5.02.2010

Local Game Stores... (on the way out?)

I posted this over on Spikey Bits.

I'd like to read an in-depth synopsis of the pros and cons (of local game stores).

As a business, isn't it tough to make money from a game store?

A store opened up in a city a few hours from where I live.  The store owner supplied paints in-store as customer service.  He also had armies and books available so folks could try out different things to plan their purchase.  Consequently, many customers didn't buy paint or books, and a number always used the store army.  When he realized the effect this was having, he withdrew these perks, but the backlash from his customers was intense.  This store is out of business.

In my own store, the owner is frustrated with GW's internet sales, and he recently lost a big order.  GW hasn't sent the Immolator kits he order two months ago... what possible reason could there be?  That's just one example.  The profit he makes from direct sales on GW is slim anyway, but he goes through cycles where they change the rules on him and other distributors to increase their margins.

It seems to me it's hard to make a profitable business, especially when GW has policies designed to take advantage of the owner's need to stock GW products, for example the requirement of keeping a certain amount of back-stock.  That sounds great, until you realize GW decides what they want to send.  There are 4 blisters of Ratlings sitting on the shelves of my FLGS... any bets on when this will sell?

The owner has a loyal base of customers that support him, meaning we purchase through him rather than online or via an internet store.  It goes without saying we pay more than we might otherwise have to, but he provides a place for us to game.  There has in the past been problems when folks gamed at the store but refused to buy from it, though it's hard to argue with them when they point out how much they save by purchasing from Ebay or the WarStore.  I'd also guess my owner makes his profits from Comics and Cards - it almost makes me take back all the jokes I've made about cardgamers.   (Almost.)

I'm curious; can any store owner really make a long-term go of it in an industry with such shallow margins?

I think this is a good place to ask this question, considering you've had a store in the past and currently have successful Ebay and internet businesses. 

I'd like your comments, pros and cons.  Any stories where this trend has caused problems in your area?

12 comments:

sonsoftaurus said...

It depends. Some can do well with it, many others fail.

Part of the failure rate is that many stores are opened by people who don't approach it as a business. They're gamers of one stripe or another who think it's better than getting a real job. They promote their favorite part (RPGs, minis, CCGS, whatever) at the expense of the rest. They spend too much time in the store playing vs. running the shop, get one of everything for themselves, etc. These folks will fail more often than not.

Those who approach it as a business will do better, but part of the success depends upon the local market. The stores I see do the best tend to be fairly diverse - games of various stripes including some more normal ones for walk-in traffic, comics, anime, as well as some online presence. No single part is going to be hugely profitable, but by being spread out they can ride out fluctuations in each sub-section better and take advantage of booms.

Col. Corbane said...

Must admit, I looked at it a while ago and after a bit of investigation, I binned it as a bad idea.

The margins are just too tight, combined with competing with increasingly popular online services, GW's wholesale policy and the serious unsociable hours required for a popular store. It just wasn't profitable enough for the effort, so I'm looking at other alternatives at the moment.

Fleahost said...

Interesting article. Codie has said for years she'd like for me to open a gaming store when I retire. I am leary as I don't have the experience with all of the comics and card games that seem to keep the store in business. I think I'd like to open up a gaming hall where a group of players cpould come and play and be a good tourney site. Anything over that not so sure of.

paul said...

From my research, most of your money is made from boardgames (assuming you have a big enough selection). You can buy little card games etc at 12 and resell at 17. Your big ticket items from fantasyflight also have a good margin.

Comics are a double edged sword from my discussions with store owners. It takes a ton of storefront to keep them and you have to have a ton of different comics so that people will actually peruse and buy.

Alternatively, you can start dropping cash into magic the gathering, bank roll prize support for tournaments, and you'll rake in the cash in card sales and concessions.

So basically anything that doesn't take up much space and doesn't cost you much to get in bed with, i.e., not miniatures. :(

Jared said...

At my LGS in central Illinois, it's all we can do to fight for the space to play 40K in-between all the Magic the Gathering players. In most cases the store owner has another guy working every evening just to deal with all the sales and concessions made to the Magic crowd. I hadn't realized the crowd was so prevalent until then. There's gotta be a bit of a bank-roll there.

Sadly enough I know must of us 40K'ers end up buying our models online as opposed to the LGS. If I can save $30 on any given purchase I make online, not much point to go pay full retail. Most of us normally buy paint and other consumables at the LGS, though.

