Thursday, October 22, 2020

Who Turned Out the Lights... Again?

Can this election just be over?  There is always a pronounced negative effect on retail sales during the U.S. Presidental election years, because consumers value certainty.  There will be a boost in sales no matter who wins.  (Joe Biden is going to win.)  Despite my incorrect prediction of the election outcome four years ago, I am confident enough in the underlying principle that this article is practically a reprint of the one I wrote at the time.

In 2012, Desert Sky Games was still newly opened and did not expect much in the way of sales.  In 2016, we were almost finished with our first lease and had a miserable month thanks to the combination of a contentious election between Clinton and Trump, the Crystal Commerce "Red October" outages, the new Magic set Kaladesh being poorly received on initial release, and a lurch in the ever-increasing shift of general merchandise shopping toward the mass market.

Now it's 2020, and in addition to a hellscape pandemic year with financial ruin upon many, we've somehow got an even more contentious election between Trump and Biden, a change-of-generation with new Playstation 5 and Xbox Series consoles already sold out on pre-order, the new Magic set Zendikar Rising underperforming at the gate thanks to a slate of Standard bans and supply chain chaos, and DSG isn't even in any other categories anymore besides TCGs and video games, which is just as well because I hear nothing but snafu stories coming from those as well.



The election will ultimately resolve out.  Like I said, regardless of who wins, people will turn the page and go back to buying things, when they can (go stimulus!).  The Nintendo Switch is having a banner year so I have no real worries there; retro is doing fine, the PS5 and XS* will both drive tremendous sales and trade-ins, and Zendikar Rising and the forthcoming Commander Legends have enough great cards in them to keep players interested.  The Expedition lands returned for their second installment since 2015's Battle for Zendikar, and this time the shocklands did not appear since they just rotated out from the Guilds year, but the fetchlands did appear, along with a great assortment of other most-wanteds, and players are loving it.  Magic in 2020, strictly as a product slate, is far and away the best it's ever been.  I wish it were possible for players to come to the store and play it.

Once the pandemic ends on November 4th (eyeroll) we can maybe even re-open the game tables before too much longer.  I don't mean that COVID wasn't real or any such nonsense; it is obviously both real and serious.  But once the election is over, the politicization of the pandemic can start tapering down and we can relegate it to the boring purview of medical professionals and state/local health agencies.  There are COVID vaccine trials already underway and I know personally some people participating in them.  The trials are being handled like the national security priority it is, and once a vaccine clears trials, it will be wise to go ahead and get it, rather than holding out or waiting for a better/revised option.

My divorce and the sale of my house are continuing to dominate my non-business time, so articles here on The Backstage Pass will likely continue to be sporadic.  Hang tight and we'll be back on track before you know it.  I have also been invited to do some article writing by one of our strategic partner companies here in the industry so I will be delighted to put a spotlight on that when it's time.

Have a great Halloween weekend, and whether the election goes your way or not, I hope you have a better end of 2020 than the middle was!


Monday, October 12, 2020

Your System May Reboot Multiple Times During This Update

I recently wrote here about my impending divorce from Stephanie, and that process has been consuming an outsized portion of my at-home time, particularly getting in extra reps with the kids.  I wanted to pay extra attention to them while they were still permanently living with me, since that era was about to end and even partial custody is never the same.  There was something of an emotional payload.  I don't discuss that sort of thing here on the weblog, but that kind of mental processing really does take all the punch right out of me in terms of mustering up enthusiasm for the business.  

As such, Desert Sky Games has mostly plodded along these last few months, and especially the last few weeks.  Thankfully, my teams can largely manage the movement of TCG merch quite competently without me standing over them, and TCGs and video games are now the only supercategories left.  I have relegated the remainder of our RPG stock to a perpetually-discounted rack just to serve our nearby regulars, and board game stock is already reduced to titles with video-game-related IP, such as Fallout and Boss Monster.  So that's a thing that got done.  The "hyperfocus" plan is well underway.  As I've alluded to in past articles here, it will become correct for business for me to split TCGs from video games and probably divide DSG into two separate stores.  There is no need for me to attempt to do that under what remains of our current lease, so I'm not going to, but the future writing is on the wall.

