Tuesday, July 17, 2018

Dumping Commenceth

It's Prime Day, which means all the stuff that hasn't sold well in the hobby game industry is going to be dumped at merciless rates online.  And it won't be over; watch for the major players to follow suit in turn later in July and throughout August, such as Target, Toys R Us, Barnes & Noble, Wal-Mart, and so on.
This ain't my first rodeo, and I knew a few things going in:

  • I needed to let the board game category lie fallow all "offseason," and saved money doing it; we'll be groaning under the weight of all the new releases by November anyway.
  • Fewer things on the wall means fewer things that are priced "double what it costs online!" and thus fewer negative visitor experiences, never mind that online is liquidation blowout on Prime Day and not really an apples-to-apples comparison.
  • This will soak up some customer dollars now, but the games discounted the steepest are the ones that didn't sell -- and thus the ones with higher odds of not being all that good -- which means their thirst for a great game won't be quenched, and their interest in the autumn onslaught of new releases will be undiminished.
  • No lessons will be learned by most publishers or mass-market resellers from all this.

What's the point of this blog article?  There is no point.  It's the circle of life.  Zebras are dancing.

Monday, July 9, 2018

The Games That Played Us

I've been reveling in the enjoyable Netflix miniseries The Toys That Made Us, a set of documentaries covering the major breakthrough toys in the industry from roughly the 1970s through today.
The series features sky-high production value, insightful interviews with the surviving veterans of the businesses from the time, excellent product shots with clean, restored specimens of the rarest and most valuable pieces, and just enough snark to make you smile.  (In the Star Trek episode, they kept smash cutting to the Star Wars logo when they had to explain what had gotten in the way.)

The first season predictably covered Star Wars (Kenner/Hasbro), Barbie (Mattel), Masters of the Universe (Mattel), and G.I. Joe (Hasbro).  The second season covered Star Trek (MEGO/Playmates/Diamond), Transformers (Takara/Hasbro), LEGO (um, Lego), and Hello Kitty (Sanrio).

If I had to guess, I'd expect their third season to explore the likes of Nintendo (by far the largest product line in the toy trade they haven't examined), Beanie Babies, Hot Wheels, My Little Pony, Thundercats, NERF, and/or probably something that was bigger overseas but flashed in the pan here, like Tamagotchi.

It occurred to me that Netflix (or YouTube Premium, or Amazon, or whoever) could do the same sort of show based on the history of the modern game industry, and they'd have enough surviving principals and physical product safely stored in collections and company vaults that they'd be able to do a lot of showing and not just telling.

I say modern game industry because they wouldn't be able to get a lot of viewership if they covered their diligence for a season or two with chess, checkers, whist/poker, cribbage, billiards, and so on.  They'd have to limit the scope to the games that present-day adults grew up playing, that a generation or two before that either weren't as widespread, or have evolved significantly since.

Here are the games I'd love to see documented on The Games That Played Us!

We know they have to start here as the modern board-game industry began in 1935 with Parker Brothers' seminal game of capitalism and futility.  The journey to what we have today with USAopoly and the licensing tie-in of classic board games has reshaped the analog game landscape.

Dungeons & Dragons
Gary Gygax's 1974 Rules for Fantastic Medieval Wargames Campaigns Playable with Paper and Pencil and Miniature Figures, actually originally an expansion for his 1971 miniatures wargame Chainmail, grew in the hobby trade for the rest of the decade, but then went nuclear after appearing in the movie E.T. the Extra-Terrestrial in 1982.  The D&D Basic Set and Expert Set were everywhere, and Advanced D&D sourcebooks were showing up in grocery stores.  An eponymous Saturday-morning cartoon left us all wondering if the party would ever get back to the rollercoaster.  Before long comic shops and bookstores moved heavily into RPGs, including spinoffs in other genres like Traveller, Gamma World, and Champions.  Then came all the mysterious cults and devil worship and Michigan steam tunnels and whatever.  AD&D 2nd Edition in the 1990s purged the hellfire but we all knew what a Baatezu was.  There was a silly movie starring Jeremy Irons, and Everquest and World of Warcraft largely supplanted D&D for years, until a double-whammy that nobody saw coming: an unexpectedly excellent 5th edition, and retro-chic thriller Stranger Things showing an entire new generation of players that fighting the Demogorgon was cool.

Games Workshop started out as a broader player in the hobby realm, publishing hobby review magazine White Dwarf (since the term had relevance both in fantasy and science fiction) and introducing an assortment of RPG and miniatures lines.  Since the 1990s, things simplified: Warhammer 40k is the most popular miniature-figure wargame in the world and everything else Games Workshop does is ancillary to it.  White Dwarf dropped all third-party content and became a house organ.  Tray-pusher Warhammer Fantasy persisted for over a decade more, especially in Europe, but has now been supplanted by a "40k version" of the same setting, Age of Sigmar.  The episode on Warhammer will get to look at lot at the business side of things, because while we were mostly just chuckin' dice, Games Workshop had to contend with technological upheaval and metallurgical problems such as worldwide spikes in the price of tin.

World of Darkness
This could be a very timely episode if the new 5th Edition of Vampire: the Masquerade takes off after its forthcoming release.  The 1990s saw D&D continue to be the category leader, but weaker than it ever had been (and it would be even weaker in the late 2000s, enough so that Pathfinder arose against it).  Goth subculture struck around that time and White Wolf's Vampire, Werewolf, and Changeling RPGs and Rage TCG all raked in the cash.  They even had a TV show, Kindred: the Embraced.  The impact was significant enough that for over 20 years, Chessex continued to make packs solely of 10-sided dice.

Klaus Teuber changed the way board games were played with The Settlers of Catan in 1995.  There was no more elimination, everyone could influence gameplay to the end, and rule sets gave full agency to the players, reducing RNG and making strategic choices the core game determinant.  "Euro-style" board games began a slow build over the course of over a decade, and after some economic dry spells, finally saw their boom in the 2010s when the entire culture of board gaming married itself to social media.  The histories of Mayfair, once an RPG publisher, and Asmodee, now the biggest board game publisher in the trade, are both entwined with the history of Catan.

Pocket Monsters
It all started as a Game Boy game and some trading cards in Japan.  But GameFreak's Pocket Monsters made the leap, somehow, to North America to become Pokemon in 1998-99, and here we are 20 years later and it's the single biggest media franchise in history, surpassing even Star Wars and Batman with a staggering 59 billion dollars in sales and its own property oversight subsidiary spun off from Nintendo, The Pokemon Company.  Linking all the milestones Pokemon has seen come and go would be a series of articles by itself.  Somehow Pokemon became the best, like no one ever was, very likely because it was the focal toy of the gigantic Millennial generation.

Magic: the Gathering
There have already been some treatments of Magic in documentary form, but pieces like Enter the Battlefield focus on pro players, and while those guys are surely decent people, their personal journeys as players are of near-zero interest to me and anyone interested in the business history of Wizards of the Coast and Magic.  We've read bits and pieces of it through decades of mothership articles, Mark Rosewater pieces, and hobby media, but for a product that arrived in 1993 and for which internet chronicling has always existed, we should be able to do better.  We should be able to show that history.  My understanding is that Wizards has some special tidbits in prep for Gen Con next month, video and media and product from the company vault that we'll all get to enjoy.  Peter Adkison and Dr. Richard Garfield are still alive.  Let's not let this one slip away; we've already lost Christopher Rush and Quinton Hoover, two of the first artists who brought the visual beauty of the game to life.

Cards Against Humanity
For the 2010s, this game is at the center of the industry's story, from the rise of Kickstarter (and the thousands upon thousands of shovelware titles that appear for every one success that breaks through) to the explosion of lowbrow party games and copycats to the publisher's brash political stunts and so on and so forth.  Love it or hate it, Cards Against Humanity is a thing now, and so are Exploding Kittens and What Do You Meme and Joking Hazard and on and on, and it all started with a bunch of people making sex and fart jokes and playing Apples to Apples with it.

There you go, Hulazon YouFlix.  Two full seasons worth of material ready for your writers and producers to do awesome things with.  I have every faith in your skills and talents.  Please make that check out to Michael Bahr, it's spelled B-a-h-r, in care of Desert Sky Games, 3875 W Ray Rd Ste 7, Chandler, AZ 85226.  I look forward to celebrating your success!

Tuesday, July 3, 2018

Hobby Comic and Game Store Closures, First Half of 2018

It's still a bloodbath out there.  Just as it was for late 2017, so it continues to be.

