Without in-store gaming, the hobby game store business model is broken.
I think Gary is correct, and I've never been so happy to be straddling the line into video games, which are going to proceed largely unchanged. My TCG, D&D, and board games businesses have taken huge hits since early March as the COVID situation began festering. My video game business, on the other hand, was like Christmas until the governor shut down the state.
Our stores are designed around [in-store gameplay] and our staff and hours reflect it.
Absolutely true. It's not an accident our game-room-closed open hours are only noon to 7pm, Monday through Saturday. Without gameplay, that's all the "open" we need to be. People who want to play games will do so at each others' homes all evening. They won't be coming back to the store at 9:30 or even 8pm.
A straight retail store is not a long-term viable business
Not in pure tabletop, no. And if you're only talking about new merch to the consumer, also no. I think it's no accident that the straight-retail offerings you see in adjacent categories, from comics to video games to vintage toys and so on, depend so heavily on the secondary market.
Customers ask, when will you have in-store gaming again? I don't know. I can tell you we may have closed our in-store gaming a little late, carefully following bare minimum CDC and county guidelines, but we won't be opening it too early.
This is exactly DSG's outlook right now as well. We were neither the first nor the last to close the game room, but knowing what we knew a few days after we did it, we should have just done it the first week of March. In terms of resuming gameplay, obviously the landscape is shifting tectonically every week or so, but my best guess as of this writing is that the game room stays closed until June, notwithstanding Pence's assumptions to the contrary. That could be too early for some localities, but COVID transmission will be sharply inhibited by the scorching Arizona summer heat, at least until people move indoors.
One of the things I dislike about this community is the inability to hold bad actors responsible.
Yeah.
We'll start with curbside delivery, then no more than five customers in the store, then no more than five people gathered for an event, then 50, then 100, then maybe it will be normal again.
In essence this resembles our likely roadmap. Our tentative plan for DSG is to allow no more than 10 people into the store at a time, which shouldn't be difficult because we didn't really see any larger crowds than that in late March when we had the game room closed but were still open for shopping. This will mean that lonely Magic players who want to hang out and chit-chat with their friends will have to do it outside. I don't expect to re-open the game room until we get some reasonably solid CDC or Arizona Department of Health Services guidance that gatherings of a given headcount have dropped into the lesser risk range.
[Incidentally, regarding curbside delivery: Of all the things that stores have been trying, DSG has shied away from this one for a number of reasons, the bottom line of which is that it's extremely labor-inefficient to do if the store isn't open for general shopping, and even then, the experience is compromised because so much of our merch is meant to be browsed and does not lend well to a web catalog. Dice, for example, or used console systems. We were happy to notice that Square integrated a curbside pickup option into our web software, but we never ended up turning it on, because Governor Ducey's Stay-at-Home order for Arizona made it a moot point. Stores selling essential items could be open outright, while stores not selling essential items could not transact business in person at all, curbside or otherwise, and were allowed only to ship. We chose at the time not to take a position on how "essential" DSG's offerings might or might not be, and thus our online sales for April have simply been shipped to the customers.]
I have a strong financial motive to get in-store gaming back up and running as quickly as possible. Don't think I'm dragging my feet. People's livelihoods depend on it eventually happening.
I wanted to call this one out and emphasize that the same is true for me and DSG. Some of our rival stores have managed to persuade free-agent players that DSG, or I personally, don't want to run events or don't want to serve competitive players, or what have you. Never mind that the competitive scene is where I came from, and DSG has a long track record of striving to run extremely high-quality events. If those bona fides don't convince you, perhaps you can accept at face value my assertion that I have not stopped loving money, and in-store gameplay is utterly critical to driving traffic to the store that ultimately turns into buying and selling cards. Is that a robust enough argument? In-store events will be back because there's a profit to be had.
[I want to reiterate the above even further because with so much uncertainty about events and event scale moving forward, we have reconfigured DSG's layout to spend a lot more floor footage on product racking and shopping, and much less on tables and chairs. The immediate visual impression for some, will be that we have "taken away a lot of the game room," and therefore we must not want players to come to the store. This is not true, we do want players to come to the store. In fact, you'll notice that the scaled-down game room got a beautiful facelift in the meanwhile, as part of our ongoing quest for WPN Premium status. We simply don't know when we will be allowed to resume gameplay! And with what might be a dangerous second winter wave of COVID-19 later this year, we are setting up to ensure we monetize our square footage as well as possible until we are at liberty to go back to high event capacity.]
Right now, stores doing home or curbside delivery will tell you they're doing only 20% or so of their previous sales.
With mostly TCGPlayer singles sales online, and a nice amount of Ikoria pre-orders from the store website, we're at around that level too. What we have not seen is much in the way of other items ordered from the store website. We put up an assortment of the most demanded tabletop games, booster boxes, and new release video games. We've sold some of the video games but most of the rest have barely been touched. Unfortunately, this is in line with what I've been teaching for a while here on the Backstage Pass, which is that store-by-store e-commerce isn't really a thing anymore, and most online sales go through marketplaces like Amazon, eBay, and TCGPlayer. Aside from Amazon-imposed limitations on how much merch I can ship to them for fulfillment, that channel has been extremely active and profitable. TCGPlayer has been good but not nearly as great as when Direct is active. And eBay continues to devolve into being a junk dump; I cannot wait to abandon it forever.
Gary's article is well worth reading in its entirety, so here's that link again. But now you've got my take on it as well.
By the time this article goes live on Tuesday, April 28th, we may have received updated guidance from the government at some level, whether local, state, or federal. If nothing else happens, the Arizona Stay-at-Home order expires Thursday night. We therefore plan to have the store open for shopping on Friday May 1st, with headcount limits, masks, plexiglass, gloves, wipes, hand sanitizer, the whole banana. But not actual bananas. Stay safe and we hope to see you soon.
