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Advice on Running a Successful Videogame Store?
xlilacx asks: "The video game industry is worth $25 billion, and predicted to rival the global music industry in the next 10 years. Even Grandma is joining in on the fun. My husband and I bought three video game retail stores two months ago, and so far sales are dismal (down 25% from last year's sales), which seems to be an industry trend. I've noticed a few things that are contibuting to our lack of profits: the people who weren't able to get an XBox 360 have decided they will wait to get one (which most likely will be after Christmas), and they will not buy any games for their old systems in the meantime; people are automatically conditioned to go to the EB-Games and GameStop stores at the malls, even if they give less in trade-ins and have horrible customer servicr; lastly, kids come in with piles of junk games (Madden 2001, etc..), and get enough store credit to buy the latest greatest game that we only mark up like 5%-10%. I'd like to ask Slashdot readers if these observations are a good reflection of the mentality of video-game buyers everywhere, and what suggestions they have for a small ma-and-pa video game store. With all the huge retailers in the video-game market and the EB/GameStop merger, is there a place left for the local game store?"
What you need is time to get game buyers to use your store, and start telling their friends.
If you can have better customer service, and provide better monetary value (be it trade-ins, slightly lower price than the local chain store, etc) the numbers should increase over time.
Have a local staff that is knowledgable about games. They should be able to tell a prospective buyer the good and the bad about a particular game, and how it compares to other games in the genre.
Perhaps post ratings from various game sites, so buyers can see the ratings and the reviews about various games in your store.
One thing a local mom-pop shop does is have a little event when a huge game is released. They will have pop and some snacks leading up to when they are allowed to sell the game, may even have it playable on a few systems so people can get their fix before they can take it home. They did this for Halo2, and I am sure other games. They also let you return a game within the first week or so if you don't like it, or you finish it for a full store credit. You get a brand-new hot title back, and can put it back on the shelf at a slightly lower price (providing the condition is good), and make two customers happy in the process.
You can also run contests, etc to get people into the store. Buy X new games, get a free used title. My advice, don't pressure then to buy. Provide an environment that provides the service, but do perks, make it a good place to hang out.
First off, fuck new releases. You only make 5-10% on them. Have pre-order programs for them, but otherwise carry minimal stock on them. If your store is so low on those sales anyways, why carry it?
Impose maximums. If people want to bring in a sports game, make sure you only take in this year or last year's sports games, and have a max # per store (5 for last year's, for example). It can take a long time. Give almost nothing for last year's title, and give a bit more than nothing for this year. Give them 20% markup.
Do not take Madden 2001.
Be smart: used is where you live. From the SEC filings, it's obvious that EB likes to keep a mix of 20% used sales out of their gross sales, and they have 50% markup on used. Look at how that mix works in a spreadsheet. It's how they survive (that, and their terrible corporpate policies). You can easily out-do them in the used space. If you have 3 stores, you can guarantee your used better than new, and you can mark up enough to make it worth your while, but not so much that you're charging people 5$ less for a used copy of a game. That'll get the savy shoppers to you.
Reward your customers. Hardcore gamers can carry a store. When I had the time and money, I would spend 50$-100$ a week at a game store. Get these people to your store. EB's terrible customer service will drive them to you. The fact that you can employ people who know about games, and you offer more than minimum wage, will help this.
Hire ex-EB/Gamestop employees. Anyone who has worked there and is a decent person will know exactly what's wrong with the company. They'll probably know more about games than random people off the street. Use this.
There are a lot of great books about running a small business. You're working in a vertical market. The key to success is having good customer service, and a reason to go to your store. Unlike EB/Gamestop, where the majority are seasonal shoppers, you can offer a whole lot more. Have launch parties for popular games, where people are invited to play them in the store. Have people who know about customer service and games, and aren't going to tell the customers to fuck off. Be a friendly face. If you can get a community going around your store, people will come there before others.
Also, think about rentals. Renting out games costs you almost nothing. 5$ for 5 days -- how many days of renting each new release until they've paid you the same profit as 1 person buying that game? If you have a regular rental business for those who don't want to buy all the time, you can keep more of your casual customers there. Heck, if they rent a lot from you, you can offer them discounts on buying new and used from you (and you can make those used discounts even bigger since you have more markup). EB/Gamestop can't compete with you there. They simply are too big, and lack the focus.
There is so much you can do. This is just my own set of ideas. I've worked at game stores in the past, and know how the models work. Hire people like me, and you'll do fine.
First read the Acts of Gord. Then really consider if you want to run a game store.
You could do other contest type things too. Pac-Man high-score board on the wall (bring in a picture of your score to get placed) or something. You could do it with any game that has something you can easily rank like that. Speed records for various games. Whatever.
Offering expertise (like a sign in the window: "We'll help you pick out what your kids will want") could help you a lot during this season too. While people at Best Buy or GameStop may be able to do that (usually depends on the employee), if you make it obvious that you can do that that may help.
Best advice besides the above? You need word of mouth. Tell your friends and get them to buy there (probably not a problem). Ask them to tell their friends, etc. Offer a discount card (someone already suggested one on used games like Funcoland used to have) and offer to give them $5 credit if they get someone to come in and buy something and say they were recommended to come by the person with the card.
Comment forecast: Bits of genius surrounded by a sea of mediocrity.
Of course, this depends on the market that you're in, but here in Baton Rouge, there is a local game store called GameWare in the Mall of Louisiana. Some items that set it apart from the EB upstairs are:
1) An arcade, including DDR. It also has some machines like Guitar Freaks (I think that's the name of the game).
2) All the current consoles (PS2, GameCube, XBox and XBox 360), handhelds (GBA/Micro, DS, PSP) and PC have some space in the store.
3) Preowned games, systems and accessories for older generations, including NES, SNES, N64, PS, Dreamcast, Genesis.
4) Possibly most importantly, the ability to buy items imported from Japan. Want a pink DS? They've got it. White PSP? No problem. Jump Superstars? Walk in and buy it. Anime stuff? Sure. Imported CDs of video game music? Got that too. Not only do they have all of this in stock, but they also are modestly priced. The pink DS is only $10 more, which in my opinion is a convience charge for being able to pick it up instead of ordering from Lik-Sang and the like. So, in my opinion, yes there is room for the locally owned game store. You just need to differentiate yourself from the big-market competition. And, in case you're wondering, it gets all the games and systems at the same time the big stores do.