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Bright Horizons

The summer is already in full swing at DSG.  I have yet to close the books for May (obviously) but it appears likely to land with numbers roughly the same as April, which was the best month in the store's history by a lot.  In April's case, the cause was obvious enough: Shadows Over Innistrad.  In May?  That's the best part.  It was no single thing.  The only categories that failed to punch their weight class in May were board games and RPGs.

Magic singles continue to be out-of-sight huge.  What was once a couple-times-daily thing: the call, email, or message asking for deep stock checks on singles, has become an hourly occurrence at minimum.  The category is turning with numbers greater than what used to be the sum of all my business as recently as a year ago.  As I reach the end of the great Point-of-Sale Migration of 2015-2016, with deployment expected to conclude around mid-June after multiple restarts and reboots, Magic singles should finally be solved, after a fashion.  I won't spoil it, a future article appears likely to recount the misery of this godawfully slow and expensive transition process.  An infrastructure decision I made in late 2014 conflated good information with bad and moved us forward with Light Speed Onsite mirrored to their client web store deployment.  That decision has cost DSG untold blood and treasure as the prevailing winds shifted in precisely the least concordant direction, and our best utility from Light Speed eroded out from under us.  And it was my call that sent us that way.

I created a "Google Page" here on the Backstage Pass to centralize a single update point for one of my most popular article series, observing the coming and going of metro Phoenix comic and hobby game stores.  The Mega-Article has gone live and future updates will occur in place, most likely without notice unless you use whatever wizardry provides you with some sort of feed notification.  I welcome corrections and already have several in the queue that will quietly roll out when I have a chance.

Phoenix Comicon is days away as this article goes live, and DSG will be there with double the booth space and as much product as we can feasibly haul into the convention center in the time allotted.  Last year's PCC was glorious and was like having two, three, or even more stores open at the same time for an all-too-brief few days.  We are counter-programming harder this year than ever before, ignoring a lot of product categories we think every third booth will overload, and instead pushing some of our core competencies at the heart of tabletop and our mainstream-friendly doorway into the comic universe.  I can't wait to see how we do.

Video games are healthy in every way and advancing exactly as I had hoped, and I am deeply grateful that I had a lot of help in the process from retailers who have been doing it for a while.  But mostly I am glad I put the needed capital into place to do it right.  The category was profitable for DSG in 2013, but without any resources behind it, it was a lark, an unreliable mechanism where we had no legitimate way to attract business beyond mere accident, and no systematic turn cycle on the goods.  Video game distribution is in a very different place than what we are used to in the tabletop world, and the kind of hand-holding and tentativeness that characterizes a typical comic or hobby game retailer is just going to get you left in the kiddie pool.  If you aren't mass market, you have to live and breathe the category to understand it well enough to have a prayer.  So far I think I'm holding my own.

I discussed recently how there were so many other promising things I could bring in, but really right now I just want to see Magic singles solved and the rest of our existing line-up performing dependably.  DSG is in a good place with staffing and organized play.  Infrastructure is tantalizingly close to taking a level.  It would be a tremendously successful busy summer season in my view if we did nothing more than put points on the scoreboard.

I won't be going to Origins or Gen Con this year as it's just not feasible with my work outlook.  It seems likely I will also skip the Alliance open house.  The Diamond Retailer Summit in September is in play, and there's a fair chance Patrick will take his turn at the GTS Come and Play Day in Atlanta in October.  We are running all tabletop events at the massive Game On Expo in Mesa in August.  And oh yeah, we have Eternal Masters, two PPTQs, Eldritch Moon, a Modern Series Championship, Conspiracy 2, and then, oh yeah, everything that isn't Magic as well.  By the time Kaladesh comes out, if I haven't covered substantial ground for our new location, I might as well pack it away until after the holidays and sweat it out in early 2017 with the clock winding down.

I have an extended family event I greatly wish to attend in early July, and that's going to take priority over wants-and-not-needs store issues.  Also, sometime in the next nine weeks I am taking the wife and kids to Coronado after missing our annual pilgrimage there twice in a row due to the needs of the business.  Fortunately, we should be able to get strong EV out of that trip, with my best availability coming during the mid-week and Stephanie off work until the school year resumes.  Oh, and by August, I need to buy a car.

There is glory to be seized in the desert.  I'll be taking my shots.  Here we go. Posted by Desert Sky Games and Comics at 8:30:00 AM No comments: Links to this post 

RPGs at Retail: Their Final Saving Throws

It seems like only three months ago that I wrote a piece on the RPG (Role-Playing Game) category, past and present.  In that article, I offered a pessimistic outlook for RPGs as a category overall, and it has turned out to be more prescient than I would have liked.  I said:

"Tabletop RPGs are a remnant of the market now, and market realities probably prevent any meaningful resurgence from here on out."

I wish I had been less correct.  RPGs have never been a cash cow for DSG, but they've always been there, steady as she goes, quietly earning and quietly supporting a player community.  Dungeons & Dragons, the granddaddy of them all, a game literally as old as I am, has always led the pack and seemed impossible to kill.

Yeah, well, it's dead now. ...Okay, maybe not quite dead, but dying at retail, sputtering out its last gasp in every meaningful measure of what makes a healthy product line for a hobby game store.  It has been poisoned, stabbed, and spelled, and it missed two saving throws and is about to attempt its last with an unfriendly modifier.

Let's go down the list:

A grim outlook.

RPGs are still selling, as of this writing, but their fate is pretty clearly sealed, and what we are seeing right now are the canaries in the coal mines dropping stone mortis.

Paizo's Pathfinder series is the first big fatality.  Paizo has been deep-discounting bundles of product and utterly eroding the value base of the component items.  They have further sold the content directly and via mass-market e-commerce channels at barely over our cost.  There's just no meat left on the bone for retailers.  People talk about retail being an endangered species in terms of the inevitability of online commerce, and I've accepted that thesis for a while now.  The McKinsey study that is oft cited states that only 9% of retail is online, but new examination suggests that the 9% figure may be distorted by sales of fuel and cars, which are virtually never online transactions.  It appears the real number may be more like 40%.  And I believe it.  I bet it's like 60% or more for books.  The reality is: Simple passive consumable content is easily delivered digitally.

