June 11, 2018

Photo Contest

As you may have heard, I have written a book called Friendly Local Game Store. We've sold hundreds of copies the first couple months and it has eight, 5-star reviews on Amazon. Yeah!

I thought I would do a bit of creative promotion of the book. Post a photo of you with the book, either the print copy or the book on your electronic device to my Gary Ray, Author Facebook Page. On August 10th, we'll declare a winner random (probably via some dice rolling method).

What do you win? Why more books, of course! The winner can give me the names and addresses of two people they think could use this book (a $50 value). I'll sign and inscribe them, and send them off. It could be a copy for you, a potential new business partner, your staff or even your local store owner. Heck, send one to your competition as a gift! I won't judge (that's a lie, I'm always judging).

I leave for vacation to Central America on Friday, so I look forward to seeing a bunch of happy photos when I login, lonesome for home.


Sunday, June 10, 2018

Five Lessons

The first lesson of small business is you've got nobody to blame but yourself. When my staff make mistakes, it's my fault. When an employee turns out to be a bad apple and steals from me? Still my fault, because I hired them. When the world collapses and my community has become cannibals? My fault for not anticipating the demand for food. All my fault, today and every day. This first lesson is what separates us from the general population and creates an informal fraternity of small business owners. Our culture plays the blame game, but it's the only game we won't sell.

The second lesson is: Life is unfair. It's entirely possible to do everything right and still fail (which is your fault, see lesson one). It's possible you have the same business model, with the same gray areas as everyone else, but someone decides to make an example of you. Talk to a store owner who opened right after 9/11 and you'll hear a story of perseverance or unfair circumstances that led to failure. We did really well during the recession, but some communities in the exurbs simply disappeared, their inhabitants moving out in the middle of the night and their retailers left with no customers. Terribly unfair. And still your fault.

If I had to propose a third lesson, it's this: Nobody cares. You're on your own. This third lesson is important because new small business owners forget the first two lessons and constantly complain. Because the trade is small and you may have only dealt with big institutions (schools, corporations, etc), you may be unaware of your ability to effect change by simply asking. Nobody cares, but you have some power to effect change. In every circumstance of my life before owning a business, if I was failing, someone would step in to help. Not small business. We're working without a net and nobody cares.

The fourth lesson is a corollary of lesson three, which is: Everyone is here to make money. What they need to do to make that money, may or may not align with your desire to make money. When their needs don't align with your needs, the phrase we tend to use is "That's none of your business." Making money is extremely hard, with retailers in the 5-10% net profit range. Look at how hard it is to juggle your personal income without going into debt or going hungry. Now multiply that complexity by ten. That's what it's like for me to run a store. If you aren't doing it to make money, you better not have a lot of money on the table. That's usually the case.

The fifth lesson is Everyone is here because they love their hobby. It's not always true and there are a few exceptions I can think of, but everyone got into this because they love hobby games and everyone stays because that passion gets them through the hard times. Sometimes they love their hobby more than they love making money, and sometimes it's the opposite. A big lesson I've learned from observation is a great company, be it a publisher or retailer, balances these two opposing forces in equal measure.

Those who understand these five rules tend to be successful. They're not wealthy. They're not always happy. They are successful in their own ways and their like minded peers wish to associate with them. Those that don't follow the rules are left to scream into the wilderness until they understand it's all their fault, life is unfair, nobody cares, and it's time to get their act together and focus on their motivation and their bottom line.

Wednesday, June 6, 2018

Neutrality in the Culture Wars

I just want to run a hobby game store in the suburbs. My store does not take political sides, make political statements or support political causes. In fact, pinning me down personally would be pretty hard, with my pseudo libertarian views. My investors range from very liberal to very conservative, and we've had the discussion early on about the role of politics and small business, with our decision being to let investors make their own stands with their own money.

This is a position I thought was reasonable, but one that has upset some of my friends, who believe change at this stage can only come from the private sector. Still, you won't find a political sign in our window and we don't donate to political causes. When we donate to charity in the name of the business, it's to help children via Toys for Tots, California fire victims, or the occasional donations to local schools. We are neutral in the culture wars.

Or at least that's what I thought. One thing to keep in mind is we are culture. Game stores are bastions of the gaming subculture, which is part of the general culture. As such, store owners are ambassadors to not only members of the subculture, but also the public. We've known this pretty much forever, with the biggest threat being the occasional Bible Belt picketing for promoting devil worship, laughable in California but a real concern elsewhere. Nowadays, we're less concerned with church groups and more concerned with maintaining credibility and a thread of leadership within our subculture.

However, as politics in general has infiltrated every level of society, small businesses of all sort are being called out for not toeing someone else's political line. Politics has gained a foot hold in geek culture, by those who want to stir up trouble and maintain their antiquated status quo. The main issue regards women playing a bigger role in the subculture and the men who support them. It's a welcome revolution, not only from my personal perspective, because what a wonderful breath of fresh air and introduction of new perspectives, but it's great for anyone who has something to sell.

As a store owner, I wouldn't be very successful if 90% of my customers were men, as it was when I started nearly 15 years ago. Much of our success is about creating a welcoming environment for all the public. This is apparently a divisive position. Our tolerance a form of intolerance to the alt right folks, who want to make every cultural arena their battleground, game stores included.

This is what happened at my store and others in the San Francisco Bay Area. In our case, our veil of neutrality was pierced when we asked a disruptive customer to leave, causing an online firestorm and real threats to life and property. The customer, a conservative white supremacist was bothering people playing games with his political rants and difficult attitude, a shit disturber in our little Switzerland. We showed him to the door and became his new cause. That this has publicly happened to other local stores, by other conservative shit disturbers, shows neutrality is hard to maintain. These people have a literal handbook for stirring up controversy, and it has moved from university campuses to main street.

