Thursday, December 31, 2020

Forgetting the Fizz

Every time I meditate, I forget how wonderful it is to center the mind. There are parts of consciousness, reached during meditation, that are beyond thinking and memory. You can't remember the feeling because there is no feeling, no thing to imprint.  You experience this non thinking, but its nature won't allow you to remember, so you forget how wonderful "it" is. If you could remember your non thought, it wouldn't be the thing, since the nature of the thing is non thingness. Still with me?

Working with customers is similar in that it brings an ineffable satisfaction. It's certainly not a deep meditative state of no-thing ness, but it's a satisfaction that's soon forgotten. When I'm away from this for periods of time, I forget about that fizz, that deep satisfaction. I feel like a bit of a fraud. Was it ever there at all? Maybe I willed it into being. You see this attempt to will it into being with new sales people who over do it. They talk too much, too loudly, don't listen, don't engage. Maybe that was me!

When these thoughts arise, you'll probably think the fizz is gone. However, you just can't remember it. It's an elusive feeling. For those of us who delegate fizz, you might think you gave it away. I used to have the fizz, but now someone else has it. John or Tammy have my fizz now. That feels especially true when you disengage and then watch your proteges take up the mantle. Yep, there goes my fizz.  You still have it, you just need to go do the thing, like a reluctant meditator. Fizz abides. You'll slip right back into that ineffable, fizzy feeling. 

You probably won't remember it afterwards though. 

Thursday, August 20, 2020

Lift Off

I am betting on the U recovery, a downgrade from a V, hopes dashed by a uniquely American belief in personal freedom. A U is a V with a trough filled with the corpses of our callously discarded elders. A "U" assumes we will see sales back to normal quickly once a vaccine is in play, which is somewhat optimistic when many industries expect up to three years to recover. They expect something that looks more like a Nike swoosh. I do not want swoosh. If I thought we were swooshing, I might exit. No swoosh.

This willful rush towards oblivion cost my business $90,000. I didn't fully realize this until I applied for a grant this week. It will set me back five years financially, assuming things were back to normal, which they are not. We survived because I borrowed money from my home equity, called on investors for more cash, took a PPP loan/grant that is still questionable as to repayment, and only then dipped into a large EIDL loan to pay off creditors. Any victory lap you perceive me taking is in the context of this tremendous cost for others personal freedoms. 

My strategy forward is fairly simple. Since I'm loaded up with government loan money, I'm rapidly expanding inventory. Some of it will be good choices, some bad, but in the end, and before I make a single loan payment, I'll have it dialed in. I am going to attempt to broaden and deepen my offerings in hopes of drawing in more customers now, boost sales to something approaching normal as time goes by, and be prepared for my approaching U recovery. 

When that recovery comes, be it a U or even the dreaded swoosh, we will be stronger than before. Which is good, because I've got some hefty new loan payments. That's nothing new though, and in fact, they are lower than my recently paid off construction loans, for the game space I can't use, in the retail location rent out of proportion with what's happening.

Saturday, May 23, 2020

We Are All Multi Channel Retailers Now

If you had asked me at the beginning of March, if having an online store was necessary, I would have told you no. The vast majority of retailers make single digits of their revenue from online sales. It's something I've watched closely, because it seems like a logical thing to do, but it actually isn't. Online sales are an exhaust port for dead stock, a blessing, and a curse for everyone else. Most online retailers use Amazon to sell online, and before that Ebay. Many more only sell Magic singles online through TCGPlayer. Only a handful make any reasonable percentage of their sales online through their own branded store, and of course, they're in a "I told you so" mode.

Was I wrong? Small business is not about planning for 100 year floods, it's about being nimble with the opportunities and threats presented and quickly pivoting in times of crisis. It takes about 100 hours to add 1,000 descriptions to an online store. Stores generally have somewhere in the 2,500 to 5,000 item range, with the big boys upwards of 15,000.  If your big store can spend 1,500 hours, we'll call it $18,000 in California wages, just so customers can view items from home and you get a few percent in direct sales, you are probably uniquely successful in this trade. It makes no sense in normal times.

