Just Another Weekend But Not Just Another Year

We approach the end of 2019, and of the twenty-teens or whatever we are calling this Godforsaken decade.  And yes I know technically the decade doesn't begin until January 2021, and I absolutely am enough of a pedant to point that out in mixed company that doesn't want to hear it, but when in Rome, we do as the Romans do, and those damned Romans say we're in a new decade next week, so that's how it is.

Christmas/Chanukah/Kwanzaa/Happy Winter Capitalism Festival is a retail season that everyone knows has an impact on commerce, but never seems to have the same impact every time anymore.  When I was growing up in the '70s and '80s, back when we used stone tools and hunted tatonka for fur coats and meat, every Christmas season was basically the same.  Starting the day after Thanksgiving, everyone spent every dollar they had in local stores until there was nothing left to be bought, and then on the 25th there was an orgy of pleasure (of gift-giving, not the other kind, you pervert) followed by a frantic run to every convenience store on the planet for AA batteries.  You could basically set your watch to it.  (Watches were a thing we wore then.)

Even in modern times and the Amazon Age, the Saturday before Christmas used to be its own kind of little Christmas for stores, especially small independent specialty retailers like we have here in the game trade.  Indeed, the several Saturdays before are supposed to be just wonderful for us.  Absolutely go-time.  Even this year with the latest possible Thanksgiving and thus the shortest possible holiday shopping window.

Some stores are still seeing that affect despite all the attenuative factors, in most cases because a given store is very well positioned for mainstream customer footfall, such as at a newer mall, or in a newer shopping plaza with strong anchors.  Even where that is not the case, real holiday sales happen in earnest at destination stores that have made substantial capital investments, like Mox Boarding House as reviewed in my Seattle visit two weeks ago.

As for us and, as I am informed, as for stores like mine?  The entire holidays this year was just another bunch of weeks, and in fact November was down a bit, owing to no year-over-year big release like we've had the past few frames: Iconic Masters, Unstable, Ultimate Masters, Keyforge Call of the Archons, and so on.  This year, we got the Throne of Eldraine Gift Bundles, which sold great except nobody had enough of them.  The new Star Wars Destiny expansion was delayed into 2020, a shame given the release of a popular and well-received Star Wars Episode IX movie.  The top board game release of the year, Wingspan, came and went from stock.  Despite DSG not being "a board game store," we moved cases upon cases of that game, when we could get any.

No surer was this the spoken truth than the weekend before Christmas for DSG, which saw sales... exactly in line with regular norms.  Those norms are targeted to cover all the bills and be profitable, so it's not like we're eating ketchup sandwiches here.  But the last time the holidays were truly bananas for us was back in 2015, before the post-election slump of 2016 and the it's-too-late-now new Amazon reality of 2017 and 2018.  Our Amazon FBA sales have been off the charts this entire 2019 holiday season, by the way.  Even when the price online was higher than in-store.

The sales activity we are getting in the gift-giving or even holiday-esque sense is mostly Dungeons & Dragons dice, books, and figures; Magic box sets of various kinds from Game Night to Commander 2019; Pokemon in general; and some of our various new-sealed video games, which is a distinct minority of our massive video game stock.  Those sales are offsetting a slight drop in "ordinary" sales of Magic singles, used video games, and other bread-and-butter activity.  Party games still have yet to launch for 2019.  We have them in stock.  They've sold modestly.  Usually right before Christmas and New Years, those shelves get scoured bare.  We'll see.

The best thing about this year is that we're missing very little in terms of sales we could have gotten, but failed to get because of a structural problem or omission.

Merch always varies of course, and had we received even more Wingspan and Eldraine Gift Bundles and additional restocks of titles like Gloomhaven and Marvel Champions, we certainly could have sold more than we did.  Any amount of Nintendo Switches we had traded in likely could have sold, but as it stands we've still got inventory.  We went through plenty of Playstation 4 systems in both directions, buying and selling.  And the WizKids Dungeons & Dragons unpainted figures are dependable sellers, such that the most demanded SKUs don't last long on the peg.  I ordered slightly lighter than I should on Pokemon packs, so that mistake goes against my personal scoreboard.

But beyond merch, DSG is robust and functional right now.  We have near-perfect payment interchange, with all credit cards and all contactless services available, lacking only really in some pay-over-the-telephone functionality that is rarely requested anyway.  We have perfect gift cards, a workflow we solved either last year or 2017, memory fails me, and that I've never had to give a moment's thought since.  We have near-perfect loyalty star administration and redemption, with excellent data providing me the insights I'll use to fine-tune after the first of the year.  We have gate-access to some of the best brands in the game business for our Amazon seller account now.  We have the best singles kiosk in the business via TCGPlayer Pro.  Finally, though I prefer off-the-shelf options in most cases, we have some custom-coded software solutions providing us access to buying prices and store credit administration right there at the registers.  Even my workstation has higher physical work capacity now, enabling me to process bigger and better video game buys into merch faster.

Desert Sky Games has certainly had its share of stumble and trial in 2019, but we're immensely better now than we were twelve months ago.  We broke into the two-comma column this year for the first time.  The end-point net income is only a small percentage of that, but it was enough to clear out the last of our bank loans and put us in a strong position facing forward.  Now I can move into 2020 and focus a little more on some things that have gotten short shrift lately, such as my personal health.  I'm looking forward to what tomorrow brings.

I wish you all a joyous holiday of whichever type you celebrate, and a safe New Years.  The next blog article here on The Backstage Pass will be in January, and will be our semi-annual Store Closure list and review.  See you then!

Wizards in Winter

It's not just the name of a great prog-metal Christmas song, but also my destination for the first half of last week: the Wizards of the Coast corporate headquarters in Renton, Washington!

This was my first trip to Seattle, and I had a great opportunity to experience the city and region during my visit.  It was cold and rainy the entire time I was there, and the scent of coffee was omnipresent, no surprises in either case.  In my youth I had been to Portland, but remembered little about it except everything being green.  I expected Seattle to remind me a lot of Denver, where my sister and her family live and where I've visited a bunch of times in my adult life.  Instead, what I discovered was that SeaTac was a lot more like San Diego, except with pine trees.  Not just the mountainous terrain or the abundant shoreline, but the architecture and city planning, all the way down to the mundane.  If you shot springtime photos of the same random single-family detached house from either Coronado or Bellevue and didn't tell me which one it was from, I might be hard-pressed to tell them apart.

I don't think the Seattle-San Diego parallel is an accident, either.  Both cities had a post-war military boom, with the former becoming an aviation nexus and the latter a naval epicenter.  Their explosive growth happened concurrently throughout the 1960s and 1970s, hence the parallels.  Later was when they diverged, with the 1990s seeing Seattle become the world capital for software, and San Diego going all-in on its resort-town geography to capture much of southern California's convention, transportation, and communications industries.

In any case, there I was, right in the middle of Queensrÿche's Empire, hand on heart and everybody listening in the silence, and I had a Monday afternoon to explore, so naturally I went to a bunch of game stores.

Maple Bar Games in University Place is a store after my own heart, an ultra-efficient deployment that's exactly how I would build DSG if I were doing it over from day one.  MBG offers broad coverage of Magic and some ancillary TCGs, enough seating to run core events, and a respectable video game stock.  Aesthetics were solid and pleasant, and parking was ample.  As with many of my peers in this industry, the owner is a friend of mine, so he and his adorable kindergarten daughter joined me for the rest of the day's excursion.

Pink Gorilla Games near the University of Washington was one of my must-see stops.  Not because I expected it to be some massive monument to import and retro video games, but because Pink Gorilla is tightly focused on doing just those things, and I've been in both fandoms since my youth.  Kelsey Lewin has two locations for the Gorilla, the other one a microboutique downtown, but today I wanted to make sure I got to the original storefront, the "Metal Jesus Home Store."  It's small by FLGS standards, under 2,000 square feet from what I could see.  But every inch of it, floor to ceiling, boasted a gorgeous array of video games, accessories, collectibles, plushies, and related aggregalia.  They even had a Gachapon machine to amuse the kiddo.

Meeples Games on the west peninsula of Seattle proper is an upstairs boutique that combines cozy earth tones with delicious cookies, and honestly if you can't appreciate that then we can't be friends anymore.  Two owners visited yet a third owner we knew and we got the grand tour, including a fully functioning kitchen tucked away right in the middle of the store's publicly-accessible footage donut.  By now the rain was pounding down pretty heavily, and to everyone else there this was basically invisible, but I was absolutely experiencing the travel since Phoenix gets about five inches of rain a year (but it sure is somethin' the day it falls).  The 7-11 next door even had my orange cocaine drink, so after chasing the cookie with that, it was off to dinner at...

Mox Boarding House in Bellevue, one of three locations, is just as silly and excessive as everyone says, and yet it's impossible not to be impressed.  The sheer capital magnitude of Mox is worth the visit.  Everything you would think a Disney Store of board games would do?  Mox does it.  Large staff census, direct customer approaches at regular intervals, demo tables, splash tables, nooks, theme aisles, general gameplay tables, a rentable room that could be used for a wedding reception if you needed it to be (and probably has been), and of course a full restaurant.  The "Mox Tacos" were acceptable, and coming from an Arizonan that counts as an endorsement.