What firsthand evidence have I observed to support my claim Pathfinder is dunzo?  It's on clearance in my store right now at 75% off and we have few takers.  I am literally willing to accept less than half what I paid for the stuff just to get it out the door, and that's not good enough.  It's not just the dregs that are left, either.  There are plenty of hardcovers remaining, and a treasure trove of flip-mats.  No, there aren't any core rulebooks, but in a clearance sale you aren't going to see those.  I look at the stuff still on this rack and I realize a sizable percentage of it is going to end up donated.  Anyone who wants to play Pathfinder has no need of me anymore, not even at 75% off.

D&D itself sells better than the rest of the category, but has been heavily discounted in our price-match offering, so much so that we've had to exclude it from the full match and cap the discount percentage, because the Amazon price on sourcebooks is, again, approximately the same as the wholesale price we pay.  That's just what happens to books on Amazon, for the most part.

The Fantasy Flight Star Wars RPGs are among the few bright spots, frequently selling through and maintaining value reasonably in light of Asmodee North America's value protection.  It has worked mostly as they planned, so far.  From appearances, anyway.  However, I cannot vouchsafe that the line is fully healthy when there have been severe supply constraints contaminating the data.  The same goes for the rest of FFG's RPG catalog: Warhammer Fantasy Roleplay, Dark Heresy, End of the World, et al.  If there is going to be one last line of RPGs on the racks, I can honestly say it might be these and not the stalwart, eternal D&D, because Fantasy Flight is protecting the value of its products more than Wizards of the Coast is these days.

Other RPGs on our shelves are mostly stillborn.  I'll keep at least one copy of Vampire: the Masquerade's kickstarted deluxe reprint on the rack for as long as I'm able to source it, because VtM is one of my all-time formative RPG life experiences, as I have written about here before.  I really wish Catalyst's Battletech reboot would take off, but thus far this has not occurred.  DSG is a suburban game store in the Pacific Southwest; it's like a second-tier point guard, it can't create its own shot.  A game has to be a hit already and we can bring it in and master it and deliver it better than most.  We're not tastemakers; we're infection vectors.

We do sell a lot of RPG dice, table mats, and miniatures, both pre-painted and unpainted.  Those, as I allude above, are the primary drivers of sales in the category.  The actual content is scarcely wanted.

RPGs won't disappear from the entire marketplace overnight.  I am not so vain as to believe that DSG is so dominant a bellwether.  What may occur is that, much as we're seeing in tabletop games right now, only a few stores (or one store) in any given area will have enough critical mass to be the real players in the category.  Even as I allow RPGs to shed from my inventory in a very systematic, metrics-driven process, I fully expect them to remain in stock until the miserable end at such stores as Imperial Outpost Games in Glendale and Game Depot in Tempe, the other two major retailers in the board game and miniatures sides of the equation in metro Phoenix.  Meanwhile, the rest of the area stores will continue making hay while the sun shines and then shift resources away from RPGs and into their particular categories of emphasis.

As for DSG, we will still be carrying RPGs long after Pathfinder and the fringe players are gone, Dungeons & Dragons finally loses all its hit points, and Fantasy Flight glides its way to more resilient categories.  It's just that the RPGs I will be selling have titles like Final Fantasy, Chrono Trigger, Dragon Warrior, the Elder Scrolls, Fable, and Ancient Ys.  And they will play with console controllers on a television monitor, not pen and paper and dice and the imagination in the mind's eye. There are benefits and drawbacks to that sea change, and we may as well make our peace with them, because there is no going back. 

Building For Tomorrow: Finding New Things to Sell

Desert Sky Games and Comics is fundamentally in the entertainment business.  It's a small specialty retail store, true, but value is added in several channels:

The last item on that checklist is just as important as the others.  It informs various models that are commonly seen in the comic and hobby game industry today.  From hole-in-the-wall nooks that try to have at least one or two really sweet cards in the case to shock-and-awe megastores that astound and delight visitors by having everything from that old series or collection, having really awesome things around is a great way to get a customer interested.  This also opens up the business plan for potentially all sorts of different merchandise, as long as it's fundamentally entertainment and we can add some value.

I do commonly refrain that I am "not running a museum here," and that sometimes can run at cross purposes to the Sense of Wonder principle.  What that really serves is as a reality check.  For example, I am a die-hard fan of Robotech, the anime television series from 1986.  But most Robotech merchandise doesn't sell these days.  The show's remnant audience are 40 years old and older, and have only marginal interest in licensed knick-knacks and mantel bait.  Nevertheless, I allow DSG to have a Robotech collector figure on the shelf (it's Rick Hunter's VF-1J Veritech fighter, transformable, if you're awesome enough to know what the hell I'm talking about) and I don't much care whether or when it sells.  I like having it there and one day someone is going to walk in that door who enjoyed Robotech as much as I did and they are going to have a delightful nostalgia moment checking it out.  And even if they don't buy it, they're going to end up buying other things down the road because they like the store now that they have had that experience.  I cannot, however, stock an entire rack full of Robotech figures.  It would badly underperform compared to a shelf full of, say, polyhedral dice.

There are so many product lines I would love to bring in for one reason or another.  There are still more product lines I've been asked for that I really do not want to bring in.  Economic factors play into both scenarios, yes, because I'm not running a museum here.  But often the tipping point comes down to whether I think I can make that key first impression on a customer.  What does that product communicate.  What are its optics.  Can I evoke that Sense of Wonder?

Let's look at a few options I've batted around, shall we?