Now things are different, and for long enough to just as well be permanent. Customers are scared and are not returning to businesses as they re-open. They would still like delivery to their homes. I bought a delivery vehicle for this purpose, as I'm that certain this will continue. Having an online store is an essential part of delivery and curbside pick up. How long will this continue? The answer is longer than you can survive without an online store.

The next year to eighteen months will be a challenge for retailers. You may not need an online store after that. You may be able to dodge this 100 year flood a second time. However, you probably can't survive this period without an online presence. You are also going to have to figure out outreach online. Facebook might have worked in the past for most customers, but you'll need to figure out where the rest of them have gone in the online world. If I thought my Pokemon kids were unresponsive on Facebook before the pandemic, they are absolutely missing in action during it. My marketing to them had been Wednesday night Pokemon.

So if you ask me in two years, will an online store be necessary, I would tell you probably not. I don't believe shopping habits have been permanently changed. I believe humans are social creatures and they thrive with social interactions, and providing that will be even more important when you can safely do so. I also don't know of any other retail business model that works without that social interaction, barring some online monopoly fueled by Wall Street capital. Yes, Amazon simply wins in a pandemic. There is no competing model.

If you ask me now if an online store is necessary now, I would say absolutely and you are very late to this party. Most retailers I know have been building their online store since late March. Those who spent the time to do it right and integrate their POS systems with an online store took longer to launch, but saw perhaps double the sales of those who put up something quick next to their point of sale systems. POS adjacent. I'm doing both, propping up our integrated online store as quickly as possible, while adding items to our stand alone online store for emergency revenue, until which time we swap in the integrated one (hopefully next week).

In normal times I would recommend going to conventions, community outreach and other channels for sales, but I'll instead recommend you look within. Search for fruit at the top of the tree. We are accustomed to doing cost-benefit analysis, and only reaching for low hanging fruit. In this time of fruit deficit, no fruit is too high. When there are no customers to serve, your time has no value. Find ways to generate revenue that you may have discounted in the past because the benefit was only marginal.

Gift wrapping is a good symbol of this. If your store doesn't do it, because "you're not good at it" or you just simply didn't see the point, get yourself a gift wrapping station today and watch a YouTube video or something. Find out what customers want and stock it, even if it's outside of distribution. This isn't a new retail channel, but it's an opportunity to tap new revenue, and when this is all over, your store will be that much better for it.

Monday, April 27, 2020

Game Store Problems and Solution in the Age of Social Isolation

After my dismal assessment of the hobby game store, I wanted to delve into the root causes and some possible solutions during this COVID-19 pandemic. There are three problems right now when stores re-open, lack of events and outsized real-estate, the effect lack of events has on staffing, and unpredictable demand of product in breadth and depth. Let's look at each of these and see if there are some solutions.

Events result in a significant portion of store sales. They drive sales of product, either directly with CCGs or indirectly, with games that drive tertiary demand. You play Magic, you buy product to play in the store, while if you play 40K, you buy product later, after you've have your rear end handed to you. When there is no in-store gaming, which is a cornerstone of the modern hobby game store, there is significant reduced sales. Often it's a big event that pays the rent. Events are so integrated into the model, we really don't know to what extent this will effect sales, but my guess is 20-40%. When I moved from a no event store to a store with events in 2008, my sales rose 48% the first year.

We are overstored. Losing events for a year means hobby game stores have too much square footage, too high a rent. 1,000-2,000 square feet of unusable space could cost as much as $6,000 a month. Commercial leases are usually multi-year affairs, although some stores will have month-to-month leases. Those who can downsize would be wise to do it, if they can do it cheaply. Last time I looked at moving, it was going to be a $50,000 expense, so the idea of moving to a small space and then moving back to a big space in a year, is unrealistic. I've suggest mothballing the business, if you can possibly put it away and get a job for a while.