There were at least five more places I can think of that I wanted to drop in on, and I penciled that in for Wednesday, and then of course it ended up not working out and I headed home on an earlier flight than planned, for which I have to give Delta props, they made it easy and trouble-free.

Tuesday was the big day at Wizards, from morning through evening.  Due to a non-disclosure agreement I actually won't be sharing most of what I discussed with them!  But I observed some things that I think we all benefit from understanding -- store owners, employees, and players alike.

Information flows in peculiar ways in and through large corporations, and Wizards is absolutely one of these, even though it rose from gamer circles and humbler digs.  Their headquarters is just an office building, though admittedly with some extremely cool decor.  It's so much "just an office building" that you only see the one angle of it from the WPN article photos because the other side of the complex is occupied by other businesses and has their logos hanging up.  (Mitsubishi Aircraft is one of them.)  But to those of us out in the world of Magic and D&D fandom, the Wizards HQ takes on something of a mystical quality.  It's basically Hogwarts!  And it's easy for us to forget that the people there, while sometimes celebrities of a sort in our particular niche, are also just folks with jobs who go to work, and possess no supernatural powers of divination.  They use everything they know to create good products, programs, and marketing, and then they count on scattered, imperfect, and sometimes unreliable information to figure out how things went.

I intuited that one of the key things I could bring to the table was a self-aware perspective, a willingness to provide unfiltered information without adversarial assumptions.  Wizards endures a bombardment of negative feedback from players and store owners alike because that's the kind of information that is most likely to find a conduit back to them.  It becomes difficult for them to ascertain what worked (beyond what sales numbers reveal) and also why the parts that worked, did so.  Imagine if an athlete had to accept all the invective that is customary to their profession, but when they succeeded, there was silence instead of cheers.  They can read the scoreboard, but it can be hard to tell what they actually did right.  While not perfect, I do get accurate reads on a lot of what worked for DSG and trustable reads on what went right among my inner circle of peer friends.  I hoped this might be a goldmine for the various internal teams I met with, a way that I could tie concrete examples to things they were wondering if we had seen happen, and if so, how much of it, and in what way(s).

You can do your part too, by completing the various surveys publishers like Wizards send out.  And from what I remember of survey implementation when I was in government employ, I can speak with professional authority that Wizards's market research is well-executed.  People like to down-meme Mark Rosewater when he refers to "market research" as having told Wizards that something is so, when that person's local game store or play group maybe doesn't do it that way.  Well, then tell them!  But tell them when they solicit the info, because the feedback channels they set up are meant to improve the quality of the information that gets to them, and make it actionable.  Publishers absolutely do take those responses seriously and they can make a difference in what your favorite game offers next in its future releases.

I delivered a substantial presentation in the afternoon, complete with a question-and-answer session that had me really wishing I would just bite the bullet and get hearing aids already -- I have a hereditary doom to become stone deaf if I survive into retirement, and the hearing loss is already noticeable -- and fortunately I managed through it with the help of a patient and friendly audience.  Wizards paid me actual moneydollars for this component of the visit, and as such I have a professional obligation to keep that work product exclusive to their private use.  They did film it, so if they opt to share any part of it, that is obviously perfectly all right by me.  For those of you whose curiosity is overwhelming, I'm afraid I can't be of much help, other than directing you to my various publicly known spheres of expertise and their related subject matter.

After a nourishing catered dinner, I joined my audience for an activity I do far too little of anymore.  I played Magic.  You heard me.

To be specific, I drafted Mystery Convention Edition.  The only way to play this set right now is at select MagicFest events; the Mystery Retail Edition has slightly different contents and releases in about three months.  I hate chaos drafting, but was pleased to learn that the level of curation in the Mystery set makes it draft and play more like a cube.  Cube drafting is one of my favorite formats of Magic to play these days, so you might imagine how surprised and happy I was to make this discovery.  I had little enthusiasm for Mystery after the initial reveal, but having played it firsthand, now I suspect it could end up being a genuine hit.  We'll find out in March.  A lot is still left to learn, such as cost and availability.

I couldn't do much more after that, because 45-year-old Bahr doesn't have the energy of these bright, outgoing youngsters anymore.  I enjoyed meeting my company reps, both past and present, as well as the content team I've worked with to bring you WPN retailer support articles, and on top of that, a veritable who's-who of familiar names and faces and people whose particular work I've either enjoyed as a player, sold as a retailer, or both.  (And of course Nelson Brown, our WPN retailer liaison, who channels Spuds MacKenzie levels of exuberance without breaking a sweat.)  A few of the longer-tenured Wizards staff were even re-acquaintances from my Level 3 Judge days.  One of my hosts and I swapped family stories, discovering to my delight that we had a lot in common.  And whilst moving from meeting to meeting, the introductions kept right on going.  I recounted that DSG had seen better-than-par sales of one of the other games Wizards produces, which of course summoned a smile from the person in charge of that product line.  It was just that kind of visit, and I did my best not to waste it.

The final day was, unfortunately, not contributory to the narrative.  Because I was out of town, naturally an inordinate number of things cropped up that demanded my specific attention, and in recognition that I'd be struggling to enjoy a day touring more game stores and/or grunge-related tourist traps with that cloud building overhead, I turned in the rental car, swapped my flight, and got my desert-dwelling bones back to the wasteland from whence they came.  It all worked out in the end, and my kids got a kick out of their Pink Gorilla t-shirts.

Roll to Save Versus Scrutiny

Two weeks ago, I discussed how and why DSG was taking an extended break from the miniatures category, which in effect means Warhammer because that's the center of the wargames universe.  I did not make this move lightly, as the article should have made clear.  Games Workshop and Warhammer have been a tabletop staple for literally decades, and for many game stores, carrying such a product line is a no-brainer.  One has to look at a sharply unfavorable market position such as mine to see a scenario where Warhammer doesn't work.

For many of the same reasons I cited for Warhammer, DSG has been shifting its approach to the board game category.  A big difference there is that board games in subgenres can still be viable.  Our selection of inexpensive party games sells as well as ever and I have no intention of moving away from them.  In the world of heavier strategy games, the board game category behaves a little more like a deep-devotion product line such as Magic or Warhammer.  A major metro will only have market room for so many tier 1, best-in-class game stores, given existing competition from online and the mass market.  Even the buzziest titles of 2019 have underperformed the mark, often by far, and even when available right during peak "new hotness."  I have seen enough.  I realize what I'm seeing, which is that DSG is not tier-1 best-in-class for board games, and won't be seen as such, so that traction isn't available to us.  There's some viability to the approach of "then be the cheapest" and I'm not as opposed to that as many of my peers, but there's an opportunity cost to putting attention and resources in that direction, and right now I get a better payoff spending that attention and resources on Magic and video games.

Which brings up the category I have next in the crosshairs, role-playing games (RPGs), which for DSG purposes means Dungeons & Dragons.

Know before you read another word that I have loved D&D since literally grade school in the early 1980s, since getting that basic Red Box set for Christmas in 1981 and having it become the forbidden fruit when my parents were misled into all the D&D-is-Satanic balderdash.  My friends and I pored over every scrap of D&D material we could get for both 1st and 2nd Editions throughout the 1980s and 1990s.  Until Vampire: the Masquerade and then Magic: the Gathering, D&D was the meaningful entirety of fantasy gaming as we knew it.  Roleplaying was the vicarious thrill that hopeless nerds like me hung our entire social livelihoods upon.  I will die a little inside if the day comes that D&D has no place in my game store.  But that day may be approaching.  I can see smoke on the water and fire in the sky ahead.  And I honestly don't know how this is going to play out yet.

The modern-day reality is that books, as a form of consumptive media, are in growth in digital formats and in decline in physical tree-corpse bound slabs.  Physical books are great in many ways; as Penny Arcade noted, they have an intuitive touch-based interface, require no charging, and work fine with the shelves you have at home.  But text as data takes up no room at all, graphical data is nowadays trivial to store, and that's before you unlock the vast potential of hypertext markup, mixed media, and so on.  Digital books are just better in something like 90% or more of scenarios.  And... they are weightless and sizeless (aside from the size of the reading device) and capable of being infinite inventory.  Even Amazon's relentless dumping of books can't compare to what basically any rightsholder can offer, and the official D&D Beyond is no exception, with this year's Black Friday sale offering the gamut of content to the public for well under the physical sourcebooks' wholesale pricing.  Much as the world of physical music has become a boutique niche, roleplaying sourcebooks are going to taper off as the delivery share converges toward the virtual.

That's not all, fortunately.  RPGs require only rules and the players' imaginations, but in practice they also make extensive use of dice, and more and more lately, visual aids such as figurines, table maps, and even intricate miniature landscapes.  And yes, all of this can be virtualized.  Video games do exist, after all.  But for now the particular expression of tabletop RPGs is a physically present social activity, and for that we're seeing a strong attachment to the tangible.  (Regardless of whether we get our table-sized iPad holoprojectors to handle the "game board," people still don't trust virtual dice.  Ask anyone about the deck shuffling algorithm in Magic Online if you don't believe me.)

The tale of the tape is relatively simple.

