how do FLGSs make money?

[evilbob]

Sorry I couldn't think of a better category for this one. This is an honest question. I live in a small city and over the last decade I've seen several shops open and close within a year or two. The majority of places that come and go tend to sell these broad categories:
- board games
- role playing books
- magic cards
- typically some game-specific minis, like warhammer
(Also: some junk food)

You'll notice that every single one of these items can be bought on amazon or ebay for way cheaper than a brick-and-mortar would ever be able to sell them.

They also tend to have tons of floorspace dedicated to tables for people to game. This is really cool - in theory. But they're also paying rent each month on a large amount of square footage that is dedicated to something that isn't stock. It's great for hosting tournaments, but it's difficult to really demo a game - especially something as huge and complex as warhammer - even with a table set up. And I don't know about you, but 99% of the time, when I visit a gaming store and people are playing, they don't spontaneously encourage others to participate in any way, or even typically acknowledge strangers - so it's not like the tables are drawing in new customers. And here's the real key: the people who play there don't typically buy things, either. Once or twice I've seen it happen - especially with magic cards - but for the most part, people already have their stuff and bring it with them. It's not like most games are consumable products, or that most gamers diversify that widely.

These stores also tend to do extremely little advertising, have one helpful employee at most (typically the owner - because someone who knows gaming AND is friendly is apparently REALLY hard to find), and don't even come close to being an environment that would encourage women to come into the store. (More like: openly hostile.) These things obviously hurt them as well. In fact, let's be honest: GAMERS can be bad for game store businesses, as far as encouraging new business is concerned. Many gamers can be abrasive, territorial, and easily offended. They can sit around, using up your floorspace without purchasing anything, and actively chase other customers away. But you kick out the wrong one and BAM - your online rep gets trashed, or you start a bunch of drama with opposing groups, and either way your business is hurt.

So how do any local gaming stores make money? There are two places locally that have been open for decades, and they've diversified into either comics and wargame minis/paints, or more casual boardgames and traditional games (puzzles, etc.). They also have big sales, better staff, and a more open environment. And the store that sells casual games is great about doing small demos of pick-up games for groups, and they are very child- and women-friendly. All of that helps. But 75% or more of the stuff they sell can be bought online at about a 1/3rd discount. They're also paying rent on extremely large areas that do not contain stock. And I often get the feeling that they are just barely making ends meet. So how in the world do these places make money? Are there even places out there that do anymore? If so: what is their secret?

Do any FLGS vets have any advice? There's a new place that just opened nearby and it's doing exactly everything that I described above. I wish they would succeed but I do not have high hopes, currently. Is there anything I could tell the owner that might help, or will he just have to learn the hard way?

 

[Hand of Evil]

Not a FLGS vet but some of my thoughts:

• Location, location, location - you have to be in a place where people are interested in the material. You have to be in a place that has good foot traffic for the age group that is interesting in your product.
• Comics, you have to have a great interest in comic, they help pay the bills.
• Cosplay, it seems to be a going market and it gets the girls into the store.
• Clean staff -

 

[Jhaelen]

and don't even come close to being an environment that would encourage women to come into the store. (More like: openly hostile.)

Hmm, could you give an example for that?
I agree with most of your posts but I don't think I ever noticed anything of this kind.

I think the major income comes from 'impulse buys': Gamers meeting at the store to play something tend to browse the store, e.g. while waiting for others to arrive or during breaks and simply buy something if it catches their fancy. Another kind of impulse buy often happens with collecting card players and wargamers: they notice they're missing certain units (minis) or cards, need new sleeves, etc. and just buy them to use them in their next game.

Then there's still the clueless parents, grandparents, or other relatives looking for presents, who hope for good advice on what might be of interest for their offspring or extended family. There's still a large percentage of the older generation that aren't internet-savvy.

And then there's loosely related specialties; LARP or cosplay equipment has already been mentioned. Then there's arts and crafts materials, and collector items, rare books, etc.