Eurocore board games are something we've had once in a while and that is at least unquestionably a part of this industry, if a grotesquely unhealthy part economically.  The gamer cohort most interested in this content is narrowing by the year, and these games are the hardest sells at retail, are among the most frequently Kickstarted, and tend to have the greatest price gulf between in-store and online.  It pains me that I can't at least throw a bunch of money at this subcategory and just have it.  Stores like The Sentry Box have the correct business framework for it.  They need to be content to wait indefinitely to get their price.  The positive side is that the optics, while overwhelming to a mainstream visitor, are the peak of virtue signaling to any Eurocore enthusiast.
Likelihood for DSG: As it stands, low.  Under the current boutique business model, these are economically unfeasible.  Turn rates are the scoreboard that counts for me right now and Eurocore board games are posting up a big donut there.  But in a future where DSG gets to be The Sentry Box Southwest, there's a fair-to-decent chance we carry them -- a lot of them.

Sports cards would appear to be an obvious inclusion, given that DSG has perfect sourcing on new product.  This category is fraught with peril, however.  Publishers are even less concerned about market devaluation than in the board game world, so margins narrow down quickly even on hot merch.  Sports memorabilia is extremely sensitive to macroeconomic conditions; when liquidity is tight, nobody is buying ornaments, and that signed LeBron jersey on the wall is the first thing that the household sells off to make ends meet.  Authentication is always a hazard and a cost with any piece of value.  Worst, however, is the failure of conveyance.  The current generation of sports card collectors will be the last.    Young people don't care about sports cards and never will.  It just hasn't ever been a part of their world.  That means the sense of wonder won't ever be there for them, and cannot overcome the downward-trending economic indicators.
Likelihood for DSG: Low.  Sports and media memorabilia in general may appear down the road, especially when we have room, as it dovetails a bit into comics and pop culture.  If we bring in sports cards in any meaningful way, it will mean we've already done all the other better things.

Vintage toys look to be in our wheelhouse and we even had a few at our original opening, some Kenner Star Wars Power of the Force 2 series stuff.  There is a devoted store called Toy Anxiety in town that covers this category, but it's all the way up in Paradise Valley.  Gotham City Comics and Coffee also has made inroads here, and they're right in our backyard.  What's the market really like for these?  I don't honestly know and that plus the space issue is what stays my hand.  There is potentially a lot of cleaning, repair, and reconditioning in this subcategory's process agenda, and no small amount of foraging through crap to find saleable goods.  So this is not quite the obvious add it may have appeared.  I do carry new collectible toys and figures from Diamond, because toys are strong on the sense of wonder and nostalgia richter scale.
Likelihood for DSG: Moderate.  I give it no worse than 50/50 on a 2018-2019 time-frame.  It's extremely consistent with things we already do, and if we got the right product knowledge into our staff roster, we could do well on the secondary market.  I'd love to grab some old Transformers or GoBots.  So would everybody, I'm sure.

Chess/Cribbage/Backgammon/etc or "Classic games" is a category that any serious game store worth its salt needs to carry.  Even ultra-modern video game retailers like Wii Play Games in Las Vegas still carry chess sets.  There isn't much turn rate on them and there isn't much margin because Amazon of course, but they are some of the most valuable retail ornaments a game store can have.  The sense of wonder is sky-high because it "proves" the store is a definitive game retailer.
Likelihood for DSG: It's a pity I have no space for ornaments.  This is an opening-day add once we get a new location locked in.  Or as soon after that as feasible.  Looking at 2016.

Anime is a decades-old market now with a deep content base.  However, there is a lot wrong with it.  Rampant piracy has made anime and manga alike virtually valueless at retail.  The ability to summon sense of wonder with it is limited.  Its target audience is younger teenaged boys who have no money, raging hormones, and no (legal) access to, uh, adult content.  There is also a concern with anime and manga due to the disturbing frequency of underaged characters appearing and engaging in adult activities and conduct.  It's probably possible to do something in this space and I know there are comic shops that are making it work, but there are just too many ways this could be bad for DSG.  A shame, considering I just said earlier in this article how much I enjoy classic anime like Robotech.
Likelihood for DSG: Not any time soon.

Disc golf and other kinesthetic toys like yo-yos and paintball guns represent an opportunity, but the reality is I don't have a lot of product knowledge and there's no room in any case.  Supposedly it's possible to source this stuff reasonably well, and a secondary market actually exists.  There are some stores in the trade like The Game Closet in Waco, Texas that deal in this market.  Rainy Day Games in the suburbs of Portland, Oregon even sells kites.  I like that.
Likelihood for DSG: We're talking 2019 or later.

Coffee and the other restaurant-track improvements represent a tremendous investment of capital and labor, for a return that is honestly anyone's guess.  So far the concessions or "retail food" approach of having a coffee bar with service and an array of simple fresh food options seems the most promising for the business structure of a small retailer like DSG.  Margins are sustainable and the capital expenditure is on a realistic amortization horizon.  Moving deeper into the restaurant world, especially for alcoholic beverage service, presents a deadlier traverse.  The labor equation is simply staggering and there are insurance and infrastructure costs that cannot be hand-waved away or worked around.  Ultimately a business has to turn something, and the game-store element would impede the turning of tables or bar stools at optimal velocity such as restaurants depend upon.  Notable stores in the trade have tried the deeper approach, such as Backstage Hobbies and Games, only to find it not worth the cost.  Cafe Mox in Seattle does nicely as a restaurant companion to Card Kingdom, but their capital situation is, to put it charitably, unusual.  DSG did our diligence on the alcohol factor in our original business plan and there was just no feasible way to do it.
Likelihood for DSG: Maybe for "retail food" from the coffee focus on out, unlikely we'd go deeper than that and even more unlikely we'll move into alcohol sales.  The coffee bar could theoretically happen any time we're ready to drop fifty grand into it to do it right, but of course we'll resolve our location scenario first.

