Competitive Espionage Highlight Reel

At least twice in the past week and five times since the beginning of the year, we have had visits from people looking for information to benefit our competitors, without them knowing we knew they were doing this.  There are certain lines of "curious questioning" that, in their ham-handedness, they ask in most obvious way possible, such as a bona fide customer never would.  But an urchin of a competitor absolutely would and does ask such questions.  Often they are tied to known discussions from social media, and we can tell whose particular grapevine is the source of some given line of inquiry, often because they're the only jackwagon pushing it.

I was especially amused at the visitor the other day who asked about all kinds of product categories, which right there is a tell because most customers are only interested in one or two things we carry and they don't care about the rest so they don't ask about the rest.  After he asked about a bunch of very particular changes we had made across a few categories, changes working fully as intended from our vantage point, the guy slipped in a question, a rehearsed-sounding line, that it "looks like we're dying or something."  Huh.  What a strange thing to say, and a strange way to say it.  You'll want to wind that reel back in, fisherman.  No bites on that cast.

We do have people wondering about our decision not to put a million-card inventory into binders or bins for people to pick through, damage, and shoplift, or spread out haphazardly in labor-eating showcases.  It's obviously because of volume efficiency and because we've got it all in an electronic system accessible from a kiosk or your computer or phone 24/7.  Not because we're dying or something.  We show them, we explain, and most people get it.  Our biggest in-town competitors do the same thing so they know how it works.  Others... I've explained it to them.  Some of them simply don't believe it.  They've spent so long expecting card singles to be merchandised and sold a certain way that the notion is ridiculous to them that a store would scale past the point where the more tactile methods are still feasible.  They're sure it must be some sign of internal decay.

Elsewhere, too: We've made major adjustments to our comic business lately (future article), the result of inherent upheaval within the category, not quite death throes.  And we went small on Warhammer for now, a move that is sales- and data-driven and is also a spec on the expected success of Star Wars Legion and A Song of Ice and Fire during the next few months.  We know people will come back to Warhammer and we'll be there when that happens.  Not quite a core breach.  Authentic customers get the picture.

It's all high comedy, we do our best to feed Boris and Natasha the exact information they could derive themselves from simple observation, plus a few peppercorns of our choosing for flavor.  They're thinking they are James Bond and have us snowed, and it's all we can do to keep a straight face while confiding to them our super-secret plan to drop Magic: the Gathering in favor of Beanie Babies.

Obviously, information about competitors has some value, or we wouldn't consume it.  However, information provided by competitors has so much less value compared to observation and deduction.  This is for the simple reason that competitors surely want me to have bad information about them, leading to incorrect assumptions and therefore bad decisions.  I may therefore assume that any information about competitors that is directed to my possession has a low confidence level of being accurate.  It's barely better than line noise.

What competitors cannot fake is what they actually do.  I can look up their eBay sold listings, for those who sell on that channel.  I can look up information in other channels as well.  I can examine buylists.  I can look at convention booths and the traffic around them.  I can observe which stores open or close branch locations, who recruits and when, and what kind of sales or specials they run.  I can look at who runs tournaments at a loss.  Many stores post photos of big Friday Night Magic crowds on Facebook; I can count heads and know they got that many that one time, but I also know they are going to self-select when to post such things, and we won't see brag posts when events run small or fail to fire.  If I really want to, I can walk right in the door of another store, though that will only provide me a snapshot of what they have on the shelves immediately to hand, and roughly how much of it.  Such a visit has some value.

I can, of course, talk to customers and friends, and send confederates of my own to run reconnaissance, but that information is necessarily second-hand.  Even from a trusted agent, I now have to filter both for their memory error, which might be minor, and for them being shown a Potemkin Village, which might surely happen if the competitor is able to mark our guy (or girl) the way we mark theirs.

Ex-employees who tour the town working at other stores are a useful source of information.  You didn't think Bill Belichick signed James Harrison off the Steelers' waiver wire purely on play value, did you?  Harrison had an imperfect photocopy of the Pittsburgh playbook in his brain, and he brought it with him to Foxborough.  I have hired from the departures of other store staffs, and they have hired from mine.  They will therefore have operational knowledge.  This is probably the most accurate second-hand information an owner can get about a competitor, and it's still vastly inferior to direct observation and deduction.  Ask anyone in the intelligence business: Expatriates are never fully trusted.

