The problem with FLGS

[jasamcarl]

Just some random musings. It's early here.

Wouldn't a good strategy for many gaming stores be to institute some sort of membership deal. A flat annual or monthly payment system which ensures customers both low prices as well as the so-called 'intangibles' which are the small stores' comparitive advantage? Because if the problem with Walmart's pricing is that it removes these intangible services from gaming customers, shouldn't the FLGS clarify and PRICE these services?

 

[DonAdam]

I find it amazing in any discussion of big vs small business that people will pass judgments that they would never would when judging people's lifestyles.

Both big and small stores provide different kinds of services for different kinds of consumers, or consumers that change mood from time to time. Big chains emphasize efficiency and prices, small chains emphasize service. Neither is going anywhere, especially for a niche market like roleplaying games.

But if I don't care for my FLGS (I do), why is it bad to purchase from the big boys? Even if I do care for them, I make many purchases there, so why must I make this one? The bottom line is that if its worth it to me (someone mentioned intangible benefits, which is right on) I'll pay the extra, as I often do when buying ridiculously priced t-shirts for small bands I like just so that they'll keep making records.

When its not time sensitive, I order off of Amazon or Buy. In the case of 3.5, I wanted the books before GenCon, and so I got the best compromise: Talon Comics. Almost as cheap as the big chains, I'll get it on time, and I can trust Derek to give me accurate information 100% of the time.

If I was ordering a second player's handbook a few months down the road, there's no question I'd go with an online retailer.

In contrast, for a $10 or $11 module I'd just as soon buy from my FLGS, because of shipping and time preference (I get it now).

I also resent calling the big chains "heartless." They simply have a different way of serving their customers, which some customers prefer. Those guys are trying to feed their families just like anyone else.

 

[ejja_1]

The decision was easy for me.

I decided to forgo 3.5, if I want to check it out I'll wait for the SRD.
And instead take the money I would have spent, and have a field day on mini's and dice at Games Plus. I find myself wary of buying anything that follows the Minisoft formula of releasing a newer version with slightly diffrent upgrades every few years.
3.0 with houserules works for me and my players, and short of someone giving them to me for free 3.5 will stay on Amawalmarts shelves.

 

[spacecrime.com]

Wouldn't a good strategy for many gaming stores be to institute some sort of membership deal. A flat annual or monthly payment system which ensures customers both low prices as well as the so-called 'intangibles' which are the small stores' comparitive advantage? ... Shouldn't the FLGS clarify and PRICE these services?

I've mulled this a fair bit, actually. There's some experiments I'd like to try, but I'd need a store layout that provides more separation of play space from merchandising. We may move next year; if so I'll be looking out for a location that can handle that plan.

That said, I think you'd be surprised just how expensive that kind of membership would be. Our play space costs literally hundreds of dollars a month, and it's not nearly as spiffy as I'd want a "Bally's of gaming" to be. To really do it "right", I think you're probably looking at a membership fee of $20 to $30 per month, especially if there's a product discount built into the membership.

I could build you a hell of a good gaming club on that kind of fee structure, but here's the problem -- the desire you're expressing in your post is the desire to save money. You're talking about something like Bally's, but I have a sneaking suspicion that what you really want is Sam's Club, which means that I'm skeptical of how many customers like you would flock to a business built around this kind of plan.

(Sam's Club is a spiffy business to be in, of course, but warehouse clubs depend on the kind of sales volume that hobby gaming is not going to achieve in my lifetime.)

The other element to consider is that even with a monthly fee, it's a bit questionable whether or not the store would be more profitable. I was idly kicking this idea around with my partner earlier, and she reminded me that golf pro shops have been having real trouble losing sales to discounters, so much so that they're becoming a drag on country club finances rather than a source of revenue. A "club with game store" might see similar problems.