The good: DSG sells a mountain-load of dice, and there isn't much more to say about that.  DSG sells a reasonable amount of WizKids D&D mini figures, and a reasonable amount of paint and brushes to go with them, but in both cases there we have supply constraints.  I can bear that problem to some degree because catastrophic success is such a preferable status than its opposite, slow and anemic failure.  Bottom line, supply is shaky but getting better.  We also finally seem to have improving supply of Gale Force Nine's D&D Spell Cards.  Who knew a licensee of Wizards of the Coast was going to struggle to get up to speed printing cards, but at least they're getting there.

The bad: Sourcebooks are poor sellers, as expected somewhat based on the factors recounted above, and yet we can't simply dismiss them because the absence of D&D sourcebooks marks a store as incompetent in the category.  And more critically, in-store play is a complete mess.  One that, per the Warhammer article, I'm less sure now might be solvable.  We've been permissive about unmonetized games in recognition of facility and schedule shortcomings, for instances where available table space exceeds demand that night.  The supportive players have, of course, come through on the purchasing front regardless.  And let's be clear: The meter isn't running on every visit. But over time we need to be selling what they're playing, or else those tables could be repurposed for TCG use and do better for us.  And the players that don't support the store, are audacious in that non-support, squatting for extensive time periods at a table and smuggling in grocery bags, and rarely to never buying anything.  I was sure that sufficiently upgrading the game room would put us in a position to monetize the space effectively.  The difficulties Gateway Games had in that department with their utterly magnificent game room served to discourage me entirely from taking that approach.

It is at this point in the article that I am going to stop being specific.  I am not announcing a threshold or offering a deal, because I meant it when I said above that I don't know how this is going to play out.  It's possible that I don't change anything regardless of what happens in the months ahead.  It's also possible that I make vast changes even if nothing happens in the months ahead.

In essence, I am unsure whether allowing D&D play in the store makes sense for the business, and I am pondering a solution to address that.  The degree of difficulty goes up due to the cascade into whether DSG would carry the known good products, minis and dice.  I'm pretty confident we can just "have dice" even in a "dormant commerce clause" manner.  But eight grid gondola aisles full of minis and two towers full of paint and supplies would surely not stay if D&D did not.  Maybe the real answer is to have two great D&D tables and have them be monetized-only, rather than using more space to bring in more players, only to find that many are parasitic.

I don't want anyone to do anything special.  I don't want any player anywhere to feel like they are being guilt-tripped into spending money they wouldn't otherwise.  I've discussed here on this weblog many times that I dislike the "social pressure" to support an LGS regardless of the value offered.  I'm totally good with the LGS taking the next step to show and promote the intangibles and other value that might be there, of course.  But that's not the point.  This isn't a "let's all gofundme" blog article.

Organized play in your LGS, including DSG, is an entire ecosystem, and either the various parts of that ecosystem are going to be healthy or they aren't.  It's my job to make sure DSG as a business is a positive contributor to that ecosystem.  We're going to find out if the result is something where every animal on the savannah gets to eat.  The totality of circumstances is what will force or stay my hand when the time comes, including determining when that time is.  We shall see.

Horus Hiatus

This is a difficult one, because it's impossible for it not to be bad news for some, even though I already know from the hard data that it's old news for many.

DSG is going to be taking a break from Warhammer.  (Well, from wargames entirely, but since Warhammer is the only one that matters most of the time, effectively, it's a break from Warhammer.)

Last year I moved DSG out of the comic book business, citing our poor positioning in the category relative to product, branding, and deployment imperatives.  You may notice that I consider that to have been a permanent move, though I suppose if by some strange turn of events I acquire a comic book store again, I guess I'd be back in that business.  With Warhammer, time and experience have taught me never to say never.  Some of the same imperatives apply here, but the reboot commitment quotient is reachable if the right combination of favorable factors occurred.

OK, I'm getting ahead of myself here.  DSG has had a small but extremely great Warhammer player community for these past two-ish years, and I think they are owed an explanation.

Before that, disposing of some housekeeping:  There is not going to be a pennies-on-the-dollar liquidation.  We'll sell the rest of our 40K stuff at 15% off MSRP during our Black Friday Week sale (This pricing is in effect immediately if any of you want to just come buy the kits now.)  Citadel Paint is going to stay, if Games Workshop permits it.  The rest is already gone.  We've been selling Age of Sigmar, Warcry, and accessories on Amazon FBA for weeks now, and seen more sales of these items by far than we were seeing in-store.  Our remaining organized play assets and promotional material have been designated to be gifted to various folks.

So, why now.  After four-plus years as a Warhammer stockist, why would I pull the plug on a high-revenue product line and move in another direction?

There is no villain this time, no finger to point, no blame to place.  Warhammer has had its ups and downs at DSG, and sometimes ups outnumber the downs, but not in Nottingham.  On balance it has been a profitable line.  The last few quarters have seen it go upside-down in revenue versus inventory brought in, but the danger from that is partly mitigated because we're gate-admitted to FBA for Warhammer and it sells very well in that fashion.  In fact, that's kind of the rub, and part of the industry shift that has led us to this change.

Overall retail trends are basically forcing us on this one.  People have changed the way they shop and buy, and major brands have changed the way they engage with consumers.  This affects Warhammer at DSG, but also D&D and board games.  Since board games are mostly played at home and not the store, the phase-out of that category will be much less visible until afterward.

Obviously, online sales are a big factor.  We're not left out in the cold on that by any means; in a can't-beat-'em-join-'em fashion, DSG has significant volume on TCGPlayer, Amazon, and eBay, though the latter is getting worse as a seller platform and will eventually be nothing but a junk dump. But the reality is, and we're seeing this even in cases when our in-store price is well below our Amazon price, people still shop Amazon first, sometimes only, and when they shop local, they tend to gravitate first toward the brand vertical (Games Workshop's own company stores), then toward big box mass market, and then the top tier of independent stores, and no further.

That's a crucial pecking order and it deserves more airtime here so you can clearly see what the conclusion is before I even tell you.

Tapping one's phone to have a series of sweatshop slave workers convey that item from a warehouse shelf to your front doorstep, it's just so easy, that for any commodity merchandise where this is an option, it's a compelling option even though we know deep down inside it's enabling awful worker treatment.  Even when there are a few bucks to be saved locally, people just assume the Amazon price will be around the cheapest (often it is absolutely not, but Amazon burned a billion dollars to convince people it was, and that plan worked) and thus they tap tap buy.  Frictionless commerce.  Jeff Bezos knew what he was doing and there's a reason he's richer than gravity.

Next after that, people turn toward the brand vertical, if there is one.  Lewis and Dart explained all about this in The New Rules of Retail, but I don't think even they expected how prominent the verticals would become.  I can't point a finger, I do it myself, I buy my tech at the Apple Store and the Microsoft Store, I buy the kids Legos at the LEGO Store, I buy gifts for my many nieces and nephews at the Disney Store, and so on.  There are no Hasbro company stores... yet... but there are Warhammer stores, and the three in our region are high performers.  Even the smallest of the three has a comprehensive stock.  Warhammer Chandler is supposed to be generating new gamers and referring them to independents in the area, and I don't doubt that some amount of that happens, but in practice this was offset by established Warhammer players migrating their buying to the company store, especially for the various exclusives.

The big box or mass market comes in next, including such stores as GameStop.  People talk about how they hate big box, but then they shop big box anyway.  I mentioned above that Amazon does not usually have the lowest price at all, but big box, especially Wal-Mart, often does. I recognize price as an imperative for most shoppers, and there's a reason why our used merch is sold typically at market price or a number resembling it, and a reason our in-print Magic boosters are 3-for-$10 every day.  Cash is king and money talks.  Big box would eat independents for lunch except that their selection tends to be narrow ultra-mainstream middle-of-the-spectrum and no further, because big box depends on the simplicity of a narrow span of options to hit logistical economy of scale.

Finally, we have independents, and by the time most shoppers are past the three prior options, they're going to go to the top-tier, "Tier 1" store for their category, and that's it.  In metro Phoenix, Imperial Outpost Games is the only Tier 1 independent Warhammer retailer.  Even when DSG had its highest Warhammer inventory count ever, roughly spring 2019, on par with the two smaller company stores for coverage, we weren't close to matching IOG.  I would have rated us Tier 2 at that time.  Nationally known stores like Giga-Bites Cafe and Little Shop of Magic are Tier 1 for Warhammer just like IOG is.  There are a couple of solidly Tier 2 stores in town like Games U and Game Depot; neither of them is on par with Giga or Little Shop, but both are legit.  These days, after more than a fiscal quarter seeing SKUs fail to turn and get sent to FBA to recoup, DSG has slid into Tier 3 territory for Warhammer.

You're probably catching on to the underlying principle here.  To be sustainable as a business, we need to put our resources into being Tier 1 at anything we carry, or else we will simply get shouldered out by market forces and ultimately fail and bust.  That's the economic reality of small specialty retail in a major metro area today, in the modern interconnected marketplace.  Even at DSG's scale as the (physically) largest game store in the Valley, we just don't have that framework in place for miniatures, and have not been able to build it successfully.  Right now I think we're at or near Tier 1 for Magic, but need lots of work to solidify that.  We recently bought out the video game stock of a store out of state that was leaving the category, and that's going to put us close to Tier 1 for video games.  We're not there for D&D or board games.  IOG and Game Depot are Tier 1 for board games, and the only unambiguously-Tier-1 D&D store in town, Gateway Games in Mesa, closed its doors two weeks ago.  So both of those categories are going to see changes as well.