Some competitors are secretive, and this is mostly a good play by them, with an important drawback that I'm sure they are happy to take their chances with.  If they are not broadcasting misinformation as a matter of practice, then most of what I can learn about that competitor will reach me firsthand, by direct observation.  This means I may not have as much information about them to sift through, but what I do have will come with a greater confidence level, and will be much more accurate.  Quality over quantity.  But I was a professional analyst in my former career.  I may be better able to interpret observational information than others.  By contrast, most competitors in markets like mine place too high a value on gossip, while any attorney can tell you that eyewitness testimony comes with such reliability concerns that even courts that have spent centuries focusing on such evidence are finally starting to move in the opposite direction.  Secretiveness is a great counter to gossip, it drops the confidence level of gossip to the level of background noise.  Secretiveness also allows a business to conceal operational corner-cutting.  All told, it's probably the highest EV (expected value) play, assuming the industry remains largely as it is today.

Where all else is not equal, such as in my case where I endeavor to build DSG to the level of a megachain and build the kind of processes that will make it run by itself, allowing me to sell it off or retire to focus on my writing or whatever, there is so much operational transparency that I can usually hide in plain sight anything I don't want known for certain, with the abundance of activity and process making it difficult to assign importance to any particular discovery.  Simple observation of our results tells a clear and concise story: Whatever else a competitor may think of DSG, we have succeeded in moving into a facility that makes us the biggest show in town, and our three closest competitors have already gone out of business in the six months since, despite our directing zero attention their way.  We're just throwing Rose's low strong, over and over again.  Scoreboard.

Every day, customer demand drives what we sell, and we spend our focus on that.  Every day, customer preferences impact how we conduct events, and we pay attention to that.  Every day, customer experience shapes how we market our value proposition, and we practice and emphasize our delivery of that experience.  Customers first.  Competitors?  Whatever.  I guess they're out there.  Competitors are just not that important.  To the customer who walks in the door, competitors may as well not exist.

How will I handle Austin "Danger" Powers when he comes to visit again?  Who cares.  I'm not worried about the urchins, because I know what they can't observe firsthand, and I know what they're going observe and get completely wrong when they do show up.

The urchins are all going to be at their main waterin' hole on Friday nights, or whenever there's stuff happening at the store level like a prerelease, and so they'll never see the huge crowds we draw for Magic, D&D, and minis at the same time on those days.

The urchins are asleep in their beds and never see my fulfillment staff arriving early every morning, hours before the store opens, to pick, pack, and ship the scads of online orders we get from various channels, a business component that earns more than many small stores' entire revenue streams.

The urchins are working at their day jobs and never see me networking from my home office with an incredible assortment of awesome retailers, publishers, and distributors, getting great information early and maximizing DSG's ability to capitalize on 11th-hour hits.

Nope, the best the urchins can do is visit my store during the small hours, browsing racks devoted largely to video games and accessories these days, products no other tabletop stores in town have anywhere near our level of expertise in.  They enter our cavernous space exceeding 6000 square feet, hear upbeat background music playing on the AV system, and see perhaps a pickup game or two going on amongst a stretch of empty tables.  A staff member greets them and goes back to quietly sorting cards or processing a distributor order.  All is tranquil.  Magic singles are out of sight.  The deep video game stock is off the floor.  This time of year is ebb tide for tabletop, so there's not much exciting to see there.  RPGs are flourishing but they don't cut an imposing figure on the fixtures.  I guess as far as Spy Hunter 007 there can tell, our operation must be pretty moribund.  He can go report that to his benefactor.  There will surely be feasting and merriment there as they wait for the imminent notice of our closure.

Perhaps that recon payload is deliberately crafted on my part.  Perhaps I want them thinking about what I am doing, instead of thinking about better ways to run their business, optimize their processes, and delight their customers.

Or perhaps I'm just a jerk, a coarse and unfriendly former Jedi, and everything I just said above is wrong, and is deliberate misinformation intended to mislead those of my competitors who read this weblog.

Building For Tomorrow: Shopping Pathways

Paco Underhill, author of the essential Why We Buy: The Science of Shopping, explains using observational data analysis why many of the retail store configurations work to increase sales and shoppability of product.  At the core of any such configuration are the pathways: the means by which visitors to the store will walk from one feature to another.

Typical configurations include a racetrack (a circular pathway surrounding the store's center and inside the periphery aisles) with product rack and fixture set up as an amphitheater (low and see-over-it in the middle of the racetrack, high and explore-into-it at the outside of the racetrack).  Using various other pieces of shopping psychology, such as proper display orientation and appropriate stock choices for endcaps, the result is an extremely shoppable store.  Think about places like Costco or Best Buy and you've already seen these concepts at work.

Of course there are disruptors and shakers pushing into new territory in terms of configuration, and we're all enjoy the experience they create and learning a distinctive imprint of their brands.  But just saying "you should be able to do it differently" and seeing it done differently are two different things. Two of the wider divergents are Apple and IKEA, and it's pretty safe to say they swing heavy hammers in their particular categories.  For some upstart furniture warehouse in Oklahoma City to turn IKEA on its ear, we're going to need to see something mind-blowingly compelling.

