Retail Gaming Store Economics [LONG]

I've never owned or worked in a gaming store, but back in college (early '80s) I did work in a record store. And I have to say, the suggestions already made about having some sort of inventory system are spot on.

In the store I worked in, part of a large regional chain, we would reorder each week basically based on what we liked, and what we remembered selling. Then we had got a new assistant manager who suggested we start tearing off the product pricing tags which came on all the stuff we got from the company warehouse (this was in the days before bar codes). He said they did it as the store where he trained, and it made a big difference.

So we started tearing the tags off, and using those when we reordered each week. And guess what -- what we thought were our biggest selling items, weren't.

Back then, the large trade publications (like Billboard) based their top sellers charts basically off what the large chain stores reported to them were their top sellers. How did the chain stores gather this information? By contacting the local stores. For our chain, we had a weekly sales report the manager called in each week. Part of that report had us list the top three selling vinyl albums, the top five selling 45 singles, the top three selling 8-track tapes and the top three selling cassette tapes (I told you this was long ago). Then the home office would compile this info from all the stores and report it to Billboard. Just about everyone did this. This is how Casey Kasem got his weekly top 40 countdown.

I remember reading how, in the '90s, record stores started using Soundscan and other systems to track actual sales at each store. This had a huge impact on the best seller charts. Whereas in the '80s, it took a really big-name artist releasing a much anticipated album to hit No. 1 in the first week of release, now it happens all the time. Just some MTV exposure to build a little anticipation, and BAM! You can have the No. 1 album in the land for a week. I remember when Elton John did it the first time, it was like Neil Armstrong landing on the Moon for the music industry. Now it happens on a regular basis.

Which I guess means Casey Kasem's countdowns were probably all wrong, and nobody knew it for all those years.

So yeah, invest in some sort of inventory tracking system that automatically tracks what you sell so you know what your best sellers are.
 

log in or register to remove this ad

dpdx said:
I know you weren't asking me, but I have family that used to live in West Islip, now they're spread out around the Island and through the Tri-State area.

Well, it was directed at you I guess ;D I looked at your location and thought, that's funny, I didn't know there was a Nassau AND Suffolk Country in OR! How strange!

EDIT

Which I guess means Casey Kasem's countdowns were probably all wrong, and nobody knew it for all those years.

Isn't it Kacey Casum? I thought it was referred to as the KC Top 40. Of course, that could be Casey. Like Stan Lee is Stanley. [Etc...]
 
Last edited:

Azure Trance said:
Wait a minute. What LGS? Game Corner? Empire Games? Men at Arms? Also if you didn't know, the WOTC store I frequent at Walt Whitman Mall in Huntington is closing down on the 26th (last day). They were going to have a 75% liquiidation sale (drool) but higher ups nixed it in favor of trying to make a profit still. May I ask what town you're from? Oddly enough I didn't even look at your location until I saw the comment:

The WotC store in Roosevelt Field is closing also. The LGS I've been referring to is in Bellmore, where I live. I'm still looking at various issues, but the store location would likely be in the East Meadow/Levittown area. Perhaps Central Nassau.

Where is Game Corner? I've heard of Empire Games & Men at Arms (probably going to visit one or both of them today). Don't think I've got Game Corner on my list.
 


A bit of advice

I have been out of retail for almost 6 years, but before I switched careers I was in retail management for 12 years, so here goes a bit of what I learned. I will try not to cover some of the advice posted above, though perhaps there may be a bit of overlap.

Cash Flow and Inventory Control
- While having a selection of high price items might be good and flashy, where you can really make money is in the small - med priced items that sell quickly. Items that make your investment/inventory dollars work for you (by turnover) and thus make you more money.
- If you have a gaming area with 4 gaming tables with space for 6 people per gaming table, that gives you 24 potential customers for continuous impulse sales – i.e. snack foods (chips, cookies, sodas, bottle water, candy bars etc). Yes the margin is low (about 20%), but the turnover is high, especially on weekends.
- Near the register should only be low priced items, cheap/loose dice, booster packs of the newest expansion, cheap game aids (pen, pencils, markers), etc. Items that give the customer the impulse to say, “hey, I need that”.
- A Point of Sale (POS) is great, but you really have to learn how to use it. Find a good one that provides stale/dated inventory and turnover information.
- Turnover, is how many times you have to order something to keep the shelf full. Several factors affect this - one is the packing size of the item (1 - 24 per pack), delivery time (1 day or 4 weeks), seasonal items (summer, Christmas items), inventory time-frame (once a 1 week, once a 1 month, daily auto-replenishment).
In an ideal POS system, you keep 3 Player’s Handbook on the shelf, every time you sell 2 the POS program automatically generates a order to your wholesalers to send you 2 more. After the 1 is sold and until the 2 on order arrive you are losing money – empty rented space, interest on inventory loans, potential cash flow, etc…Some POS systems can tell how many days an item was out-of-stock during a month, a year, basically you are pay rent for air! A good POS will generate weekly reports of your “outs” study it and adjust your inventory as necessary.
- Stale inventory, is how long an item sits on the shelf, but does depend on the type of business. For a restaurant business it probably is only a matter of days. If I were you I would set for 30-60 days top, run a POS report telling you what items have been on the shelf longer than 60 days. These items are costly you money! Such as rented space, interest on loans, and potential cash flow on an item that could sell faster. Pull it off the shelf and in a prominent area of the store, front impact display near the front … so that customers walking in will see it right away. Mark it down 1 increment per week - 20%, then 30%, then 50%, then 75%, and yes then 90% until it is gone. Then never-never order that item again for your inventory. If some customer requests it later, special order, but ask for 10% down – and no-refunds. Be upfront if customers why this item or that is never stock – it does not sell for you.

