I'm brainstorming for an upcoming presentation, so here are some thoughts about game stores and the UVP:
Game retailers are in the business of selling "hedonic" goods. That's a fancy way of saying we sell crap you don't need. We're not in the need game, we're in the want game. Hedonic goods
are products that provide pleasure, fun and enjoyment. Because we're in the want game, we can't operate a store like we're in the need game, selling utilitarian goods.
We have to provide something special that ties into that pleasure, fun and enjoyment. We are part of the product experience and we need to provide a level of value that enhances that experience through our value proposition. We can't run a traditional store with a traditional value proposition and we're in danger if we simply rely on a Useful Value Proposition. What we need is a Unique Value Proposition.
The traditional value proposition in retail, the one you still see with utilitarian goods, is the three legged stool. You've got reasonably good service, reasonably good selection, at a reasonably good price. When was the last time you chatted about a new brand of potato chips to the cashier at Wal Mart? How many special orders a day do you think they take at the grocery store? How often do you think people say "I'll just buy that cheaper online" at the gas station? The biggest mistake you can make running a hedonic store is to running it like a utilitarian store, although plenty of utilitarian stores attempt to go beyond the traditional model to make shopping with them special.
When I first opened my store 2004, I ran it using this traditional model. I focused on customer service, I stocked every game I thought anyone could possibly want (more than was smart), and although I held the line at MSRP, I would regularly buy liquidated goods to offer the occasional great deal. I had no events, no game space, and although I worked many hours a week, I was home by 6 each night. My traditional value proposition in a hedonic market was an extremely limiting model. I had to master every traditional metric to stay afloat. It worked, but it was not the future of retail and I didn't want it to be my future.
Every game store owner intuitively know the traditional value proposition is not an effective model for them. My traditional value proposition worked because I was running a traditional retail establishment with proper capitalization. Most new game stores tend to be undercapitalized and utilize new tools to squeeze profitability out of nearly nothing. They've got a useful value proposition, and although it's a brittle model, it works with enough sweat.
A useful value proposition offers something important to the hedonic customer beyond the traditional three legged stool of the traditional value proposition that's so easily replicated on the Internet. The most common useful value proposition is in store events and a fairly tight focus of inventory and knowledge in one well understood arena: Magic: The Gathering. Even today, a good percentage of game store owner chatter is about what's happening right now with Magic: The Gathering. Those who aren't completely reliant on this useful value proposition right now likely started with it, so it's deeply ingrained in store owner culture.
There are other areas of the Useful Value Proposition that the average game store engages in. This is stuff I still talk about on my website, since my marketing presence hasn't gone beyond this level:
- Engaging displays
- Multimedia wonders
- Clean-Well Lit-Friendly
- Demo game library
- That guy/gal
Developing a Useful Value Proposition is why game stores exist, but it's also a baseline for retail survival in this age. Stores like Sears and Toys R Us failed to be useful. They barely managed to maintain a traditional value proposition, yet alone providing a useful service, and unique was beyond their wildest dreams. With enough money and momentum, such as with giant corporate retailers, a traditional model is still sustainable for a while longer. For the rest of us, developing at least a Useful Value Proposition is basic survival. But is it enough?
As giant retailers struggle to define UVP as Useful Value Proposition, top game trade retailers are struggling to find their Unique Value Proposition. As we lack money and momentum, we need to find safety in a rapidly changing retail landscape. We not only fight against Internet retailers, who sell things, our core business, as a loss leader, but the Useful Value Proposition store is constantly fighting against new game trade competitors. The barrier to entry for new stores is incredibly low and it doesn't take more than some folding chairs and a magic binder for them to suddenly become useful. Some retail markets see a steady stream of pop ups, in a tug of war with their customer community. Useful simply doesn't cut it any more.
It should also be noted that a true Unique Value Proposition is built on shifting sands. What's unique today may be only useful tomorrow. My first business was running a BBS system with hundreds of subscribers. This was before the Internet. We had a captive audience. We were unique. When the Internet began opening up to the public, we spent thousands of dollars becoming a hybrid BBS, with Internet access, our own domain with email and for a time it worked and we maintained our UVP.
The next change was customer direct access to the Internet and many BBS systems became Internet service providers. However, we were still paying off debt from our last investment in our UVP. The shifting sands buried us and we weren't able to adapt fast enough. Most of those ISPs are gone now, as their entire business model became a commodity offered by the telephone and cable providers. The value of a Unique Value Proposition is only as difficult as it is to replicate by competitors. However, investing in a Unique Value Proposition is treacherous, but worthwhile, as you are at least miles ahead of the Useful Value Proposition businesses. While you're trying desperately to adapt and grow to new trends, the Useful retailers will be left in the dust (which is what I believe will happen).
So what's a Unique Value Proposition for hobby game stores? It's something a pop up store can't replicate without resources or money. It lives in the philosophy of Third Place Theory, providing a social outlet in a cold world. It's embracing "experiential retail" as their unique model. Examples of a UVP:
- The coffee shop, bar, restaurant
- The mega event center
- The vertically integrated store
- The liquidation king
- The taste maker (supercharged demos)
Some of these examples are self explanatory and many are uniquely positioned, but the one I want to mention, because it doesn't require a bunch of capital or connections, is the taste maker. This is an area pioneered and talked about by game retailers Steve Ellis and Travis Severance and it basically requires a strong emphasis on demoing games at a very high level.
Imagine what would happen if you had 3-10 demo tables and every month you taught customers the games on those tables, rotating them every 30 days to keep them fresh. Several things occur:
First, you've created a unique experience in your store and the ripple effect of your sales efforts creates demand in your community. Rather than sitting back and waiting for customers to come in, you are creating the demand by showing off a pleasurable, fun and enjoyable product.
Second, you have turbocharged employee knowledge, which puts you well beyond the traditional value proposition in retail. If you have three tables of demo games a month, it means every staff member has learned 36 new games that year. Increase the number of tables and you increase the power of this model.
Third, and the biggest reason to give this a chance if you're on the fence or dubious, is the massive increase in sales. Sales skyrocket upwards of 400%. You start focusing on finding new product for the hopper. You take larger stakes in games you know from experience you can sell. You stop dabbling with product and focusing on a system, rather than a stream of board games, ten a day at the current rate. You have created a Unique Value Proposition in your hedonic arena.
The taste maker model requires a staffing level and management expertise most stores will struggle to obtain, and thus it's unique and not simply useful. A general rule of thumb is if it's easy and cheap, it's simply useful. If it's hard or expensive, it's likely unique. The key is to not find yourself tapped out of resources with your unique value proposition when the next shift occurs, or you could find yourself running a BBS in the age of the Internet.