We have a clear Tier 1 game room, and we realize many Warhammer players will ask why we don't keep minis tables around regardless.  The reason is that the game room has to be cash-gated (pay to play) or else it's just a promotional expense for things the store sells.  To cash-gate a game room, it usually needs to be a restaurant like Snakes & Lattes or Giga-Bites.  While I like both of those places, I am realistically never entering the restaurant business.  For a long time I thought I could cash-gate the game room by upgrading it and making it nice, but Gateway Games had the nicest D&D rooms in literally the entire southwest and they encountered nonstop price resistance and player non-cooperation, forcing me to recognize that plan is a non-starter.  I'm glad I discovered this before paying for such infrastructure upgrades.  While some manner of game-room gating is likely as time goes on, and it could very well include minis capacity, it's not going to be today, and it's not going to happen in time to change our Warhammer decision.

"So you're dropping Warhammer because you're Tier 3 or worse but not board games or D&D where you're Tier 3 or worse?"  Board games are a bit more fluid, like I said above, because players don't really need the store to have a place to play.  We can accordion that category bigger and smaller at will and it mostly won't get noticed.  Deadwood stock can be deleted from the racks quietly and sent to Amazon FBA, a process that has already been happening.  While board games are "muggle-approachable," they also are a category where a brick-and-mortar store doesn't add that much value, and I envision their departure from DSG happening without any announcement.

For D&D, we still do need to solve the cash-gating equation for the game room, and we have an idea in mind that wouldn't work for minis but could work for tables of seven players plus a Dungeon Master, and we'll be implementing that soon.  We sell so many dice and WizKids D&D minis that the category has something of a reprieve, because Amazon dumps sourcebooks at a nickel over bottom cost and I assure you that if I had to exit a second category today, it would be RPGs.

In contrast to those two categories, Warhammer's sourcing is effectively locked to publisher direct, which causes chaos when anything goes wrong with an order; it requires a substantial expenditure of space and resources for everything involved from product to tables to terrain to floor to my managerial attention, and it's not "muggle-friendly" as an approachable IP.  None of these things are the players' fault and none represent any bad acting on the part of anyone.  It's just inherent characteristics of the wargames hobby.  Some of these concern points also existed for comics, but Warhammer stuck around at DSG an entire year longer than comics did.

So why just a "break" if those sound like such permanent-esque factors?

One of the projects I didn't really have time to bring to fruition was internally dubbed "Secret Site Wargames," pronounced "SWIG" for short and yes I know the acronym is imperfect.  SWIG would have been a small, 1200-square-foot independent store (branded differently than DSG, and more in the wargames theme, but your DSG Stars and store credit would still cross over) carrying miniatures and nothing else.  We even had a site picked out for it with a great lease rate.  SWIG would have carried Games Workshop's full catalog at all times, plus the major minis games and paint and tool lines from elsewhere in the industry, such as Army Painter, Vallejo, X-Wing, Lord of the Rings, Song of Ice and Fire, Woodland Scenics, and so on.  The attraction would have been the absolute brand and stock focus on those lines making the store Tier 1 in the category, plus MAP-maximum discounts and nothing-a-month rent making those discounts possible, earning the cash-is-king crown.  I think this is probably the mastered concept and in today's market landscape it's a winning play.  Part of why I'm calling DSG's move a "break" from Warhammer is because SWIG may still exist at some point, perhaps as soon as late 2020, depending how other factors go.  It's safe to say if I carry Warhammer again, SWIG is probably the only way I'd do it.  I don't mind spilling the beans about this because an idea, without execution, is worth nothing.  If someone beats me to the punch and launches a SWIG-alike successfully, they deserve the reward.  I've spoken with a few of our Warhammer players who have ideas along these lines and I would be happy to publicly align with them as friendly network/allied stores if they move ahead with it.

There are definitely other stores dabbling in Warhammer in town, Tier 3 or worse, and while their business is their problem, they should really all exit the category too because why would a devoted wargamer even go there when they have such superior options as the Tier 2 or better stores, or the brand vertical of Games Workshop's own company stores, or Amazon?  I think in practice a lot of these stores have the Warhammer merch in stock, at base stock level, just as a hedge or as fanservice to a small portion of customers or to see if something sparks, but it never really does and the trend line continues to bend the other way.

As of the end of Q3 2019, DSG makes almost 90% of its revenue from TCGs and video games.  The future-facing business path before us is to be in those categories and utterly master them.  That's where the lion's share of my professional attention is going to be directed.  I have always liked Warhammer and will continue to like it, and I recognize that if other businesses can provide a world-class Tier 1 experience to the Warhammer hobbyist and I cannot, at least for the time being, I need to get out of the way.

Chaos and Capacitors

I don't have a whole lot of time this week, so I bumped the articles I started weeks ago that I figured I'd be wrapping up around now, and I'm checking in here instead and we'll reach those subjects later.

It's a madhouse right now.  The entire industry, I mean.  All the more so for a month that's typically a bit of a slowdown.  Wizards of the Coast announced a bunch of Magic products, one of which we don't get to know anything about until players start opening packs at a table.  There was suddenly a new edition and new printing of Wingspan, and none of us have any idea from day to day whether we're going to have too much of that title or zero on the shelves.  Most of the attention in new video games is directed toward 2020 and the launches of the Playstation 5 and the Xbox... uh, Two, while the Nintendo Switch released a quiet version update and a less quiet Lite variant.  We continue to see digital storefronts de-list games that then become obtainable only by the original physical media.  And will there be tariffs?  If so, when?  Who knows?

For DSG's part, we finally finished building my back office and workshop, and we're setting up to have a three-phase revamp of the game room floor.  Getting all the shipping equipment and such out of the main part of the building is also part of our Wizards Premium Store application, a process that's finally almost finished.  The 1st phase continues after the removal of shipping equipment (and my workstation) to the back room, with a reconfiguration of the singles backstage area and my staff workstations there.  That opens up a few hundred square feet of floor and it will be shaped differently, so we get to adjust how the "big tables" for non-TCG games are deployed.  Phase 2 will enclose those table areas for privacy and admission gating.  Phase 3 will mostly be software, and swapping out some fixtures that we've been meaning to phase out.

Many of you have been following my biannual store closure articles here on the blog, where I list all the stores I've been informed about that have hung up their spurs during the six months prior.  The list for January 2020's article about the second half of 2019 is going to be a doozy, and includes multiple local stores, with more that I suspect will announce before much longer.  The closures track with some of the industrywide tectonic shifts that we've been seeing grow for years now, and I think in a couple of months we're going to have clarity on a few things.  On other things?  Foggier than ever, I am sure.

In the video game world, I'm approaching 20 or so Sega Game Gears sitting in back storage because none of them work, because all Game Gears are broken now.  They are all recoverable, however.  They do power up, but they need their capacitors replaced in order to have video and sound.  The Game Gear was an underappreciated system that lately is starting to stoke interest in retro circles, because its catalog was thick with rare Japanese-style RPGs and other genres favored by otaku more than mainstream gamers.  Moreover, it uses a common Genesis v2 AC adapter, so we don't have to chew through untold quantities of AA batteries or chase down a rare power cable, assuming we can get a working system in the first place.  Unfortunately, the necessary capacitor replacement, at least on a unit-by-unit basis, projects to a lot of labor time, and with parts and troubleshooting could add around $60-$70 to the cost sunk into one system, that would then be able to sell for, at most, $80-$100.  Thooooough... now some enterprising folks have been developing drop-in LCD replacement screens and other quality-of-life mods that push the viable resale price of a "maxed out" Game Gear to $250 and up, though with parts and labor sunk in of at least $150.  There has to be a way to assembly-line this and use some economy of scale to bring a bunch of these back to life cost-effectively, and looking around at eBay listings, there are already some guys doing this, so proof-of-concept passes muster.  I just need to do some diligence on that process, and until then, I'll keep buying the broken ones at $2 to $5 each depending on condition and stowing them for later.

Meanwhile we're smack in the middle of the craziest and most insane football season I can ever remember.  Even when we get to Sunday business, which is kind of rote at this point -- lots of buys, a short day, booster drafting, Pokemon league, and catching up on my admin work -- there's the backdrop of all the awesome football going on.  I've never been happier to have NFL Red Zone at the store, for as little as I get to sit and watch it for more than a few minutes at a time.

Gingerbread

The Throne of Eldraine prerelease came and went, and we found ourselves celebrating ~400 players worth of attendance while simultaneously bemoaning being over 100 players short of a sellout.  The early release booster boxes sold well both on pre-orders and during the weekend, which salvaged much of the difference.  A good time was had by many, and that's a win for sure.

My initial impression that this set would be a hit came with some reservations.  I thought with no dual land cycle and no spicy reprints, many players might sit Eldraine out.  Standard players would buy the singles they needed, and 60-card eternal formats would largely ignore the set.  There's something for Commander players in every set these days, because Hasbro likes money, so that was certainly going to be a selling vector.  But sure enough, Eldraine has some innovative new card capabilities and pushed mechanics to play with, and players in general are enjoying the theme.  Perhaps all the more because we already know it lasts only one set and not a full block.  (Maybe we can finally revisit Kamigawa now that we know it isn't going to eat up a year of Standard for us to do so.)