The culture wars are not waged only by one side. The most recent example, the most infuriating really, was a Portland case where two employees were fired for not serving a customer after the store had closed. As will happen in an eating establishment, there's a cut off time when the kitchen is closed, but customers remain to finish their meals. The customer in question was a black woman, a firestorm ensued, and in a pretty profound act of cowardice, the owners fired the employees involved under political pressure:

"In the statement "Back To Eden" says the employees were fired because the woman and the "clamoring public" demanded they be fired.
In one statement, the bakery admitted that the employees did not necessarily do anything wrong, "this is more about how a black woman was made to feel" at the business.
That statements have since been deleted."
In radically liberal Portland, the threat of boycott and review slamming for not towing the political line is enough for a store owner to not have their employees backs due to a misunderstanding. Backing employees is what you do as an owner. If you've got a procedural or training problem in your business, you own that problem, it is your fault. The buck stops with you, which is the big lesson in owning a business.

As cowardly as this act was, you have to remember that such a business problem is an existential threat to the livelihood of this owner, whose purpose in life is just to serve you their hand made granola. Really, they make hand made granola. That's not to excuse their cowardice but more to offer an explanation.

Imagine if you, as an individual, expressed your political views on Facebook, and a group of people came to your business, camped in your lobby and demanded you be fired. Take it a step further and imagine they went to your bank and demanded your branch manager close your accounts and cancel your mortgage, destroying your net worth. That's the threat to a small business. Your kids will go hungry and all you want to do is sell games or granola, and since we're not culture warriors, you won't always see acts of heroism. Being a Switzerland in the culture wars is a tricky proposition.

Tuesday, June 5, 2018

Weird, Unwieldy Wonderful, Kickstarter

I was for it before I was against it but I came around again and have supported it for years now. I'm talking about Kickstarter. When games began emerging on Kickstarter, they were so unique and unicorny that I bought every one. Big mistake. Besides the duds, many didn't ship, taking my money which as a retailer, was often in the hundreds of dollars. I'm still owed money by the Wizard Nystul and an extra from the Walking Dead.

The old guard got their shot early on, including the undelivered Nystul's Infinite Dungeon.
It's kind of ironic considering how the spell works.


Kickstarter is a distribution method, not a design studio, so there's no reason to believe they're any better than traditionally funded games. The consensus is they're overall a little worse, actually. What they often tend to be are things that wouldn't make it through normal channels, the weird, the unwieldy, the wonderful. For that reason, I'm interested.

Backing the right Kickstarter derived games gives my store a unique flair other stores don't have. This is especially true if I have to buy deep into a Kickstarter and I get the game early or it's only available through this method. I can use my size as a competitive advantage, a differentiator.

Waiting on my Pencil Dice with Ken Whitman
However, what game designers need to understand is my goals are different than theirs. Their goal is to capture sales from as many end user customers as possible. I say end user customers, because I'm technically their customer too, but they would prefer to avoid me when possible. Game stores are the marketing arm and low margin distribution channel to get their game to those who may have missed their campaign. We're gravy, not the meat.

My goal, as a supporter of their game, is to capture those customers from them, before they do. If I do it wrong, and announce a game offering a poor value proposition, I just used my efforts to drive customers to the designer. This obviously means that I'm trying to capture sales at the same time as them, while the campaign is going on. That's because I don't actually know if I want to back that game if I don't have customer interest, and with backer kits asking my to commit for more copies or thousands of dollars of add ons at the end, my ability to capture customers right now, before the game arrives, is incredibly important.

We compete for customers, while also acting as partners. That's as new economy as it gets! It's also a terrible business model for the game trade. The game trade is a poster child for bad business models. As a retailer, if you see some new technology, Print on Demand, 3D Printing, Kickstarter, and you immediately think how this will enhance your business, you're doing it wrong. New technologies disintermediate the middle men. Consumers make the same mistake. These same technologies won't create books printed in your living room or 40K armies banged out on your printer, they'll provide small press publishers the ability to create cottage industries where they sell you the weird, the unwieldy, and the wonderful when they couldn't have before.

So how do I make it work? When I sign on to a Kickstarter as a retailer, I don't sit back and watch my money work for someone else for a year (or forever) and then tell customers about it once my far too many copies show up on some random day. What I do is promote that Kickstarter while the campaign is going on. I announce it to my customer group on Facebook. I let them know a pre order with me is safer than with you, the publisher. I offer a 10% discount to offset the rampant, wink wink nudge nudge, tax evasion that is the Kickstarter pre order system. Then I get to watch that pre order money work for me, while staying up at night wondering if the stretch goals for Dark Souls will ever arrive and what exactly my liability is if they don't.

The publisher needs to understand we are at cross purposes. We are competing for the same customers. Their organized play or other attempts to get me to promote their game is so far off the mark to be laughable when I've got legitimate partners, without cross purposes. I will help you sell your game to my customers, but we are at odds with each other beyond that. Keep this in mind. Know that pimping your game with the word Kickstarter just tells me you're part of this special relationship that's only worth it for a tiny number of stores. For everyone else, the small stores, the distributors, and for a growing number of disillusioned customers, Kickstarter is the mark of death. But don't get all pouty about it. I may end up being your last friend in this equation.

Friday, June 1, 2018

Prognosticating (Tradecraft)

In a previous incarnation, I was an IT manager in a failing technology company where the blame would shift on a weekly basis, resulting in layoffs. This week it was the marketing manager, last week it was the head of development. Eventually the founder and CEO ran out of people to fire and the board fired him.

In such an environment, with shifting loyalties, regular vocational executions, and no real consequences, morality tended to get a bit compromised. That's how I found myself rooting around on the HR directors laptop over the network. "Holy crap, she has the RIF list in an Excel spreadsheet called RIF List!"

I became known as the guy who "knew things." People would come to me and try to wheedle out whether they would be alright or not. Or in the case of the company attorney, he would visit talking about cars and I would advise him now is not the best time to buy that Mercedes. Eventually my name appeared on that list, which meant my days were numbered. By the time I was laid off, I had been searching for weeks and already had a job lined up. When it comes to the game trade, I don't have a magical list pilfered from a laptop, but I do predict trouble. I feel a disturbance in my cash flow.