Coins are a collectible I have always loved.  They have the narrowest margins in all of commerce, narrower even than new video game consoles, but that's okay because the merchandise is literally already money.  So literally that a store can't accept credit cards for coin purchases under most interchange agreements because technically that's a cash advance.  To carry coins and not just be a WE BUY GOLD pawnshop and trigger a ton of government requirements, I would need to emphasize the numismatic inventory rather than the bullion.  That means having a few glass showcases full of quality coins, and a rack of accessories and storage merch.  I don't have the room right this moment but it could be done with our Magic inventory about to migrate to a digital catalog system.  The sense of wonder for rare and valuable shiny gold and silver objects is obvious.
Likelihood for DSG: Questionable but possible.  There are a number of triggering scenarios that would make me add these practically overnight, mostly involving the economy taking a sharp dive.

Stamps, meanwhile, have a hobby trajectory that makes baseball cards look future-facing, what with electronic communication nearly obsoleting letter mail.  It's also a dangerous slope toward general Americana, which does overlap into media memorabilia and sports memorabilia, but also slides in the other direction into kitsch and even antiques.  There are markets for that.  By the time a store in this industry reaches those distant provinces, it has probably wandered too far.  I have enough sweet old ladies buying comic boards for their quilting without inviting them to fight their way past tables of playtesting grinders to get to my aisle of French Bronze and Pompeian Gold 19th-century jewelry boxes.
Likelihood for DSG: All signs point to "no."  However, we do still ship a lot of product via eBay.  One amusing arbitrage in the stamp collecting world is that as you acquire collection lots and estate lots, you end up using the non-valuable stamps... as common postage.  Not seeing much of a down side to keeping at least one fishing pole at the edge of this pond, wedged into the side of a shoreline rock.

Learning toys such as puzzles and the Melissa & Doug building sets are something that people are used to seeing at Barnes & Noble et al., and sometimes appear at the higher-end game stores in the trade.  It is apparently a category that heavily favors stores that can maintain a continuous mainstream footprint, such as mall stores, and that have the economics to maximize holiday season traffic.  There are a bunch of ways for DSG to get into this, but it's in line behind several more promising candidates from this list.
Likelihood for DSG: By 2019 or 2020 we may be in this space.

Yu-Gi-Oh! Singles are something we are frequently asked to bring in.  However, this category is a dumpster fire, and most people don't actually want to buy them, they just want to get some money for the junk singles they've long since torn up in careless handling.  Any time the store gets its weekly message "u guys sell ygo" I am tempted to reply, "We do not buy Yu-Gi-Oh cards.  Thanks and have a great day!"  That was going to be his next question anyway.  Why not just skip to the end of the novel.  We all know the butler did it.
Likelihood for DSG: No plans to move in this direction.

Movies and music on solid media would appear at first glance to be a product category that has gone the way of the buggy whip.  Digital consumption is just so easy and runs the gamut from only moderately expensive (iTunes) to free-with-strings-attached (Amazon, Google Play) to absolutely free, kind of (Pirate torrents).  However, upon research, this is an unexpectedly healthy category due to forgiving economics, and the sense of wonder is fairly easy to achieve as virtually everybody can think of a movie or album that stirs memories.  There's a lot of "pawnshop effect" involved here, though, and we'd want to be careful with the optics not to turn into a full-bore thrift store.
Likelihood for DSG: We are probably one great acquisition opportunity away. LEGO is nostalgia to the next level, and on top of that it sells better today than it ever has.  Distribution is locked down tighter than a liquor store in Provo, though.  The buy-in for full coverage and real margins is five figures left of the decimal, their stockist requirements are stringent, and you have to apply for access and wait your turn.  We can do this; we spend that much or more every week on product restocks.  Ordering light for a few weeks would make the buy-in transparent to our normal economics.  But it's still a tall order given the amount of uncertainty built in to the process.  The secondary market for LEGO is deeply established.  The nostalgia tug is strong.  This is a product line optimally positioned to appear once we have a new location open and through its sea trials.
Likelihood for DSG: All signs point to "yes," but in 2017 or later.

Hobby modeling, and by this I mean other than "for the general purpose of miniature wargaming."  The modeling hobby goes a lot deeper than that.  There are historical miniatures, though this is a fading market like baseball cards.  There are model cars and planes and such for ornamental purposes; mantelbait.  Then you get into the action side of the category: remote-control vehicles of every stripe, model rocketry, even electric trains which are the nut high no matter what you guys say and no I'm not old why do you ask.  Trains are awesome.  It's amazing just how much overlap there is between the comic and hobby game trade and stuff like this.  It would give me a great excuse to bring in like fifteen grand worth of paint.  Best of all, the sense of wonder is really easy to evoke with moving models.
Likelihood for DSG: Not soon, but I would love to be in this market eventually.  It's probably just like our market, with everything sold online at a nickel over cost.  Maybe I'll just buy myself some electric trains and have done with it.  Wait, I already have those.  I think I'll go play with my electric trains now.  If you'll excuse me.

Electronics, such as iPhones and iPads, Fitbits, Pebbles, and so on, represent a very forward-facing and future-friendly business outlook.  However, the mainstream market knows this and there is extremely strict brand control and very little meat on the bone for a small independent dealer, at least for new merchandise.  We've dabbled in used iDevices and done just fine, but nobody is readily looking for us to sell them, so it would be something that we did on good opportunity if we delved further into that realm.  Concurrent with video games there starts to open a door to used computer gear generally, especially Macintosh where some residual value is the norm.  As with stamps and vintage toys, as discussed above, I would worry about turning into something of a junk shop.  The outbound path from selling used computers is a pretty deep rabbit hole.
Likelihood for DSG: (Shrug emoticon)

Arcade games and pinball were a part of DSG since the beginning, and our last equipment finally moved out of the store in March 2016 as we struggled to eke every last square foot of efficiency out of our badly outgrown current location.  Metrics for the category overall indicated a stratified earning pattern based on what software we were able to put into place and in what combination.  There was little benefit to a deployment of a few units beyond the third or fourth.  However, once unit count got up toward ten, revenues increased markedly.  This is because a group of that much arcade gear in one place becomes an attraction in itself, and has great optics, evoking nostalgia and a strong sense of wonder.  People are then drawn to the location for just that and we have the opportunity to get them excited about other things we offer as well.
Likelihood for DSG: Count on it.  The DSG Vintage Arcade will be back when we have the floor for it.  We have a deep reserve of expertise in this category and a truly embarrassing hoard of hardware.  The category even has overlap and resonance with console video games.

