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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?"
It seems to me like this is the typical problem with big business; big businesses can afford to buy tons of copies at once and ensure cheap prices, while small businesses get stuck with higher prices. In this case, the big businesses are the online game suppliers--it's tough to compete when they're buying it really, really cheap and don't have as much labor costs, no expensive rent, and can make up for the shipping cost by not paying tax (Correct me if I'm wrong, but when someone buys online from out of state, the government gets zero taxes right - none from consumer, none from business?) Unless there's some way to get a distinct advantage over the online/big business, you're running a losing race. Like someone mentioned with Funcoland, the only things you're really got to your advantage are environment and community: and those didn't stop people from going to Walmart instead of the mom 'n' pop stores that got run out of business. In reference to the junk games traded in for new games, you could always restrict trade-ins to used games--group games by 'value' and let them trade in within the same 'value' for nearly free, or pay money to upgrade up. A store where you could essentially buy one game, then trade it in a huge amount of time at very little cost would be appealing. In conclusiong...umm...good luck?
Have a website for your stores that lists exactly the inventory of each of the three stores. Allow people to select which stores they want to search/browse the inventory of. Allow them to construct wishlists of new used games that they want at your website. Allow them to keep them hidden, visible only to friends, or visible to anyone. Have message boards. Sell to anyone online. Allow them to specify how much they are willing to pay for a used game, and then you can look for games in multiples of wishlists in bundles on e-bay, and if you think you can make a good deal reselling them bid for the e-bay bundles and notify the wishlist makers that you have the game when you are successful.
Have blacklists of used games you will not buy.
Encourage people to take multiple copies of any printed materials you generate to give to their friends. (Pricelists, blacklists, whatnot)
Allow people to play any used game for free for say an hour a day in-store.
Try not to think of yourself as a mom-and-pop. Remember Microsoft and Apple started small.
1) Are you a gamer? If not, hire some intelligent diehard gamers to help you get what gamers want. You'll probably know a few from your repeat customers.
2) Junk Games: There comes a saturation point where you simply cannot accept any more of a particular title. If you've got 10 copies on hand, don't accept any more, or reduce the trade credit value to something trivial. A sliding scale on trade credit value is more fair, but also more confusing to customers ("But just 5 minutes ago, you gave that guy $2.00 for this game!") and more trouble to keep updated.
3) Big system releases are always rough on the secondhand stores. If you can't get 360 systems, focus on what you can get. Offer specials and deals for the holidays. Offer packages of similar games (All Sonic the Hedgehog games for the Sega Genesis in one pack). Toss in a free game or two from a small selection with the purchase of other systems. Try to keep the discount in the 10-15% range.
4) Keep some items on hand for novelty sake. Understand that you won't necessarily sell them, but that they will function more as museum pieces to attract customers. NES Power Pads are cheap, and make interesting wall decorations. Power Gloves and ROBs can also be had reasonbly, and are similarly eye-catching.
5) If you don't already have any, set up some systems for customers to try games in store. Allow customers to request games ("Can I try this game?"). Only enforce any kind of time limit if there are other customers waiting to try games, or if the customer has been playing for an hour or more. Remember that sales counter duties take precedence over demo system duties (as in, finish ringing up customers before taking care of the kid wanting to switch games... again.)
6) Gather up all the merchandise you'd rather never see again, and are potentially willing to lose completely. Put it in a "$5.00 or less!" bin. Toss in a few higher quality "acceptable losses."
7) Watch flea markets, garage sales, even eBay for an affordable, functioning arcade cabinet. Alternatively, rent one from your local "amusement machines" dealer. Make sure it's something older, from the late 80s or early 90s. Put it on free play on the weekends.
Happiness is relative, Based upon the way we live.
Exactly. As odd as this sounds, your focus shouldn't be selling games, it should be building a community and a regular, dedicated shopping-base. If you have the space, I suggest putting a couch in with a TV, or a couple of TVs, instead of the regular IDUs. It'll make your stores feel welcoming and people will want to stay.
My parents used to run a toyshop, and being the gamer I am, I set up a gaming section there. Problem is games have such a small mark up on them, that it wasn't worth the investment (except for crazes like Pokemon), so I have an insight into your woes.
My suggestion is to make your stores work like some book stores. Their major profits come from selling coffee, not from selling books, even though the people running the place are book geeks. If you understand gaming, use it as a strength to sell things to gamers, not just games and systems.
Think of this; put those couches in, people will stay and play games for a while. If people are in a place for a while, they get to know everyone else in that place (common interests and all), which will make them stay longer. If they stay longer, they'll get hungry and thirsty, so sell drinks and some food. As the community grows, so do your sales. If people like you, they think "I could buy this game from website X and wait a day or 2 for it to arrive, or I could spend a couple of hours playing it at that mum and dad's store, where I can talk to people I know and like, about the game. After that, I can come home and play the rest of it after I bought it". To put it in another context, it'd be like running an open member's arcade with lower overheads.