As a potential new store owner, I would plot a trajectory. I would visit the next several distributor trade shows as well as GAMA. Is the industry doing better, worse, or about the same? Ask retailers at these shows what's exciting, if anything. If they aren't excited, that's a sign. Plot a game trade trajectory over your shows. The game trade is recession proof, assuming customers have jobs, but it has its own cycles you need to be aware of. The economy could crash during this research period. Doesn't matter, and in fact may help you with future lease negotiations. What's the trajectory of the game trade? That's what you want to discern.

Ask 50 store owners, are you doing better, worse or about the same? Some successful stores are stalling out and looking around for ways to diversify. Other stores are circling the drain and talking about changing their formats, moving to small locations or closing entirely. It's hard to tell, on the whole, whether we're seeing more stores or fewer. New stores, undercapitalized, under researched, are still popping up quicker than the old guard stores are closing.

While you do all this, raise more capital, perfect your business plan, figure out more details of your operation and what you really want out of all this. Take some community college classes to save money on skills you need. I recommend: Excel and spreadsheets, Quickbooks and accounting, small business management, website design, Photoshop and graphic design, and video editing. If you're handy, learn basic carpentry and home electrical. You'll need all of this. This is what I tell my 13 year old to learn, as he'll always have some extra cash if he knows how to do these things.

If you've got a solid business plan, a six figure investment and a ton fo research under your belt, there is nothing that can stop you really. Even if you start in a down environment, everything is up for you. However, if you have no plan, a shoestring start up budget, and you're relying on some optimistic numbers to get you through your first year, and YOU ALL ARE, you need to time it right. It's like the stock market. You want to get in while things are going up. You can't predict the bottom, so don't think you can jump in then. You certainly don't want to be going down, because you really don't know how far down it will go.

Right now I think we're heading into a down cycle, but don't trust me. I'm one of your fifty retailers. We're down about the same as last year, in a period when my business should be growing by double digits. I'm not looking for advice, thanks, I'm stating facts. If I am wrong, and I often am, you will have taken a year to raise money, educate yourself, acquire skills, and shake the hands of 50 game store retailers. You won't have the chance to to this again, so you win whether I'm right or not.

Wednesday, May 30, 2018

How to Order Games (Tradecraft)

This week I'm handing off the ordering process to my manager for the next three months. I'll be on vacation in Central America for seven weeks, so this includes a couple weeks of practice and a week after I get back. If you're trying to hand off this process to someone, this might be useful. It could also be useful if you're new to ordering. Trips like this are an excellent opportunity to check your policies and procedures. Last time I was gone for a month, it took me about four hours to get the store back up to speed when I returned. That's what I want to see.

In the beginning, there were pre-orders. These have been placed in the past and will arrive throughout this period on a schedule of their choosing. I don't track them because they're unpredictable and our revenue levels can easily absorb them. My store pre orders absolutely everything and nothing is ordered last minute other than special orders and the Games Workshop weekly surprises. I don't read dailies. Although I'm handing off ordering, a critical part of this process is buying of new goods, and that's not getting handed off. So really I'm handing off restock ordering and purchase budget management.

My primary distributor is ACD and I get a full list of all pre orders every Saturday morning.
I have an almost equal amount of work to with Alliance, especially for Asmodee.


If I had no budget controls, there would be around $10,000 of stock that could be ordered at the moment. This is accomplished by generating purchase orders from our point of sale machine. To keep on budget, we use Open to Buy. You can download a sample Open to Buy spreadsheet here.

Open to Buy is how we know how much we can spend. Cost of goods are added, product purchases subtracted, and the total subtracted from the available balance, leaving a balance hopefully near zero. I'm currently over budget by almost $4,000, so there's no spending right now. Or is there?

Open to Buy with a negative starting balance

Pre orders will show up regardless of budget and although we can vaguely plan for the big ones, the small ones hit us by surprise and we tend to adjust purchasing after the fact. It's alright to go over budget, but it's not alright to keep buying once you're there. I do have exceptions though. I don't run the kind of store that doesn't have product on the shelves when Magic is released, so some categories get to exceed the budget.

These are my Top of Mind departments. It's alright to top off these departments even when over budget. They include the top performer in each department:


  • Dungeons & Dragons
  • Warhammer 40K (especially Space Marines)
  • Chessex dice
  • Magic: The Gathering
  • Asmodee Family
I would like not to be out of any of these products we've determined to be worthy of carrying, regardless of budget. Most of them are also exempt from strict inventory metrics. Chessex is a "product pyramid" where we don't perform metrics, although Asmodee regularly gets looked at since the line is so vast. 

A long term buyer would be required to do inventory analysis on their potential purchasing to see what to continue ordering and what to drop. I would like to say we're training for that this week, but we're going to focus on budget for that filtering mechanism for now. Long term inventory analysis would be critical for success.

The next step is communication. All my sales reps need to understand that from this point forward, my manager is buying until further notice. Email communication goes to and from them and they have permission to buy. The manager also needs to ensure they have access to all the various web portals for orders, including logins and passwords.


Ordering schedule with notes

From here it's a matter of keeping on schedule, knowing when to order. Pre-orders will auto ship, if they hit enough freight, but restocks need to be manually placed, budget permitting, Top of Mind overriding. My schedule is particular to our circumstances with warehouses being next day ship and Games Workshop slapping penalties for more than one order a week. GW is by far the most painful to manage here and I'm often scrambling to make sure I have all the new releases. They could really use a pre order mechanism.

At this point I'll be out of the ordering loop, focusing instead on daily receipt totals I receive from staff. My job is now finance and continuing to place pre orders. My primary job is to make sure we don't run out of cash, but being out of the country, I have limits on what's possible, especially with new online banking which locks down my bills a week in advance. Ideally I would have checks ready from backup accounts, a big cash cushion, or overdraft protection on my account.

The last bit of this puzzle, for trips over my distributor terms (30 days) is a Google Sheets document with the bills. If I were going for a couple weeks, I could just pay my bills when I returned, but I'll exceed my store terms, along with various credit cards and utilities that often give me 2-3 weeks to pay.

