Knowledge is Power

knowledgeThis past week I was engaged by another retailer that’s looking to make some improvements and through a number of posts in some retailer only Facebook groups the subject of research came up.  It’s a nebulous subject that can go in different directions and take you down many paths.  I thought I’d peel back some of the layers of said onion and quasi-organize it.  This is not comprehensive, I’m not writing a book.  Gary Ray, owner of Black Diamond Games is though, so wait for that.  I’ll be buying it. The man is a wealth of information and to get it all for 20 bucks is a steal.

First off, Google is your friend.  The ability to use search engines efficiently is an actual skill and while it can be learned, experience tells me that some people will just never figure it out.  Second, I’m not going to discuss more advanced topics like SWOT analysis (one more thing you can ask Google).

BEFORE YOU OPEN

Screen Shot 2017-07-05 at 11.37.51 PMI’m going to make a terrible assumption here because I don’t want to drone on about having money.  I’m going to assume you’ve got the requisite funds or that you can borrow them at favorable terms.  Some combination of cash/inventory in the neighborhood of 100k is what I recommend.  Don’t open a store with $5000 and a binder of Magic Cards.

There’s a ton of research to do before you ever open your doors for business but where do you start?  I think logically the best place to begin is to pull out a map of the area you’re considering opening your business in.  Don’t limit yourself to the strip mall 3 blocks from your house.  Think about how far you’re willing to drive to and from your business everyday and then draw a circle around your residence.  Maybe you’re willing to move, in that case you might have multiple circles on your map.  Keep in mind, I’m still talking about 1 geography.  It may be as small as one side of your County or Parish or as large as say, Southeastern Louisiana.  Is your circle less than 50 miles in diameter?  If it is, then make it 50 so you can use it to track all the stores within 25 miles of your intended target audience.  I’m a little OCD about it but I could tell you the name and location of every active game and comic store in Louisiana, Southern Mississippi, and as far east as Mobile.

TALK WITH OTHER RETAILERS

It should go without saying that you should visit as many comic and game stores as you possibly can to get ideas.  It’s likely that those well outside of your intended market will be willing to share ideas and answer your questions.  There are also some retailers that write excellent blogs that I follow regularly.  These include Gary Ray (Quest for Fun!), Michael Bahr (DSGCW: The Backstage Pass), Brian Hibbs (Tilting at Windmills), and Paul Simer (Too Lazy to Fail).  They write much more frequently than I can and if you read them all you’ll get an excellent view of what it means to be a retailer.

FIND & UNDERSTAND YOUR COMPETITION

Use resources like Comic Shop Locator, WoTC’s Store Locator, or one of many other publisher specific store locators (Games Workshop, Privateer Press, etc.) to locate potential competitors.  Think about what other local stores might overlap or compete with you (toy stores, sports cards shops, book stores, 2nd & Charles, GameStop, etc.).  Mark each of them on your map and make notes that are relevant to each store – their strengths and weaknesses, what verticals they’re in and so on.  Make a point to visit any potential direct competitors.  Do they have good reputations?  Are they well stocked?  Do they constantly run sales (a tell tale sign they’re struggling)?  Do they keep their hours?  What kind of ratings do they have on Facebook, Google, Yelp, etc.?  What’s their value proposition?

DEMOGRAPHICS MATTER

What do I mean by that?  You need to obtain recent statistical data for your chosen geography.  What’s the population of the city?  County?  Median household income?  Is it growing or shrinking?  Combining this data with information about your competition and doing some analysis will provide you with enough data to move decide if it’s worth continuing to conduct research.  There’s generally no hard and fast thumbs up/down at this point.  What will most likely be pointed out is if there’s a definite “no, this is not a good idea”.  There’s a ton of gray area and not a lot of scenarios that will yield an obvious “yes”.

What if your research tells you it’s not a good idea to open where you’re considering?  Well, you can choose a different market or you can go talk to the existing business owners about their interest in selling to you.  Please, don’t assume you can do it better.  As Admiral Akbar would say, it’s a trap.  While in theory it may be true, owning and operating your own business is a lot more difficult than getting up every day and going to work for someone else.  A significant amount of new comic and game stores don’t make it 2 years so don’t assume you won’t be in that number.  Be objective in your self evaluation.  Don’t assume you can pilfer the customers of your soon-to-be competitors.  If you don’t have a plan to create new customers, make one.

WHAT DO I SELL?dwight kiss

I’m a big fan of KISS.  The acronym, not the band.  ”Keep it simple, stupid” are words to live by.  I’d like to say it’s likely you’re plugged into the local community in some way so you have a decent idea of what the core of your business should be.  I’d really like to say that, but my experience says that’s 50/50 at best.  If you are, great, choose 3-5 lines to focus on to start your business.  Resist the urge to be all things to all people until you’ve established yourself and have the necessary resources to deliver.  If you’re not plugged into the community, get there.  Join local Facebook groups, learn about what locals are into.  The question isn’t “What do I want to focus on?”  It’s “What is the community interested in?”

I’m skipping a lot of stuff we might research in the interest of moving on to things more currently on my mind.  Things I’m completely leaving in your hands (practice your Google Fu):

  • Where do I get fixtures?
  • What POS should I get? CC processor?
  • What distributors should I deal with?
  • How much should I pay for people’s stuff?
  • How do I build a business plan?
  • How do I get a loan?
  • Should I crowdfund my business?  (I’ll give you this one.  No, crowdfunding a new retail business fails basically always.)
  • How do I negotiate a lease?
  • How do I lay out my store?
  • Soooooooo many other questions.

HOW DO I PICK NEW PRODUCT LINES?

You start with observing customer habits and listening to their requests.  One or two requests doesn’t mean much, but when you have half a dozen people asking for something it’s worth looking into.  Does it make sense to carry it?  What kind of margin will it yield?  Will it have staying power?  What about a steady supply chain?  Can my existing staff support it?  Does the publisher support retail or do they allow their product to be devalued?  That last one can be tricky because Wizards of the Coast does both.

WHAT ABOUT NEW VERTICALS?HuntBros

What’s the difference between a product line and a vertical?  Comics, miniatures, or CCGs are verticals.  Magic the Gathering, Guildball, and DC Comics are product lines.  This is the gist of the question I was asked recently in response to posting photos of the kitchen we just installed at our store.  Why a kitchen you say?  Well, so we could capture all the food business we’ve been missing out on.  We’re also firm believers in the Third Place Theory.  But that’s a whole new business!  Yes, it is.  We already operate more than one business under our roof – comics and games.  The business side of comics is nothing like games.  And speaking of comics, it’s more a complicated business than games so you probably have a better chance being successful if you’re a comic store that’s interested in selling games than vice versa.  We’re not stopping at food either, we have plans to start buying/selling used video games later this year.

Understanding your limits and trying to find a good fit within those limits is where your research begins when considering a whole new vertical.  We’ve never been involved in owning or managing a restaurant.  We also didn’t want to add a vertical that would require an entire new staff so traditional options were out.  We didn’t want employees making sandwiches, salads, or fancy coffee all day.  If you are interested in those things, talk to Gary Sproul at The Haunted Game Cafe in Fort Collins, CO.  He does a great job with things I would fail at horribly.  We wanted food that could be prepared by our existing staff in minutes but wasn’t going to be seen as inferior by our customers.  One where we’d only need additional staff at peak sales times.  Hunt Brothers Pizza is perfect for that.  It’s typically sold at gas stations and bowling alleys, it’s reasonably priced and the margin is appropriate for the level of effort.  Also, if you haven’t had it, it’s really good pizza.  And who doesn’t love pizza?

-Steve