And this is just the stores we know about!  To add them to this list they have to be discovered closed or announce their closure firsthand on social media.  In a private retailer channel we've been collecting screenshots and photos, doing our diligence.  As I said in the original article linked above, my information is imperfect, but I am confident this list does not materially mischaracterize events.

So how many more closed beyond these?  Believe it or not, probably fewer than there were new stores opening.  The false lure of "being paid to play games all day" possesses a pull so fierce that heroin is shaking its head in awe muttering "damn, that's tempting!"

Gaze ye and despair:

  1. Archangel Games (Clio, MI) 
  2. Badlands Comics and Games (Dickinson, ND)
  3. BattleZone Games (Marion, IA)
  4. BC Comix (3 locations in Fenton, MI, Battle Creek, MI, and Brighton, MI, but opened one 9200sf combined location in Howell, MI)
  5. Book and CD Hut (Somerset, KY)
  6. Boxcar Cafe (Calgary, AB, Canada)
  7. Break From Reality (Johnstown, CO)
  8. Card Advantage Game Center (Athens, GA)
  9. Cardboard Crowns (Dayton, OH)
  10. Central City Comix (Surrey, BC, Canada)
  11. Chinook & Hobby West (Calgary, AB, Canada)
  12. Comikaze & Toys (Goodyear, AZ)
  13. Conway Games (Vancouver, WA) reopened different owner/brand
  14. The Comix Gallery (Wilmette, IL)
  15. Discland (Bloomington, MN)
  16. E&D Games (Port Richey, FL)
  17. Epic Puzzles and Games (West Valley City, UT)
  18. EXP Restaurant + Bar (Vancouver, BC, Canada)
  19. Face Off Cards (Winnipeg, MB, Canada)
  20. Frontrunner Comics (Dallas, TX)
  21. Funagain Games (Amazon and online operations)
  22. The Game Castle (Londonderry, NH)
  23. Game Master (Laguna Hills, CA)
  24. Game Paradise (Indianapolis, IN)
  25. Gamers (3 locations in IA, still open in 3 locations in NE)
  26. Gamestar (Multiple locations in Washington state)
  27. The Game Warehouse (Greencastle, IN)
  28. Get Your Game On (Ferndale, MI) other location remains open
  29. Highlander Games (Minneapolis, MN)
  30. Hobby Invasion (Selma, NC)
  31. Jay St. Video Games (Saratoga Springs, NY) other locations remain open
  32. Just By Chance Games (Waterloo, ON, Canada)
  33. The Legendary Lotus (Garden Grove, CA)
  34. Legends Comics & Games (Santa Clara, CA) other locations remain open
  35. Mad Reads Comics (Brighton, CO)
  36. McGuffin Games (Little Falls, MN)
  37. Meltdown Comics (Los Angeles, CA)
  38. Modern Myths (2 locations in Massachusetts)
  39. Myth Games (Calgary, AB, Canada)
  40. Mythic Game Store (Henderson, NV)
  41. People Play Games (Chicago, IL)
  42. Phyrexian Games (Fitchburg, MA)
  43. Pips Board Game Cafe (Calgary, AB, Canada)
  44. Play N Trade (Duncan, BC, Canada)
  45. PlayersMTG (Lewisville, TX)
  46. Radiant Rogue Games (Dawagiac, MI)
  47. Revolution Games (Calgary, AB, Canada)
  48. The Safehouse (Kuala Lumpur, Malaysia)
  49. Save Point (Lemoyne, PA)
  50. Silver Jem Games (Arlington, TX)
  51. Silver Lime Cafe (Altrincham, Manchester, UK)
  52. Star Port (Lynchburg, VA)
  53. Super Michael Bros (Tampa, FL)
  54. Tabletop Game Shoppe (Mesa, AZ)
  55. Toys R Us (735 U.S. locations)
  56. The Uncanny Comic Shop (Clermont, FL)
  57. Unique Gifts and Games (Grayslake, IL)
  58. Villainous Lair (San Diego, CA)
  59. Wizards Retro Games (Southington, CT)

The list is a bit longer than last time, and of course there's that big one nestled in there right before the end.

Moreover, this isn't just a list of deadbeat stores.  While there are surely some that ought not to have opened to begin with, there are a pretty respectable number of very good businesses on that casualty list, and the reality is that business is pretty treacherous territory.  When you're in small specialty retail, you get close to zero shelter from laws and regulations meant for megacorps who can either afford compliance or can just push that cost onto their customers.  You get much less economy of scale than the big boxes and big shippers.  Ultimately every problem is yours and every cost comes right out of the owner's take home at the end of the day.  You can cheat, but eventually cheaters get caught and there is a risk of ruinous consequence.  Or you can play it straight, and be even further at a competitive disadvantage to the cheaters, as new ones spring up to replace those that get crushed.

Whatever the reason, the stores above have closed their doors.  The typical former customer who visits the empty husk that used to be that store will rattle the door handle for a few seconds, shrug, and walk away.  A tiny percentage will find a new waterin' hole among that store's surviving competitors, or even the inevitable new upstarts that will appear.  Slightly more will become storeless gamers playing mostly at home.  The largest percentage will simply quit the hobby.  That's the saddest part of all, because the mutual goal of all stores for the betterment of the entire industry is to get as many people as possible to engage.  When gamers disengage and become non-gamers, nobody wins.

Tuesday, June 26, 2018

Building For Tomorrow: The Commitment Quotient

This is a followup of sorts to my article Building For Tomorrow: Finding New Things to Sell from waaaay back in May 2016.

One of the most important things in business is to avoid spending resources that will not provide a return on that investment.  To avoid that spending, you have to be able to say "no."  And if anything, I haven't said "no" enough.

Desert Sky Games benefits from being full-spectrum, but is also spread thin from being full-spectrum.  As the Chandler location's construction costs taxed our budget for the past year and counting, and as we saw a drop in customer traffic upon the initial move that we then had to recover and rebuild, we put resources into the merchandise that was paying off the most dependably: Magic, video games, Dungeons & Dragons, and board games.  It was simple retail Darwinism and coffee was for closers.  Those four pillars are the foundation of our revenue right now.

Accordingly, we have categories that have sunk beneath the "commitment quotient," or "CQ."  That's a term I just invented out of thin air to describe the level and mix of stock and the amount of fixturization/merchandising and product knowledge and promotion that is sufficient for a store to carry so that an average customer with a greater-than-trivial interest in that category will take you seriously as a retailer of that product category.  The CQ boils down to a money amount a store needs to spend, but because that expenditure is made up of interlocking pieces that a store may, in some respects, already have deployed, it's not quite as simple as quoting one number.  It really is a resource and expertise collection, that is only consequentially expressible as a monetary cost.

To meet a category's CQ, it is not necessary to have a stock level to shock-and-awe the most hardcore of devotees, though that surely meets the CQ if you can.  If you can't meet the CQ in a category, you're going to lose some sales and some money.  It becomes a question of degree, and depending on the particular economics of any given category, such a failure can be anywhere from relatively painless to horribly expensive.  You're not a "real" seller of Thing X.  People will immediately realize that Other Store Y in town is better for them, if Y has even a modicum better spread of Thing X, even if, objectively speaking, Y's offering is not that great.  Other Stores have gotten away with this grass-is-greener the-devil-I-know effect for some time, especially when incumbent.  I've been the Other Store in some instances.

To give an example, the commitment quotient for Dungeons & Dragons would set you back around six or seven grand at wholesale.  Sourcebooks, accessories, dice, dice accessories, miniatures, paints, rack and fixture that presents it professionally, and finally some furniture to facilitate gameplay.

We're talking about shelf levels of half a dozen starter sets and Players Handbooks, half that in Monster Manuals and Dungeon Master's Guides, one of each of every other sourcebook, and however many screens and spell cards you can get because Gale Force Nine appears incapable of printing them with regularity.  I use old newsstand racks for this so I can face everything out, but IKEA Expedit/Kallax are also an acceptable solution if you're OK with spine-out display.

We're talking a couple hundred different colors and finishes of plastic dice and a handful of premium options, plus dice accessories like bags, dice towers, and so on, as well as marker-friendly grid table mats.  It's almost impossible to stock too many dice.  Just when I think I've surely ordered more dice than we can sell through, they're gone.