As I write this article, the divorce wheels are in motion and finally Stephanie has leased her own place and moved out of our house, where I remain.  The housing market is so insane right now that we can't help but sell; it's going to afford us a complete debt wipe plus living expenses for a long time to come, and that's the kind of thing that can really help combat the coping stress from a life change like this.



I will be living in the house while we sell it, and I couldn't help but be struck by the emptiness of it after the move-out.  Because of school logistics, we're primarily housing the children with Steph.  I will get plenty of custody time, but "main home" is with Mom, for them.  For the weekend of the move, my parents blessedly offered to take them up north to their cabin and let the kids spend the weekend playing in the forest and not watching all their stuff get hauled out of the only home they've ever known, and when they got back, their bedrooms and such were "ready" for them at Steph's apartment.  We hope that softened the blow a little bit for the kiddos, and I do get them next weekend already so they're going to be back with me five days after the drop-off, which is good.  Kids get used to routines and that's exactly what we plan to give them.

So over the weekend my girlfriend Hannah joined me and we went about the business of resetting the house for sale staging.  The market is so hot we barely have to do anything more than an as-is sale, but on the advice of our Realtor, we're putting in some targeted cleaning and polishing to emphasize open space and light and make the place desirable.  But it's so empty to me.  Moreover, it's going to be empty again, and my ultimate destination new home will be empty, so I get to do this all over anywhere between now and the end of the year or so, once the house sells.  Then, I figure to rent for a year or two and then re-buy into the house market.  I am gambling that house prices will have settled back down and it will make sense to buy.  If I'm wrong, oh well, that's the risk I take.

How do I take this experience and glean value from it for the business?

Well, as I mentioned above, the store lease is in the backswing now and we now get to start planning ahead to our next move.  After the difficulties from our 2017 move and spending the better part of 2018 paying for it, I need another move like I need a hole in my head, but the business reality is that I am personally risk-averse and I have a fiduciary duty to the DSG investors and we are going to make the play that reduces our vulnerability to future pandemics and other macroeconomic disasters as much as possible.  We realize that black swan events are bad as a basis for policy, but when you have tectonic plates shifting within the industry anyway (MTG Arena, crowdfunding's ascendancy in general tabletop, Amazon as a general rule, increasing minimum wages, comic distribution chaos, and so on), a black swan mitigation strategy can be something that dovetails into a general push toward ruggedness.

I've joked that I'm all-in on the 1000-square-foot shoebox now, but that really is too small, and a COVID vaccine will exist at some point and I'll still want to host meaningful numbers of players for nightly tournaments.  We assuredly do not need 6400 square feet of glory and the biggest independent game store location in the entire metro.  So the next facility will be somewhere in between.  I really wish the original Gilbert location landlords had played ball with us on our lease renewal rate, rather than holding to the higher price, because that location was a bit on the small side for the post-COVID world, but a lot closer to where we want to be than the current size, and it sits half-empty to this day.  Our current landlord is fairly accommodating about suite modifications, so for all we know we might be able to stay put and just reduce footage.  Or else that becomes the point at which we separate the TCG store from the video game store and move forward under two different banners with two different (smaller) doorways.  This whole scenario is not something to be solved now, but it's on the 2021-2022 itinerary.

If I can arrange that sweet-spot next lease, whichever of the above permutations occurs, I'll ink up and the team will get to reboot DSG once again into an empty building, and convert it by means of labor and materials from a vanilla shell into a Friendly Local Game Store that the community can enjoy and embrace as its own.  The great thing about a tabula rasa facility is that it can become so much more.

Between multiple home moves and store moves, by the time we get to around 2023, I will hope to be situated for at least half a decade in whatever buildings I've managed to occupy.  Let us hope that the hobby game industry is behaving favorably by then, so that I may.