A $20-30 monthly fee would not be enough to match deep discount prices (my guess is that it would support about a 15% discount), so bargain hunters would still shop elsewhere. Which means that (as is usually the case with small-store discounting) the store just giving up profit on sales it would have gotten anyway.

None of this invalidates the idea of a membership-based gaming club. I just think it should be directed at a different audience, and that customer segmentation is a lot more important to a game store's success than trying to be all things to all people. As DonAdam said, big and little stores provide different services for different kinds of customers (or moods, a very wise observation). I've experimented with a variety of approaches over the years, and I've always made more profit offering premium services at premium prices than by offering discounts. If I do a gaming club in the future, it's going to follow that premium model and try to provide an amazing experience to folks who are willing to pay for it. I think that's a better bet for a small store than trying to appeal to people who want to spend as little money as possible.

cheers,

 

[Kichwas]

I don't understand loyalty to a local store. At what point in my life did I chose those people to be my advocate? At what point did they earn that loyalty?

I live in a nation which values Capitalism as the supreme virtue...

Being loyal to my FLGS is anti-patriotic according to they tell me these days.

Now I'm not a economist, but big scary Wal-Mart's price cuts don't seem to scare me. If Wal-Mart somehow makes every FLGS go out of business and then jacks the prices up won't FLGS's just open up again.

Despite my above comments...

It's not price that is a threat with big chains, it's availability of small press product.

Sure you can get core books from amazon, but what about some obscure d20 product that happens to catch your fancy? Is amazon going to be willing to carry a book that only has a print run of 200 to 500 or so?

 

[jasamcarl]

I've mulled this a fair bit, actually. There's some experiments I'd like to try, but I'd need a store layout that provides more separation of play space from merchandising. We may move next year; if so I'll be looking out for a location that can handle that plan.

That said, I think you'd be surprised just how expensive that kind of membership would be. Our play space costs literally hundreds of dollars a month, and it's not nearly as spiffy as I'd want a "Bally's of gaming" to be. To really do it "right", I think you're probably looking at a membership fee of $20 to $30 per month, especially if there's a product discount built into the membership.

I could build you a hell of a good gaming club on that kind of fee structure, but here's the problem -- the desire you're expressing in your post is the desire to save money. You're talking about something like Bally's, but I have a sneaking suspicion that what you really want is Sam's Club, which means that I'm skeptical of how many customers like you would flock to a business built around this kind of plan.

(Sam's Club is a spiffy business to be in, of course, but warehouse clubs depend on the kind of sales volume that hobby gaming is not going to achieve in my lifetime.)

The other element to consider is that even with a monthly fee, it's a bit questionable whether or not the store would be more profitable. I was idly kicking this idea around with my partner earlier, and she reminded me that golf pro shops have been having real trouble losing sales to discounters, so much so that they're becoming a drag on country club finances rather than a source of revenue. A "club with game store" might see similar problems.

A $20-30 monthly fee would not be enough to match deep discount prices (my guess is that it would support about a 15% discount), so bargain hunters would still shop elsewhere. Which means that (as is usually the case with small-store discounting) the store just giving up profit on sales it would have gotten anyway.

None of this invalidates the idea of a membership-based gaming club. I just think it should be directed at a different audience, and that customer segmentation is a lot more important to a game store's success than trying to be all things to all people. As DonAdam said, big and little stores provide different services for different kinds of customers (or moods, a very wise observation). I've experimented with a variety of approaches over the years, and I've always made more profit offering premium services at premium prices than by offering discounts. If I do a gaming club in the future, it's going to follow that premium model and try to provide an amazing experience to folks who are willing to pay for it. I think that's a better bet for a small store than trying to appeal to people who want to spend as little money as possible.

cheers,

Kinda. What I was really getting at is that stores should not so much discount as lump all their expected returns for a given 'regular' customer into the membership and sell them product at cost. Its a form of price discrimination that would allow you to discount individual books for irregular customers, but also reward frequent customers.

