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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?"
Have you ever heard of Funcoland? (they were bought up by GameStop I think...) They had a thriving business. They did several things right:
:)
1. They dealt with used as well as new games. Sounds like you're doing that so you're already on good ground there. One of the reasons I liked shopping there was that it was easy to say "Well, I've only got $10, I wonder what Funcoland has today."
2. They had a wonderful warranty system. If you bought a cleaning kit for the system, you got a one year warranty regardless of if it was new or used. I honestly would never have cared for that until Sony hit the market. As a plus, the cleaning kit was great to have around. (as opposed to just handing over some cash just for a piece of paper with 'warranty' written on it.)
3. Funcoland also had a club card. I think this is fairly common these days. Buy the card for $10, get 10% off every used game you buy for a year. Plus it came with a subscription to a magazine. It was definitely a good deal for the customers because it didn't take long to make that $10 back. Again, that encouraged me to come.
4. Funco also had stations set up so people could try the game before they buy them.
5. I don't know if you can pull this off, but I'll mention it anyway: Funco had a number of stores, so it was usually possible to get what you want. They'd make calls for you to find and hold what you're looking for so you can go pick it up. This seems unlikely for you for now, so I have an alternative suggestion: Are there other ma and pop stores nearby? If you are willing to call them and say "do you have this game I don't have?" for the customer, you'll encourage them to make your place the one-stop shop. I know it seems funny to send business other people's way, but customer service is a big bonus. The Funco I frequented had friends over at the local E.B. They'd send business back and forth between them. I liked both those stores a lot because the people were willing to help.
The only thing I'd really ding Funco for was making it hard to tell what games they had in stock. I can't say it was necessarily their fault, but they often had most of their games in drawers. If you can do something to display what you've got, bonus.
Good luck.
"Derp de derp."
...the only non-corporate stores that seem to be doing anything are the "vintage" type stores. They generally have a decent selection of newer games, but it's obvious they rely solely on trade-ins for them.
Given what kind of prices and built-in customer base the chains have, I really think this is your best bet. A lot of us 30+ gamers are out there thinking it would be great fun to go pick up a used NES and play some Dragon Warrior or what not.
Here's what I'd suggest. Note that this is purely from a customer's perspective, so it may not jibe with best business practices.
1. Have a clean, uncramped, well-ventilated store. Walk into a chain store in a mall these days and it's so overpacked that you can barely move when you're in there. This really shouldn't be happening when you can use mostly wall space and some sanely placed racks for your product. And ventilation is more important than you might think -- many mom & pop shops have sent me packing because they've consistently smelled like rotting B.O.
2. Have an engaged, knowledgeable, and non-disgusting work force. Hire people with an active interest in games across multiple systems who actually pay attention to what's out and what's coming up, and who can make meaningful recommendations to people. No hypemongers or rabid single-system fanboys, please. And no planetoids with poor hygiene, either. As I mentioned above, if visiting the store becomes an assault on the senses, people won't come back.
3. Don't give me the hard sell. No, I don't want the fucking strategy guide. And don't argue with me when I say I want a new copy instead of a used one. If I come up to the counter and ask for something, just sell it to me without the extra push.
4. Let me try before I buy. Have multiple kiosks for each system and let people try out any game in the store. Have the latest demo discs available too, so people can try out upcoming games.
5. Sell new releases as soon as possible. I don't know the mechanics of this, but occasionally the chain stores will let pre-orderers pick up their game a day early, or they'll sell a huge new release at midnight the night before it would usually be on sale. Most hardcore gamers like to get their new stuff as soon as they can, and whoever can get it in their hands first at a fair price will get their business.
6. Have review information available in-store. This could be as simple as having a public web kiosk that points to Metacritic.com or something similar. You might even be able to convince them to contribute some money toward the kiosk since you'd be driving traffic to their site. Anyway, I mention this because I'll often spot an obscure title in a store and have no way of knowing if it's any good or not. The store employees usually aren't much help (and even good employees can't be familiar with every game out there), so having on-site access to a range of reviews for every game could help close a sale that might not otherwise happen.