My manager enters each bill into this sheet so I can use online banking to schedule payments. My biggest problem with this from my last trip was enjoying myself and forgetting to pay the bills. I woke up one morning and realized a bunch of stuff was due and just missed having the electricity cut off. Not for the first time, the weakest link in my system was me.

Monday, May 28, 2018

Medium is the Message (Tradecraft)

I went with my son to watch Solo yesterday. We made a day of it with lunch at the theater and comic books afterwards. This movie has been brutally attacked by the fan community, but I mostly went to see what I could salvage from Donald Glover's performance as Lando. Instead, I found an entertaining movie, a compelling if predictable storyline, and strong character development. I think it was the best of the recent crop of rebooted Star Wars films.

Most importantly, my 13 year old son, who is more the target audience than myself, was completely engaged and barely able to contain himself. He grabbed me when I got up to use the restroom during a bit of dialogue, "You're going to miss the best part!" It was all the best part for him. He was also happy at the end because they didn't murder the main characters, which left him upset and less likely to want to see a movie after Infinity War, Rogue One and The Last Jedi. So why is everyone so down on this movie?

This movie is tanking at the box office, mostly because fans watched the sausage being made. They read about changes of directors, how one actor was so bad they had to hire an acting couch, how we were brutally putting to bed the past by killing off our beloved characters and now a prequel! Robots calling for equal rights!!!??? How dare they! We shall show them the power of the force of geekery! Damn Social Justice Warriors! SJW! Other acronyms!

The medium had become the message, to bring in Marshall McCluhan. The story of Solo was about corporate greed and milking Solo until he became an empty husk of a character. Next chapter, Solo the Lich King. Why would anyone want to see that? The final product was fantastic, but it didn't matter.

When I think of The Last Jedi, I think of this shot, not even in the movie.
Mark Hamill realizing the fate of Luke Skywalker.

Your medium becoming your message can happen to any business. When you let go of a beloved employee, cancel a popular event, drop a product line, all things that will need to happen at some point, the customers will begin to associate the quality of your store with the behind the scenes activities that should have nothing to do with their shopping experience. Your authenticity comes into question.

We are not just their shopping experience, we are their cultural touchstone. Our authenticity, our ability to confirm their place in the tribe, our ability to commiserate with the perpetual lack of plastic Battle Sisters, that's what we do. They reward us, while they're engaging in culture, by buying something. The buying is often incidental, especially nowadays. By the way, customers will think this is overblown and deny this, as they deny much of their instinctual behavior that we just barely understand. That's fine, but we know it to be true.

We are the medium. It is our message. However, because it's such a fuzzy concept, much like Top of Mind or Word of Mouth, it's something we rarely consider in the brutal world of retail. It's a subjective and fuzzy thing. A great game store, like a great game publisher, will have equal business sense with equal amounts of authenticity mojo.

We can do a lot of damage when we don't maintain our medium. We can lose our message without even knowing it. Most game stores are by their nature not professional operations, so most are at risk at any time of having their message get away from them. The only saving grace for unprofessional small stores is their undeniable passion. In passion there is forgiveness.

The bigger threat may be for the larger stores. Management naturally grows farther away from day to day operations and their authentic message. I rarely work the sales floor. If my business hits the next stage of development, my manager will rarely work the sales floor -- something I'll add, management is well aware of and not interested in doing. That's because they love the customers, and if they wanted to work a corporate desk job, they could go make a lot more money doing it somewhere else. You can become so big, people stop going there, to paraphrase Yogi Berra.

Anyway, great movie. You are the message. Just don't get cocky, kid.

Saturday, May 26, 2018

About the Book

25 yesterday, 10 today, yeah!
Book sales are going great! If you bought a copy, first of all, thank you! Second, I would like to request that if you bought my book, please leave a review. You can do it on Amazon or Goodreads or wherever you got it.

This sounds weird, but review quantities are actually more important than review ratings, when it comes to search rankings. Even if you thought it was just alright, please say it was just alright. One sentence is enough.

This is a small press book, so this process is a bit of an academic exercise for me. I'm under no illusion the book will become something big, but I greatly enjoy learning the process of how all this publishing stuff works, and it would be foolish for me to not engage fully. I get emails now from store owners telling me this book has been helpful, so I do believe it's getting to the audience that needs it.

As a retailer, I'm overly critical of how the sausage is made, and making a thing is a great way for a retailer to get a more holistic view of the trade. I recommend it. Make a thing.

If you still want a copy of the book, but don't have one yet, consider a few options. Please go to Goodreads and put it on your Want to Read list. The Want to Read list generates buzz, and you can help me without spending money.

If you're a retailer, ACD's Wisconsin warehouse just got 25 copies this week (down to 10 as I write this), hand delivered by my publisher. Getting a tour of the warehouse yesterday and finding my book was an Indiana Jones level of warehouse fun. Everything at the warehouse is sorted by (semi) random code to prevent mis picks, so you look the item up in a computer and hunt the shelves. My store has sold over 30 copies, and I've been able to restock through normal channels throughout the release cycle. I have no back room deal or garage full of books.


I was under the paranoid impression distributors sold out on release and ignored my book, but it turns out distributors are on second and third orders, but they sell out the day they're received. Game distributors don't do books. It's something my publisher explained before I wrote it. I was told I would sell most of my books, you guessed it, on Amazon. Anyway, if you can't get a copy from ACD, GTS now has them in their SoCal, Washington and St. Louis warehouses and Indie Press Revolution is down to just three.

If you're a consumer or prospective store owner, you can of course buy a print copy on Amazon. Even better, now that there's a small amount of supply, ask your friendly local game store to order you a copy of Friendly Local Game Store. This book outsells most of my D&D books in store, without most customers knowing I wrote it, so it's certainly something a store should at least stock once.

Thanks!

Climbing the Indie Press Revolution chart (it has since cooled).
As a friend set, OMG! You're beating No Country For Old Kobolds.