The Club thing could used as another way to differentiate the customers, because, presuming that the hardcore is more likely to play a game at the table, it could be a lure for them to get into their 'high' expenditure pricing scheme.

Basically, I think gamestores should be trying to suck as much money out of the committed 'community' gamer as possible. That is their niche.

Let me know how off base i am.

 

[spacecrime.com]

(I should note that I'm mostly talking about in-store play here. That's not to ignore other competitive advantages like product mix, customer guidance, and instant gratification. It's just that those benefits are spread pretty evenly between all customers and products, and don' t really warrant separate figuring. In-store play is just a good example of a service that only benefits some customers and that is fairly easy to quantify.)

Kinda. What I was really getting at is that stores should not so much discount as lump all their expected returns for a given 'regular' customer into the membership and sell them product at cost.

Think about that for a second. Why would I do that? Why would I engage in a business activity that gains me no profit?

At that point, I'm better off running a club and not selling product at all. (And if I'm just going to run a club, I'm better off buying a Curves franchise and making some <b>real</b> money.)

Its a form of price discrimination that would allow you to discount individual books for irregular customers, but also reward frequent customers.

So, I'm discounting to irregular customers and to regular customers. I think that leaves people who aren't customers as only folks paying full price. Which means we're back to discounting across the board, which is not really discriminating enough for me.

By the way, I'm all for rewarding great customers (which does not necessarily involve purchases -- for instance and IMHO, adults who teach kids D&D are worth their weight in gold). But I'd rather do it with gifts and sharing advance reading copies of books and other small gestures of friendship than by devaluing product that I sell.

The Club thing could used as another way to differentiate the customers, because, presuming that the hardcore is more likely to play a game at the table, it could be a lure for them to get into their 'high' expenditure pricing scheme.

Except that you're trying to turn a tried-and-true profit center (selling product) into a low-profit rewards program for hardcore players, who may or may not generate profit in a pay-for-play environment.

That doesn't make any sense to me, especially since 90% of my current customer base doesn't play in the store at all. In-store play is a good feature to advertise, and it's great for recruiting new gamers into the hobby, but the simple fact is that most of my best customers would gain no benefit from the kind of program you're proposing.

If that's the case, then it seems to me that I'm better off separating the pay-for-play business and the retail store. If the members-only club is profitable because I'm charging an appropriate fee for the services I provide, and the retail store is profitable because I'm selling products at the best price I can get, then I've got the best of both worlds.


(This, by the way, is a very useful train of thought for me. I'm getting a much better idea of how to approach some of the experiments I want to do in the future, so thank you!)

Basically, I think gamestores should be trying to suck as much money out of the committed 'community' gamer as possible. That is their niche.

Sure, but that "as much money as possible" has to be profit. High sales and no profit = failure every time.

Let me know how off base i am.

I don't think it's so much that you're off base. But I think you're thinking as a consumer ("it's fun to have a place to play games", and "it's nice to buy games for less") instead of a business owner. I think you're missing the key question that a business owner has to ask, which is "how can I make the most profit for the least risk?"

 

[Dismas]

Discount Schemes

My FLGS is also a normal bookshop. They have a customer loyalty scheme that runs like this.

Every GBP5 I spend on books, dice, figures I get a little card stamped. 20 Stamps gives me GBP5 off my next purchase.

They also belong to a community discount scheme. I have a local discount card for a wide range of shops in the area and it just so happens that the card gives me a 5% discount in the book store as well.

Now these discounts aren't huge, but the shop sells everything at RRP, is quiet close to where I live and the staff are more helpfull and interested than my local dedicated hobby shop.

 

[jasamcarl]

(I should note that I'm mostly talking about in-store play here. That's not to ignore other competitive advantages like product mix, customer guidance, and instant gratification. It's just that those benefits are spread pretty evenly between all customers and products, and don' t really warrant separate figuring. In-store play is just a good example of a service that only benefits some customers and that is fairly easy to quantify.)



