Is the age of discounts over?

[Festivus]

If the prices at the FLGS are unchanged, and the prices at Amazon rise, and you stop buying things from Amazon, won't you have more money left over?

If your gaming budget stays constant, won't you go to the FLGS with the money you didn't spend at Amazon?

PS

My budget remains constant yes, but my buying power is now diminished because I can't get things cheaper at Amazon. Instead of spending $50 and getting three books I get to spend $50 and get two.

Normally I would spend $25 at Amazon and $25 at FLGS. Now, I will likely spend $50 at the FLGS (win for them) and zero at Amazon.com (lose for them). Net result, I get one less book of gamey goodness (lose for me).

Seems to me that unless Amazon (and other deep discount e-tailers) keeps the big discount they stand to lose a lot of business. Hmm, I better check my portfolio for discount online retailers and think about dumping them.

 

[Whizbang Dustyboots]

But big-box retailers who are so severely undercutting, especially when publishers may not want their products selling so cheaply, aren't exactly helping.

Oh, I agree here. When I was still living there, Blacksburg had an entire end of town where ALL the businesses shut down because Wal-Mart moved in, priced things (allegedly) below cost and let dozens of businesses dry up and blow away before raising their prices back up. It was like a bomb went off.

(Note: Wal-Mart can't and doesn't do this in a place with a really healthy economy with lots of competition already in place. But this is a very common MO in rural America, before anyone quibbles by saying "there's a Wal-Mart here in Los Angeles, and the stores are all still in business!")

 

[rgard]

Well, I think it remains to be seen how this will affect things. On the one hand, it limits competition among retailers by limiting the retailer's flexibility to set prices. That's not so good for the consumer. On the other hand, it encourages marketplace diversity by making it more difficult for a very large retailer (say, Wal-mart, Borders, Amazon, etc.) to squeeze out smaller retailers by selling product at a loss. That's good for small retailers (FLGS).

Well, Walmart didn't do me any favors the day SW Ep3 came out along with the Revenge of the Sith minis. Walmart was selling boosters for $9.87 (or some other prime number near this) while $12.99 was the retail and $19.97 (again some bizarre prime number pricing system they use) vs. $24.99 retail.

The small business owner can't compete with that.

Thanks,
Rich

 

[Storminator]

My budget remains constant yes, but my buying power is now diminished because I can't get things cheaper at Amazon. Instead of spending $50 and getting three books I get to spend $50 and get two.

Normally I would spend $25 at Amazon and $25 at FLGS. Now, I will likely spend $50 at the FLGS (win for them) and zero at Amazon.com (lose for them). Net result, I get one less book of gamey goodness (lose for me).

This post I completely agree with. It is in direct odds with your previous post, which is why I questioned that one.

PS

 

[Whizbang Dustyboots]

But maybe they will stop going out of business at the current rate. Maybe they'll start going out of business because of individual incompetence, and not for reasons intrinsic to the business model.

I predict the rate of closures will be almost unchanged. We'll see in a few years.

 

[Whizbang Dustyboots]

Yeah, no kidding. Just goes to show that "all the powers that be" are in favor of the businesses rather than the consumer. Shaft the consumer. Profits matter the most.

Nine senior citizens, many of whom don't use e-mail and have their clerks look things up on the Internet for them, are hardly representative of "the powers that be."

 

[Felix]

No.

When I present an analysis I have the polite habit of stating my assumptions. IF those assumptions are assumed, do you have a problem with the argument? We can argue about the validity of the assumptions later on, but don't tell me you won't even consider them for a moment.

That's an obviously untrue assumption based on illogical emotional ties to the notion of an FLGS.

Frankly, I don't care about "FLGS"; all my gaming has grown from school or ENWorld. So the obvious basis for my assumption, isn't. Please refrain from handing me my motivation.

Why would FLGS tend to grow the hobby relative to discount retailers?

Gaming is a social activity: gaming stores provide a location; discount retailers don't.

Growth in the gaming industry is based upon introducing people to the social activity: gaming stores provide a physical location to introduce someone new; discount retailers don't.​

IF the demand for gaming books is inelastic: removing discount distributors will not reduce demand, and will assist the FLGS, which will hopefully improve the FLGS' ability to do those two things above.