I am quite happy for the return of masterpieces, to the extent they did.  At a nice low hit rate, regular booster packs serve up full-art foil Planeswalkers, gorgeous foil storybook cards, and assorted other goodies.  The special collector boosters were known to be value faucets, but it was nice to know any pack on the shelf could offer a jackpot.  Players notice these things, even if they don't open them very often.  I think this set's overwhelming extension into gimmick cards is a bit much, but I guess they figured they'd go big in order to learn whether they had to go home.  Which is fair.

We sold out of the early booster boxes paired to the collector pack at $139 on the day before the prerelease, and then as I planned all along, I made the booster box price with just the Kenrith buy-a-box foil (along with the rest of the new Standard's booster boxes) $99+tax for the weekend.  Sales activity was heavy.  We didn't quite run out, so a few lucky customers on October 4th will get the bonus card with their box purchase.  I'm not enthusiastic in a general sense about $99 booster boxes when that's not even close to a sustainable markup, but we're in a position where we can do this for a while and maybe exert significant pressure on the local market.  Each of the $99 boxes are available to me in essentially infinite quantities from my combination of distributors, DSG cleared the last of its bank loans back during the summer and thus has pretty good cash flow these days, and I hear all kinds of grapevine chatter about one store or another getting close to a lease exit option and possibly bowing out, leaving players scrambling for a new waterin' hole, and potentially looking our way.  If Eldraine is in short supply on release, I'll have to adjust the box price to market for a bit, and then I can go back to $99 when it's more abundant.

Speaking of other local stores, I didn't expect so many local competitors to be underselling the box+collector-pack-bundle as aggressively as they did.  But whatever, ours all sold, so apparently my guarantee that anyone who bought in on that deal would absolutely, positively, no question about it, get the collector pack, was appealing to consumers.  One other store tried to one-up us by also guaranteeing the pack at a lower price, but then they ran out and in fact their guarantee was not a guarantee.  I heard this from players who had been on the receiving end of the scenario.  It would have been nice for them to call out that store on social media, but nope, that store gambled that they would only grumble verbally and accept being screwed, and that store somehow gambled successfully.  It's disappointing but here we are.

For those stores that didn't guarantee anything, I think they have undervalued certainty.  For the player with a full-time job and perhaps a family, they don't want "bonus treat included only while supplies last," they don't want to line up for four hours to save $25, they don't want maybe kinda coulda woulda hem haw.  They want the thing, no excuses.  Here is money and now you will please provide the thing.  The end.

That's one example of a long play I've been working on, of steering the store's cone of influence toward a narrower range of things, so that we can more often "have everything" and then craft an offering that is increasingly "no excuses."  I think "no excuses" plays stronger than resorting to gimmicks, even if consumers aren't as conscious of it when they choose.  Price will always matter to some extent, but price is either inert or impotent if you don't have the goods, which is still the gold standard.  So I'm most engaged these days in products where DSG is already strong and presents scale beyond what most competitors can approach, or where DSG's range of resources is enough to put us there.  An example of the latter would be the Final Fantasy TCG.  We hosted a huge tournament for Square Enix, and we had the budget to boost our stock of demanded boosters for the event and afterward, and after buying up a few collections and breaking some packs, we have become one of the larger and best-stocked sellers of FFTCG singles on TCGPlayer.

In terms of what to cut in the narrowing effort, nothing is on the chopping block at the moment.  I know I wrote recently that I'm looking kinda sideways at Dungeons & Dragons, the problems of which are bimodal and overlapping: Hasbro refuses to do anything to mitigate Amazon dumping sourcebooks at near or below distributor cost, and there exists a significent cohort of the player population that wouldn't spend a dime in a game store if their lives depended on it, whether from poverty or having bought from Amazon already or whatever reason.  This wouldn't be as bad except that a table full of D&D players takes up a lot of square feet of floor whether it's an engaged group that shops the store, or an unengaged group that doesn't.  One day I'll have upgraded the game room enough to gate it for pay in a "no excuses" fashion, and then we'll let the tale of the tape decide what happens to D&D.  In the meanwhile, the release schedule isn't too taxing for the line, so I'm at liberty to leave things alone for now and see what happens.  But if I had to cut a category today, it would be RPGs.

This is the "between week" so while you're reading this, the DSG staff will be opening Throne of Eldraine boosters (and Brawl decks) for singles and setting up for what we hope will be an enjoyable weekend.  I've got the kids for the next two weeks mostly to myself because Steph is on an adventure to Scotland, so there's a fair to decent chance I will take next week off from writing, or else put up a quick blurb about something.  Meanwhile, enjoy the story and live happily ever after!

Welcome Those Whom Your Adversaries Disregard

I am sympathetic toward PepsiCo over the Coca-Cola company, because of a bit of history between the two that I think is illustrative of what happens when a business calcifies its thinking and a smart competitor swoops in to pick up the money that's being left on the table.

Among the specific expressions of my sympathy toward Pepsi is that DSG only carries Aquafina bottled water.  Never Dasani and not the house brands unless Aquafina is unavailable.  Not only is Aquafina good, but it's bottled a bit more ruggedly than most other offerings, and thus provides something of a "higher-end" experience.  But more importantly, I like supporting (with dollars) a brand with a business that includes such an admirable bit of history.

Dr. Richard Gunderman wrote a great article in Psychology Today about how Coke and Pepsi fought for business over largely racial lines in the 1940s and 1950s.  Naturally, the Atlantic turned the story into clickbait, but it's no worse a story for being thus utilized.  I highly recommend reading Dr. Gunderman's article in its entirety, but the summary is this:

Coca-Cola was based in Atlanta and had little interest during that era in catering to black-owned businesses or customers, mainly because its decision-makers were typical southern racists.  The company had even endorsed a segregationist's re-election as governor of Georgia.  This is before the Civil Rights Act, at a time when restaurants and hotels would openly Wuher black customers out the door with a "We don't serve your kind here" or worse.

Meanwhile over at Pepsi, executives saw the statistical growth in what was then called "the Negro market" and observed Coke flipping those potential customers the bird, over and over again.  The light bulb went on, Pepsi remembered that it liked money, and the company put together a "special markets division" and tasked them to develop a marketing campaign that has to be seen as one of the all-time against-the-odds successes in all of advertising history.

Pepsi tied high-profile black endorsers to positive family-and-community imaging in its marketing to black communities.  While other companies utilized negative stereotypes about blacks, Pepsi went the other way.  We should caveat that Pepsi was no bastion of noble purity throughout this; plenty of Pepsi's own employees were as racist as the next guy during that time period, and gave the "special markets division" short shrift and little respect within the company even as it was succeeding in its mission.  Pepsi also took care not to push too hard on the special-markets campaign within earshot of "conventional" markets, in fear of upsetting white audiences.  It's dismaying that they hedged their bet in this manner, but supposably that was the reality of the time.

Well, we all know how the story turned out.  The good guys won.  Black communities saw that Pepsi was catering to them, and they reciprocated that with business at the register.  Pepsi's sales increased dramatically and they rose from an economy brand to the solid second-place market position ever after.  And the efforts of Pepsi's "special markets division" became a case study for a business finding and embracing a niche audience and turning it into something much more.

(As we entered the modern era and both companies became megacorporations, they ultimately shed any reluctance to exploit any market they could possibly find and identify.  Coca-Cola in particular courted the urban minority youth market hard with a basketball-focused brand makeover for Sprite that ran for years.  But history hasn't forgotten their Old Shame.)

So, this is the point in the blog article where I want to be careful not to hit the ham-handed cliches.  Surely it has been discussed ad nauseam how awful the hobby game industry is when it comes to dealing with anyone who isn't a cis straight white male.  Yes, there has been progress.  Yes, there is a general progressive attitude in the more professional networking circles.  And yes, stores like mine who are in it for the long haul found ways to roll out the welcome mat to... non-males, non-cis, non-white, non-straight, etc, gamers.  But we're not fully there yet, as an industry.  And any time some LGS disregards those audiences or aligns with those who impede that audience's ability to enjoy games, that's an open opportunity for every competing store that likes money and isn't aligned with bigots or bullies.

But I'm not writing this article to virtue-signal and I'm not writing this to earn a pat on the head.  I want to challenge myself, and the rest of us, to find out who we aren't bringing in, but would otherwise be reaching, and whom our competition is disregarding.  And I mean more than just competition in the form of other hobby game stores.  Online is our competition, the mass market is our competition, other forms of entertainment are our competition.

A few that come to mind, that I think are food for further thought:

• Visually impaired and hearing-impaired gamers.  I don't think any of us would not want to welcome them, but wishing does not make it so.  We have a blind D&D player and I was initially at a loss as to how to facilitate his gameplay.  Fortunately, my store manager had some military training on that and he knew right away how to provide movement guidance, environmental guidance, verbal and otherwise auditory cues, and so on, so that the player could get into the game and fully participate.  I don't even know what I am going to do if a deaf player joins a booster draft, for example.  I imagine writing would work, but would be slow and cumbersome.  Nobody in the company knows sign language.  At DSG's scale, it's not a matter of "if," but of "when."