The other option is lease modifications. Right now, most landlords are not having this. If they don't want to forgive rent, they certainly don't want to change your lease. This catastrophe has happened too quickly for them to absorb or comprehend the damage. When we begin to re-open, and it's clear a lot of stores remain closed or simply can't pay rent, cracks in their armor will form. During the 2008 recession, I was able to re-negotiate my lease. I only expect this to happen if we are economically impacted for the rest of the year, such as the predicted comeback of the virus in the Fall. There is no evidence lease modifications will work now, but keep an eye on your neighbors.

Will online events work? When you're out of crisis mode, if you can wrap your head around Magic Arena or D&D online, these are great for keeping communities alive. Our Magic judge has been great in running Magic Arena for our community, and we've had success with volunteers stepping up and running D&D games for kids. The ideal store would have a business oriented partner handling the overwhelming tasks of survival and re-start and a more events oriented partner doing outreach and online event coordination. If you can do both of these yourself, you are far better prepared for this than I.  There is no direct revenue of any significance involved in this, but it keeps your customers engaged, entertained, and hopefully planning to return to your store later.

The second problem is the reduction in staff hours. My store was open 85 hours a week, with at least two to three people on staff most of those hours. My payroll costs have grown 50% in the last five years due to increased event space. This is because of the growing demand for events. The business was pretty relaxed from 10-5, when I worked, but it was hopping after hours until 10 or 11pm. We will likely change our hours from 11-7, like I had when it was just me working the store, with no events. I only need about half my staff to run with these hours.

Knowledgeable staff are critical to a hobby game store. It takes six weeks to train a staff member, but six months to have them truly competent (six years to mastery). Losing any of them is a huge economic loss in itself. How do we retain them during this crisis? The PPP loan is a stop gap solution, one I've received. It will cover my payroll for the next two months, starting this week. I'm giving starting bonus hours to help compete against overly generous unemployment benefits. 

PPP is set up very badly, in that it starts while businesses are still sheltered in place. Businesses are competing against the government who gave employees huge bonus money, more than they would have made working. I never thought I would use the term "burn rate" again, but here we are. I need to get my payroll burn rate up, regardless of the value of that labor. If I can maintain high payroll costs, my PPP loan is forgiven.

We're using PPP hours to populate our new point-of-sale system with item descriptions and photos to sync to a new online store. Hopefully some of that money will be used for generating direct revenue in June. What will happen in July, when PPP runs out and demand is a mystery.

Increase labor demand. Reducing head count is inevitable without some other method of increasing demand for labor. Increasing non conventional sales may take care of some of this. Curbside delivery, contactless home delivery,  and online shipping can be part of the solution. Right now we're seeing artificially high online sales of around 20-30%, all for home delivery. Most game stores who did online sales in the Before Times will tell you it was only in single percentage digits. Online sales for most stores was supplemental, and it was neither necessary nor relevant to most stores.

When people can shop again, I anticipate a larger than previous percentage of online shopping using various delivery methods. It would be wise to have your store set up so customers can shop at home for pickup or delivery. This demand should last a year to eighteen months, but it may just entrench a trend that was already growing.

I'm considering leasing a vehicle for the business for deliveries. That's how confident I am this will continue for a while. These type of sales are time consuming and lower margin than in-store sales, but if they maintain your most important asset, your staff, they're worth slogging through for a while. If I can afford it, I plan to give up most of my store hours as an owner to provide a much needed shift to an employee.

Product demand relates to what degree of sales decline we're likely to see, if any, and what sales patterns will change, if any. During The Great Recession, a lot of vanity product dried up and disappeared. A lot of cool things you see on Kickstarter today would have been carried directly by innovative game stores ten years ago. I was proud of that extra effort. Our ability to be the curator of cool has shifted online, at least for the alpha customers.

Right now I'm sitting on a pile of low interest, long term, six figure, EIDL loan money, that could transform my business. I could double my inventory. Quadruple it, if I were a mad man. I could turn my game space into shelves. I could transform my store into a gamers dream, and I could do it now and have it ready when we re-open. I would be a dark lord of games, all shall love me and despair!