 

[evilbob]

Thanks for the responses.

Location is always important to businesses, but what's a good location for a gaming store? In our small city there's not a "gaming culture hub." Nothing even close. A good location for a gaming store, in my opinion, is something near a place that serves quick but decent food (not fast food, but something a step up), and maybe near a Gamestop (some synergy?). If you get into the heart of downtown, the rent will eat you alive. Not sure where would be best. So far, most places have chosen: "the place with the cheapest rent." Unsurprisingly, they have a hard time drawing customers - but even a place with a GREAT location (lots of foot traffic) and good backing folded after a couple years.

Comics and cosplay are both niche markets - sort of like RPG books and boardgames, honestly. They do all go well together, but as an outsider to the comic book industry, my take is that they are spiraling downhill fast, and more than one comic shop wouldn't survive in this town. I'd get into why but that's not really the point of this thread. And most cosplayers tend to make their own stuff, right? What do you even sell them?

Impulse buys are what grocery stores use to make a couple extra bucks at checkout. It's not what keeps them in business. Certainly impulse buys are a big deal, but "oh right I need one more card/mini for this game" can't be something you base a business on, can it? That's my main question: what is really the core of this business? Even rare books or trades can't be the main thing: you can't pay rent each month on a couple of rare magic cards because the business is too unpredictable (and again: internet).

As for relatives that shop for gamers, none of them would ever walk into one of these stores, mostly because of the same reasons no women would ever walk into these stores.

Finally: I've been in about two or maybe three local gaming shops in my life that weren't openly hostile to women. If you need help discovering why, try talking to a woman about why she would never go in there. Here are a few reasons off the top of my head that are typical of what I've seen:
- most gaming shops I've seen are "man caves." This includes the cleanliness and feel of the place (bad for any business), but one of the biggest offenders is the massive, overt, rampant sexism displayed in all advertising for nearly everything a gaming shop would carry (posters, t-shirts, book covers, game boxes, minis, some card games - all of these have typical sexist art signalling "this is not for you")
- if you think no one talks to you when you walk in, try being a woman; not only does no one talk to you or try to help you, they typically assume you're just being drug along against your will or lost

Like I said, a couple places are great at NOT doing this, and certainly your millage will vary based on where you live. Where I live: it's not so great.

 

[evilbob]

Another fundamental flaw in gaming stores: your target market is mostly younger people (15-25). These people don't typically have a lot of money. They're also very happy to walk out of your store and buy something online for cheaper (who am I kidding - I mean pirate it) if you don't hook them. And they also tend to be crappy customers (more immature, cliquish, and drive off other customers). I remember a coffee shop in my home town that tried to attract teenagers that died a horrible death, but when it turned into a bar and drove all the kids away, it did great.

Meanwhile, the slightly older folks (25-35) actually have money, but they don't have as much time to game. So they don't need as much stuff, and they don't come by your store as often. I am guessing these factors go up as the age goes up as well.



Thinking about it more, the only sort of gaming store I can come up with that would make money is sort of a hybrid coffee shop / Barnes and Noble / game store. And given B&N's recent downsizing and changing business model, even this is probably a bad idea.

My thought is that the only thing a gaming store has over its online counterparts is the community aspect - so that's the thing you REALLY have to nail. You have to have a really inviting store that caters extremely well to new customers and includes women. I'd imagine a sort of Starbucks with a sitting area and lots of stock and books to look at, except with a bunch of tables for gaming as well. The table space is premium, but I don't know how else you can encourage involvement. You also need a friendly staff that are out there demoing games on those tables the whole time you're open, and as many community events and tournaments and whatever that you can feasibly host. Basically, what I envision is a store that thrives on getting as many feet through that door as possible, because your foot traffic-turning-customer rate will never be very high. You also need to be able to turn curious people into believers with friendly game demonstrations. And honestly, you probably make most of your rent off coffee.