Think about that for a second. Why would I do that? Why would I engage in a business activity that gains me no profit?

At that point, I'm better off running a club and not selling product at all. (And if I'm just going to run a club, I'm better off buying a Curves franchise and making some <b>real</b> money.)



So, I'm discounting to irregular customers and to regular customers. I think that leaves people who aren't customers as only folks paying full price. Which means we're back to discounting across the board, which is not really discriminating enough for me.

By the way, I'm all for rewarding great customers (which does not necessarily involve purchases -- for instance and IMHO, adults who teach kids D&D are worth their weight in gold). But I'd rather do it with gifts and sharing advance reading copies of books and other small gestures of friendship than by devaluing product that I sell.



Except that you're trying to turn a tried-and-true profit center (selling product) into a low-profit rewards program for hardcore players, who may or may not generate profit in a pay-for-play environment.

That doesn't make any sense to me, especially since 90% of my current customer base doesn't play in the store at all. In-store play is a good feature to advertise, and it's great for recruiting new gamers into the hobby, but the simple fact is that most of my best customers would gain no benefit from the kind of program you're proposing.

If that's the case, then it seems to me that I'm better off separating the pay-for-play business and the retail store. If the members-only club is profitable because I'm charging an appropriate fee for the services I provide, and the retail store is profitable because I'm selling products at the best price I can get, then I've got the best of both worlds.


(This, by the way, is a very useful train of thought for me. I'm getting a much better idea of how to approach some of the experiments I want to do in the future, so thank you!)



Sure, but that "as much money as possible" has to be profit. High sales and no profit = failure every time.



I don't think it's so much that you're off base. But I think you're thinking as a consumer ("it's fun to have a place to play games", and "it's nice to buy games for less") instead of a business owner. I think you're missing the key question that a business owner has to ask, which is "how can I make the most profit for the least risk?"

You still don't seem to get my point. This is probably my fault, because i'm assuming you've had exposure to certain abstract business/economic concepts. I think if you understood what I was getting at, you would see that what i'm proposing actually helps you and 'harms' the customer.

The reason why you add a membership, in addition to the normal arrangment is to seperate the customers, or have them sort themselves into a high demand and low demand group. The key to this setup is to force the high demand group to pay more, but allow for discounting to bring in low demand customers, yet to ensure that both have an incentive to stick with their plan. What you do is take the aggregate annual profit assuming non-discounted prices from your 'regulars', and make that a membership fee. Then sell the books at cost for those customers. They will be rewarded for purchasing at scale and your profits will not decrease, because you will not be taking a loss with the larger number of books they buy, but will be receiving the same profit minus a discount scheme. Through in 'premium' access to playing tables just to accentuate the bargain you are handing them. You might even be able to raise the membership fee, depending on how much value this adds to them.

Low demand, 'irregular' customers will not opt into this because they would be paying a large fixed cost and only spread it over a small number of products. Instead, based upon whatever competition is out there, you discount the rate at which they are paying on monthy or bi-monthly scheduels inorder to attract them. You might only be making a marginal product off of these 'light' customers, but that doesn't matter, because your regulars are paying full price.

This is an ultra-simplistic take on how secondary price-discrimination works; it assumes that you have to very disimmilar types of customers. Realistically, you would probably have to discount the hardcore to a lesser degree that the irregulars. The problem with traditional discounting is that you might increase the number of books an irregular customer would purchase, but you are getting away with allowing your regulars to pay that price, despite the fact they would have payed undiscounted for matters of convenience; they probably hang out at the store a lot anyway, they like to experiment with a lot of games on the fly, etc.

There are obviously still price pressures that force discounting in this scheme, but it would allow a store to leverage its brand and position and exploit the relative inelasticity of its demand curve. Basically, you still discount, but you do so efficiently.

 

[jasamcarl]

Of course, this would all require a set of 'willingness to pay' data which you don't have access to. Just the random mumblings of an econ major.