Nothing, and by this I mean even narrowing down what we already have, potentially down to just Magic: the Gathering.  If I have one product left to sell, it will be that.  This is not a direction I am interested in going, but in doing my business diligence I have to consider the possibility of any option that might one day reach the table.  There is a wise saying in business: Winners focus, losers spray.  As much as I like all this different stuff, what if we are not as good at any of it as a business that focuses exclusively on one category and just utterly masters it, covering it to the last degree.  Wouldn't we consistently lose market traction to them?  Of course this means they forfeit some of DSG's key advantages, such as logistics, sourcing volume, and product line overlap efficiency.  Our competitive agenda might be the retail equivalent of repeated groin kicks and nothing else.  For now I think it's within our capabilities to keep exploring new ground, once we have enough floor to give our discoveries a chance to attract an audience.
Likelihood for DSG: If we're ever Just a Magic Store, and I mean in a more literal sense and not just the pejorative of a gamer upset that a 900-pound gorilla of a TCG dominates the industry, then we will shed our way to just Magic if and only if we have decided to monetize until the clock runs out.  Businesses do exist to make money, after all.  This course of action is not being realistically considered for the foreseeable, as it would entail forfeiting the value added from all our product knowledge in the other categories we're already doing substantial business in.
Posted by Desert Sky Games and Comics at 8:00:00 AM No comments: Links to this post 

A Pound of Flesh

In the early days of Desert Sky Games, before it was "and Comics," Magic: the Gathering was responsible for the meaningful totality of all our revenue.  We had a meager array of board games and collectibles, and of course there was Pokemon and Yu-Gi-Oh, but Magic and the product categories that depended on Magic, such as sleeves, playmats, and card storage, made up greater than 80% of every dollar earned.  Maybe greater than 90%; it depended how I counted a given month, and whether I counted revenue net of buys.

So it was no real surprise in the early going to see that our few negative online reviews dismissed us for being "Just a Magic store."  Nobody likes to get one or two stars out of five, but I could not legitimately argue that they were wrong.  DSG was absolutely, without any doubt, Just a Magic Store.

I look toward the horizon and plan for the long term.  From the outset, the partners knew Magic was the revenue center in the present, but a diversified store was the safest bet for the future.  Painstakingly, with fits and starts as we overcame business changes and partner changes, DSG diversified until non-Magic products finally became the majority revenue sources late last summer.  (Paradoxically, the volume of our Magic business at less than 50% of all sales today is much more in absolute dollars than when Magic was 90% of all sales early on.)

Diversification practically became a mantra.  In early 2013, we added video games, though we'd end up putting that category on the back burner a year later.  In late 2013, we added comics.  In mid-2014, we went wider on board games, bringing up the support level for publishers like Fantasy Flight.  Early 2015 saw us add Games Workshop and the megacategory of miniature wargames.  Late 2015 brought some things from the margins into healthy positions, such as HeroClix, Dice Masters, Pokemon, and apparel.  Early 2016's big splashes thus far have been Guild Ball, a big level up in Warhammer and Comics, and the return of video games.  We're running three Fantasy Flight Regionals this month.  We hosted the first Pro Circuit Championships for Dice Masters and Android: Netrunner.  We have prestige events on the calendar left and right, for Magic and then everything else too.

Naturally, the negative reviews lately still complain that we are "Just a Magic store."

How.  How can they still say that.  It's enough to make me want to slam my fingers in a door.  You could scarcely find a store within buckshot of us that supports a wider and more diverse roster of games and player communities.  Our calendar overflows with events, to the point where half the impetus behind finding a new location is just to be able to keep up with business as usual.  Whatever game you play that isn't Magic, the odds are really good that if you're in our twenty-mile halo, we're the place hosting.

But nope, we're Just a Magic Store.

/deep breath.

So what is it that these players are looking for.  What is it that qualifies a diverse store as finally being a diverse store, and not Just a Magic Store?

I tendered this question before my peers on one of the private Facebook retailer groups.  A great deal of insightful commentary came back, and I think we're forming a theorem here.

Some of the reason is simple Gamer Prejudice.  Cliquishness.  Compounded by the social awkwardness of us garden-variety gamer nerds, but still, that.  Most of my players don't do this.  But there is a significant cohort that wants the store to be MY clubhouse, not YOUR clubhouse.  The answer to this, of course, is that my store is not a clubhouse.  It is a business that welcomes players from all walks of life.  Publicly, players tend to make their peace with this.  Privately, some players still nurse misgivings.  No store can be as cozy as the best house living rooms anyway, so maybe there's a player demographic that's just going to be happier playing at home.

Some of the reason is because some gamers are the Contras.  They embrace whatever game system is Not Magic, and that's the hill they pick to die on.  It's a personality thing.  We all know the person in our group of friends who does this, whether it's with games, or music, or sports, or movies, or literature.  They stake their social identity on being the trend defier, the person swimming against the mainstream.  These will be the most vocal of those who condemn a diversified store as Just a Magic Store if it sells Magic at all.  Decipher players used to be notorious for this.

But some, and I suspect the most deeply affected group, hate Magic and stores that sell Magic for a reason stretching back two decades and more.  And this type of player, while the toughest to reach, can also be the happiest and most devoted customer afterward if you manage to do so.

It goes like this.  In 1992, the hobby game and comic industry was driven by printed content.  Books, graphic novels, role-playing games.  Miniature wargames were also a thing, albeit much less prevalent than today.  Everything from the way stores were set up to the economics of the product to where the games were played, all stemmed from the fundamental nature of the printed content.  Stores were small to keep costs low.  Turn rates were meager.  More people bought books because there were no such things as PDFs, and indeed no such things as websites.  (The Web started in 1993.)