• Younger gamers, especially those barely of age to learn how to socialize in a tabletop or role-playing format.  Most conventional FLGSes are utterly unprepared for the particulars of this audience.  The trailblazer in this regard is surely Rob Gruber of Good Times Games on the west coast of Canada, whose paid-admission all-ages immersive roleplay experiences have been polished to a shine and have his business punching well above its weight class.  Follow the Good Times Games feed on social media if you want to learn about an orthogonal approach to the hobby game world that just might be the most unscratched surface left in most markets (including my own).

• There are gamers I've mentioned here before who are avidly and assiduously determined to consume only G-rated or PG-rated entertainment, such as the LDS (Mormon) missionaries who already frequent DSG during their free-time days.  I suspect that this potential audience is both deeper and more multifaceted than any of us realize.  I'm not even sure what this audience is called, and I don't think it's limited to Christian or similar communities either.  And I would imagine this demographic probably has reasonable disposable income... that they already aren't spending on a lot of pop culture entertainment offerings.  There was a business called CleanFlicks that used to edit DVDs and VHS movies to reach this audience, and they were doing well until the movie studies sued them for creating derivative works.  They re-opened purely as a curation service and thrived for six more years after that until streaming killed the video rental biz.  I don't think an FLGS would want to actually edit the games we sell, but curation and filtering might have some serious value here.  In fact, the more I write about this, the more I want to try it.  I doubt Magic: the Gathering would make the "clean" title lineup, so we would start with unambiguously family-friendly fare like Ticket to Ride and build from there.  I am also not religious, so I would have some homework ahead of me to understand the audience and tailor the offering.

• Spanish-speaking gamers, or potential gamers, and you can substitute in a linguistic minority that is more pertinent to your locale if you have one.  Almost two million people out of the five million living in metro Phoenix speak Español, and just by the law of large numbers that suggests hundreds of thousands at least who speak Spanish primarily, and may speak little or no English at all.  Major games like Magic: the Gathering and HeroClix are available in Spanish, and Asmodee and other board game publishers include multilingual instructions with most or all titles.  Most modern video games play in every language based on console settings.  How many of those people would shop at Juegos de Arizona if I had a bilingual staff and opened a location in the heart of demographically Latinx parts of town?

That seems like a very short list, and I'm sure there are obvious ones I am missing.  Who else could we be reaching?  Who might be on the outs of the bar-and-club social scene, and not even know the tabletop hobby is a thing?  Who might be ill-situated to live and breathe social media and e-commerce, but still enjoy strategic challenges?  Not all of our stores will be in a position to capture all of these "fugitive resource" audiences, but at the scale of small business, just doing an excellent job developing one such niche market might be enough to spell economic success and a substantial first-to-market incumbency advantage.

Throne of Eldraine Collector Booster Pricing

For the first time, there will be a "Collector Booster" offering with the new Magic: the Gathering expansion, Throne of Eldraine.  This booster will basically be chock full of value; more on that in a moment.  In fact, I am pretty excited to get my hands on some even though I rarely play these days.  I think it's an awesome idea and I hope that as they iterate, they will polish it to a brilliant sheen.  In the meanwhile, though, we all get to be beta testers for this, and that means some bumpy roads ahead in a few more weeks.

The collector boosters will come in boxes of 12 packs, and those boxes are expensive as hell from distribution, let me tell you.  MTG Design Director Mark Rosewater famously estimated a "$20-$25 store price" for the boosters and he needs to shut right up because that's barely over wholesale and players have assumed (justifiably, given MaRo's authority) that he is telling the truth and any store pricing to market is just greedy.  For a normal booster product he would have been quoting a short-margin estimate.  And this is no normal booster product.

Market value on collector boosters is going to be more than $20-$25.  We don't really know how much more yet.  The TCGPlayer lowest offer as of right this moment is $36.98 shipped per collector booster, which seems like a reasonable guess.  I expect $45-$50 and up to be the norm once the dumb stores undersell their tiny allocations of it and the limited supply in the wild exerts upward price pressure.  That's right, supply is constrained severely on this.  Ratios of booster boxes to collector booster boxes from distributors ranges from around 12:1 to 20:1 on the purchase, though I've heard of outliers in both directions.  I'm not going to discuss the ratio I got, except to say distribution took good care of me.  But even with that, and even with DSG's order of literal hundreds of booster boxes of Eldraine, my collector booster allocation is very small, and so is everyone else's.  Remember these are twelve boosters per box, not 36, so it's even more limited than it sounds.

And the collector boosters are a one-shot print run.  Which means it will be out of print immediately and subject to market demand immediately.  It also means thousands of collectors will buy collector booster boxes to throw in their closets for years to come, further shrinking the circulating supply and exerting even more upward price pressure.  I'm not just imagining this, it's very easy to look at how the market has behaved with other highly demanded, limited-print products and assume this one will work similarly in many respects.  Ultimate Masters and Commander's Arsenal, for example.

If collector boosters had been an unlimited print run, MaRo's $20-$25 number might have made more sense, though based on our cost, I expect most long-run stores would have opened at $29.99 and probably done something like 4-for-$100-tax-included as their special splurge bundle deal.

By the way, what booster pack could possibly be worth that much?  Well, the wholesale price is so high it's tough to say if it really will be worth it, but the menu certainly promises a lot.  Each collector booster contains:

• 1 rare or mythic rare with extended art;
• 1 foil rare or mythic rare or special-frame card;
• 9 foil commons/uncommons;
• 3 special-frame cards such as showcases or borderless planeswalkers;
• 1 ancillary card that ordinarily appears in non-booster product; and
• 1 foil token.

That's... that's a pretty impressive yield even at a high price range.  It's a riff on those neat all-foil Alara block boosters that came in big art blisters.

Moreover, this product configuration is ideal for what stores would want to break for singles, except we don't dare break many (or possibly any) of these for singles because we're barely going to have enough to serve the sealed-pack demand we expect to see from our players, and selling players what they want is a tremendously high priority for me.  So as always we'll have thousands upon thousands of bulk commons from regular boosters, which are now being given the moniker "draft boosters," as we open cases of them to fill our release day stock, and we mostly leave the collector boosters alone.

Honestly, I hope the collector boosters are such a huge hit that Wizards just makes them unlimited prints.  I don't care that the price will go down.  People see me talking about a high price and assume I'm out to push them for as much money as I can get.  That's not the case.  I make money just fine doing business normally day in and day out.  I want people to be able to get the pieces to play their game.  I am perfectly happy to do that by means of a maximally accessible market.  Unfortunately, the market in reality is full of limited prints and out-of-prints and both genuine and artificial scarcity and I have to use tools, including price, to manage the provision of those wares to my clientele.

"BUt bAhR Wut if UR wrONg & CoLLectOR bOoStErS R chEEp fOr a LOng tIMe???"  Then who cares?  I'll have too much stock and I will need to either be willing to sit on it for longer, or follow the market price downward to join the herd.  I do this all the time to items where the market price drops.  It's just not noticed as much, because if market price is going down, usually that means the card or product is not in demand, which means nobody is asking for it, which means nobody is observing that we're reducing the price on it.  Read your Frederic Bastiat already, people.  Educate yourselves.  Sometimes the most impactful economic effects are unseen.

I'm pretty sure I'm not wrong about this, though.  You might say I'm betting my livelihood on the soundness of my judgment.  That's not arrogance or conceit, it's confidence in what I've learned with years of experience.

You know who doesn't have years of experience?  A lot of game stores that I see already underselling Throne of Eldraine, both the main set, the collector boosters, and the prerelease.

I don't think I have to talk much about the prerelease, it's a literally not-outsourceable experience that should command a premium and stores that chronically undersell it tend to fail and close.

The pre-order boxes that are available at the prerelease for Eldraine include a collector booster this time, while supplies last.  The supply we've been allocated is slightly over half of the number of early booster boxes we have to sell, which means not everyone can even take advantage of the promotion.  DSG gets well over 100 booster boxes for the early release, and we were allocated only enough collector boosters for the early release to pair with fewer than 100 of those boxes.  That's not a very large allocation.

A store that's only getting 48 or 60 booster boxes allocated for early sale is going to have, what, two or three dozen collector boosters to pair for the promotion?  According to Wizards, they could have as few as 12, or one display full.  And yet they undersell that, because that lets them take players' money now, and make excuses later when early release day comes and many pre-order customers don't get the collector boosters.  I'm sure they will tap-dance a promise to make good with a collector booster and maybe an extra couple of packs a week later at release, and some players will be OK with this, while others will remain angry.  As a player, I'd be offended if a store took my pre-order money up front, knowing they weren't going to have enough collector boosters to cover the early release orders.  I would feel misled, deceived, lied to (by omission).  I guess we'll all see how things shake out in a month or so.  Players are smart, they usually figure out when they've been had.

For DSG, we're not going to take a single pre-order that can't be paired to a collector booster until those have sold out, and there will be full disclosure at that time.  I suspect the non-paired boxes (that still do get the buy-a-box foil card) will mostly sell during prerelease weekend.  To me this is basic integrity, and I see most reputable stores setting things up similarly, including many competitors.  Most of us know Throne of Eldraine is going to be a firecracker hit of a product, and we are perfectly content to make great sales on it in a straightforward manner.