I'll tell you one thing, if a store like that existed near me, I'd buy my games and spend a good amount of time and money there.
Looks can be deceiving. Or CAN they?
1st, in the long term - Jerf is right, if you can find a buyer get your capitol outta brick and mortar game sales - it's a mugs game. But there are some things you could do now that might help if you (and I mean you, not that perfect manager everybody thinks they can hire to do all the work - he/she doesn't exist) are willing to put in 80 hour weeks for . . . well forever, you might be able to pull a pretty good living out of three stores. If you want a turnkey business get your money out and buy a MacDonald's. The first rule of retail is MAKE MONEY ON EVERY TRANSACTION. When you buy these worthless games you are giving money away, even if it's just store credit. So stop it, right now. The customer who brings in a stack of worthless games to trade for a new one is not the customer you want. So take some steps to gently discourage this kind of behavior To whit - Buy only games you can sell in 30 days. Ten cents for a game you can't sell is ten cents closer to chapter 11. So when that kid comes in with the huge stack, buy the Doom 3 and send him home with the rest of them. Restrict the employees who are authorized to buy used games. Preferably to you and perhaps a single manager only. Letting Min wage clerks buy is inviting them - and their friends - to rip you off. Even a basically honest person will take advantage if invited. Restrict the times when used games can be brought in. Again preferably to when you or your trusted manager can be there and will have time to deal with them. Use this to drive additional traffic to an otherwise slow weekday. Do this, and pay realistic prices (one third or less than your selling price) and you'll stop hemorrhaging money. Next - Fix the used games section. If your used game section is typical of such things it's a bunch of random games in a bin or tossed onto shelves constantly pawed over by cheap gamers (like me). Get your staff (they will hate this but that's while it's called work) to pull them all off the shelf and reshelve them, attractively IN ALPHABETICAL ORDER. Used games are your stock just as much as new ones, they should be presented with just as much care - more, in fact, because your profit margin on used games can be much higher. Make one employee responsible for keeping up the section. While your doing this weed out all that dead wood (copies of Madden 2000, MOO 3, etc) and throw them in a bin at $5 each, 3 for $10, 8 for twenty. The idea is to get them out of the store. After 30 days cut the prices in half, after 60 throw them the hell away. In general you have no wiggle room on new games and console sales; your profit margin there is always going to be thin. You MUST find other business to be in - high dollar collector retro equipment games scour the flea markets, buy low and sell into the collector market - maybe online, for top dollar. Sell books, not just hint guides but game related novels - maybe general science fiction, fantasy - comic books. DVDs. Again properly managed used sales can have a higher profit margin than new, again - don't buy junk. Arbitrage - right now Xbox 360's are selling for %50 above retail on eBay - there is money there for you had you been prepared to go after it. Remember the only way to grow your business is by making more money. All the above suggestions that entail giving things away - or buying and maintaining a bunch of demo units and letting people play them - are just fancy ways of giving money away. That sort of approach works in a high margin business - like real estate or yacht sales, not retail media sales. Having reviews of more obscure titles is a good idea, but not by providing online access - find, print out and post online reviews near titles that could use a boost - not just once but several every week. Well I could go on . . . anyway good luck with your stores.
I think the biggest point here that is being missed is simple ... gamers like to play games! Make a store and let gamers play games together! A lot of posts have covered the Small Business 101 already with profesional staff, clean floor layouts, etc. What you need to get a mom and pop store up and running is by offering more than a store.
You want advertising? If you are located in a good area throw a projector up in the back of a pickup and set up an Xbox running Halo 2 on it. Grab some of your buds or local gamers and throw the image on the side of your store. People driving by will have no choice but to stop and LOOK. While this example is extreme you get the idea about how you need to project your store.
The greatest game store I ever visited dealt in not only video games, but also Tabletop, Pen and Paper, and etc. These are hobbies that require hobby stores to support them. Offering space to play card games, pen and paper games, and tabletop games can get gamers in on a consistent basis. Maybe they will just so happen to pick up that latest title when they stop by for their D&D friday.
I'm no business super star, but I know a mom and pop game store isn't going to survive in this day of Wal Mart (because honestly that is your MAIN competition) without some POP and FLARE.
It has nothing to do with comic books. It has to do with obscenity. Yes, the lawyer used a "comic books are for kids" argument, but that's just for the jury. Legally, local communities can indeed declare anything they want obscene, not just comic books, but books, movies, etc. Yes, it would be more difficult to convince juries on those points, but there's nothing to prevent it. Yes, it's a travesty of justice. Blame our lawmakers for allowing local communities to set obscenity standards. Bruce