We're talking WizKids's pre-primed, unpainted, officially licensed "Nolzur's" D&D miniatures line, a case pack of half a dozen of as many of them your distributor can get you.  (The difference between GF9's perpetual outages and WizKids's perpetual outages?  Each time WizKids finally restocks us, they really restock us.)  If you're lucky enough to strike paydirt on those, it's very easy to have over 100 different figure packs on your racks, including their Deep Cuts and Wardlings branded figures, both of which are perfectly good for D&D.

And you'll need a line of paint and tools for people to use to customize their figures, and for dungeon masters (DMs) to customize NPCs, monsters, enemies, objects, and terrain.  Army Painter provides a full line with commercial rack, and a bunch of distributors have it.  WizKids also produces pre-painted miniatures in blind boosters that you'll want on the shelves to the tune of a booster case plus the case incentive premium model.

Then you'll want to have some tables that aren't taken up 24/7 by TCG players, so that adventurers can play in your store!  It helps a great deal if at least one store owner or employee understands how Adventure League works and can coordinate with DMs for a monetized high-quality organized play offering.

To be really healthy with D&D, you'll want double or more of that sourcebook count, a seriously huge inventory of dice, somewhat more of the other stuff, and more organized play.  But if a D&D player walks into your store and sees the stock I describe above, they know you're for real.  Your risk of losing money because of an insufficient entry into the category is in the very low percentages.  You absolutely will attract D&D players to your store to buy from you.  You met the CQ.

So, what happens when our coverage of a product category doesn't hit the CQ?  We have a few that are failing to do so now, and a few that I'm concerned are headed that way.  And there are products I want to get into right away but where I know we won't be able to hit the CQ yet, so I am holding off.

Apparel and collectible toys have fallen beneath the CQ for us to be considered a serious player in those categories by anyone who walks in.  Fortunately, those two categories don't punish dabblers much.  We can have just one rack of shirts and one rack of POPs, as we currently do, and the penalty is that we don't sell many shirts or POPs... which was already the case.  Otherwise I wouldn't have let them attrit down to that level.

You may recall shortly after the store move that I stood on the verge of eliminating miniature wargames.  That danger has largely passed at this point, but only because we placed the category into something of a "maintenance mode" that amounts to just enough coverage that our devoted regulars can get the models and supplies they need.  I'm still not convinced that going huge on Warhammer or miniatures generally is still a thing that it makes sense to do.  I'm convinced that if we can keep the toxic side of the community away and encourage them to play at other stores, the player roster that remains will be good people.

So should I keep wargames now that I already have them?  The CQ for this category is a bit abnormal in that you can ignore most product lines as long as you carry Warhammer and the Citadel paint and tool assortment.  Games Workshop has polished this to a shine over the course of decades, and now provides (with pricing incentives) multiple buy-in levels complete with branded rack and fixture that constitute essentially ideal CQ for a store entering the category.  Over time, a store that sees success with Warhammer will start to learn which other SKUs are essential despite not being in the pre-set stock groupings.  But in terms of starting up, it's a solved equation.  And, crucially, in re-starting up it's a solved equation, which means that stores can drop and rebuild if they have to.  I don't think I am going to do that, but it's reassuring to know that I can without screwing up minis.

Comics continue to underperform.  Not long ago they spent some time in cash-flow-negative territory, which is just utterly unacceptable.  With the move and the combination of stores, we knew we'd lose some boxholder traffic.  But we couldn't just start shorting orders because we couldn't know which boxholders would go deadbeat on us.  We had two things happen that have brought us back out of the red in the category, though it isn't fully healthy yet.  First, the mini-golf place moved in next door and has brought in an increase in casual visitors, which has in turn grown comic sales, especially of all-ages books.  And second, there was an orderly transition from my previous comic manager, who relocated for his other employment, to my new comic manager, formerly a store assistant manager.  They have been keeping orders lock-tight.  I don't see a lot of waste.  In four months with no back-issue library to speak of, we've managed not yet to overrun the new-and-recent racks.  It's impressive.

So should I keep comics now that I already have them?  The CQ for the comics category is enormous.  I often tell people to be ready to spend five figures and change over the course of the first few months to get established.  If you can't spread a fairly comprehensive array of new releases each and every week, nobody will subscribe a box with you and casual visitors won't take you seriously in the slightest.  However, you won't have sales yet so you'll waste a lot of wood in the early going.  I almost think the CQ is even bigger than that, though.  I look at the most successful comic businesses today and I notice one common element: They're not just comics-first, they're practically comics-only.  To wit, many of them pay only passing attention to the "games" side of the industry.  And they might be right to operate that way.  (This is part of why I'm not concerned about GameStop's entry into the comics category.)  This leaves me in something of a conundrum.  Having comics be an appendage at the games-focused DSG is probably inefficient unless they somehow grow all the way back to scale organically.  It probably makes more sense for me to split off Desert Sky Comics as its own thing, though I'd rather not spare the personnel expertise and my focus right now is on the hub store.  I guess the outcome for now is that pulling the plug entirely on comics is still on the table, and that might even be the correct decision, but man, it seems like a punt when I've already hit the CQ.

We have a few small game systems with low CQs and they're sticking around because we can be real players on those product lines without risking too much illiquidity.  In each case we're already players in their overarching category, so a component CQ for adding a game can be cheap, and that's likely why game stores tend to expand within what they already do, more often than adding new things entirely.

Star Wars Destiny can be carried "for reals" for less than a grand sunk, and the same fixtures you use for any TCG, and the same organized play labor you already use for Magic.  Singles are optional; we've been waiting to get ours back in action for when Crystal Commerce and TCGPlayer integrate the category.  So we'll be supporting Destiny until it's well and truly dying, which doesn't seem likely any time soon.  Its CQ is minuscule.

Guild Ball is a micro wargame that's basically death soccer with tremendous British "flavour."  If you're already carrying enough minis to have a paint and tool line in place, the CQ for Guild Ball is about the same as for Destiny, less than $1k.  I wouldn't pick it up as your first and only miniatures line (unless perhaps it's your first wargame and you're already carrying Wizkids Nolzur's, Wardlings, and Deep Cuts for all your D&D players) but if you're in minis at all, it's safe for now.

Dragon Ball Super is a hot TCG that's been getting hotter.  Distribution is pretty narrow, with GTS getting the lion's share of product, but it's obtainable.  The CQ for DBS is also in that sub-$1k range as long as you're not going to do singles, and we're waiting on integration for the same reason as with Destiny.  The booster packs and boxes are known form factors.  There are only three main sets so far and a handful of ancillary packs.  Most stores already have card tables and an event schedule.  Giddy-up.

Finally, Lightseekers is a new property, a TCG that's blended to a smartphone game.  It has some marketing push behind it from I know not where, and the hook is that it's an easy play and quite a bit of fun.  It's tough for any new TCG to get traction, but Lightseekers seems on the verge of doing it.  And the CQ is made easier by a publisher-direct starter option that I won't detail too closely here because I understand they're making some adjustments to it.

The CQ for the Pokemon TCG, if you're going to carry singles, is pretty high.  Realistically you need to dump five grand or more to start, to be doing it right.  And then you have to spend every day to buy walk-in collections, and 90% of them will be worthless 1999-2001 cards in awful condition.  Moreover, the current market for Pokemon singles has been worsening, as I mentioned recently.  Nothing is worth anything the day after tomorrow, the crucial cards needed for high-level tournament play (such that it exists for Pokemon) become spike expensive overnight, nobody trades them in, and they become chaff like everything else once the metagame shifts.  Kids who don't know much about the game or don't play competitively just want EX and GX cards, and there's no good EV to open them from packs and no good ratio to buy them that gets many takers.  In 2018 I've seen better Pokemon singles sales from our sticker vending machine, and they don't even know what card they're going to get!  And unlike Magic players, the Pokemon players don't want to use the electronic kiosk system.  They want all the benefits of it, such as instant knowledge of stock of any given card, but they want to pick through bins and search through binders physically, and neither of those things work well if you're cataloguing the cards.

So, despite the fact that I've long since paid the CQ for Pokemon singles, with an inventory years in the making, I may drop them.  Sales are down, chaff trades are overwhelming to the point where we just stopped buying, and moving away from them could free up resources to do something better.  I'm going to try a few things that might get output back to where it needs to be.  If it all comes to nothing, I'll likely sell the singles inventory to another retailer and not worry about it, or convert it to pick bins and have the shiny kid bait in a glass showcase, offering visual you-see-it-we-have-it shopping like we were a bunch of barbarians or something.

That old article I linked at the start?  It's easy to see why we have or haven't moved on some of those product categories it mentioned.  Look here:

Sports cards?  Prohibitively high CQ for now, only overlap is card supplies.