That assumes I know what's going to happen. It assumes I expect normal, and not dark times ahead where I lose money every month for a year. It most importantly assumes I know what customers will want when I re-open. Do I double my 40K offerings? Do I go deeper on board games? Do I finally buy six figures in Magic singles? I simply don't know what they'll want, and to what degree, and neither do you. I must wait and see. I may diminish and go into the south (I'm learning Spanish).

I'm expecting a bit of a W recession, where we've been hit hard, we'll see a strong initial recovery, and then we'll get hit again in the Fall. Governments will be more reluctant to close down then, and they'll likely use technology to aim closures and re-open more aggressively. If I thought this were actually over, if I believed in the V instead of the W, I would make very different decisions. With a W, you keep your powder dry and look for opportunities to keep everyone working and the money flowing. If I believed in the V, I would make a grand gesture or plan to return to normal earlier. Pick the wrong letter and you move at the wrong time.

Saturday, April 25, 2020

The Future of In-Store Gaming

Without in-store gaming, the hobby game store business model is broken. Let's not pretend it's not. If we survive the year, it will be because of charitable customers. A store with game space has a Useful Value Proposition. It's not unique, not special, but it's expected and it's critically important.

Social gaming is something you can't get online. You can't get the breadth of social gaming at home with your friends or family. It's a critical loss leader of a service that defines the hobby game trade. Our stores are designed around it and our staff and hours reflect it. A straight retail store is not a long term viable business, at least not for anyone who has space and staff set up for such a store. It wouldn't surprise me if upwards of 40% of our sales are tied to in store gaming.

Customers ask, when will you have in-store gaming again? I don't know. I can tell you we may have closed our in-store gaming a little late, carefully following bare minimum CDC and county guidelines, but we won't be opening it too early. There's no amount of pressure or economic injury too great to risk what we know is a killer. There are stores planning to open with customers wearing masks, playing in pods. Umm, no. I guarantee you, there will be stores doing this, but it's grossly irresponsible and you shouldn't engage. One of the things I dislike about this community is the inability to hold bad actors accountable.

The key term is social distancing
. As long as there is social distancing, meaning you stay six feet from each other in public spaces, there is no in-store gaming. Let's not pretend the 40K crowd can play their game while carefully abiding by the six foot social distancing rule. It's a fantasy. Let it go. As long as social distancing is recommended, there will be no responsible in store gaming.

What happens next?  There are half a dozen studies suggesting we'll have some sort of reverse social gathering recommendations. We'll start with curbside delivery, then no more than five customers in the store, no more than five people gathered for an event, then 50, then 100, then maybe it will be normal again. This could take a year or longer. Some customers will never in-store game again, just as some people will never go to a movie theater again.

What I would like my customers to understand is:
  1. I have a strong financial motive to get in-store gaming back up and running as quickly as possible. Don't think I'm dragging my feet. Peoples livelihoods depend on it eventually happening.
  2. I know you're young and invulnerable and aren't overly concerned with dying of a virus that mostly harms the old and infirm, but we need to work together to keep our community safe.
  3. I won't compromise the health of my staff or my customers, even if staff or customers are willing to take risks. Please don't come to me with justifications or reasonings as to why your event is different. 
  4. Likewise, there will be those who think we are reckless for following new opening guidelines. If you can't abide by our painfully difficult decisions, please leave. There were angry people on both sides before and that won't change.

I need to ask customers to support small business during this critical transition period with their money. New games are being released. Buy that friend you haven't seen in a month a gift certificate. Store owners know our value proposition, what we offer, is compromised. We need customers to vote for our survival with their wallets. Please continue buying from us, even though it's scary and we aren't offering your regular event.

Right now, stores doing home or curbside delivery will tell you they're only doing 20% or so of their previous sales. That means 80% of previous customers are not helping. If you want to see your local store continue to exist, we need you to actively spend your money to make this happen, even though we aren't offering the same experience you've grown to love. We'll get through this together.

Wednesday, April 22, 2020

Treacherous Government Loans and Account Segregation

My small business received both the EIDL and PPP loans. Yes, thank you, it was a bunch of work, but no harder than creating a Pathfinder 2nd Edition character for the first time. I have some unique experience in creative financing my business, so I saw the opportunities and jumped on them. This is my area. However, these loans are treacherous. I'm going to briefly go over why they're treacherous and how you can navigate these waters.