ACD Games Day

I'm back from a whirlwind trip to Wisconsin for ACD Games Day, having left California on Wednesday and returned Friday. I got off the plane in Madison thinking this is just too much effort for such a short show, but then I was overwhelmed with the greenery and the clear skies. It reminded me it has been too long since I've spent time outdoors, having fallen victim to the trap of working too much on my Jeep without taking time to actually use it.

I've only ever visited Madison in spring and summer, the last time being on my cross country road trip in July. It's an allergy free paradise of beautiful scenery, Bavarian levels of great food, and because it's a college town, a lot of youthful energy. I need to visit when it's ten degrees with a foot of snow on the ground. At one point I was planning to sell my house and move to Madison to start my store, but that's a long story. Suffice it to say, it's a fantasy I don't think would have been a mistake.

Having just gone to the GAMA Trade Show a couple months ago, I think I can say the consensus on 2018 is it's a bit cool. There are no must have hits, no great new games everyone is excited about, and the winners tend to be 2017 hold overs or stuff that quickly went out of stock. Magic: Dominaria is a clear hit, but lack of stock has limited success. 2018 appears to be a year when everyone is catching their breath, so I wouldn't describe it as a down year or a bad year, just a more of the same year, but an alarming year if your business is front list driven.  Of course, I have this strong confirmation bias as my sales are flat from a spectacular 2017. This has retailers scrambling to look harder at diversification.

ACD Distribution, who is hosting this show, and has diversified heavily into toys, including Hasbro. This is a smart and natural move since Asmodee and others have sought predictability with exclusive distribution outside of ACD. You gotta sell something, as one of the seminars teaches, so toys is one of those areas.

I spoke with the Hasbro rep this week, and with the death of Toys R Us, there's a scramble to fill the hole in the marketplace. He confirmed that Target and Wal Mart are certainly stepping up, but there's plenty of room for independent retailers to fill that gap. It doesn't need to be straight toys though, there's likely room to turn some of those merchandised mass market games, used for decoration. For example, with the discontinuation of the Winning Moves classic Monopoly, I haven't carried the most popular board game in the world for a year or so now. Hasbro can help me there via ACD, and I don't need to buy cases of it.

My own presentations went fine. My Open to Buy and Inventory Management presentation is a nuts and bolts presentation that I know connects with many new store owners trying to get a grip on inventory. My new Finding Your Unique Value Proposition will get some work done on it, as it essentially says what you do now won't be enough for the future, here are examples of how to future proof your business, and thank you for listening, go back to your doomed existence. It needs some action items to help people get from "you're doomed" to "here's how you plan your future."

Saturday, May 19, 2018

Nothing Special (Tradecraft)

Some of my friends have been kicking around an article from the Harvard Business Review entitled The Five Stages of Small Business Growth. There are summaries of this article online, but if you own a business, you should download the PDF with all the details, especially the impact on owners. It was published in 1987, but it could have been published today. It's relevant.

The article discusses the stages of small business growth and most importantly the role and motivations of the owner during each stage. If you've felt like an NPC, Non Player Character, through your tenure as small business owner, this article helps you gain some perspective. You are the hero of this journey, at least in this article. This is important for small business owners because as you grow, the owner tends to fade into the background, a natural, as it turns out, but disconcerting development.

Your role is increasingly in the background, and your personal needs, what you want from this, are not usually part of the discussion. So you develop feelings of alienation and loss, which can lead to erratic grasping behavior or some odd expressions of disengagement (my experience, not the article). This article helps put your role into perspective so none of these stages come as a surprise. Or as one of my Buddhist teachers once told me after I complained about travel making me feel disoriented: "Well, don't get oriented."




As technical and wonky as this article may be, it draws observations about the role and motivations of owners at each stage of development. I felt like I must be the only one suffering through the Survival phase, that living like a pauper and just hoping it would fail or succeed already, was unique to my experience. Nope. Happens to every small business owner.

How about the alienation that comes from delegation in the Success phase, where I'm increasingly disengaged and money is suddenly an issue, with demands from new hobbies and the business? Happens to everyone at this stage. It's the Success-Disengagement substage, otherwise known as III-D (D is for Disengagement) with our recent expansion an attempt to move to III-G (G is for Growth), the painful and often scary, success-growth substage. That's where I am now, classification III-G, which I have to admit, makes it a little less formidable.

So I must have it all down and there are no more surprises, right? When I look at Stage IV, Take Off, I realize I may never get there. I may never get my III-G attempts to launch into a full on IV. Stage IV is incredibly rare in the game trade, but don't let the field fool you, as only 12% of small businesses ever get there.

There is no wrong answer in the stages of growth and you can languish in Survival for your entire existence, as most mom and pop stores do (according to the article). Or you can buy your house in Maui and remotely manage while chugging along in the III-G Success phase (according to the article). When you look at the staggering requirements for Stage IV, buying someone else's II at the Survival stage or a healthy III-D seems so much more palatable.

I do know of business owners in Stage IV, but they tend to be too busy to chat most of the time, with their large enterprises and high finance. I'm not sure I want to be that busy again, especially now that I'm older with a family and more to lose, and thus III-D, with occasional launches into III-G, is where I'll end up for the long term. It's where 57.9% of companies end up. Nothing special.


Thursday, May 17, 2018

The Law of Six Dudes (Tradecraft)

I love miniature games. I love everything about them, the beautiful sculpts, the creativity in painting, thinking up various ways to trounce my foes. Because I love them, I want to carry all of them. However, not every store is cut out for this, or more accurately not every demographic is capable of supporting this. I've discovered The Law of Six Dudes.

The Law of Six Dudes says I may sell a ton of starter sets for any given miniature game, but there will be a limited number of customers who engage with that game beyond that initial surge. It's six dudes. They're not all dudes, and the number six is my arbitrary number. It's not really a law, more a rule of thumb, but you get my gist.

