HOW TO DO IT?
This is part of a series of articles written by James Mathe on his old website. I have brought select articles over here, for reasons that are mostly personal. All author credit remains with James Mathe’s estate. He is credited here as a guest author.
Timeline – Create a timeline to open. Use it to setup deliveries, promotions, advertising, website & social media pages, events, etc. Start to get the word out and build buzz before you open. Do not run your grand opening event the week you open, make sure you have everything running smooth and looking good and host a big party a month or two after opening.
Purchasing – Buying inventory for your store is going to be one of the most challenging aspects of your new job. It’s also the one that will probably have the most impact on your success. Decide what kind of store you wish to be and check out the competition and what they are doing and stocking. You will most likely be dealing with ordering once a week from at least 2 distributors, but one will be your primary distributor. You need a primary as you want to get free shipping and the best discount tier and to do that you’ll need to push the majority of your ordering through a main distributor. Alliance Games is required to be one of those as they have a lot of exclusive deals with some publishers (Z-Man, WizKids, DaVinci Games, Days of Wonder, Mayfair, etc). ACD will most likely be another as they do a great job and have a great selection. Regretfully you’ll have to go direct to some vendors like WOTC to get the best pricing or even use Amazon for things like Cards Against Humanity. Early on it’s best to go broad, not deep on most inventory- having just one of a game on hand is fine. Learning what to order and when to pre-order and all that is regretfully more crystal ball and gut feeling the hard science. There are tools though to help you keep your finger on the pulse of the game industry:
- GTM, Meeple Monthly, Casual Gamer Magazines
- Weekly mailings from Distributors
- BGG Hotness & Top games lists
- Recently Purchased Games Geek List
- Competitor new releases and hot seller lists
Budgeting – You’ll want to create a budget that includes things like advertising, prize support / event kits, as well as your inventory purchasing. Differentiate properly between fixed and variable expenses. Inventory purchases should be based on your sales and not just what’s new you want to stock – if you don’t budget / pace yourself in today’s market, you’ll be quickly overrun by inventory creep. Most important thing you can do is get on NET 30 terms with your distributor partners as fast as possible. Your “budget” for inventory after your initial growth period should roughly be the amount of product you can sell within 30-45 days. In other words, don’t hamstring yourself with a fixed purchasing budget, but don’t just buy everything that comes out either.
Staffing – You’re probably going to work the store yourself for the first year or two… so staffing in that case it is really just an issue of you coming to grips with the fact that you’re going to be working 7 days a week without vacation or days off for a long while. But eventually you’re going to want at least some part time help so you can actually get back to having a life. One key point of advice I have to give you here is, DON’T HIRE YOUR BEST CUSTOMER! Seriously, don’t hire your MTG regulars either. They know and are obsessed with one thing and that will show in their performance behind the counter. Some of our worst hires over the years were MTG players. Try to find someone who’s not already a regular that knows a variety of games and is friendly and approachable. You will be much better served training someone in games then trying to train someone in behavior or appearance. One last word of advice, it’s not that expensive to pay an employee legally, don’t pay them cash or in product or you will get reported and busted by the IRS – it always comes back to haunt you.
Employee Manual – You may be the only one working now, but eventually you will want someone lending a hand. You need to have a manual to set the expectations and rules in place. Dress code, internet usage, etc. In some states, if it’s not in your manual that an employee can’t do something – they can collect unemployment from you if you fire them. Believe me, I was also shocked when I told the state of Wisconsin Unemployment office that I fired someone for watching Anime porn during work and they asked if it was in the employee manual that they couldn’t. We didn’t have that in there, so they got full benefits from us. You will want to keep common procedures, staff duties, contact numbers, policies, code of conduct, etc. listed in this manual.Google Docs/Calendar – This is a great tool for internal and external use. Internally you can use this to handle your staff scheduling. Externally you can use it for your events calendar for customers to review. You can also create private and shared documents and spread sheets for the business end of things. Best of all you can access it from any computer.
UNDERSTANDING THE RAT-RACE
Distributor Exclusives – I covered this topic in my older blog post, and years later nothing much has changed.