Store Presentation
1 Clean and clean - vacuum, dust, polish, and clean the windows – daily, if not weekly.
2 Brightly lit store, extra lighting in the game area.
3 Wide and open store, easy to access, please no clutter
4 Every six months adjust the layout of the store, freshen it up. Move the WOTC D&D D20 from the left side to the right side of store. Move the dice packs from the endcap display to right above the D&D hardback books. This gives you a chance to clean bookcases and displays under the books and boxes. It gives everything a new look and motivates you to assess your inventory.

Advertisement
Yellow pages works best for that is how I found my local gaming stores. After that word of mouth is probably the best - which needs good customer relations.

Hope that helps
 

Re: A bit of advice

Troll-Hunter said:
I have been out of retail for almost 6 years, but before I switched careers I was in retail management for 12 years, so here goes a bit of what I learned. I will try not to cover some of the advice posted above, though perhaps there may be a bit of overlap.

Cash Flow and Inventory Control
<SNIP>
Store Presentation
<SNIP>
Advertisement
<SNIP>
Hope that helps

Great info TH. I need to research POS systems. I've got no clue about the options (or the cost [I hope they lease these]) available. Store presentation is a big one for me. I'm a parent with three kids. I want a store that's going to appeal to hardcore gamers but will be open and inviting to any parent walking in with their kids to get the latest Poke-Yu-Gi-Magic-Dragonball Z cards. I'd like them to be intrigued about the other games, and see gaming as a healthy, imagination-building, strategic-thinking developement endeavor.

Let me thank everyone who has repsonded here, and those that have contacted me directly. The information has been invaluable! Please keep it coming!

--Sam
 

Sam, I would also investigate some of the larger distributors, and what options they offer.

Diamond (the comics distributor) presented one of my comic/FLGS in DE with a POS system. I believe they sold it to him at a reduced cost (possibly a fairly negligeble one...they strongly encouraged him to purchase and use it). Their motivation was to encourage him to use them as his distributor, and they both benefited from the accurate sales information and ordering estimates.

This FLGS in particular (which I believe is still in operation) had a huge shop, with normal books, used books, games, comics and other assorted oddness. A very cool store to hang, but his product turnover was terrible, and it was clear that he wasn't making much money...it was a labor of love.

Folks like you and me, with a family to look after...well, we can't afford that level of recklessness. I contend that a well-run FLGS will get and keep my business. Too many of them are run by, well...gamers.

Case in point: I went to one of my local FLGSs this past weekend, the Compleat Strategist (which is a chain, as it happens). They carry a good inventory, have the latest product usually and are somewhat knowledgable. That said, their service is criminally bad. The staff is more involved in playing games than running the store, from what I can see. I went in, and unable to find some products I wanted, I ordered them from the store (in my effort to support them). Two weeks pass, and I hear nothing. I call, only to find that no one knows what's happened to the order, and that apparently the NY office never fulfilled it...even though they shipped some items to general inventory that I had ordered...which then disappeared off of the shelves. They pulled the one that remained, and are trying again (BadAxes' HoHF:Elves, in case you're curious). If I had known, I would have just ordered directly from BadAxe or an online store....and I may yet, if they don't cough up the goods.

I shouldn't have to wave to get the manager or cashier's attention, pulling him away from a game of magic, diplomacy or Warhammer. That would seem obvious, but it really isn't, apparently.
 

Sam said:


The WotC store in Roosevelt Field is closing also. The LGS I've been referring to is in Bellmore, where I live. I'm still looking at various issues, but the store location would likely be in the East Meadow/Levittown area. Perhaps Central Nassau.

Aye, their all closing except for one upstate.

Sam said:
Where is Game Corner? I've heard of Empire Games & Men at Arms (probably going to visit one or both of them today). Don't think I've got Game Corner on my list.

... east. Helpful, ja? Well, it's east of Huntington anyway for about 15 minutes. It's on Jericho TP; they have an ad in the yellow pages.

Also, someone else I know today referred to your store (What are the chances of two LGS closing in LI?) Didn't catch the name, but apparently it sponsored RPGA Living Greyhawk campaigns and was the only one on LI which did so. He's thinking about holding them at Stony Brook Gaming Club.
 

I'm no expert on running an rpg store but I wanted to second the importance having either used or marked down stuff.

Since an FLGS can't compete with amazon, buy.com, or other discount sources on price (of brand new stuff), having some stuff at a marked down cheaper price is a way you can attract people looking for a bargain.

If you have a shelf full of discounted stuff, people will come in just to look at that. Hopefully, they'll become regular visitors. Encourage this by making sure you regularly have different things available.
 

One thing I think a lot of gaming stores overlook is the use of non-gaming materials as income. One of the biggest of these would be - Food and drink.

As long as you can keep it isolated (relatively) to your gaming area - where a lot of the regulars come to sit and game - it would seem to be a good source of additional income. Sodas, juices, chips, snack cakes, candy and such.

--*Rob
 

Remove ads

Top