So what do you do when faced with the Law of Six Dudes? This comes down to your very retail philosophy. Do you demo games, run events, and promote these games to break the Law of Six Dudes? You can spend an infinite amount of energy attempting to create a community where there is none. You may get some of those starter set people to re-engage and you'll suddenly have Eight Dudes, or Ten Dudes. That's an awful lot of work for not a lot of return. Is that your job as a retailer?

You may decide to drop miniatures entirely. Certainly no reasonable mass market retailer would continue supporting a product line that appealed to Six Dudes. But we're specialty retail. We're where you go where everybody knows your name. I've carried RPG product lines for over a decade for TWO dudes. The problem is miniature games are really expensive to carry. The opportunity cost to carry a wall of plastic (once lead) for the potential for a Seventh Dude is far higher than one of each book in the RPG department. It would not be unreasonable to declare your store not a miniatures store and stop letting your love of pretty models get in your way. That's not unreasonable at all.

Our solution has been one of accommodation. I accept that there may but one successful miniature game, and thouest name is Warhammer 40K. However, I also accept that there are strategies to accommodate those six dudes. This means miniature product is carefully curated and cycled through. When the six dudes have had their fill, I don't wait for dude seven to wander in. We also don't clog our event nights with these six dudes, but instead have a catch-all day where all the army men from the beginning of time can be fielded. We've dabbled with nearly every major miniature game over the last 14 years, and you may play them all on Sunday.

Accept your Law of Six Dudes. You are not all things to all people. If you can grow beyond the six, that's great. If you wish to declare you are really not a miniatures store, and drop them entirely, that is perfectly fine and reflects your wisdom not your foolishness. If you want to accommodate as we've done with a curated experience, that's a potentially profitable position that makes most (but not all) customers happy. What you really don't want to do, and I did it for years, is delude yourself about your demographics and your position in the market. It's a painful way to lose money, catering to six dudes, pretending there may be twelve or a hundred. It ties up capital, makes you sad, and shows everyone you're the fool.

The upside of the Fool is it's the card of renewal and new beginnings. 
Start embracing The Law of Six Dudes with a clearance sale.

Wednesday, May 16, 2018

Shifting Value Propositions (Tradecraft)

When you open a hobby game store, you have no idea what kind of store you'll be. If you're starting with a giant Magic collection and you're a Magic maven, sure, Magic will be a big part of your mix. However, you really don't know if you'll be big into board games or miniature games until you figure out the needs of your customer. Your store inventory reflects their needs. Likewise, business models are being shown to shift over time as well, and you need to be just as flexible in this arena as you are with inventory.

In the beginning, there was the Traditional Value Proposition, the pretty good price, with pretty good service, with pretty good selection. Tap 80% of the population and you could safely ignore the other 20%, their poor reviews and all (also known as word of mouth). That has given way to a more Useful Value Proposition, where you find ways to make your retail operation sticky to attract and keep customers, usually through concepts like Third Place Theory. Third Place Theory builds community, and communities are resilient and defy common retail considerations. Finally, you have the future proofing of a Unique Value Proposition, the special sauce in your operation, which might be the building you bought to bend the price curve, community outreach, or supercharged demos that make you the source of demand, rather than attempting to predict supply.

The problem is the Traditional Value Proposition is obsolete, and stores relying on it are closing. The Useful Value Proposition, relying on Third Place Theory, was indeed useful 7-10 years ago, but is now becoming ... wait for it ... traditional. Most game stores are in the useful category, and as useful becomes traditional, their mojo declines and they're at risk. At one point, the early movers of Third Place Theory were unique with their value proposition, so they've slid all the way from Unique to Traditional. Like the shifting whims of customers that determine your inventory mix, your entire retail operation is also built on shifting sands, and you need to be prepared to adapt.

You may think you will run a particular type of store when you begin, but in fact, you absolutely will need to change over time, provided you succeed and you're around long enough. This is not news to more dynamic businesses. Retail didn't change much for a hundred years up until around 1991, when the technology began to intervene. Sears was Amazon for nearly a century, selling everything from wrist watches to houses through catalogs (Sears emerged from the big innovation of that day, catalog sales made viable by the railroad). Sears was so wildly successful they opened brick and mortar stores, much like Amazon is doing today. In 1991 they were the unassailable king of retail. Then the web happened and online shopping provided a Unique alternative.

The key to retail success is coming up with your Unique Value Proposition, but what's even more important is keeping nimble for when your Unique proposition becomes merely Useful, and hopefully before it becomes Traditional. I once ran a profitable BBS system, that relied on technology with multiple phone lines and crazy looking octopus cards. When the web emerged, we invested in new technology to link our BBS to the Internet. Before the loans were paid back, the model shifted again to websites and portals, and we simply couldn't adapt fast enough, while some BBS system could, and became Internet Service Providers. A critical part of having the Unique Value Proposition is being nimble enough to shift your model as you become Useful and then Traditional. When you look at the Traditional Value Proposition losers in retail, the big stores, you'll find the Internet didn't kill them. Almost universally, their lack of dexterity to change did them in. You may be one thing now, but in the future, you'll be another.

Sunday, May 13, 2018

GMROI Checkup (Tradecraft)

You may find yourself with higher sales but that sinking feeling something is wrong with your store. It's like the money is coming in, but there's still no cash at the end of the day to pay bills. It's not that people are stealing from you, but you've seen an increase in sales of corrosive products that erode your margin. Or perhaps you run poorly thought out events under the umbrella of a "marketing expense." Marketing expenses are where bad ideas go to die. This is when you need a GMROI checkup.

We work on a lot of assumptions about how our stores work. We do the work, we hit sales targets, things are well. When you invest in low margin product, or low margin activities, assumptions are no longer enough to keep you afloat. Some examples of this are Ultra Pro with their "net" pricing that leaves you with a 35% margin. For a long time, CCGs like Pokemon and Yugioh were at a 40% margin, although you can boost that with the right distributor.