I've rambled enough about this for now.  It's exciting when a big change happens to Magic as a product, especially where substantial sums of money are involved.  It's a chance to look at the landscape and draw some inferences and make some decisions and see how they play out.  I guess I'll know in about two months whether and how much those decisions were fruitful.

Rugged Consistency Does Not Come Cheap

I encountered an article called The Costs of Reliability by Sarah Constantin.  Constantin poses the question, "Why can people be so much better at doing a thing for fun than doing that same thing as a job?"  Her argument went in the direction of it being easier to "do something valuable," in the abstract, than to meet a specific commitment.  I think she's correct in that assessment but that the answer goes a little further in luxury goods industries like mine.

A professional business has to stand behind the work they do or the product they sell, and that need permeates process and reaches its tendrils into virtually every workflow.  And that consistency, the consistency to provide a "ruggedly consistent" experience, for lack of a better adjective, costs.  It has labor cost, materials cost, FFE (furniture, fixtures, and equipment) cost, logistical/focus cost, and it can inform the choice of merch to be carried or service(s) to be offered, meaning there is also cost of goods involved.

Constantin's defense of her thesis nicely sets up my extension of the argument, which leads me to believe we really are looking at different overlapping facet groups on the same gemstone.  She notes:

The costs of reliability are often invisible, for they can be very important.  The cost (in time and in office supplies and software tools) of tracking and documenting your work so you can deliver it on time.  The cost (in labor and equipment) of quality assurance testing.  The opportunity cost of creating simpler and less ambitious things so that you can deliver them on time and free of defects.  Reliability becomes more important with scale.

Absolute truth right there.  I want to touch one more part of her argument and then illustrate a little of what we see in the hobby game industry and why I apply the filter of rugged consistency to this issue:

In general, you can get greater efficiency for things you don't absolutely need than for things you do; if something is merely nice-to-have, you can handle it if it occasionally fails, and your average cost-benefit ratio can be very good indeed.  But this doesn't mean you can easily copy the efficiency of luxuries in the production of necessities.  This suggests that "toys" are a good place to look for innovation.  Frivolous, optional goods [...] we should expect technology that first succeeds in "toy" domains to expand to "importnat, life-and-death" domains later.

Okay, so the thing is, in my industry we basically sell toys.  So we should be at liberty to have stuff fail and/or suck, right? As long as it's not too often, hey man, that bleeding edge is bloody for a reason, isn't it?  And that's where consumer behavior throws us the curveball: Despite toys and games being indulgent luxury goods, and not life necessities, consumers still gravitate toward dependable and proven-successful options.  And this is true for our "services" as well as our merch.

• More than any other factor, consumers dislike being made to wait.  Were it not for this factor, far more stores would get by with skeleton crews and single register stations.  I have a minimum staff anytime census of two, and two main register stations with additional backup options in case we have hardware issues, and I'm often on site to ease congestion in case of a sudden spike in visits.
• Similarly, a single kiosk can be slow, or go down, or simply have a slow shopper occupying it.  We have four kiosks up (one staff-facing) and could use two more.  Multiple factors get addressed in redundancy: Wait reduction, equipment problems, traffic flow.  The other day I had a guy ordering an entire foil cube on the kiosk.  You think I want some kid who needs $3 worth of Pokemon cards leaning on that dude to hurry up and finish because there's only one kiosk?  No sirree.  That gentleman and his cube can take all the time he needs.
• After a secondary or tertiary game has its moment, players tend to flight-to-quality their way back to Magic: the Gathering, Pokemon, Dungeons & Dragons, and Warhammer.  Any time there's economic turbulence, that flight-to-quality happens faster as consumers prioritize.  Put those two factors together and it doesn't make a lot of sense to spend on other things, even new hotness, if that results in even a temporary skimp on the category leader(s).  (Provided a given store carries that category.)
• Players tend to return to a place where the events are run the same way every time, even if that method has inefficiencies.  They know what to expect and the event becomes comfort food for them.  They sign the entry sheet the same way every time.  They sit at the same table until the pairings go up.  Comfort food.  We spend extra labor and attention to make sure if we're changing anything about that process, it's subtle and unintrusive.
• Players tend to come in on the nights when their favorite staff member is working, especially if it is their friend.  This brings with it a cost where the business needs to train that staff member not to spend too much time socializing, though obviously being a friendly host aligns well with the business's objectives.
• In terms of the shipping service, we overship by probably 10% of cost in the packaging, handling, and sometimes even postage we spend, because we know that when a buyer receives something in the mail and it's in rough shape, the instant reaction is absolute fury toward the seller.  Even if it's the courier's fault!  (They may sometimes realize that later, but still.)  We even "help" the couriers to some extent by trying to pack ruggedly in such a way that the goods won't be as susceptible to damage.  When sending things to FBA, much the same principle applies.  Prep and pack it so that a tortured warehouse slave with zero seconds to spare will be able to process it inbound and outbound without damage.
• On the product side, when it comes to buying video games that won't fall apart when children get access to them, there's only one name: Nintendo.  This means stores can tend to see fewer defects in Nintendo products, but also needs to test and prep well, because someone will remember if their Game Boy Advance they just bought wakes up dead.  It's such a rare thing, that store must not be taking good care of its merch!
• Speaking of which, I could write an entire article on general merch care as it overlaps into the world of comics as well, but I'm no longer in the comics business, so I won't.  Suffice it to say that there are a myriad of things we do, from shrink-wrapping D&D books to the simple sleeving of singles, aimed at preserving the condition and thus value of collectibles, and doing all those things incurs costs.
• For that matter, no merch is ever on the floor at DSG and I have seemingly superfluous shelves at the bottom of the grid gondolas.  Despite the expense to buy and deploy these things, they are there so that we can mop the floor without splashing the merch.  This was a critical thing when we had comics on the rack, not quite as crucial now with many general tabletop products not being collectible, but people still want to buy things that are in nice shape.
• The rabbit hole would go deep indeed if I got into the realm of products I don't carry, or don't yet carry, because I haven't solved how to deploy them in such a way that they are shoppable and look great but don't get destroyed by daily contact or become shoplifting magnets.

In the video game world, publishers bend over backward to make sure there is rugged consistency in their product, even when it becomes costly to do so.  Microsoft reportedly spent a billion dollars fixing red rings of death in the original Xbox 360 between 2006 and 2010, what division VP Peter Moore said was Xbox's "Tylenol Moment."  Sony's reputation suffers to some extent due to not opting to address either the PS3 Yellow Light of Death or the PSN Security Breach of 2011 with the same degree of comprehensive make-it-right.  Nintendo just recently had to defend their own reputation with the Switch "drift fix," with joy-cons having a defect crop up somewhat more commonly than statistically likely.  Nintendo offered free repair, even outside the warranty period, with free freight pre-paid, and it was fast.  I had one of the "drifting" left joy-cons, and I had it back and in fully working order inside of a week.  Nintendo then released Switch Model HAC-001(01), a full system revision with more battery life, a somewhat newer screen fabrication, and a differently engineered thumbstick to correct that drift issue from the outset.  The Big N ain't screwing around when it comes to reliability.

Ultimately, it falls upon everyone in the vertical to compete based on rugged consistency, because the only way to build trust with the consumer is for that consumer to get what they want, dependably, and at the quality expected, when they do business with you.  If you can't provide that, the consumer has a literal marketplace of options to turn to instead.  And it costs a lot to acquire a customer, but even more to recover one.

Seven Years Strong

Saturday, August 10th, 2019 marks the seventh anniversary of the brick-and-mortar storefront of Desert Sky Games.  If you had asked me in 2012 whether we would still be doing this at the end of the decade, even the optimistic version of Bahr would have been forced to answer, "Probably not."

Nonetheless, somehow we persevered and the store today is basically performing the best it ever has.  The last few anniversary posts have adequately reminisced about the events we either enjoyed or endured all these years, so I won't revisit those subjects.

One thing I will observe is that a business can't go seven years without losing some things.  We've been diligent and worked hard, and we've created a business culture and a business history.  We've put in the hours and planted the flowers.  We've sorted more cards than there are grains of sand on the beach, or so it would seem.

After all those years of effort, there are some things that are now gone forever.

And those things are called bank loans.

...

/flex

Hobby Comic and Game Store Closures, First Half of 2019

Are you all enjoying your Summer Break?  I know I am.  I'm getting a lot done and Desert Sky Games is on an absolute tear right now.  Much as I'm starting to get the itch to resume weekly writing, I'm going to continue to take advantage of the self-imposed downtime to work on projects, develop personnel, and spend more off hours with the wife and kids.

Obviously it's that time of year again, in which I count down the stores that hung it up between January 1, 2019 and June 30, 2019, that I know about. As I regularly reiterate, my information sources are imperfect, but I am confident that this list does not fundamentally mischaracterize the situation. I required a firsthand-source announcement or evidence of the discovery of the store closed in order to add it to the list.  A store that changes ownership to an entirely different business entity is typically counted as a closure, though I will sometimes omit such an instance if there was zero change in the store branding (not applicable for anything listed this time around).