The EIDL loan has approved uses and disapproved uses. A lot of disapproved uses are things you might do all the time, like issuing profit or paying off old debt. This is theoretically a thirty year loan. Are you not going to have profit for 30 years to prove the SBA Gods that you've used the loan for legitimate funds? No, but you need to be able to prove profit taking and debt retirement did not come from this money.

Likewise, the PPP loan, to act like a grant and be forgiven, can only be used for (some) payroll costs, some insurance, rent, utilities (whatever that means) and mortgages from the Before Times. Payroll has to be kept at 75% with the same number of full time employees (30+ hours?) to be forgiven. I am not an authority on this. Nobody is an authority on this. It''s complicated and likely to change, so you need to handle this money in a special way, although it doesn't quite need the same level of segregation as the EIDL money.

Here's what I've done. The first thing I did was create money market accounts at my local bank. This earns something like zero point zero nothing percent interest, but the account segregates the money from my general funds. Now I can transfer money from loan accounts to the general fund for specific uses with specific notations. I can use my own money without bumping into loan money restrictions. I created these entries in my Chart of Accounts:

I am not an accountant, but my accountant approves of what I'm doing. Step two is to create Long Term Liability accounts for these debts, which is nothing special, just how you would track a loan. 

Finally, how do you actually track expenses? I was discussing this with friends and the issue of Class came up. I've never used this before now. Setting up Class, an option in Quickbooks, allows you to note each expense line with a Class notation. So most of my Payroll taxes are allowed to be paid with PPP money, except federal taxes. I can line item each tax type as PPP approved using Class, except federal taxes. This allows me to track my usual expenses without too much interruption in work flow. When it comes time to prove how I spent the money,  I can run a report using the Class and it takes me minutes instead of it being nearly impossible.

Yes, you do need to be this detailed, and no, you probably don't need an accountant. You do need to be very clear on what is allowed and what is not for each loan. Getting your PPP money deployed in approved usages in the short period required is going to be a chore and will take creativity. My 15 year old is suddenly back on payroll. My old manager is back. Employees are being tapped to work from home on projects that don't exist yet that I'm scrambling to create (online store). Once the PPP money hits my account, the race is on to spend it properly and quickly.

The EIDL money is a little easier. I'l be paying my vendors with a big chunk and mostly leaving that money in its account for the duration. Its segregation is the most important thing, so as not to run afoul of the government.

Good luck! I know getting this stuff is hard. If you haven't gotten the PPP yet, keep trying. It's to your advantage to get it as late as possible in this crisis, when your people are going to be able to work doing something useful. Stop lamenting about large corporations getting unfair shares and start working on this. You will be far ahead of me if you get it later.

Saturday, April 4, 2020

Rescue and Recovery

I own a hobby game store but one of my other hobbies, the one that takes all my meager disposable income, is overlanding and off roading. I have been stuck many times in my Jeep. For a while, it seemed like that's what you did, drive until you got stuck. I learned a lot during this time, both about preparation and technique as well as wisdom in avoiding mistakes.

Once I tried to get up a muddy hill and slid back down sideways, nearly over an embankment. I tried several more times and slid into the exact same nook on the hill, a little closer to the edge each time. Eventually I got half way up, avoided the slide, and winched my way over the top. My friend who didn't get stuck was focused on getting me to learn how to navigate the vehicle up the hill. I just wanted to get to the top. My installer thought I was foolish to buy a winch, "I've been off-roading for 20 years and never used my winch." Well, he never went with us. I ended up using the winch several more times that year. There are some fundamentals to off-roading that apply to business.

Be prepared. In my Jeep sliding situation, I had the original, street tires on the vehicle. I had no business being in mud. A wiser me would have looked at that hill and said "Nope! We go around." In business this means having some form of reserve. A cash reserve is the most obvious. Before we had our large construction project, with tremendous debt, I had cash reserves. We would look around and try to solve problems with money, rather than seeing problems and putting them on my white board of shame, a list to be solved another day.