7. Have a frequent buyer program with real benefits. Reward loyalty with periodic unrestricted discounts and game-related goodies (e.g. that promotional Prince Of Persia soundtrack CD that came with preorders of POP:T2T at some stores). And give people a one-time discount when they refer a friend to your store.
8. Keep your prices reasonable. Most people understand that mom & pop shops need to bump up their margin a little compared to chain stores, but if you're more than about 5% above the competition you probably won't keep any customers. And even the people who are willing to pay a little extra are only going to do it if they're getting added value from shopping at your store instead of a chain.
You might also consider hosting and/or sponsoring gaming events to get your name out there and build up good will. Even hosting a little weekly Madden tournament in your store with a $20 store credit purse would draw in a decent number of younger customers.
Good luck...
Is there room for the local gaming store?
My answer: "...sales are dismal (down 25% from last year's sales), which seems to be an industry trend..."
Seriously, sell now while you can still get something out of it, if this isn't a hobby. If you're in business for real, you're going to be slaughtered.
This isn't cynicism, this is realism. The industry is growing leaps and bounds, sure, but the brick retail market is not going to grow with it, and will probably continue to decline. (Note how it's already started to.)
Most of the advice I saw before I started writing this is that it boils down to "Cater to the hard core gamer". But the reason there aren't stores that already "cater to the hard core gamer" is that there isn't enough money in it, period, end of line. That's not an option, really.
Sell the stores to one of the people who think catering to hard core gamers will save the business, let them eat the losses.
Yes!
:)
I worked at a GameXchange for three years in high school. This made us laugh until we cried.
To the OP:
As someone else said, screw new releases for the most part. They won't make you any money. The REAL money is in used older games. Take in a playstation game, give store credit. Clean it, test it, and turn around and charge 150 to 200 percent of that. You've got to be up-front about your customers about the fact that you must be selective in order to survive. Be honest and pay well for the good stuff, and not well for the crap that won't sell.
You've got to know your games. The two or three guys that ran the store with me knew what they were doing, and liked the history and trivia of the stuff, so they had background when someone asked them a technical question. We also had our preferences and warned customers about them. "Me? Oh, I dunno man, I suck at the newer console FPS games. You need to talk to Ryan over there. Ryan! Get your pasty butt over here!"
Get used to explaining to parents with young kids about ESRB ratings and make sure they understand full well that GTA isn't okay for their second graders. Be ready with some age-appropriate but not sucky alternatives. They'll love you for it.
Play upbeat but not "offensive" music and keep the place well-lit and clean. You can carry a store on hardcore gamers, but just barely and you have to hit the right market. Nothing worse for a casual gamer than the grungy, dark place with obscure games and shady employees.
If you have a regular that seems to be a decent kid, hire him and treat him right. Your good employees will earn their pay many times over, and love you for giving them an awesome college or high school job. A little store credit sprinkled here and there can do good things for you... most of the really enthusiastic ones will save it for the rare stuff that only comes in so often anyway...
As far as help goes, you're going to either be hiring students or people who are failures at life. I'm sorry, but that's the way it is. You need to BE THERE to be a good influence on the business. Remember the great guys I worked with? They moved on with life and I was the only one left when the new crop got trained in. I didn't want to manage the store because I wanted to keep my grades up. The owner came in for 20 minutes every two weeks, being so stretched thin trying to open new stores that he let mediocre employees drive his business into the ground through incompetence and theft.
He hired a "mid-level guy" to manage three of the stores. We pegged him as a crook as soon as we met him. I went over his head when my pay had been shorted two periods in a row, and he retaliated by claiming missing inventory and deposits. I was fired the week before I was going to leave for college anyway. When I came home for Christmas, I found out that the guy had emptied a $10k bank account and split.
Anyway, rant off. I've got lots of little tidbits from general management to inventory proceedures that I've seen work well, so send a message if you want any help...
I'll tell you this: There were about 12 months of really good times with good co-workers. We made 3x the profits of the other two years and I would have done the work for, well, not for free, but I was a happy guy when I was coming in to work. Don't screw it up.