Disc golf?  CQ isn't awful but it overlaps with nothing so we'd incur the full weight of it.

Vintage toys?  High CQ, though it's not all money; a big need here is space to store and triage acquisitions.  We do have the space, we're willing to leverage it, and therefore we might move this way before too much longer.

Classic games?  Moderate CQ and we've already started moving in.

Coffee and/or food service?  Sky-high CQ.  In fact, entire-business-level CQ.

LEGO?  Moderate CQ, and process mastery is the main obstacle here.  I have about 25% of the seed inventory already, in storage.

Vintage arcade?  We're doing it, full blast.

Electronics?  Moderate CQ and it's a direction I've been looking to go.

Lord willing and the creek don't rise, I expect to use the months and years ahead to iterate the store's merch portfolio to reach an equilibrium point where I'm not outgrowing our space again, and instead pushing for efficiency and depth, and therefore sustainable net.  New additions will enter when I am sure I can meet or exceed that category's commitment quotient.  This will serve as a natural gate to expansion components, and I accept that categories with smaller CQs will seem artificially better prospects to get added sooner.

You know what had a bargain-basement CQ, especially in proportion to the sales we saw for them?  Fidget spinners.  That's why in short order you started seeing them everywhere.  A low CQ for us sometimes means a low CQ for any business.  I'll still take it.

Tuesday, June 19, 2018

How Will the Rise of Tabletop Look Decades From Now?

When you're right there in a cultural moment, it's not always easy to tell how dated it's going to seem when it's a distant memory.  Don't believe me?  Look at these fine rodent-promoting gentlemen laying it down, circa 1985:
A good friend of mine recently noted that, with the breadth of media we have these days and the horizon-to-horizon options in general entertainment and cultural engagement, newer generations won't experience any of the kind of shared zeitgeist that we Gen-Xers and our precedessors did.  He's probably right, and that saddens the heart of yours truly, who has immersed to fandom in sci-fi (movies), romantic realism (art), prog and goth metal (music), and a somewhat broader palate in literature, all during a period of time spanning roughly 1982 to 2004, after which I stopped wanting to encounter anything new.

Even for Millennials, the shared zeitgeist is more distilled, in each exhibit there is usually a dominant figure, and it defines the entire type of thing.  They have this ultra-narrow but white-hot generational affinity for things spanning roughly 1992 to a few years ago, the endpoint isn't really fixed yet, it might end up being 2014 in analogue to when my tolerance for society ran out.  For Millennials, there's a real hotspot from 1999 to 2001 or so in which almost everything they liked or cared about was a pretty big deal in general for mainstream culture, and thus their nostalgia pivot points sit there.  Post-grunge and nu-metal, boy bands (sooo many boy bands), Pokemon TCG, the Nintendo 64, the Star Wars prequels, the Harry Potter books.  I could roll my eyes and say I can't relate, but then why do I go into a nuclear-grade nostalgia trance every time I hear Take the Time or Anybody Listening, fire up a game of Faxanadu or Super Metroid, or start my Nth re-read of The Belgariad?  It's the same thing.

By the time you get to the Post-Millennials, whatever the hell we're calling them, the shared cultural convention has given way to a million different isolated cells of hyperfocused fandom, goes the theory.  But if it's all isolated to the degree that anything can cultivate a following, does anything really become "huge" the way it once did?  Maybe not?

Certainly in broad swaths we see a shared zeitgeist still.  If you don't believe me, understand that Gangnam Style has been viewed on YouTube 3.1 billion times, as of this writing, and counting.  And if I were to show you any of a dozen common memes, you'd not only know the most common versions of them, but probably the shorthand for the meme itself.  But also we see that most "event" books, movies, and music are based on properties that rose to prominence during earlier generations.

The tabletop boom as we know it today started around 2010, as the economy dragged itself out of the trough of the 2008-2009 recession.  So it's on the tail end of Millennial tolerance as a "generational" thing, Boomers and Gen-X-ers are already past the affinity stage so we just take it as another thing to do (and maybe that makes it more stable for us!), and what about the Post-Millennials?  The tabletop boom is burning hot right now in 2018, and right now should be their nostalgia pivot years.  This is it.  A substantial part of the generation to which my kids belong is having their formative shared cultural experience peaking over the next few years.

But if their fandom is infinitely widely dispersed, is the entirety of tabletop enough to be a common nostalgia point?  Is all of tabletop, from TCGs to board games to miniatures to collectibles to deckbuilders to party games to classic games and all the rest, enough to be a cultural impression as strong as Gangnam Style?  What if the answer is No?

I can tell you right now, Allie, my oldest, will go from age 10 to 14 during these crucial years.  She is a late Post-Millennial; Pew Research bounds "Generation Z" as 1997 to 2014 births.  And Allie doesn't give a wild flying care about tabletop, for the most part.  Her iPad is her Precious and you can attempt to wrench it away from her at your own peril.  Video games are oxygen to her.  Ask her about Minecraft.  Maybe that's one of the few things that rises to the Gangnam level.  There damned sure isn't much else that she sticks with for any length of time.  She has the infinite channels of the eternally connected life.  She can consume any content at any time.  (Well, notwithstanding the papier-mache gate of Parental Controls.)  My friend's cultural observation appears confirmed by Allie's reality.

I guess I wrote my way from one question into multiple questions.  How will the rise of tabletop look decades from now... to whom?

The Silent Generation is mostly absent from tabletop, simply because it was never part of their lives beyond the simple bounds of Monopoly, cribbage, and playing cards.  For the Boomers and Generation X, the rise of tabletop (and its inevitable fall) are probably going to look a lot like the passage of hair metal or grunge, the Disney Revived era, the 1990s comic book bubble, or what have you.  We were there for it, and already adults, set in our ways, and rather than taking personally how "dated" it appears, it's a period piece to us.

Millennials are a little closer to the moment but theirs has been a skeptical generation even as it engaged in the hobby.  They knew from day one that electronic pursuits would predominate, even though tabletop would probably always have a niche following.  Their interest level in tabletop will drop the farthest and bottom out the lowest, and will track the decline of tabletop overall.  At the trough, they'll see playing "analog" games as an embarrassingly silly thing, like late 1990s low-budget CGI effects.

Post-Millennials?  I expect them to look at the rise and fall of tabletop the way I look at the rise and fall of disco.  I was alive when it happened, but by circumstance of timing, I never had any reason to care.  By virtue of their inevitable need to distinguish themselves socially from their predecessors, expect Post-Millennials to be the flagbearers for tabletop right around the time Millennials won't be caught dead placing a worker Meeple and passing the turn.

Generation Nextest, with births from 2015 until whenever, will see the tabletop era the way Xers like me see the Korean War.  It was over before we begun.  The primitive 4K video recordings of people playing tabletop games will look antiquated compared to the immersive omnidirectional content of their brain-stem network interface.  They'll discover lost arts and spend their days fighting a virtual war against the computer systems of megacorporations.

TL;DR -- Probably a good thing I didn't sign a ten-year lease.

Tuesday, June 12, 2018

The Game Stops Here

In the tabletop retailer Facebook groups, there is extensive discussion of mass market outlets like Amazon and Target, but owing perhaps to the lack of a prominent category-killer chain, that's about as far as the discussion goes.  Toys R Us is dead now, or dying, or whatever.  Barnes & Noble whipsaws between going deep and blowout clearance; it seems obvious they're on the brink.  When Hastings was still in business, it wasn't a big topic of discussion despite the close product mix and the company having among its owners the publisher WizKids, once known for HeroClix and now known for D&D miniatures so white-hot popular that supply doesn't begin to meet demand.

In fact, the only small-store tabletop chain stores that ever get brought up are the Games Workshop company stores, the newer of which are simply branded as Warhammer stores.  Often a tabletop retailer will be concerned if a GW store arrives in their orbit, expecting their Warhammer sales to tank.  In reality, I'm deeply hoping they drop a store right there two miles off my starboard stern at the Chandler Fashion Mall.  GW stores are great for independents.  They sell the product in a superbly merchandised scheme, they sell it at MSRP, and they actively demo the game.  I couldn't ask for more from a publisher-owned outlet with products I carry.  I hear a lot about how the GW stores get the "cream" of customer spending, the initial burst of interest and money, and pass off those customers for "maintenance" to independents when the low-hanging fruit spending is over.  I think that's a short-sighted perspective.  A person who truly engages in the Warhammer hobby won't stop at 2000 points worth of Space Marines.  And what do you care how much money the other store makes.  You worry about how much money your store makes.