Announced or Discovered Closed 

1. CHAIN OF STORES: ThinkGeek (Worldwide closure) 
2. DISTRIBUTOR: Aladdin Distribution (Burnsville, MN) 
3. DISTRIBUTOR: E-Figures Distribution (Southold, NY) 
4. 138 Comics (Lemon Grove, CA) 
5. 1st Person Games (Pocatello, ID)
6. Aardvark Books (San Francisco, CA) 
7. Abubika Gaming (Gastonia, NC) 
8. The Adventurers Guild (Edmonton, AB, Canada)
9. All the King's Men Chess & Games (Pitman, NJ) 
10. Angry Squirrelz (Moses Lake, WA) continues business in apparel and not hobby games
11. Apex Hobby Shop (Sparta, WI) other location closed late 2018, all closed now 
12. BC Comix (Howell, MI) One huge location built from 3 smaller locations, all closed 
13. Bearded Browncoats Comics and Games (Gainesville, FL) Ocala location remains open
14. BetaTCG dot com Gaming Center (Richland, WA) 
15. Board Game Warriors (New Westminster, BC) 
16. Caffeinated Gaming (Zieglerville, PA) 
17. Captain Jack's Comics (Minneapolis, MN) 
18. Chameleon Collectibles (Apache Junction, AZ) 
19. Coins Cards & Comics Colorado (Arvada, CO) 
20. Collectors Corner (Baltimore, MD) 
21. The Comic Cave (Springfield, MO) 
22. Comic Universe (Folsom, PA) 
23. Core Games Lansdowne (Burnaby, BC, Canada) 
24. Cosmic Comics and Games (Centralia, WA) 
25. Creative Kidstuff (Minneapolis, MN area) 6 locations all closing 
26. Desu-Nation (Temple City, CA) 
27. The Dragon's Hoard (Moorhead, MN)
28. Endgame (Oakland, CA) 
29. Ever Green Game & Hobby (Missoula, MT) 
30. Family Game Store (Savage, MD) 
31. Flashback Games (Tempe, AZ) 
32. Fodder Cannon Games (Charlotte, NC) 
33. A Galaxy Called Dallas (Garland, TX) 
34. GameCorner (Longwood, FL) has since reopened*
35. Gamers Guild (Kenner, LA) 
36. GameSpace (St. Mary's, ON, Canada) 
37. The Games People Play (Cambridge, MA) Oldest existing board game store 
38. GameXcape (Asheville, NC) 
39. Gateway Gaming (Naples, FL) 
40. The Geekery HQ (Astoria, NY) 
41. GMZ4U (Clovis, CA) 
42. Good Games 'N More (Inver Grove Heights, MN) 
43. Gorilla King Comics (Baltimore, MD) 
44. Graphic Action Comics (Newcastle, NSW, Australia) 
45. Hobbytown USA (Lake in the Hills, IL) - franchise location 
46. Ibuywargames (Woking, England, UK) 
47. Infinite Lives (Oswego, NY) other location remains open 
48. Inner Sanctum Collectibles (Cambridge, England, UK) 
49. Jay St Video Games (Multiple locations) One store still operating
50. Link to the Past Video Games (Spring Hill, FL) 
51. Little Shop of Movies (Vancouver, BC, Canada) 
52. Mad Ox Comics / Titan Comics / Games & Comics / Little Monster / whatever Marcus King is calling his store this time (London, KY) 
53. Magician's Forge (Ft. Myers, FL) 
54. Manawerx (Glendale, AZ) Closed and consolidated with North Valley Games; site re-opened under new ownership entity Amazing Discoveries Glendale LLC 
55. Mario's House of Video Games (Provo, UT)
56. Mile High Comics (Lakewood, CO) Main location remains open 
57. The Multiverse Comics (Hurst, TX) 
58. My Pop Culture (Tauranga, New Zealand) 
59. Mythic Realm Games (Mount Vista, WA) 
60. No Land Beyond (Baltimore, MD) 
61. Oregon Trail Games (The Dalles, OR) 
62. Out of the Box Hobby (Stevens Point, WI)
63. PhoenixMTG (Apache Junction, AZ) Opened at site of Chameleon above, then two months later closed and sold and re-opened under new ownership entity
64. Players Paradice Board Game Cafe (Milton Keynes, UK) 
65. Playthings (Madison, WI) 
66. Reality Shift Games (Narragansett, RI) 
67. The Record Store (Howell, NJ) 
68. Redbeard's Games (Dundalk, MD)
69. The Rook OTR (Cincinnati, OH) 
70. R.U. Game? (Brandon, FL) 2 other Tampa area locations remain open 
71. Saint Mark's Comics (New York, NY) 
72. Sanctuary Games (Hutchinson, MN) 
73. Sixth Chamber Used Books (St Paul, MN) 
74. SMASH Comics Games Toys (Sanford, FL)
75. The Sourcery Game Store (Fredericksburg, VA) 
76. Starlit Citadel (Vancouver, BC, Canada) 
77. Stiger's Battle Grounds (Hillsdale, MI) 
78. Tap Two Blue (Los Angeles, CA)
79. Time Vault Games (Portland, OR) 
80. Tom & Stephanies Sportscards (sic) (Philipsburg, PA) 
81. Toyriffic (Hudson, WI) Re-opened and closed again 
82. Two Cats Comics (San Francisco, CA) 
83. Two Kings Gaming (Williamsville, NY) 
84. Ultimate Games and Comics (Hanson, KY) 
85. Uncanny Heroes Comics (Lakeland, FL) combining to other location 
86. Vault 302 Comics (West Branch, MI) 
87. Vegas Comics (Henderson, NV) 
88. The WarStore (Southold, NY) 
89. We Know Video Games (Albuquerque, NM) 3 locations all closing 
90. Wizard's Guild (Athens, GA) 
91. Wizard's Tower (Stuart, FL) 
92. Wow Cool Alternative Comics (Cupertino, CA) 
93. Young's Hobbies (Coventry, England, UK) other location remains open
94. Ziege Games (Howell, MI)

* Stores sometimes close and promise to reopen soon.  I'm counting the closures here, not out of any animus against those stores, but because the success rate of re-opening tends to be very low, they often re-close again (see Toyriffic), and I can't feasibly babysit those stores to see whether they are the one who ends up bucking the trend and re-opening and sticking.  Having said that, it sounds like GameCorner might have defied the odds and gotten back up and running for real.  Well done!

After posting these articles I typically receive a flurry of additional store closure info, so I figure I should also publish the ones we know about that didn't close just yet but already announced that they're done, so well-meaning folks know they don't have to send those in. Here:

Already announced closing 2nd half of 2019

1. Big Daddy Games (St. Augustine, FL)
2. Epic Loot (Centerville, OH) consolidating from 3 locations to 2
3. The Final Dungeon (Woodstock, GA)
4. Rivertown Comics & Games (Red Wing, MN) 
5. Wonderland Games (Lake Charles, LA) 

So, the list grows again. Fifty stores, then 59, then 69 (dude!), then 78, now 90-plus-multiples and going up as I add more from edits, and you have to extrapolate that I probably know about maybe 10% of the real closures, most are anonymous holes-in-the-wall in Nowheresville, West Carolina, so the real number is probably 900+.

How many will close in the second half of 2019? Speaking in the editorial voice, I don't think as many will close, solely because so many already have and we're bound to see a regression to the mean attrition rate.  And there are still two new dumb bastards hanging up a shingle and a dream every time some earnest retailer turns in their badge.

Something I want to emphasize again is that a store closure should not be assumed reflective of ignorance, incompetence, or laziness on the part of the owner(s). Though that does happen probably more often than it ought. The reality is, the deck is stacked against small businesses in America (and even in Canada and the UK and elsewhere, as you can see in the list). Virtually every imposed cost hits with no economy of scale to absorb or mitigate it. Virtually every loss ends up at the feet of the ownership, who get paid last. Virtually every entitlement takes away the next dollar and there's no way to be sure where the dollar after that will come from. I mean we kind of know, but until you have it, you never really know. Every day I wonder if that's the day that the general public will make an irrevocable turn away from every niche product line I happen to carry. Sales don't have to go to zero overnight to kill off a lot of businesses. In fact, in a heated bubble market, a simple slowdown of the growth rate might be enough.

I've spent the last seven years pouring my every effort into making Desert Sky Games the best it can be, and I've seen peers working every bit as hard who caught a few worse breaks and they don't have stores anymore. I've seen people who stuck it out and survived long-ago downturns weathering the current turbulence with aplomb and a healthy reserve; I've seen people whose stores did fine during the last famine run out of gas this time and have no back-pocket solution to call upon. I've seen people with no business running stores have Brewster's Millions scenarios allowing them to piss away untold fortunes paying area grinders to love them temporarily. I've seen people with no business running stores get roped into "investments" by fast-talking turn-key hucksters, both on the tabletop side and the video game side of the swimming pool. And I've seen the churn affect stores from 500 square feet to 500,000 square feet, which is why these lists will never really end.

As I remind you all every time I make these posts, DSG is still for sale and always will be until I've handed over the keys, but nobody who can afford it wants it, and nobody who wants it can afford it. Guess I'll get up in the morning tomorrow and spend another day trying to raise my game.