The proper functioning of a traditional game store historically required a 50% gross margin, but that has been slipping for years. My impression is it hovers around 45% for a diversified store and perhaps down to 40% for a more card centric model.  Besides product problems, you may also be running "customer appreciation" events that rewards "butts in seats" but erode your margin. The margin of your traditional $15 Friday Night Magic event is pretty poor if you're in a state with sales tax and you're including it in your event fee. Our FNM hovers around 25%.

The solution to this is fewer customer appreciation events. If you have to have them, boost your game center sales by monetizing space. We do this by requiring a buy in to play, a $5 for $5 of store credit model. Every scheduled event uses this model, with free play only when nothing is scheduled. This won't change your margins, but it will increase your sales as freeloaders are now required to become customers. Your event won't support pay to play? Appreciation goes both ways and it sounds like you are the one not being appreciated. Drop the event. You don't owe them anything.

When it comes to inventory, you have several options. First, use just in time inventory for low margin items. An extra box of Pokemon or a month supply of Ultra Pro sleeves is an opportunity cost you can't afford. Go lean on these products. Order more often if need be, provided you can avoid freight. Also be ruthless with these inventory categories. We used to carry every play mat. I never met a play mat I didn't like. Just last week I decided there were just too many low performers to treat it like the "product pyramid" as we do with dice, especially at low margins. As Magic had tanked over the last year, so had play mats. It turned out a third weren't performing to my liking. Goodbye.

You can also mark up low margin items. Many stores see CCG supplies as a profit center making up for lower prices on their cards. If you've got low CCG prices and low CCG supply prices, you should definitely be balancing this out. Even if you aren't in the balancing game, who is Ultra Pro to decide you will carry their stuff at the worst margin in the game trade? Mark it up.

Finally, get out of some of these lines altogether by diversifying. If you have more than three lines of card sleeves, you probably have too many. Drop the lowest performer. Card players have a tendency to fetishize their sleeves and they need to get over it.  Of course, if you raise the price, you can have a wall of card sleeves a mile long. An Ultra Pro example would be to lean out your stock, raise your prices and take that money and invest it in just about anything else. If you have the market for high margin items, go there.

Our jigsaw puzzles aren't great sellers but they're the highest margin item in the store. If you're going into board games, seek the brand value protected product. Look to Asmodee right now as they've changed their MAP on their core line to no more than a 10% discount. Seek value with product over 50% margin.

There are also categories that have price elasticity that will allow you to go over MSRP, such as dice, miniatures, and even some of those aforementioned card supplies. An extra quarter for a miniature won't be noticed by the customer, but it might keep you in business. Take advantage of any opportunity to balance your margins by exceeding that 50% line in the sand. Look for sales of things you actually need. Buy direct from China. Embrace publishers who provide such opportunities.

Thursday, May 3, 2018

The Best Damn Clubhouse Store (Tradecraft)

Let's build one. Yeah, the model is broken, but let's make one that works.

Location: We want a Class C retail location, right on the edge of hospitable. It needs to have enough square feet for huge events, seating for 200, but it also has to be presentable to moms and their children. It also needs to include a multi year lease, which makes it potentially a unicorn of a location. Don't go light industrial, go marginal retail.

Concessions: While most full spectrum stores might have half and half retail to game space, you're going two thirds game space to one third retail. You are also going to put in a full snack bar with prepared drinks, either coffee or some sort of funky soda shop. You'll have sandwiches brought in, but you won't prepare them, at least at first. In general, you need to supplement your income with prepared food and drink. You will personally make sure every prepared drink is better than everyone within ten miles and you will master the machine.

Concessions Alternative: You don't like drinking liquids? Alright, you now conquer the secondary market. You buy used games, including used video games. You wheel and deal and sell power cords for X-boxes and tap that market in your community. You now bring in the general public who get angry and swear at you because you won't give them top dollar on Madden 2025. It's cheaper than concessions permits though.

Product Load: Oh dear lord do you have a lot of CCGs. You have every box of Magic obtainable, sold at stupid pack prices. It's alright, even poor selling Magic sells better than every other thing in the game trade. Your single collection is vast, is also sold online at TCGPlayerPro, and you've got a ten grand bankroll in the safe for buying deeper. You are nuts and collect full play sets of absolutely everything ever. You crack 6-10 cases of everything new. This is your "top of mind" experience. You have Towers of Power, searchable collections of singles in boxes around your store, so tall they make the gods in Heaven jealous. You shake your fist at them. Young men tell their families they're looking for a job, but they're worshipping at the Tower of Power all friggin' day long.

You have Pokemon cards and singles as well. You carry a core set of Yugioh singles that everyone recognizes. Anus of Exodia? Yeah, we got that. You dabble with fringe Japanese card games and hopefully you've got someone who cares and can break the habit of this garbage sold at cost online. Good luck with that. Ganbatte!

You carry Asmodee, everything from every line. And that's all when it comes to board games. You make a point of never getting rid of a game until Asmodee themselves gets rid of it. If this segment takes off, perhaps you dabble in other brand value protected board game lines, but you deal in publisher lines not individual games. For now, you become an expert in all things Asmodee: Catan, Star Wars games, Ticket to Ride, you name it. Nobody else gets in. You are an Asmodee company store.

You also carry the Games Workshop stockist line of 40K, the basics of GW, along with their paint line. Again, you buy the new stuff to small degrees, but you don't meander into other miniature games or deeper into this line. You take the low hanging fruit and let the high hanging fruit rot on the ground as it falls. Don't eat that rotten fruit. If this really explodes, go for it. It's all brand value protected. But I warned you about the fruit.

Finally, Dungeons & Dragons, the full line and no more. Spine out. Grudgingly. In the back corner. Maybe with dice in a case. You don't need this line, but it will make you money. If it doesn't work, drop it like its hot. Wizards of the Coast lets Amazon sell this below cost, and they don't provide organized play, so you have no friends here.

Events: Your event coordinators are all employees. Lets get that straight. They work for you, even the Magic judges. Yeah, you'll bribe an L2 when you need one, which hopefully is often, but quality of events is your bag, and this is what's required. Notice how Wizards of the Coast both judges you on your event quality AND demands to be in charge of judges, WHILE telling you judges aren't their responsibility. Play the game.