Being prepared also means having a plan. What would you do if you were forced to shut down for a long period of time? Would you continue the business at all? That's the first question. Is it worth it? If so, how? Having checked your resolve ahead of time means you are acting on your plan while others are searching their hearts. This is a discussion I've had with friends and family many times, and the weekend before I was shut down, we revisited this. Is it worth continuing if they shut you down?

Self rescue. Rule zero of survival is nobody is coming. Be self reliant. With rule zero in mind, how are you going to self rescue in a time of crisis? You should certainly call for help, but remember, nobody is coming. Hope they come, expect they won't. My solution was to set up an online store and do no-contact home delivery. The best time to have set up an online store was a year ago, but you do what you can in the time of crisis. In coming days, I will change that to far less profitable, but safer, shipping of all orders. Nobody is coming. I'll believe there is an outside solution when the money hits my bank account.

Call for help. Nobody is coming, but they might. I've got a ham in the Jeep, but I really want a satellite communicator. The price tag and subscription throws me off, but before every big trip, I consider it again. How remote is this trip? Who am I going with?

In the case of the business, I'm refinancing my house to acquire cash out and tapping investors for a "cash call." This alone is probably enough to self-rescue, assuming things go back to normal. They'll never be normal again. When I went to initiate a refinance, the first several days the banks were swamped and stopped publishing rates. The next week, my mortgage broker added me to her schedule. It has been three weeks and she hasn't called me back. I'm half way through a refinance with a second broker. Is it possible this falls through? Absolutely. Should I have relied on the first broker? Nobody is coming.

I'm also applying for an SBA economic injury disaster loan, and was recently approved for one. Next is the PPP payroll protection plan, which really will employ my staff for more hours than I would give them otherwise, probably building a new online store I should have created a year ago.

One of these things needs to happen. I need the mortgage refi or the SBA loan and gravy if I get both. Let's turn failure into an embarrassment of riches. Since nobody is coming, sending out a request for help on every frequency might increase my chances somebody comes. If nobody comes, the online store becomes an even hotter priority. Everyone is screwed. It is to everyones interest to be patient and allow self recovery. It's the best option since nobody is coming.

The time to be prepared with a strong resolve and resources in place, was before this happened. The time to begin the self rescue and call for help was last week. The time to accept nobody is coming and figure this out on your own is now.

Wednesday, January 15, 2020

The Storm is Everywhere

Stewards is how I describe our relationship to the gaming subculture. The days of stores as taste makers are long behind us, although you can leverage and channel interest through events and demos. I felt this strongly selling role playing game during the holidays.

We certainly sold our share of gaming books, but with the slower, wiser, release cycle of 5E, there are a tremendous number of players who just don't need any books, most of the time. The sheer number of these new customers and the slow book release schedule meant dice and miniature sales have been stratospheric in the trade. You couldn't have enough of either in 2019. Customers have money and they want to spend it and it will be with you, or increasingly, elsewhere. This season I could feel the Etsyfication of the hobby.

There have always been low volume makers of stuff for gaming, but players are now tied into an omnichannel environment, where games are bought and played and talked about virtually everywhere. We are just one channel and perhaps not their primary. I know game trade buyers at distribution and they do their best to follow trends, but there are just too many makers and Kickstarter projects to keep up with and not enough budget to follow every line. 

We have customers that have gravitated away from our sales channel nearly entirely, as well as those who live and play the games we sell without knowing or caring we exist. It's not that they have better options (selection and price), like in the past, but they have different options. Their experiences and purchased products only have vague overlap. My store is full of customers three nights a week, and if I could just read their mind, tap into their other channels. 

I had holiday customers arrive with a list of titles with little resemblance to my reality, as if they were stringing random words together. There is not a strong understanding amongst casual consumers that these channels don't merge at the end point of brick and mortar retail. When that light bulb goes off, we'll find ourselves marginalized, if we haven't been already. Who wants to shop where they sell half of what you're interested in, when there's a source with 100%? If you have the budget and the knowledge, attempting to get in on the action of another channel is a wise move, although you'll never really tap the potential of the other channels. You don't need to be all channels but you don't want to be the worst channel. You don't need to outrun the bear, just outrun your buddy.