You also need to determine if hard core gamers help or hurt your business. In my experience they do more harm than good: they don't buy more than most people, but they will get cliquish and drive other people away with their attitudes. They don't typically sing your praises, but they'll let the whole world know when you do something wrong. Maybe tournaments are a bad idea? I honestly don't know how much those sorts of things generate.


Just to play devil's advocate again, though, "community" in general seems to be getting passe anymore. People meet online and chat online and game online - but they don't seem to care as much about being somewhere in person, and where ever they are, they seem to want to be somewhere else. Maybe the thing I don't understand about gaming stores is that I don't understand what most younger people actually want to do with their time anymore. I don't know.

Still wondering if there's any way to help my poor local gaming companies stick around...

 

[Vyvyan Basterd]

Not a FLGS vet but some of my thoughts:

• Comics, you have to have a great interest in comic, they help pay the bills.

I'm no expert either, but many long-standing FLGS that I've frequented were selling comics but got out. One in particular told me it was because he was losing money because the margin was too thin. Out of the three best run game stores I currently frequent, one carries a large selection of comics and the other two have none. I'd at least research this more if I were going to sell them.

The one common factor I see at every store I visit (that is doing well) is the hosting of CCG events.

 

[Vyvyan Basterd]

I remember a coffee shop in my home town that tried to attract teenagers that died a horrible death, but when it turned into a bar and drove all the kids away, it did great.

This has less to do with teenagers and more to do with alcohol. Ever notice how many bars can survive in a very small area? You can only sell so many non-alcoholic drinks, so your place essentially becomes an after-school community center.

 

[evilbob]

You can only sell so many non-alcoholic drinks, so your place essentially becomes an after-school community center.

Exactly - full of people who aren't often very mature, spending money, or bringing in business. It tends to devolve into a private club for a certain clique, and when the drama inevitably tears that clique apart, your customer base (slim as it was) is gone. You can't be a business and a fad at the same time.

Magic (are there other CCGs anymore?) events are definitely a huge part of most FLGSs I've seen - although the two that have been around for decades don't host them at all, actually. This sort of goes back to my question about hardcore gamers: good or bad for business? I suppose if you can make yourself the big name in town for tourneys and that gets enough feet through your door looking for your stock, it could help. But CCGs (other than Magic) tend to still skew young, and that brings the issues I mentioned before. (Sorry about my constant ageism in this thread, by the way: I don't mean to say that all young people are crappy customers, or don't spend money. I'm just saying that my observation is that on average, younger people don't tend to spend as much, and many of the problematic customers I've seen over the years tend to be in that age range. Which means businesses that heavily or exclusively target 15-25 year olds - outside of college campuses - don't tend to last long, in my experience.)

 

[Olgar Shiverstone]

Sell at a loss, make it up in volume.

Or:
[sblock]
Q: How do you make a small fortune in the hobby gaming business?
A: Start with a large one!
[/sblock]

 

[Stormonu]

My brother and I did some research on this as, he was thinking about opening one. Around here in MS (where its relatively cheap), we figured that we'd have to make somewhere around $10K/month just to keep afloat. That broke down to about $1K on rent, $200 on electric, $2-3K for the owner (about $50K/year, or $20-$30 an hour), $1.6K for an assistant. That doesn't include insurance or other bills that'd likely spring up. The rest (about $5K) was to keep in-store stock. Assuming you sold your stock for twice what you got it for from the supplier, that'd be just about enough to cover bills (~$5K bills, $5K to buy new stock). That's with not offering a discount.

As far as actually selling things, the one thing we got out of it was that selling one line - RPGs, wargames, CCG's, comics, etc. Wasn't going to be possible. Staying afloat would require diversification; if one line goes sour, you have another to fall back on. The bigger problem is getting the people in (we were looking at opening from the local University, but the better the location, the higher the rent!), and getting them to buy. That could be done through a mix of in-store events and areas to game, an online store (ebay, amazon or least likely, your own) and gamer trades.