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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.
In my area, the only Mom & Pop game stores left are the ones that specialize in used games, typically the NES-era through about 2000ish, but a few current generation games pop in on occasion. Of course they also offer the used books/cds/dvds/etc. which can't hurt (especially since they want $100 for Chrono Trigger with or without the box).
http://crummysocks.com
First off, fuck new releases. You only make 5-10% on them. Have pre-order programs for them, but otherwise carry minimal stock on them. If your store is so low on those sales anyways, why carry it?
Impose maximums. If people want to bring in a sports game, make sure you only take in this year or last year's sports games, and have a max # per store (5 for last year's, for example). It can take a long time. Give almost nothing for last year's title, and give a bit more than nothing for this year. Give them 20% markup.
Do not take Madden 2001.
Be smart: used is where you live. From the SEC filings, it's obvious that EB likes to keep a mix of 20% used sales out of their gross sales, and they have 50% markup on used. Look at how that mix works in a spreadsheet. It's how they survive (that, and their terrible corporpate policies). You can easily out-do them in the used space. If you have 3 stores, you can guarantee your used better than new, and you can mark up enough to make it worth your while, but not so much that you're charging people 5$ 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.
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."
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?
First read the Acts of Gord. Then really consider if you want to run a game store.
A small point regarding:
"so far sales are dismal (down 25% from last year's sales"
I kind of think last year was a bit special as far big name releases. You had Half Life 2, Doom 3, WoW, Metroid Prime 2, GTA San Andreas, Halo 2, and perhaps Rome Total War so I think all of those maybe contributed to 2004 being a stellar year for game sales.
(Say what you want about the actual games themselves but they were all hugely anticipated...)
...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.
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.
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.
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.
I spent several years in video game retail. Given that was all back in the 1990s, but aside from Microsoft coming into the picture, things haven't changed much. Right of the bat, the best advice I have is to get the hell out before you lose your shirt. Video game profit margins are pathetic - most big retailers treat games as the would any other loss leader, picking up their profits on items like generic controllers and memory cards that sell at a 500% to 900% markup, and if a big game actually sells well enough for them to profit from the cost of keeping it in the store, it's a fluke.
That said, if you really want to make money, here are some tips:
1. Don't try to make profits selling games. Sell acessories, like new controllers and memory cards. Don't let a single customer leave without pushing him or her to buy a memory card or strategy guide. The easiest people to sell to are people who play sports and racing games, because they build up collections of saved games for every year of their favorite EA games as well as replays for racing games.
2. Jump on the used game bandwagon. There's a lot of profit to be made buying a game for $5.00 and selling it for $15.00, especially since you aren't even paying distributors to ship them. If a game sits around too long, dump it on eBay for a tiny profit and charge the sucker who buys it $5.00 for shipping, mail it media mail for under $2.00 and keep the other $3.00.
3. Sell niche items. Keep weird stuff like Playstation-to-Dreamcast adapters, everything-to-USB adapters, and high-end joysticks from Hori and MAS Systems in stock. When you aren't busy with customers, sell these items on eBay.
4. If there is a local market, start importing hot Japanese releases.
5. Try to build up a business selling board games, RPGs, and CCGs. Just be careful not to invest too much money up front, because you don't want to get stuck with a backstock.
Again, good luck. There's little place left for independent game retailers, so if you plan to survive, find a niche, start expanding, and hope to get bought out by Gamestop or a similar company that just doesn't want to bother competing to wipe you out, because that's really the only good option an independent retailer has anymore.
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.
Your biggest problem is that electronic distributio is now a matter of "when" and not "if." All the majors are going to cut out the middlemen and start selling games music and movies direct via broadband. Sony has already said that this is an important part of it's strategy for years to come, nd nintendo has promised it in THIS generation of games.
Your next problem is that the bit retailers have better profit margins and vendor relations. If the distributor has to choose between you getting your new Xboxes and Best buy getting them, you WILL lose.
Is it all bleak? Certainly not. Consider value-added services. Cyber-cafes make money, lots of it. You have people come in and use computers/games for $???/hr and you have a "pro shop" where they can buy their own to take home. Make it something akin to a bar where people can hang out and spend money, paying for the "ambiance." Retail is hard, and getting harder. Best of luck
People who think they know everything really piss off those of us that actually do.
The Supreme Court let this stand, so the First Amendment doesn't apply to comic books anymore and I'd imagine by extension to any medium that is seen as "for kids." The video games rating system might offer protection but I'd still think twice about it.
"MIT betrayed all of its basic principles."
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
I can offer some suggestions based on what my father discovered running his successful shop. The shop failed soon after he sold it off, due to the lack of imagination of the new owners. This is a fishmongers in the UK, but a lot of the advice is universal:
1) Publicity: get your shop noticed. Run wacky competitions, do promotions on holidays. Try to get in local press/TV news/radio. Example - my dad paid someone to dress up as a mermaid and sit on the counter welcoming customers and giving out prizes for a competition one holiday, which got a picture in the local paper, the kind of advertising you can't buy.
2) Offer service beyond what your competitors can. Become an expert in games, offer advice. My father would give out cooking ideas and advice, which helped boost return custom.
3) Sell add-ons and related goods. For fish it was white wine, Japanese seaweed etc, I'm sure there are equivalents in gaming.
4) Decor: Make the store stand out so that it's clearly not an EB. Install model castles, make the game racks look like giant consoles, whatever, but differentiate yourself.