Friday, February 17, 2017

No Place Like Hub

This week's article, a rather substantial one, ran late and I finally decided to bump it forward into a future week and instead post next week's article early.  Apologies for any inconvenience.

We're approaching March, which means a week in Las Vegas for the GAMA Trade Show and the arrival of a huge Magic release, Modern Masters 2017.  What that also means for me is that it's time to get back to scouting new locations for our hub store, on the assumption that the Gilbert location will have to move this fall when its lease ends.
It's amazing just how thin the pickings are.  For as poor as the commercial leasing market is supposed to be right now in this era of political and economic turmoil, most worthy rents appear rented and not changing any time soon.  In fact, one of my nearby competitors is moving at the end of March and I have found his landing spot within 80% confidence, not by means of my own intellectual prowess, but simply because I knew his search zone and there were only a few candidate locations that made any amount of sense for him that were actually available for lease.

So yeah, the cupboard is quite bare, both overall and given our usage needs specifics.  And I don't want to get locked into a bad lease because it was all that was available.

The photo above is a site I scouted last week that has a lot going for it: size, upscale plaza, decent physical condition, and nearly move-in ready.  But wait, no dice: There's a GameStop in the plaza, so we're likely to be locked out by a usage exclusive.  It also faces west, a point against, and the rent rate is a touch on the expensive side, which would be fine if things went well, and would be death if we stumbled out of the gate.  Even so, I will do my diligence before eliminating it.

The default assumption is that the new location will be the hub.  I am fully willing to make DSG Tempe the hub, but I don't think the landlord is going to let us.  There is not very much parking at that plaza and we are starting to strangle out the co-tenant restaurants on busy event days.  It's good that the Tempe store is right on the light rail line, and it's good that it's a walk-up for a fairly huge amount of population in the high-density housing nearby and at ASU's main campus, but at the end of the day it's simply not going to be our Madness Games or Sentry Box.  Which is too bad because the cost to operate that store is extremely favorable.

So if Tempe cannot be an event hub, it could still be a shipping hub.  The way Magic: the Gathering has swooned in recent months, I almost wonder how necessary a large event center really is anymore.  But then Tempe will go and have almost 100 players for Friday Night Magic, as it just did, and I am reminded that yeah, capacity is probably a good idea.  Gilbert did not have as many last week but it was still a crowded house.  I really don't like the idea of telling people not to come to my stores and play games, when I spend so much marketing money and effort telling people to come to my stores and play games.

Let's suppose the business model didn't favor large event hosting for whatever combination of reasons.  Tempe has the physical space and the central location to be the nexus for administration of a network of branch stores as originally imagined in the mergesplosion of last December.  We're already laying the early groundwork for Superstition Springs, despite being informed that no fewer than three other stores are moving to that area or opening there.  We believe our plan for that location will be unaffected by their proximity.  We also should have a safe and clear means to deploy at least 50 seats of capacity, safely getting us Advanced Plus status with Wizards of the Coast, however much that counts when you've got three or more stores in a chain and can get product easily anyway.  There is no urgency for us to work on our Payson location because my access to commercial space there is not time-limited; I am at liberty to develop that when the scheduling suits us.  What happens if I make a daring move farther south in Gilbert (or neighboring Chandler) into the wealthy neighborhoods between the San Tan 202 freeway and the Hunt Highway?  The store would not need to be large, and it would not need to host the main singles inventory.  Square foot for square foot, such a store would be expensive to lease and operate.  But does that matter if we are getting prime demographic customer arrivals?  We would have to build it really beautifully and feature the cream of the crop of product lines, but I think it could be done.

Of course, a lot can change between now and the summer, when we realistically have to go ahead and make our move in order to clear permits on time.  Perhaps we will return from GAMA and find that the local commercial leasing market has opened up a ton of options for us.  Perhaps Tempe, Gilbert, and whatever other location will each become a hub: Tempe as a comics hub, Gilbert as a shipping hub, and Superstition Springs for events, if we're able to get a ton of cheap floor there.

Mostly I am excited because I know the components of the business that are already working and will properly scale.  Being able to "load-balance" two stores of inventory has been a revelation.  Our procurement has never been this efficient, and we still haven't even locked down all our handling processes yet!  Load-balancing for three or more stores is just going to be frosting on the cake: I can order aggressively on items I know should gain traction, and I can go broad but thin on things that are there so we can be the place that has them, but for which a single store would have been taking a greater gamble by stocking.  I can even carry things that achieve market coverage merely by being in stock at the hub, and no branches.  We're already seeing some of that scale payoff with Tempe hosting the comics back-issue library and Gilbert hosting the deep miniatures stock.

Wherever we go, the underlying goal is to create a fun place for people to shop and play, that is close enough to where they live and/or work that they are sufficiently able to visit that location in the first place.  Some centralization has to happen, but a lot of the mechanics of this can be transparent to the end user.  The comic collector who only wants new content will have his or her pull box hosted at any location he or she chooses.  The latest Magic and Pokemon packs will appear at every DSG.  The website will serve the entire chain.  But nothing I do is going to eliminate the need for the store to be reachable by the audience.  There has to be a "there" there.  That is what I need to build, and the future shape and form of "there" will be in my mind's eye while I scout for our new home.

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