Net Pricing – Another very annoying thing happening in the distribution marketplace the last couple years is the constant edging up of prices by using what’s known as “Net Pricing”. This means regardless of your standard discount you earned with a distributor, they are going to charge you $X for a product. While sometimes this is the publishers forcing the issue and making the distributors charge more for a game without adjusting it’s MSRP, lately distributors have been just bumping prices up on hot sellers. They don’t even tell you, so you need to watch your invoices during receiving to even catch it. It used to be we’d eat these short discounts, but since it’s become so prolific, most stores have started to just adjust the retail price of their products to double the cost (this is known as Keystone pricing).
Product Pricing – Aside from the issues with Net Pricing (or because of it) you are sometimes faced with setting an odd price point to sell a product at. Much research as gone into pricing and how consumers view different price points. There are books in the footer of this blog to help you understand, but in short, always price things with $.99 on the end and if a product is over $20 always price it with $4.99 or 5.99 on the end. If you price a product at $32.50 you will sell just as many of that product at $24.99 – so, why would you just leave money on the table? For the longest time, this bothered me, with Catan being at $42 but since it’s such a high profile item you cannot afford to call attention to your price point by marking it up. Finally, with 5th edition they got smart and now price it at $49. Everyone I have talked to says they sell just as many – so I shutter to think how many years and hundreds of copies of this game we were all leaving $7 on the table.
Amazon – We all hate them. They are a scourge on our industry (and many others). But the reality is you need to deal with them both from a policy standard to your customers as well as being forced to stock some specialty exclusive items from them, like Cards Against Humanity and Surge. CAH sells just fine at $44.99 / $19.99 in hundreds of game stores around the country, so if you don’t stock it you’re leaving profit on the table for your competitors. From a policy stand point, it never pays to match Amazon pricing. If a customer is going to shop with them then they are not really your customer to begin with – they are overly price sensitive. We do have many customers who will buy expensive items online but come to us for $25 and cheaper games and supplies. So cater to that, not the deep discounting.
Big-Box Stores – As much as we all hate that they (Walmart, Target, Barnes & Nobel, etc) sell some of the same games we sell but don’t support the hobby by providing play space, the fact that they are helping our hobby games reach a larger audience has helped everyone as a whole. That said, the big box stores don’t care about the games and will clearance them quickly or not honor street dates. This detracts from our ability to function as a store that does provide knowledgeable service and organized play.
Street Dates – Street dates are simply a stated release date that the manufacturer hopefully enforces through all channels to make sure everyone has an equal chance to sell a new hot product. These are a good thing – but something that is commonly ignored or abused by big box stores. They can be a bad thing if the manufacturer never enforces or punishes those who break the street date. Most distributors will not ship a product until the last minute so there is no chance of you as a small store breaking the street dates. But, Target and Walmart and others are not well policed and many times they put a product out before the street date, thus getting an early exclusive. Report these when you find them, but I wouldn’t hold your breath on any of them being punished.
WOTC has started to do some nice things to help out the hobby retailers such as providing you with some products (D&D and such) 2 weeks before any other big box (or Amazon) gets your product. This allows you as a hobby store to have basically an exclusive on a high profile product for 2 weeks. So make sure you’re marketing takes advantage of that.
Online Stores – Online stores and deep discounters specifically are here to stay. They are competing in an over-saturated market and thus heavy discounts is where they make their sales. Many of them do so for a year or two and go out of business, but the damage is done. So as a physical location (brick and mortar) retailer, you need to compete on service and events. Amazon doesn’t offer play space. An online discounter is not going to demo you a game. You can’t meet new friends from shopping online. These are all great reasons for you to provide play space and events to attract a customer base that appreciates the social interactions and knowledgeable staff you provide them. Thus, it is key to your future existence that you and your staff know the product and can constantly provide reasons for someone to come into your store.
Min Mark Up Agreements – MMA or MAP (Min Advertised Price) as it’s also sometimes called is simply a manufacturer insisting on it’s trade partners (you) to not sell at over a certain discount level. This is only really enforceable though if they manufacturer makes you sign an agreement or has the ability to cut your supply off. Mayfair games is most known for their stance on this and so you will not find heavy discounts for Settlers of Catan online. WOTC has gone through great lengths to track where boxes of MTG are going through the channels to help stop the heavy discount that used to occur, there is still much but it’s much better than it was. In the end, though, it comes down to policing and enforcement and punishment… if those don’t exist there is little reason for some to play by the rules.(This was the second of at least 4 parts in a series of articles… to be continued)
Part 4 will cover how to stay alive (diversification, not discounting, service, knowledge) and how to stay healthy (expected COG, margins, turn rates and such)…