Having said all that, take the worst tabletop retailer discussion of the GW stores or whatever mass market outlet you like, and it's a candle before the raging bonfire of the video game retailer Facebook groups and how they discuss GameStop.  It's an absolute obsession.  Some of the video game business owners seem like they spend as much time worrying about what GameStop is doing as they do on their own stores.
Desert Sky Games is across the street from a GameStop and two miles away from another GameStop in the aforementioned Chandler Fashion Mall.  And yet, astonishingly, we are still capable of making money in the video game business, and we do it without paying all that much attention to what GameStop is doing on any given day.  How can this be?

I won't straw-man this, so I should give airtime to the legitimate worries of independent video game stores where GameStop is concerned.  Look here.

}- GameStop is so well known they get a high volume of buys from the public, especially of the newest and hottest titles and gear, despite the fact that virtually any independent store will pay more for those games and systems.  A lot of independents get the "leftovers" that the local GameStop wouldn't buy.  And a lot of it is crap.  People post memes about how their entire video game collection is only worth $7.50 when they trade it in to GameStop... and then they do it anyway, instead of selling it to us!

}- GameStop is able to deal in new video game systems and games due to their massive scale, where most independent stores pass on that because of ultra-tight margins, worse than anything in tabletop, and the high speed at which prices plummet when a new title's shine wears off, often making the store lose money outright if they can't shift that stuff within 30 days of release.  That means a lot of calls and walk-ins where people ask for that day's hot new games, and the independent store generally has to apologize and say no, to which the customer replies, "Oh.  I'll just get it at GameStop."

}- Due to their working capital and merchandising systematization, GameStop can drop a store just about anywhere they think they ought to, and have it look pretty decent, in a way that independents cannot really match, pound for pound.  And they have a prepared lease that gives them the plaza or mall exclusive on much of what they sell.

}- Publishers provide GameStop exclusive products.  Independents get those same goods later on the backswing for resale used, obviously, but that's later and the money is missed now.

}- GameStop's software integration and deployment allows them to have a relatively powerful rewards offering, seamlessly functional between their in-store and online sales, and everything else that comes with a huge data infrastructure, such as return-abuse flagging, data mining, load balancing, preemptive price movement, and so on.

}- Oh, and GameStop has been pushing their way into the tabletop and collectibles markets, and now apparently comic books, because they can.

There are surely more factors, but let's go with those.

And here is why they don't crush us.

{- Regardless of what buys we do and don't get on any given day, the longer an independent store stays established, the more people gradually learn that they are better off selling to us.  Our trade prices are regularly higher and our cash offers are virtually always higher.  GameStop overpays on a few things from time to time due to some nuance of their data analytics.  For example, they overpay on aging sports titles, until a threshold passes and then they won't even take them.  The same goes for MMO games like Destiny that are hot tickets one day, and the next day have a trade value of zero at the 'Stop.  Our practice has been to utilize our own buying policies and not worry that much about why GameStop changes an offer price.  For most titles we're going to be offering at least as much or more; for titles we really want, we make a point of being extra generous.

{- Because GameStop focuses so hard on new frontlist and practically disregards retro, there is a symbiotic relationship where we provide customer service by recommending GameStop when someone wants, say, a brand-new Nintendo Switch, and the GameStop gets us back by sending people across the street to our store when they have a pile of cartridges or are looking for titles for previous-generation systems.  And their staff proved friendly and accommodating when we approached them in the same fashion.

{- The GameStop floor plan calls for microboutiques with a Pareto-portioned merchandise mix.  They can never go as deep as we can overall.  Even on newer systems where they make their hay, you'll mainly see the AAA titles, though thanks to scale their online store can go further.  But GameStop's online store is no different to us functionally than any other online competitor, whether Amazon, Cool Stuff, Star City, and so on.  Once you're talking about someone mail-ordering, even when it's as easy as phone taps, you've already changed the venue away from a local store.  So in terms of GameStop's ability to place their cookie-cutter deployment wherever they want, yes, they can do that.  It's a step up from a flea-market stall, but it is of the same species, an ever-migrating shop counter, and a functional one at that.  Your typical independent wants to cultivate a following by picking a location very carefully and staying there for the length of the owner's career, and that difference in objective changes the entire decision tree and makes the comparison apples and oranges.

{- Touching on the previous two points, with our own Elite Pro GameStop membership, we can take advantage of their periodic Buy-2-Get-1 offers on retro titles or accessories, bringing in tough gets like Link to the Past or Smash Bros or PS4 controllers at a margin that's acceptable given the extremely high turn rate.  We can just pay for it and it's worth it, or if we have the time to spare, we can root out overstock we have that they are overpaying on that hasn't gone to zero yet, like Madden [This Year minus 1], and get their store credit bonus to add to our bankroll for their next B2G1 sale.  And they don't care; their approach to this is systemic and disregards outliers like us cherry-picking stock we want against the high volume of inventory they have coming in every day.  I stress that stores like ours don't want to spend a lot of time dickering around with this, since we're better off just focusing on the customer(s) right in front of us.  But the tool is in the workshop for the odd times we might decide to apply it.

{- Any mass-market approach with master-planned processes is going to struggle to hit efficiencies with product lines that are especially fiddly.  That's why they don't ever offer card singles, and that's what makes their push into comics look like two sunset industries leaning on each other and taking a gamble.  While I think they've surely got a return-merch deal in place with Diamond and the publishers that hedges most of the risk, I don't expect them to lose money on the comics thing.  At the same time, they are not going to become a Friendly Local Comic Store.  They simply can't do it.  Not with their physical footprint and not with their process structure.

{- It's easy to forget while our gaze caresses the bumps and folds of our own navels that GameStop has other competitors: the rest of the mass market!  And that makes the exclusives something of a double-edged sword.  What makes someone buy God of War at GameStop when they can get it for the same price or less from Target?  Sometimes those two stores are in the same plaza!  Mass-market outlets use exclusives as lures to get people to come in, almost all of them do it, and what do you know, we do it too with store-exclusive comic covers, WPN-exclusive Magic products, organized play promos from Fantasy Flight and WizKids, and so on.  So while the strike time of a hot GameStop exclusive like the Secret of Mana remaster creates some feelbads for independents, the reality is it's nothing but the status quo, and it washes out in the larger numbers.

{- Finally, yes, GameStop has a software infrastructure advantage that independents can't match.  Independents also don't have to match it, because independents aren't operating a continent worth of stores.  Yes, it would be great for our more humble point-of-sale packages to provide the kind of robust analytics and functionality that GameStop's does.  And you know what?  We almost can.  Megapackages like Magento are within reach of larger independents.  Microsoft RMH, if they can ever fully migrate the world off RMS, is a powerful tool.  And in the world of small-shop cloud-based solutions, we have some narrowly tailored stuff that puts us in the ballpark and for which local expertise simply has to bridge the gap.

At the end of the day, it comes back to fundamentals.  Focus on one's own business.  Refine and iterate.  Find ways to delight customers.  Exhibit integrity.  Master processes.  Build up your employees.  Take care of business and you'll be fine.  Coveting thy neighbour's ox and ass is about as useful as spending your days reading Game Informer.

Tuesday, June 5, 2018

What the Hell is Wrong With This Industry?

If we ever want publishers, manufacturers, distributors, and customers to take us seriously and do real business with us that's sustainable in the long term, we need more professionalism in the retailer tier of this industry and we need it badly.  I don't have the answer, but I absolutely admire the problem.

I'm not talking about the everyday things, store behaviors we hear about on the regular and have become depressingly accustomed to, such as the payroll fraud, the filthy facilities, buying from minors, mistreatment of women and others, and so on.  At this point it's so characteristic of the comic and hobby game industry that when you tell someone a store is doing it, they look at you like you just told them that used-car dealers tend to engage in pressure sales.  Sky blue, water wet.  And this reality is not gaining us many allies.

Unfortunately, there are times when some comic or game store takes the next step, and does something truly deplorable.  These, unfortunately, are the incidents that create deeper impressions in the minds of those involved or affected, and contribute an outsized portion to the general public's overall disdain for stores such as mine.

The following are things actual comic or hobby game stores have done in the Year of Our Lord Two Thousand Eighteen.  These actually happened.  I won't call out the stores by name, purely on the off chance that I've mischaracterized something, and not because I think any of these deserve charitable anonymity.