You run Magic as often as people will show up, and you'll incentivize attendance to make it happen, but you'll also do it profitably. All events are pay to play. All events are professionally managed too. You'll also run Pokemon and Yugioh, with Pokemon players groomed to be future Magic players. This is a major reason why your store needs to be above average, as you are including children in the mix and their justifiably judgmental mothers. When you lose Pokemon, your days are numbered. If you ever find a game to graduate to from Magic, run that too. Bridge? Mah Jong? Why yes!

You buy every organized play kit from Asmodee and you make that shit work. Management bonuses depend on it. You hold regionals for Legend of the Throne Wars and people come from hours away.

With the slack in your schedule, a bad thing I might ad, you run events for your Asmodee and Games Workshop events, but be incredibly reluctant to give up space for D&D or other games that aren't directly adding revenue OR aren't brand value protected. WOTC gets away with Magic because Magic is huge. D&D? Less so.

Staff: You are a CCG maven. You've been playing for years. You compete. You write or make videos, and if not you try it before you start the store. You hire like minded individuals who will both run the store, run events, and make the occasional caramel mariachi. You will endeavor to have a well rounded staff that attempts to have a balance between men and women, as you have a hole to dig out of with a clubhouse style store.

There are no volunteers. There are no crappy events either. You run events you can monetize, and if you can't monetize them, they don't get run. You demo games on the half dozen tables around the store, primarily Asmodee offerings. This structure works better in low wage states, unlike California and Washington, but it can be done there too.

This clubhouse is amazing. Give me a couple hundred grand and I'm all in.


Find Your Niche (Tradecraft)

I like the auto industry, and I would in that business if it didn't rank in seediness up there with pornography and social media analytics. Ford is on my mind after announcing they would stop making cars, other than the Mustang. There's a lesson here for every business.

This lesson comes from the old Ries and Trout book, the 22 Immutable Laws of Marketing.  I love this book, although it's a little dated nowadays. I loved it so much, I used it for the last chapter of my masters thesis describing how 14th Century Japanese Buddhist philosophy evolved new theories of enlightenment to fill open niches of thought. It was a real page turner. The lesson I have in mind is called The Law of the Category. Being first in a category is everything. Everything.  If you can't be the category winner, which usually takes half of the market share in a mature market (why I thought board games were ripe for the picking by somebody), then dominate a new category.

In the case of Ford, they're the number five auto marker in what is absolutely not a mature market. It's a market where millions of vehicles a year are made by companies you've probably never heard of. If you feel overwhelmed by pop up competitors, the auto industry is hardly any better. It's a dangerous market and Ford is losing.

Where Ford is winning is trucks. They sell nearly twice as many trucks as their nearest competitor, the sign of a mature market. Ford has one truck product line, the F-Series that outsells all their non Mustang cars combined. Trucks are also more profitable than cars. Ford is a winning truck company and a losing overall vehicle manufacturer.  So they chose to follow the Law of the Category and be a winning truck manufacturer (with an iconic sporty car).

This is a lesson any mature business, including game stores, can apply to their situation, and one I've applied a time or two. I say mature because newer businesses, assuming they're diversified, try to be all things to all people. They either don't know how to run the numbers to see where they're making and losing money, or they refuse to cede market segments to competitors because of fear the competitor will grow and dominate them (because they lack a Unique Value Proposition).

The reality is focusing on what you do best, what makes you the most money, dominating your segment and not attempting to spread out to conquer the market, is where success lies. Trying to starve competitors doesn't help you or them, and it doesn't stop a new competitor from coming along later. I'm always ready to pivot, I'm always expanding and contracting.

When a new store came along and started deep discounting miniatures, I fought. However, when customers followed price, I pivoted and stopped fighting, putting that money elsewhere. When that store inevitably went out of businesses, I pivoted back and now miniatures are a top selling department. When my competitors attempt to specialize in Japanese card games, which are rounding errors on my balance sheet and difficult to source, I left it to them. Maybe I'll be back one day. What nobody sees is how that capital is shifted to strengths. I chase strengths rather than shore up weaknesses, you know, like Ford.

Wednesday, May 2, 2018

Victory!

Friendly Local Game Store is sold out at game distributors. I always chide publishers who declare victory on selling out, since my job as a store owner is primarily about successfully predicting demand. It's like starving to death and declaring victory on your grocery budget.

This highlights the trouble small publishers face with the distribution system. You make a thing, you beat the drum, you tell suppliers about the drum beating, they gauge demand but hear only quiet drums in the distance, and then they sell out and publishers question why they didn't pick up the saxophone instead. Drumming is hard, and thus we have Kickstarter, direct sales to consumers, and the increasingly popular and always available, electronic copies.

Speaking of electronic copies, Amazon has a big order of physical copies still on the way (showing the evil empire isn't omniscient either), but they did go live with the Kindle edition. You can also get PDF, EPUB and Kindle formats from DriveThruRPG. Upcoming outlets include Indie Press Revolution and iBook. Finally, you can bypass the nonsense and go direct. Atlas Games offers a 50% margin and free shipping on six copies to established retailers. Black Diamond Games has sold 25 copies to date with our early release orders.

Those 25 copies are to consumers, I shall point out, most of whom have no idea who I am. Yesterday I was interviewed by Edward Uhler of the Heavy Cardboard podcast and one thing we discussed he also noticed was how gamers are intensely curious about how the sausage is made. Gamers are intrigued by complex systems and win conditions, and the game trade certainly has complex systems. Friendly Local Game Store pulls back the curtain while also trying to be entertaining, a book a curious gamer is likely to find interesting, not just game store owners, and based on the large initial Amazon order, they agree.

My interview with Heavy Cardboard goes live May 17th and Edward asked a lot of insightful questions. It should be fun. Meanwhile, if you're a store owner and you didn't get your pre orders in, which is most store owners, please back order copies so distributors can hear the drum beat again.