Magic: the Gathering was released in the summer of 1993, and it just blasted everything else right off the table.  The "CCG Boom" followed (back when Trading Card Games, or TCGs, were still known as Collectible Card Games) and quickly became the "CCG Bubble."  An unsustainable share of industry dollars flowed to the TCG product lines and away from comics, minis, and RPGs, with the pie still mostly finite due to the shift outpacing market growth.

As Shannon Appelcline's RPG industry history book series Designers & Dragons recounts, a great many publishers were starved out and folded during the CCG boom and bubble.  The bubble ended up bursting, of course, but that actually hurt the remaining RPG publishers even more, because so many stores failed and even distributors fell on hard times.  What hurt the industry as a whole, hurt RPGs.  Things were so bad that the granddaddy of them all, TSR, publishers of Dungeons & Dragons, sold out at scrap value in 1997 to Magic's publisher, Wizards of the Coast, which was in turn bought for megamillions by Hasbro.  And what little RPG lifeblood survived the TCG onslaught, the MMORPG (online computer game) market drained even more mercilessly at the turn of the decade.  Everquest and World of Warcraft.

For that matter, the rest of the industry may as well have gone on a sabbatical in 1999 with the enormity of the Pokemon TCG fad's explosion drowning out the rest of the trade's airwaves.  I was operating Arizona Gamer during this time.  There were literally lines of humans at the door each morning at the peak of the fervor, waiting to see if we got a truck with a Pokemon delivery.  Nothing else mattered.

Ever after, even when Magic was at its nadir around 2007-2008, the TCG category has driven the comic and hobby game industry.  It has determined prerogatives and shaped economics.  Stores are built and configured to accommodate TCG organized play.  Online sales are bent around the flow of TCG product.  Point-of-sale systems are narrowly tailored to the requirements of that single category.  The money never fully went back the other way.  Even the board game boom of 2010-2013 was eclipsed by a new modern Magic boom from late 2009 through the present day.

Each time the RPG, miniatures, and tabletop glory of old seems on the verge of resurging, something happens that either suppresses it again or steers even further power into the nexus of TCGs.  Production values get really good?  Too bad, PDFs crush sales of lavish, vivid-color hardbacks.  Content gets really sweet?  Sorry, Kickstarter floods the market with crap.  Great content at a great price?  Sorry, license expired, game is discontinued.  Great content at a great price and it's homegrown IP?  Sorry, the price of tin just tripled, we have to convert our entire miniatures line to resin and plastic and charge a king's ransom for it.  Meanwhile, the Magic: the Gathering juggernaut just keeps on jugging.

So when you get a player who has spent the last twenty years not just nursing a misgiving about Magic, but outright hating it, harboring a deep resentment about everything that has happened to take away what made the hobby great in their halcyon years, and seeing Magic as the figurehead for the entire debacle, now you start to understand.  That player doesn't even want to see any Magic in your store.  That player won't be happy if you have Magic at all, never mind whether you're focused on it.  There are only a few stores in my metro, for example, where Magic is an afterthought.  Those are the stores these players praise in glowing tones.

It's not enough for the store to elevate that player's preferred game.  That player needs to see Magic diminished.  Punished, in fact.  They need payback.  Comeuppance.  Marginalization.  Reparations.  From their vantage point, Magic ruined tabletop games.  Magic ruined their hobby, which means it ruined their memories and their youth and their treasured nostalgia, just like Star Wars: Episode I ruined George Lucas's legacy.  And these players want Magic ruined to restore the balance. They want a pound of flesh, like the literary Shylock did in The Merchant of Venice.  They know it will go hard, but they will better the instruction.

And yet they know this is an economic impossibility.  There is just too much money in Magic.  Many stores these days let Magic pay the bills so they can support other games out of love of the community.  The player knows this and resents Magic even more for it, like forced wardship to an unwanted benefactor.  So this player shakes his fist and curses the sky and condemns any store that yields to the reality of Magic's place atop the industry as "Just a Magic store," never mind that the same store might be a Nerdvana of other products as well.

How can anyone possibly try to bridge that chasm?

This is how.

For the rest of this article, I am speaking to that player.

You, who saw the tabletop hobby you love overridden by the monolith of Mana, poisoned by the Black Lotus of circumstance.

You, who cherished every night around the table watching Jerry attack the gazebo while Dennis prayed for just one saving throw against the hail of poisoned arrows.

You, who pushed a tray of Bretonnian Knights into a snap-perfect engagement with a foul pod of Lizardmen and trampled past them to the Slann Mage Priest behind.

You, whose Brujah neonate made her own way and earned the respect of Tremere and Nosferatu alike, until that gorgeous Toreador crossed her path that night and changed everything.

And you, determined to adapt and enjoy whatever else of value came your way, from the Star Trek CCG to Catan to Pathfinder to Dominion to X-Wing to Dead of Winter, only to see the hated MTG overshadowing it all.

To you, I say this.

I get it.

I absolutely understand and respect it.  Seriously.  I recognize completely.

Because I was there too.

I know, I know.  I play Magic now so I'm an apostate, I can never fully understand.  But I do.  Because by the time I first played Magic, I was already 20 years old.  Those formative experiences of gaming youth that seared into our brains were already there for me by then.

I had already spent those nights at summer camp playing AD&D, trekking across Greyhawk and Krynn.  I had already drowned in the angst of rainy weekends playing VtM, indulging Ventrue intrigue and Gangrel savagery while hoping in the daytime world to land a proper date (and mostly failing).  I even painted up a bunch of Wood Elves and Eldar because I like to play the army that sees the rules from a 90-degree angle.  Those memories defined friendships, defined places, mixed with music and stress and school and travel and far too little sex.  As it was for you, so it was for me.

In 1994, with Revised Edition and The Dark still on store shelves, I was introduced to Magic: the Gathering.  I immersed in it, and then sold out and quit.  Too frustrating, too expensive.