Breaking out of our channel requires budget, insight and being on trend. As I get older, I am often not on trend, such as my mystification as to why people watch hours of gaming when they can just do it. I understand why people watch professional sports, but gaming seems more accessible, especially when there's always hours of research and prep for a D&D game. I mentioned this on my personal page and have been educated, so you don't need to explain it to me. I get that there's evolved mastery of the game on display, rather than a scripted farce, which is what I see because I'm so very far from personal mastery of the game. I'm more in the Colvillian camp of slight deviations from the baseline.

The new D&D book, Explorer’s Guide to Wildemount, is a web series tie in by Matt Mercer, of Critical Roll. Even Wizards of the Coast has no choice but to get on trend, to figure out what players want, and of course, they are omnichannel oriented, including deep discounting on Amazon. The grognards like me shake our fists, demanding a reboot of Planescape, much like how the grognard retailer in me shakes my first about those deep discount Amazon D&D sales. 

But Wizard's knows to follow the trends, to tie into the energy in the room, to play the channels. My employees weren't even alive when Planescape was published, which is true of most customers. Maybe ride the channel while the riding is good? Critical Role is right now, at the subcultural forefront, with 758K subscribers with dozens of videos with over a million views. 

These problems are opportunities, don't let me depress you. These are problems you want to have, the catching of raindrops in a thimble during a hurricane. The mass marketization of the game trade is really an omnichannel endeavor, as the mass market is mostly dead. Hobby game stores are closing in droves, as they're unable to catch enough water in their thimbles. The smart ones, the larger ones for the most part, are making larger thimbles, sometimes creating their own literal channels. We saw the clouds and knew the storm was coming, but we were wrong about its origin. The storm is everywhere. 

Wednesday, January 1, 2020

The Holidays Were Nice

December was an interesting month for my store, if you think terrifying is interesting. It was a happy, hopeful, cheerful month. There was no sign of impeachment fatigue, as my wife suggested. There wasn't a feeling people were holding back because of a feared recession or tariffs. It was simply ... nice. 

Nice is not what the last two years have been for us, especially the whirlwind holiday season of 2018. Really, I felt like we were hanging on for dear life with stratospheric, never before imagined sales. So, a whirlwind to ... nice. Light drizzle at best.

This is true for perhaps two thirds of retailers, from what I can gather. If you were kicking ass and taking names in November, growing rapidly, fueling your new initiatives, you probably had a great or at least flat December. You are winning. So what happened for the rest of us?

First, as I mentioned, it was nice. It was not a catastrophe, although I've used that word in describing it, mostly because I had mentally already spent the profits.  The season was very 2017 for us, last time I saw nice. 

I should also mention we had a very efficient holiday season, as in nothing was discounted, there was no product in need of liquidation after Black Friday, and although our gross sales were down 15% from last year, our gross profit was only down 7%. We had some unfortunate outages, but I can count them on one hand (I really missed Dixit). We were a well oiled engine, albeit a V6 instead of a V8. 

Second, reasons. There was no big Magic release, which was an oddity last year. WOTC doesn't normally do December releases, so it supercharged our engine. Events were also lackluster for Magic and other games. Events did not drive sales at all. 

So everything else was the same? Mmmm, no. Everything was down for us except accessories like dice, miniatures, and paint. Again, it was nice, but we've been riding high on mass excitement surrounding hobby games and it has died down a bit. But it's still nice!

Third, if I can throw in a third, what should we expect from the first quarter of 2020? This was the question that had me stressed this week. Will I see a 15% decline in January? Will we return to nice? Maybe. Perhaps. I am planning for nice, but hoping for the whirlwind. 

We ended our year 15 up an amazing 12%, despite a "nice" December. Please don't take planning for nice as capitulation, but I expect a flat 2020 with a focus on efficiency. It's recession thinking, but it's really just a return to nice. Again, there will be those with grand initiatives, and I think this is a good time to pursue them.