For most small specialty retailers, sticking to Underhill's proven methodology is the best approach.

Of course, we have variance in the size, shape, and orientation of our commercial buildings or suites. That makes a difference.  There may or may not be windows, secondary entryways or exits, unusual positioning of restrooms, or what have you.  Little Shop of Magic in Las Vegas occupies a renovated professional office floor.  Meeples Games in Seattle operates a kitchen.  Nerdvana in Tennessee made room in their staff area for a technical workbench to perform cell phone repairs.  Whatever store it is and wherever it is, unless it's the cookie-cutter 1000-square-foot shoebox with a counter running the length of the left side, it probably required some adaptation to make Underhill's setup work.

And then we have Desert Sky Games, six months after the move to Chandler.  Has it been that long already, I ask, knowing it has aged me years.

Right from the start, we set up the rudiments of the model.  The cash wrap and tills are on the left, the merchandise is in the middle, there is a counterclockwise racetrack around it, and the game room is behind all of that.  Like a game of Sim City (pictured), we had to set a lot of things up knowing they would be inefficient now, but would be in the right places for later.  Especially in the first month when the entire store was compressed into the front 30% of the footage, there were some head-scratcher layout decisions that only later bore fruit, like starting the merchandise some fifteen feet in, to provide a decompression zone.

We're running into a few issues that aren't agreeing with the model and are, in my observation, appearing to impede shopper ease.

Because we're using the grid rack fixtures we already owned, there is not a sufficiently low amphitheater.  It's improved significantly from the Gilbert store deployment and from the first-month tarp-limited storelet we had, but it's not good enough.  The Citadel and Army Painter paint racks block sight lines badly, and we have a gondola with apparel that we haven't managed to arrange more approachably.

We don't even really have the exterior ring as such, though there is a small piece of it in the form of some racking that is supposed to hold built white cardboard boxes that we never seem to have time to build.  But even those racks are going to be overrun by additional arcade games.  In fact...

The immediate turn-right is occupied on the wall by the vintage arcade.  While this has surely contributed to the arcade performing better than it ever has in DSG history, it also creates something of a shadow dead-zone for products.  It doesn't help that the stuff that's not security-intensive that we can readily feature there is well outnumbered in the store by stuff we need closer to where staff can watch it.  This is an open puzzle and one I'll look to iterate when I build some more grid gondolas out of the stack of fixture racking in the Fungeon.

Oh, also, the Fungeon (Fun Dungeon, you see, it's a play on words...) NEVER MIND anyway it's not built yet even today.  Once completed, we'll be able to get rid of the giant mound of crap in the back center of the suite once I can put main shipping into the unfinished room.  That space will then turn into something relevant for gameplay.  In turn, gameplay space nearer the front of the store can be optimized, such as with a streaming station, and configured so that it meshes with the south end of the retail space.  There are a bunch of dependencies and it seems like each domino isn't ready to be pushed because I discover another domino precedent to it.

One thing that works are the video game racks, which are low-height and easy to shop, but are also sort of right in the middle of the amphitheater where nobody can see them.  They do need better signage but also it seems like I may need to break up the aisles and make them easier to enter.  This could potentially allow things like dedicated racks for each given system.  I'm not sure exactly how this is going to get reconfigured, but I'm close.  I at least know what the result needs to be.  As it is right now they have a low attract rate and a high conversion rate.  From among customers who actually make it to the video game racks, we get plenty of sales.

The storefront is going to switch to Square Retail POS soon, leaving singles for now on Crystal Commerce.  This is going to help me solve another problem, which is that it's becoming increasingly difficult to keep track manually of what sells through and has to be restocked that sits on the main floor.  Enough of the business is used merch now that this isn't a debilitating problem.  But it's related to pathways in that I've got a bunch of shoppable racks that the natural flow of the floor does not direct people toward in a meaningful way.  They only get there if they explore further on their own initiative, which not all shoppers do.

Our comic deployment is about to change considerably and I don't think it's finished doing so.  We engaged in a massive inventory conveyance to Game On in Prescott, who gave us an offer too generous for us to refuse, and that leaves the comic side of our business focused on boxholders and new releases almost entirely.  That part of our mechanism has been performing well and now we get to configure a focused setup for that and let it run on diesel fuel for a while so we can get some other cost centers and feature centers wrangled properly.

There's more than that and I suppose without photos this makes for something of a dry read.  But this sort of boring iteration is at the core of my work right now.  We have four and a half years left on the lease and no moves or alterations of the footage on the immediate horizon, so it's all kicks and punches until further notice.  Fundamentals, in product first and then in facility.  Facility looks the worse for its second-priority ranking.  And here we are.