Years progressed.  I strove to enjoy the other games, despite the burning corona of Magic ever present.  I was a DCI judge for a while, stripes on deck at the Pro Tour.  But it wasn't where I started, so it was always transitory.  I sold out of Magic multiple times, bought back in again, and sold out again.  I played the board games, the deckbuilding games, and what TCGs remained.  I even competed in the Star Wars CCG World Championships in 2006, when the Players' Committee staged it at Pastimes in Niles, Illinois.

But I think back to that youth spent gaming, and even though I know it isn't fully so, it's difficult for me to escape that same impression you have, that Magic is what took it all away.  Even though there were more proximate causes in reality, from MMORPGs to industry entropy to we as people growing up and changing the focus of our lives.  But Magic collided with the first domino, so our brains commit the anchoring fallacy and assign Magic disproportionate blame.  We associate Magic with our anger at the outcome.  I recognize the vintage of that bitter aftertaste.  I know that flavor.  And it's pretty damned salty.

And here is what I understand that makes that bitterness dissipate.

It will happen to Magic too.

Something else will come along that will blow TCGs out of the water, and the entire generation of people who dominate Friendly Local Game Stores with their Magic tournaments and prereleases and glass cases full of foils and rares and everything else, will see it all dry up and crumble away, and they will blame that new thing for the shredding of their cherished memories and experiences.

As it was with us, other proximate causes will factor in.  Video games are a titanic market compared to hobby games, even Magic, and it won't take much of a console boomlet to shoulder TCGs aside and pinch their prevalence.  E-sports are running away with fan attention and Magic is hopelessly without a cogent plan to keep up, so much so that Hasbro deposed Wizards CEO Greg Leeds and replaced him with Microsoft sales guru Chris Cocks to solve exactly that problem.  Something completely out of left field, like a fitness boom, could push players outdoors and away from card tables.  Wizards might actually solve everything and make a perfect Magic v2.0 subscription smartphone app, relegating the Tree Corpse Edition to the dustbin and cutting the game stores out of the equation.  Or, as it also was with us, entropy and the changing focus of peoples' lives and the churn of audience may see the game sputter out at long last.

But it will feel like the big disruptive thing was what killed Magic.  So today's devoted Magic players and fans will blame and hate that thing with the fire of a burning Chandra Nalaar.

And they'll go into game stores looking for a binder full of Magic cards that they might browse, and everyone will be at the visor-pod chairs playing Virtual Space Combat instead.  And the Magic player will lament that kids don't even look each other in the eyes when they play games anymore.  And there isn't even a tabletop!  Why, in their day, there were Magic tournaments seven days a week, and every corner Magic store had an inventory of hundreds of thousands of cards, and new product came out every month or two, rather than yearly or worse or whatever it has become.  And they will leave a Yapp! review for that store, saying "The staff were friendly and place was clean, but it was just another Virtual Space Combat store."

Revel in that moment, when it comes.  We will have earned it.  You will have been delivered the balance you sought all those years.  I will miss Magic, but it was just a great game, not the game of my formative life.  Our kids will no doubt buy visor-pod chairs on Amazon Prime.

The Magic players will curse Virtual Space Combat, and demand their pound of flesh. 

Why Store Problems Are All My Fault

That dirty restroom floor?  My fault.  That time an employee was distracted rather than greeting you as you entered?  My fault.  That perpetual stock outage on DeathModels Hemorrhage Red paint?  Entirely my fault.  The cash offer you didn't like for your mint foil ManaTwister?  Also my fault.

Why are these things entirely my fault?  Stay with me here.  It will all make sense.

Everyone knows by now that comic and hobby game store owners are idle rich.  We stop by once in a while to pick up the checks and play a few games.  Why else would so many people want to open game stores? The reality of the matter is far more mundane, of course.  Running a small specialty retail store, which is what most comic and hobby game stores are, requires a competency set and process framework that is similar at its core to any other small specialty retail store.  Scrapbooking supplies, swimming pool equipment, women's shoes, cell phone screen repair, it's all of the same genus, even if there is some difference in species.  And very few of us are sitting in yachts in Miami Bay with wads of cash strewn about and ropes of Moissanite around our necks.

The core competency set is sufficiently well-mastered in retail that it spans an entire sub-industry of seminars, how-to literature, web videos, and even business blogs like this one.  How meta.  In general, the owner of a small business has to build process.  Through building process, it becomes possible to hire humans.  With humans on payroll, it becomes possible to procure goods, intake and process those orders, merchandise them to present them for sale, field public visits, exchange goods for money, and at the end of the day, close the doors and clean up the facility.  With those humans, the business can market itself to the audience, convert that audience into a clientele, and invest that clientele with sufficient happiness that it chooses to return.  Still additional humans perform accounting, compliance, staffing, physical maintenance, technological maintenance, and foundational tasks such as securing and renewing a lease and raising capital.

In no small number of comic and hobby game stores, everything in the foregoing paragraph is performed by one human: the owner.  There are only so many hours in the day, so an owner eventually has to hire more humans in order to do additional work.  Since these humans usually don't bring a bunch of capital to risk on the business enterprise, they generally have to be paid for the work they do every time.  And given the limitations of space and time and the unfortunate lack of actual psychic powers and mind-reading, this means the owner will need to convey an understanding to the employee of what needs doin' and how needs doin' it.  This is "process."

When I owned Wizard's Tower Gaming Center in 1998, and then was a partner in Arizona Gamer from 1999-2001, it was during a younger era in my life when I externalized a lot of blame for my misfortunes.  I wasn't making sales because those darned customers just wouldn't come in.  I couldn't keep any staff because they were lazy and undependable.  My store never really advanced because I just didn't bring enough money to the table to start.  (Okay, that last part was true anyway.)  The actual failure, though, was one of process.  Every single thing that was wrong with my businesses was ultimately my fault.  I was the owner.  I had the power to decide what was policy and implement it.  If I lacked the resources, it was upon me to gather more resources.  And so on.