Andrew said...

"I can save money so I buy it online." This attitude more than any other will cause the store to fail. If the store provides space to play and you use the space. I feel you are honor bound to buy from the shop.

If all it does is provide a place to buy, then of course price is the biggest concern. But a FLGS offers more than that. To cheat and not give them your business is why the stores fail.

Too often I have seen stores that have a lot of people hanging out and playing games. Yet the store fails and closes. The only reason why stems from the people who play there but buy online. Too bad those people are the ones that complain the loudest when it closes. The FLGS offers more than a place to buy stuff, they are not Wal Mart. Imagine going to hang out and play with your toys at Wal Mart? They are a corporation that you owe no loyalty because all they offer is a place to purchase. Buy where it is cheap.

This mentality is what the article deals with and I think that the FLGS is very important, but that in todays day and age it is becoming near impossible to stay afloat for the long term. Younger people see a bargain and go for it, Why pay full price when it is cheaper on the internet? Well it fails to assess how much the FLGS does for you beyond the ability to buy.

grimcron said...

I totally agree that online stores are directly/indirectly killing our LGS. Myself and few others have recognized this and has been paying 'more' willingly. But many others do not see it this way. It's sad really. Support your LGS!

Big Whit said...

I got into a heated discussion on our local forum last year when a guy went on a rant about not buying from the FLGS store. At that time I felt like it was my responsibility to defend ebay for all the poor gamers. We jabbed back and forth and my biggest point that I wanted to make was that getting started and trying to be competitive was impossible at GW's store prices. But then I realized that after 2 years of playing I had 3 2500pt armies and I had started a forth. I was no longer a new gamer and I could afford to slow down and buy from the FLGS. I still maintain that if you are just starting out then it is okay to build up your first army, as long as you buy affordable things like codex, dice, paint and maybe even assault on black reach from the FLGS, which is what I did. I would never think about giving a new gamer hell for trying to get on his own two 40k feet, but at the same time there comes a day when an intervention is needed to get him off of ebay crack. I now purchase everything from the FLGS and I haven't looked at ebay except to see how well my dice cups are selling or to look at golf clubs. One exception, If I see a Vulcan Hes tan for sale that bastard is mine. I can't believe GW doesn't allow retailers to sell his Vulcan ass, and I refuse to buy him and ship him to the store. What a kick in the nuts that would be for a store owner opening that package.

Big Whit said...

I call a time out, there is an actual gaming girl on the followers board. Nobody make any sudden movements. Crap, Brent you ruined it and no, I will not give you a Dutch rudder!

mathhammer said...

There is always the pool hall model.

Let people rent tables to play on.

Darkwynn said...

Most of the game stores are not viable for the long run. The ones that are going to do well will Be the warstore because it has the online retail section and has the biggest brand. The way to make money in the current model is online that is it. Though here is a catch 22 with their business model.

You run into a point where having increase sales will actually cost you more money your making at some points because of fixed and variable cost. This is a reason why a lot of business people will not purse this type of business. I have looked at it from many angles and its a labor of love not profit.


With GW pushing its absurd rules for retailers and having to operate under such archaic contracts its hard to do anything. You are not able to run a business correctly and you have a limited view into the future of what products coming out. This plays a issue on Capital as you have no idea where to float your capital for inventory so to speak. GW answer is well stock 4 deep which kills the capital you need for the business.

GW has truly no interest in helping a independent retailer grow or make their business successful. On top of the 45% margins that retailers make instead of GW stores who make close to 90% it doesn't create enough revenue on any scale to run a shop. Normal retail store operates on margins from product close to 60-90%. That is why your most successful stores will be diverse in product which is very hard to do for a lot of people and it will just fail 90% of the time.

Crazy Red Praetorian said...

I owned and operated two comic/game stores for 10 years and a few years before that owned a comic only store/mini distibutor for few year during the comic "boom". It was profitable for most of that time. However, I was well stocked, had larger(3000+) sq ft stores and my stock was very diverse. It is a tough business and very frustrating. One of my stores had a gaming club that played regularly at my store. They shopped with me for supplies and such but made their major purchases as a club with an online dealer. Customers will order from you and disappear, some think you are their therapist, best friend, mother, and banker all rolled into one.

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