Here is the, by definition incomplete, list.

-> A comic store closed forever on zero days' notice and took all accrued customer store credit with it.  This is not a unique scenario, but it was one that has occurred less often with the rise of Magic-heavy clubhouse closures, since they tend to continue liquidating online afterward and many attempt to make good with store credit holders.  Not this time, and apparently with an unusually large escrow figure involved.

-> A game store took official Magic: the Gathering product art and added giant porn-style "chest augmentation" to the main female character image for their event advertising on Facebook.  Because if there's one message Wizards of the Coast wants to be sending, it's that they are the same as the companies that make all the anime lolicon TCGs.

-> A game store closed but didn't tell Wizards of the Coast, so as to preserve the temporary ability to get Magic booster boxes at wholesale to sell out of the trunk of their car, which they did, at a nickel over cost.  After a few weeks of seeing dwindling player engagement -- possibly, and I know I'm reaching here, because they no longer had a real store -- they finally threw in the towel, posted a ferocious Take That message on Facebook blaming their former customers for their store's failure, and sold off their remaining inventory at a nearby Grand Prix to one of the visiting dealers.

-> An antique store side-dealing in video games in the southeast decided, what the hell, we're going to sell the Chinese counterfeit NES Classic Mini, and posted to their Facebook wall a photo with a huge stack of them for sale at $40 apiece.

-> A game store cut to top 8 of its Store Championship when only five players were left in the event.  (Not a clue how they got the event software to perform this; it was reported by players who lost in the quarterfinals.)  The bracket of four players played a quarterfinal and a semifinal, while the 5th seed was given a bye all the way to the final.  Oh, and the fifth seed was an employee of the store.  And he won.

-> The new owner of a fully diversified and established game store exited the video game category not by holding a liquidation sale, but by trading in the entire store's inventory to GameStop.

-> A game store attempting to crowdfund its opening budget fell woefully short and launched a diatribe at its community promising them they would never "have a store that cares about them" if they were unwilling to pony up cash in advance for an unproven dreamer.

-> Craigslist spam appeared repeatedly offering "OG XBOX Softmoded w/30,000+ GAMES" (sic) -- normally the work of garage dealers and hobbyists who apparently don't fear a C&D, this time it was discovered to be the work of an area video game store that has built itself a shady reputation.

-> Multiple stores of each kind closed for the day at various times due to light rain, light snow, didn't want to miss the big game, or because the owner and sole employee wasn't feeling up to it, and/or a plethora of other excuses that aren't really malice on anyone's part, but amount to simple unprofessionalism and beg for the worst possible customer reaction when one approaches the door and sees only an engaged lock and a dark room beyond.

-> A game store asked for community help in starting the construction buildout of their new facility, heedless apparently of the scorching level of liability at risk and the strong likelihood that their insurance, if any, would not cover such a volunteer deployment.  (For that matter, the tax code is also relevant to this situation.)  When only one volunteer appeared, the store posted a video to Facebook sneering and shaming the community for not turning out in greater numbers.

-> A game store known as a loose fence for stolen collections offered to sell a prominent judge's stolen collection back to him, at "cost."  Fortunately, in a happy ending, the store was persuaded (once an attorney got involved) to return the collection to its rightful owner, rather than seeing the matter get referred to the state Attorney General.  This same store, during the publicity morass that followed, decided to double down by engaging in misogynistic social media activity.  They are still open and doing business and area grinders defend them passionately.

-> The CEO of a small game store chain took to social media to call out and harass an executive with a publisher that had cut off that chain's access to tier-exclusive upcoming products and promotions.  The CEO in question, possibly drunk or high or both at the time, tagged into the meandering trainwreck of a post virtually anyone he could think of that knew that publisher or who he himself had verbally sparred with in the past, including at least one tasteless tag of a deceased store owner who was well regarded and truly missed by his peers and community.  The CEO's diatribe degenerated from empty but obnoxious blandishments to outright threats, before mysteriously disappearing from Facebook.  Fortunately, there exist these things called "screenshots."

-> A comic store employed Ken Whitman.  On purpose.

The reality is this.  The comic and hobby game industry is niche of niche -- about $2 billion, half of it comics and media, as of figures published in 2017.  The video game industry is somewhat larger at $100 billion, give or take cab fare, but the independent stores' share of that scene is utterly minuscule, a fraction of a fragment.  There is frighteningly little money to be made in this space because everyone wants in (presumably to work with fun things all day, de-emphasis on "work") and that has given us a landscape in which landlords don't take us seriously, the media doesn't take us seriously, publishers don't take us seriously, distributors hedge from every angle with us, and ultimately the customers don't take us seriously.  My family has been mostly supportive, but many of my peers have found that their own family and friends think of their business and profession as a joke.  And every time a retailer in this industry does something like the incidents recounted in the list above, that reinforces the belief that all those parties are right.  They disregard us and for all they know, they should disregard us.

Some of us are trying to do this better.  We don't have the deepest pockets to do it with, and much of what we're doing amounts to "run our store, but exhibit integrity wherever possible," but it's something at least.  Will we ascend to the "established" cred that the nicer local or regional microchains in other industries have achieved, in time to avoid being crushed by one mass-market entity or another who decides to lean on us with a chip stack we could never match?  If we don't, will anyone but us care?

We're broadcasting now and the clock is running.  This show will be however good we can make it.

Tuesday, May 29, 2018

Bring On That Seasonal Business

We are now ramping into our first summer at the Chandler location, and it's a little unsettling to realize that we have no idea what kind of business we're going to see.  Hot summer nights and our Pandora Radio are going to result in... what?  A mobbed game room and all the concessions business we can handle, on top of regular sales?  Or crickets and tumbleweeds?

The Gilbert location loved summer.  Deep in the suburbs, when school let out for the year, all the kids and teens had a bunch of allowance money and nothing to do.  All the college kids drove or flew back home to stay with their parents, and typically had part-time work money and nothing to do.  It was a perfect storm of making June consistently one of our best months of the year, and July near the bottom of Tier 1.

But the clarion call that School was Out For Summer that DSG Gilbert thrived upon, had precisely the opposite effect on DSG Tempe.  Arizona State University's main campus stood two miles northwest of the store, and once finals were over, it was "Hey thanks for all the Magic tournaments, we'll see you at the end of August!"  And lo, there were months of most visitors being bums Transient-Americans taking a break from riding the light rail back and forth all day every day.

What will happen in Chandler?  The store isn't deep in the suburbs like Gilbert was.  It's shallow in the suburbs.  The ASU factor should/might? function roughly the same inasmuch as the modal building in our halo, near to far, is the single-family detached residence.  But it might not.  We already saw a number of regulars bounce out of town to head back wherever and spend the summer living rent-free with their folks.  So let's call the college audience a To Be Determined on that.  The younger set is where we have other interposing factors...

The Chandler Unified School District, which envelops our store and extends far to the east and south, is on a modified year-round school schedule.  Autumn, Winter, and Spring Breaks all run two weeks apiece so we had a bit of a traffic bump during those times.  The semester finally ends on May 30th, and for a little while it's going to be just like in any other area... but then school starts back up on July 18th or something like that.  So whatever summer break business bump we enjoy from that point on will have to come from the smaller Kyrene District to our west and the smaller Tempe District to our north.  Fortunately, the Kyrene District, which encompasses all of Ahwatukee, is basically our turf now.  The younger players won't realistically enjoy bike access, especially with 117-degree highs.  But mostly people can get to us, and we're right on the main bus route through the east half of Tempe.

Our new next-door neighbors, the Swingin' Safari Mini Golf LLC, appear to be betting big on a summer of heavy business, because they pulled out all the stops to get open last week after a compressed buildout.  The East Valley Crossfit that had formerly occupied the suite was delayed in departing for their new home at a bigger facility.  The golf folks got their contractors into high gear in a hurry, an art I wish I had mastered around this time last year, and they're open for business now and drawing families to the plaza.  Their arrival basically just doubled the advertising potency of both of our marketing efforts.  Our arrivals radiate to them, and vice versa.  I'm tremendously happy about the way this played out.  During prime time, we've already seen substantial foot traffic from people who had just been mini-golfing.  And it's mainstream foot traffic, making it safer for me to bring in an even more diverse inventory offering and worry less about the fiddliest 1% of the merch we're dealing with now.