The industry has 30 years of market research upon which to conduct their econometric models, and I suspect it's likely they've found that gaming supplies are inelastic.

Re: Borders, Barnes & Noble:

Simply because Borders and B&N make a fair trade at selling gaming books, this does not invalidate the overall effect the removal of discount retailers will have on the FLGS, and eventually the growth of the gaming industry. We're talking long-term here, where a 1-3% change can mean very big things.

 

[Bacris]

Walmart was selling boosters for $9.87 (or some other prime number near this) while $12.99 was the retail and $19.97 (again some bizarre prime number pricing system they use) vs. $24.99 retail.

I don't have a source to quote anymore, but there was a report on this pricing scheme where consumers perceived those odd prices as cheaper, even if it wasn't always cheaper... Hence the odd pricing.

 

[Dannyalcatraz]

The specialty game and comic shops have been dying a very long time now, and any producer worth a damn has been focusing on the regular big box book stores for years now.

Part of the reason for this is that the big box stores can easily cross-subsidize the products that the game & comic book shops with the profits they make off of other products.

Several FLGS owners on this site have complained that stores like Amazon are selling RPGs at lower prices than they can buy from their distributors.

Example: Big Box store wants to sell as many copies of a computer game based on an RPG. To cross-promote, they sell the RPG as well. Because they are Big Box, they have the buying power to buy in bulk, recieving a typical bulk purchase discount between 5-15% on their order (on all of the above products). They sell the CRPG at MSRP, perhaps with a short-term discounted introductory sale price, but instead of selling the RPG the same way, they discount it deeply (possibly below cost), using it as a loss-leader to get the would-be RPG purchaser into their store (online or brick & mortar) to (hopefully) buy the CRPG as well. The online stores are usually even helpful enough to bundle them together!

And as a juicy side benefit, they get to decrease competition.

Short term, it means that you get two books instead of three, as someone mentioned above...but the long term without this ruling means that if the Big Box stores become the monopoly or oligopoly in the RPG market, you might only get one instead of two. Assuming an inelastic demand for RPGs, instead of setting the price low to drive off competitors, they'll be able to set prices high to milk you like a money cow.

This isn't just a problem with game stores- a similar thing is going on in the US gasoline market. Many independent gas retailers (in TX and CA, at least) are getting charged up to ¢40 more per gallon than the big guys, essentially driving them out of the gas business.

According to a friend of mine who is a multiple franchisee for a US convenience store chain, there are only a few products in any such store that are actually profitable in any meaningful sense: tobacco products, alcohol products, lottery tickets, porn and gasoline...and gas is what gets people to stop. (Fancy bottled waters & energy drinks are starting to rise in profitablilty, though.) Everything else is there to increase the likelyhood that you'll buy something on the high-profit list.

 

[Whizbang Dustyboots]

Frankly, I don't care about "FLGS"; all my gaming has grown from school or ENWorld. So the obvious basis for my assumption, isn't. Please refrain from handing me my motivation.

I wasn't. The "F" in FLGS tells it all: There is a bias on the part of many RPG gamers in favor of the mom and pop shop, based in sentiment.

Gaming is a social activity: gaming stores provide a location; discount retailers don't.

Which very few people participate in. The polls done here at ENWorld suggest that most gamers have NEVER played a game at a LGS.

Growth in the gaming industry is based upon introducing people to the social activity: gaming stores provide a physical location to introduce someone new; discount retailers don't.

I have never seen a Borders employee chase someone out of the store with a stick for explaining what an RPG is. In fact, I've seen people playing games in the coffee house areas of both B&N and Borders, so long as they're cognizant of the other customers.

The industry has 30 years of market research upon which to conduct their econometric models, and I suspect it's likely they've found that gaming supplies are inelastic.

The industry has been chronically mismanaged for its entire length, and only in the last few years has anything resembling a professional way of doing things started to appear and the MOST successful publisher, Wizards of the Coast, ended up closing their retail outlets. Prior to that, the previous big dog, TSR, was apparently governed by throwing darts at a board.

You'll forgive me if I don't get excited about the industry's decades of market research.