Any lacking or failing of the store, no matter how trivial, can then be chalked up to process failure on some level, and process starts with the owner (or in my case, the managing partner, the partner vested with authority by the other partners to administer the business).

Let's examine:

PROBLEM: The restroom floor is dirty.
REASON: Cleaning procedures are about as literal as process gets.  They are typically checklist tasks that are assigned to staff as part of opening or closing a store.  If a restroom floor becomes dirty midday due to a spill or something, it becomes direct supervision by the manager on duty, whose authority it is to direct process.  Right now we're having a problem where the linoleum restroom floor is getting dirty too much and too quickly despite being cleaned.  Some combination of the following must therefore be true: We are using inadequate cleaning equipment or detergent; we are cleaning it too infrequently; we are failing to execute the cleaning task itself; the linoleum is worn and needs replacing; other factors.  It is up to me to coordinate with management to troubleshoot this process.  We've mostly eliminated execution and frequency as causal factors.  We're experimenting with different detergents to see whether we can get a winner.  The fact that other floors in the facility do not have this problem suggests it may be the linoleum.  However, with a short remaining lease, replacing the linoleum is not a cost-effective solution.  In that case, if we reach no other solution, the situation will remain directly as a consequence of my deciding not to allocate resources to reflooring the restroom.  Pretty clearly my fault, then.

PROBLEM: The employee didn't greet you when you came in.
REASON: This ultimately comes down to what Michael Crichton called "Flight deck procedures requiring added scrutiny."  There are people who would say this is just an employee performing badly.  However, that's far too shallow of an analysis.  Most employees will do well if given the opportunity, the confidence of management, good training, and a clear set of expectations.  That's all process, so that's all on me to coordinate with management to ensure that we have.  But what if despite all that and an employee being genuinely excellent?  Well, if we're chronically understaffed because business growth has outpaced staffing, as is happening right now as I type this, then that's my fault for not hiring enough humans.  Or my fault for not coordinating with management to ensure that scheduling put enough humans into place during busy times and days.  And it's my fault if I didn't use our data-gathering resources to find out when those times and days were.  And so on.  What if it's just a freak occurrence, a spike rush in business never anticipated?  You don't want to make policy based on black swan scenarios.  But this comes down to management and process too.  The staff training and guidance has to be that situational awareness where we acknowledge and welcome the arrival, cycle back to the line at the register, and then check in with the customer as soon as feasible.  We'll never be perfect, but if I do my job properly, the failure instances will be minimized.  And what if the employee just has a bad day?  It's up to management to decide whether to reassign or redirect.  Which again comes down to process.

PROBLEM: Out of stock on whatever (chronically, not just spot outages).
REASON: It's easier to hang this on my neck because it's known that I handle (effectively) all the procurement for DSG.  But there is deeper process than this.  Inadequate inventory diligence can lead to something being gone from the shelf (theft, a miscount, whatever) but not triggering a re-order in the point-of-sale system.  Inadequate customer rapport can lead to getting a distorted or absent picture of what kind of upcoming releases have "buzz."  (Customer requests alone are not sufficient criteria for order forecasting, but more information is better than less information, even if its reliability is variable.)  If I've run the store unprofitably, I won't be able to attend the GAMA Trade Show, distributor open houses, or other events at which I can see and try new upcoming releases firsthand.  If I have developed insufficient technical infrastructure... well, it goes on from there.  Easily my fault.  Even if it's an outage caused by production breaks with the manufacturer, the process failure is that we've neglected to ascertain that and communicate it effectively to the customer.

PROBLEM: Offers on buy ratio are upsetting customers.
REASON: One of two fundamental things could have occurred here.  Either our offer was fine but the customer had a different expectation, or our offer was not fine and the customer is right to be upset.  In both cases, it falls to process, which means it starts with me.  Managing customer expectations requires rapport, communication, and finesse.  This is part of staff training, part of good hiring of socially well-adjusted people, good product knowledge, good sales chops, it goes on.  As above, all this means I need to coordinate with my management team to put good staff training and development into effect, and let our staff's natural talent and personality shine through.  A customer who trusts and likes the staff member reviewing his cards or games for purchase will be less upset because he knows the employee isn't trying to swindle him; it's just value ratio, and the market price is what it is (and is not set by us, but by... the market).  Value ratio, meanwhile, is the other thing that could be wrong.  And recently it has been wrong, and I have lost buys because of it.  We turn through a lot more low-value cards day by day than high-value.  This should not be a surprise.  Toyota sells more cars than Ferrari does.  Our buy and sell ratios were set with that in mind, and were a one-size-fits-all percentage for cash and another for store credit, the end, with simplicity being a sub-goal.  However, we found that on higher-end cards, it really was kind of an unfair ratio.  We still got some trade-ins, mostly just for credit, but a lot of sellers passed on our offer, and a few got upset about it, thinking we were trying to exploit them.  I revised the process this week in anticipation of video game buys, and we now have ratio upgrades once a card's market value gets higher than a given point.  To prepare for an unknown quantity of buys at this ratio, we made sure we had a lot more money in the bank ready to allocate to this.  The entire process here involved direct work from me plus coordination with management to make sure everyone on staff knew the score.  So far, signs are good that we made the correct call on this, despite making the ratios less simple.

Those are a few examples of different problems with different causes, different expressions, different customer effects, and different needed solutions, where the common thread was that I, as the person in charge of it all, need to develop and implement better processes to solve the problem.  And that is what I mean when I say that store problems are all my fault.  There is a positive side to this universal responsibility, and that is that a store with great processes has a lot of value.  The more the store can function adequately during extended absences by ownership, generally the result of strong processes being overseen by talented managers, the more that business is worth, and generally the more profitable it ends up being.

*Artwork (C) 2016 Mike Krahulik / Jerry Holkins
Posted by Desert Sky Games and Comics at 1:03:00 PM No comments: Links to this post Desert Sky Games and Comics
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