We have some senior staff members moving onward to greater things in the month ahead, and our part-timers who have waited patiently to be handed tons of hours are about to get them.  This changes the dynamic a bit as we'll be spread thinner on management.  Couple that with the increased traffic both seasonally and due to our new neighbor, and the staffing dynamic might just lurch to a configuration that's uncannily similar to what we wanted to build toward anyway.  A straighter chain of command, with the shift managers having more direct oversight over mainline staff.  More process-based workdays and fewer "night watchman" shift postures.

There is still plenty that can go wrong this summer that has nothing to do with business tempo.  Air conditioning is not optional and we haven't yet gotten a great mix of performance out of our facility's equipment on that mark.  For all we know the Magic Core Set 2019 could suck.  (But I doubt it.)  Vagaries of weather might send everyone outside for activities, or conversely, keep them at home and uninterested in making the drive over.  I don't think any of these are extremely likely scenarios.  But when you're running your own business, it's easy to imagine reasons things won't go the way we want.  As always, planning for the worst but hoping for the best is our answer.

We're a retro video game store, so obviously I have to wrap this article with The Ataris performing their cover of Don Henley's "Boys of Summer."  Because they called their band The Ataris.

Keep cool out there!

Tuesday, May 22, 2018

The Five-Percent Solution

If Sherlock Holmes were to examine Business Insider, he would surely wonder why that website so rarely publishes content about the insides of businesses.  What might impress Sherlock more would be a great article in which they recently charted how high-income and low-income Americans spend their money.

The lede of the article is that poor people get taken to the cleaners on housing and transportation costs, while rich people tend to spend an inordinate amount of money protecting their assets and personal position.  And within that context there's a little nugget that's relevant to the comic and hobby game industry, that rich and poor alike spend about 5% of their money on entertainment.

Further in the article we get breakdowns of household and individual spending on entertainment in raw dollars.  Household:

And individual:

The discrepancy by income level shouldn't be a surprise.  Five percent of a big number is a lot, while five percent of a smaller number is less.

But do you see the far more relevant thing, in terms of this industry?

Take a look again and see if you can get it.  I'll wait.  In fact here's a nice photo of a customized SNES console to give you some spoiler space.

See it yet?

More context.  Five percent of the total spending is on entertainment.  Of that, only some portion is going to be on tabletop games or even video games.  Some will be on movies, some on concerts, sporting events, outdoor recreation, bowling nights or beach vacations, even people visiting the glow-in-the-dark mini golf place next door to us.

Let's go out on a limb and say that our average customer is someone who spends half their entertainment dollars on our merch categories.  Then we have to remember that there are Amazon, TCGPlayer, and other comic and hobby game stores!  Let's be extremely generous and say that our specific store gets a fifth of that figure.  So a tenth of their total entertainment expenditure.

Now do you see it?

Look at how those absolute dollars correlate to the prices of the stuff we sell.

Oh my goodness, right?

Look here.  At one tenth, a rich household spending $5,919 per year on entertainment probably spends $600 in our store.  A poor household spending $1,270 per year brings us all of $120.

On the individual scale, $1,909 for the rich is just under $200 per person to us, while the poor, at $747, are going to end up spending about $75 per year as individuals.

And if there was ever a hard lesson that a store can't count on serving the same group of grinders day in and day out, that should be it.

There isn't enough money coming from any one customer segment or cohort to support the business.

Now let's be more fair.  I cater to some devoted gamers, for Magic and other games, competitive or casual but undoubtedly focused, who spend a hell of a lot more than $600 every year and aren't even rich people.  In some cases there are guys who drop most of that in a month and aren't rich, though a few of them are professionals dragging in decent coin and so they're well enough off to afford it for sure.  And hey, some people just obsess on a narrow range of hobbies.  Nothin' wrong with that.  Lord knows that's what I do.

But the reality is any given face that comes in the door, we're going to be lucky if they bring us, on average, more than $75 to $200 worth of annual sales.  While that's a number I am perfectly happy to cater to, it also is a number that tells us some crucial things:

1. We must always be acquiring new customers, because the existing regulars cannot be expected to float the entire store on their own.  It's not fair to them and not realistic to expect this.  Many, many clubhouse stores expect essentially this to occur.  We must be welcoming to the visitor who is not already deeply geek-literate.  The curious, the dabbler, the person interested enough to poke their nose in the door and see what they find.

2. We should be highly skeptical of products that sell for more than $75, and doubly so for products that sell for more than $200.  Because those products are effectively non-starters for a significant part of our audience, or would constitute nearly the entirety of their annual spending with us.  When Wizards of the Coast says that booster boxes are not a meaningful purchase configuration for the majority of Magic players, maybe they aren't as obviously wrong as Magic-focused stores and competitive players assume.  And yet we've had over a year now of product overload.  Knoweth the left hand what the right hand is doing?

3. Positive experience cultivation with each transaction is far more important than we already rated it.  And we already considered it pretty damned important!  This unfortunately empowers negative review culture, which as we all know is the clap.

4. Many aspects of the comic and hobby game industry are too fiddly to withstand the implications of these numbers.  Which, again, are skewed generously in our favor for the purpose of this exercise, so you have to imagine they're worse in application.  Comics look better proportionately when you consider this; a pull-box customer who gets four titles a month is well within the parameters.  Wide categories like video games and board games are a bit safer here.  For something like Warhammer, it seems like they're utterly dependent on deeply committed hobbyists way on one end of the scale.  I can't imagine how other wargame miniatures ever gain traction.

5. A gasoline price spike basically wipes out the entertainment fund for poorer people, if we're taking into consideration the initial graph showing that they incur an outsized burden from housing and transportation expenses.  Did it happen that way in the past?  It's tough to isolate this effect from the general economic meltdown of 2008-2009, but we already know a ton of game stores went under during that time-frame; was this another piece of the equation?  I bet if we had sufficient data collection to see the expenditures by income level, we'd see the poor player spending dropped off right around the time we were at $4/gallon.

It seems like every time I learn more about business, I wonder why I'm in this particular industry that seems to swim against every economic and social tide with such reckless abandon.  That might just be our value proposition, the fact that we're here to delight the people whom the rest of the recreation industries have disregarded.  But it sure does suggest that we've voluntarily made it more difficult for ourselves to make a living.

Anyway, time for me to go enjoy some of that food that I spent somewhere between 11% and 15% of my household income on.

Tuesday, May 15, 2018

I Was an Oblivious Customer

This is a story about when I was an oblivious game store customer.  But so you understand the significance of what I was doing and the bad assumptions I was making, I first must teach a lesson about the product that was central to my behavior.

Once I graduated from law school and didn't yet have a multitude of children occupying my time and attention, I re-indulged myself in the video game collecting hobby.  One of the rare items then, and one that was visibly getting rarer as we went, was the Nintendo Gamecube Official Component Cable, shown in this photo.

The GCN OCC was only marketed in Japan and thus only available via import distributors or stores that did business though them.  The OCC used an ASIC (Application-Specific Integrated Circuit, or in other words, "a custom chip with secret innards") to process video for output.  Nintendo never published the specs of the ASIC, so third-party cable manufacturers could not create substitute cables.  For 16 years, if you wanted to get 480p video out of your Gamecube, it was the OCC or nothing, and there weren't enough OCCs to go around.

(Aside: As of 2006 we could play most Gamecube games in 480p on the Wii, which had a cheap and abundant component cable.  However, the Wii did not work with all Gamecube games, it did not work with all third-party Gamecube accessories, and it did not work with the Game Boy Player, a non-trivial drawback at a time when the Game Boy Advance was getting hot titles like Metroid Zero Mission that played great on a television.  And if you wanted to speedrun or play competitively, you had to use the original hardware for your time or score to count.)

At the time I was seeking it, the OCC ran anywhere from $80 to $140 on Amazon and eBay, depending whether it had the original packaging or was used, and if so, its condition.  I tried to hunt one down in the wild, naturally assuming that any video game store that had one would be unaware of its value and would surely sell it to me for the MSRP of $29.99 or so.  After all, knowing the value of video game merchandise was only how they literally made their living, so surely they'd punt that and I could roll them.

Every time I visited a video game shop of any stripe, I would browse what they had, and naturally I wanted to be left alone because autism.  But I knew I'd eventually be greeted and asked if I needed help.  The question I had locked and loaded for that was "Do you have any Gamecube Official Component Cables?"

They never had the cable and only rarely did they offer to "special order" it, which I imagine meant getting it at a haircut less than full market value from an import distributor and marking it up, because they would throw back numbers like $200 and $250, to which I would reply "never mind." I wanted it, but not enough to really pay for it.  I wanted it to be essentially given to me for way less than it was really worth.  This was not a realistic expectation.

I would then judge that store to be "not a serious video game store" or "worthless" or "incompetent," depending what mood I was in at the time or whether I thought the owner had sufficiently kissed my ring and acknowledged my clear and impressive expertise in knowing to ask for such a rare and sought-after niche product.  It was self-centeredness to the point of narcissism, the kind of oblivious "whatevs, I got mine" attitude that is becoming more common every day, especially among the youth.

I eventually got an OCC in a Gamecube collection buy.  The other guy knew the value of it, and thanks to combining up the games and system into a lump sum, I ended up paying $150 or so for the cable at a time when the average eBay sold listing was around $175.  Not too bad and we both got what we wanted.  I made a joke post to Facebook with a photo of the cable complaining, "I bought a Gamecube and the stupid TV cable has the wrong colors!  What the hell!"

Today, the GCN OCC market price is down to around $250, after a couple years in $500 territory for complete-in-box and $350 bought loose.  The reason the price actually started coming back down to earth is that players finally got another option.  In late 2017, sixteen years after the Gamecube hit the market, someone finally reverse-engineered the OCC ASIC and produced direct-to-HDMI output adapters for the Gamecube.  We carry them in the store, the EON GCHD, and it's $149.  Not cheap, but far cheaper than the alternative, and it works beautifully and is well-suited to modern televisions which don't even always have component input jacks anymore.

So, anyway, the point was that I was an absolutely oblivious customer and my behaviors were way out of line with reality, both in terms of the market overall and in terms of how I interacted with store personnel.  And at the time I had no awareness or insight into that.  I was just another blowhard who had no idea how stupid I looked to the pros behind the counter, and I was a tire-kicker to boot.

Most of my customers today don't behave the way I behaved.  Most have realistic expectations, or more to the point, they want a thing and it's within the core of what we offer, and that's why they showed up, and all is right in the world.  Most understand intuitively that the store makes its hay selling the stuff that's new and/or broadly in demand, and that we won't necessarily be sitting on a secret stash of GCN OCCs or graded Summer Magic or an unopened case of NBA Elite 11.  It's not that we don't want to sell such things, obviously we do.  It's just that rare things are, well, rare, and the economics don't reward us for seeking out such goods and then deep-sixing them into the vault for who knows how long, rather than reselling them now.  Most people understand that, and those who do seek holy-grail-level collectibles aren't offended when the object of their desire isn't in stock all that often.  Most people don't obsess over having us kiss the ring.  But sometimes we get people who exhibit exactly one or more or my regrettable former traits.  And that's just how it goes, it's part of the trade.

Our solution to this from the staffing side is to be attentive toward new arrivals and to put a bit of extra care into how we service the more friendly and sociable of our regulars.  By starting people off on the right track and then providing a social payoff for exemplary behavior from the people we already know, we send a message that an inclusive and fun experience is what we're about, everyone who's on board with that are going to get our "A" game, and the scrappers are welcome to go be somebody else's problem.

My solution to this from the ownership side is to understand the psychology of the behavior I am seeing out of the one guy who's acting as I once did.  If possible, there may be common ground from which a positive experience can result.  There may be good in him yet.  If not, I accept that we're not going to please everyone, and reorient my focus toward the next visitor who arrives.

These solutions are imperfect, but a general goes to battle with the army we've got, not the army we wish we had.

Tuesday, May 8, 2018

Lefty Loosey, Righty Tighty

I wonder just how far into the world of electronic restoration this business might profitably go.  It is admittedly a pretty far cry from the selling of boxed analog tabletop game products, which we do on the regular.  But I'm having to face the possibility that if I don't to something in that space, I'm failing to monetize skill assets the company holds ready, and could train and develop further.

Sunday, our cash register iMac decided its hard drive had served long enough.  Beachballing so hard it could no longer load Safari or Mail, the terminal became useless, and I knew I had to replace or repair it.

Unfortunately, repairing iMacs isn't as easy as dusting crops, boy.

The 2012 and newer models are particularly difficult to service because the shell is held together by adhesive.  That's aside from the RAM drawer, which is the easiest ever to get into and requires no tools and even has instructions printed on the casing nearby.

Fortunately, this was a 2011 iMac, so I could get into it without cutting through destructible matter.  All it required was a heavy suction cup to unfasten the front glass, which is attached via a combination of fittings and magnets.  Then a Torx screwdriver keyed me the rest of the way in.  Had I only a RAM replacement to perform on this model, that can be done with nothing more than a Phillips and a few spare minutes.

The 3.5" SATA hard drive was easy enough to remove, though it has a custom thermal sensor rather than a SMART system so the iMac's fan will run too much unless or until I find a more effective solution than resetting the System Management Controller, which only temporarily convinced it to stand down.  Heat may not be as much of an issue because I replaced the bad hard disk with a solid-state drive I rescued from our old shipping desk PC that suffered motherboard failure a few months ago.  In fact, lacking a reinstall disc for macOS, I simply powered the system back up and it booted Windows 10 without incident.  It doesn't like to cooperate with the printers, likely due to driver mismatches, but I'm going to put High Sierra back on it anyway so that will be solved soon enough.  Bottom line, we have our cash register terminal back and it should run fine for a few years before being put out to pasture.

Most of you probably don't know or care what any of the foregoing means so I will tell you that the TL;DR of it is that I was able to perform a non-trivial repair on a computer that's not designed to be user-serviceable, saving the company $700 to $1200 depending on what a replacement would have ended up setting us back, or some several hundred dollars in repair labor and/or parts from a professional outfit somewhere in town.  And if someone had walked in the door with a similar need, provided that I had researched a bulletproof solution to the thermal sensor issue and practiced the repair in general, I could have had them out the door in under an hour with money in the bank on an economically sustainable deliverable.

And though it blew my Sunday itinerary out of the water because I was learning as I went, repairing that iMac was still high-value work.  If there's one thing owners in the greater comic and hobby game industry too often fail to do, it's to systematize basic or core work and spend more time doing higher-value work.

Core work is still important, because it runs the business.  But the people we hire are there to do the core work.  Moreover, it's what they expect to be doing.  Giving them good training and clear processes and turning them loose to impress you with their initiative is often the best way to have that core work be performed well.  Core work is going to succeed when you've cultivated competency and judgment through training.

Then the expert-mode play is to start training our standout staff members on how to do higher-value work.

What's the difference?  It's more than just how much money the work produces or saves for the company, though that's surely an important element.  With higher-value work, competency is upgraded to knowledge and skill, while judgment increases in responsibility.

Every time I teach a staff member how to do higher-value work, and they internalize and perform that work successfully, they get better and the business gets better.  And everyone's job actually gets easier, including their own.  I have given them greater agency.  And with effective conveyance of agency, an owner can start to achieve true duplication.  That achieves the dual purpose of making it possible for the jobs you hire to become careers, and freeing the owner from being chained to the dashboard.

So, does this mean I should start soliciting Mac repairs, as yet another step toward building this amazing business with high-value work and robust investiture of agency in my people and a bold future promising power strips on every countertop?  Well, maybe.  Probably not yet.  But looking forward, combined with some other things I'm keeping under wraps for now that I was intending to develop, this is looking like a sensible direction.

DSG already does a limited assortment of video game hardware repairs, a menu limited primarily by my ability to systematize it and train others to do it when neither me nor our silent partner who is an electrical engineer are available.  But it's an area that has already done well for us and where we are learning the problems now so we can set it up better as we go.  I already discovered we charged too little for a common NES repair.  Our success rate has been 100% on units serviced, and the process is close to mastered.  We can build in some gross margin and it's still a competitive price for the consumer.  That's solving a process.

Sadly, this suggests to me that my internal reservation that the store should have gone small, not big, and cut its focus down to Magic and video games, may have been the smarter course.  I still like the other things DSG does, and in fact as a gamer I am a board game player first and most often.  But mastery of a value proposition has more power, pound for pound, than diversity of value propositions.

The converse, however, is that diversity of value propositions makes the business far more resistant to failure, with revenue coming in from a nondependent array of sources.  That, coupled with our industry's headlong rush toward Third Place mechanisms, suggests that the gigantic space with a favorable lease was the correct long play after all.  We had better hope so, because we have 53 months left on that favorable lease.

I don't want to overthink the business implications of having swapped out the storage device in a broken computer.  But big things are made up of little things, and sometimes little things pack an outsized punch.  I wonder if this is one of those times.