Thanks for the compliment, now buy something!

I know some of you appreciate me telling you when I have a particularly wonkish entry, so this one is mostly about business.


So how is it that I've managed to create the store I like, and yet have it perform so lacklusterly sometimes? How can I have a store that so many people find intriguing enough to compliment me, and yet have so few of the same people buying from me?

I think it's because we're off the beaten track, out of the mainstream. The same thing that intrigues everyone and so interests me, is the same thing that most people aren't interested enough to buy.

Because if it was product that was in the mainstream, they could find it at the mass market outlets. (Comics sell to a very small percentage of the population -- but that's why I'm the only guy selling them.)

The reason I sell the "out of the mainstream" material, is because it's the only material that is left in the marketplace that I can realistically sell. It's what the market has given me.

If it was just price, I think I could compete. I could get within shouting distance of the mass market prices, and make up for it with service, selection, convenience and knowledge. But pricing isn't it.

It's a much bigger fabric of intertwining advantages that the manufacturers have given to the mass market. Most people don't even seem aware of this. They think it's all about volume discounting and more efficiency and the bigger size. They think that independents haven't been able to compete, and thus don't deserve to survive.

But it isn't a level playing field. Not even close.

I repeat, it isn't about the price.

The only way I know to explain this, is to use a couple of products as examples.

People come into my store all the time looking for Marvel toys. You'd think Spider-man and Hulk and Daredevil and Wolverine toys would be a natural fit, right? I carry Marvel comics, and I carry toys.

So here's the problem. One, admittedly, is price. I'm paying about the same price that the mass market sells the same toy. But, as I said, I could compete if that's all it was. I'd accept a smaller margin and be within acceptable range. Say, sell a toy a chain store has for 5.99 for 7.99. A couple dollars difference.

But....I know from experience that I'm likely to get that case of toys two to three months AFTER it's already shown up in the mainstream marketplace.

Secondly, every case of toys has twelve figures. I have no choice as to what figures I get, or what quantities. There may be 6 figures available, overall, but I may get 1 each of 3 of them, 3 each of 3 of them of them, and none of two of them. At random. (In the last case of Lord of the Rings toys, I got 6 Gollum toys, which no one wanted at the time.)

Now if I'm a mass market store, if I get 10 cases those numbers might even out. Me? I can afford one case, maybe two.

But actually, for the mass market it doesn't matter how uneven the distribution. Because at the end of the selling period, they are either given a credit for unsold toys, which they can then blow out for a further profit, or they send them back.

So....assuming I've accepted the smaller profit margin, I need to sell about 9 or 10 out of the 12 figures in every case just to break even.

As I said, the toys come in randomly and vary from series to series, but a good rule of thumb is that out of every case, 3 toys are sure sellers, 3 toys are probable sellers, 3 toys are possible sellers, and 3 toys are real dogs which will take years to sell if they ever do.

As I said above, it doesn't matter to the chain stores -- they put all the toys out for the same price, so Spider-man costs the same as the Taskmaster toy.

What ends up happening, of course, is the Spider-man and Hulk and Daredevil toys sell instantly, and the rest become what is known in the trade as "Shelf-Huggers."

The mass marketers just apply the credit for the unsold toys to the next wave of toys, which they get in three months before me, and I'm still sitting on the last batch of shelf-huggers.

I have figured out only one way to fight this -- charge more for the better figures. So now, the price differential is 5.99 versus 14.99, or something. And even that only brings me to a break-even situation. And makes us look bad.

The only toy line I carry that I'm willing to do this with, are Star Wars toys. I get a case of 12 toys in, and there is one Yoda in there, or a Boba Fett. I put it on the wall for 19.99. Six months later, the toy can't be found anywhere, and someone may actually buy the toy from me.

And yet, I probably still have three or four toys left out of that case, and even selling Bobba Fett and Yoda for 19.99, I probaby have only broken even. So I look bad, breaking even. I do it for Star Wars, because love Star Wars and because people accept that five years after the toy came out, it might cost more.

Even if I am successful at selling all the toys, it's still less than half the margin I get on most of my product, and I'm probably better off using the cash, space, time and energy selling other stuff.

I'm not even talking about the shipping, credit terms, and other advantages the mass market has.

But even all the above would be something I think I could compete with, at least some of the time, except for one thing -- Exclusives.

Exclusives come in two flavors. One is, a unique item only offered to that outlet. And secondly, unique packaging only offered to that outlet.

Packaging is important. If I have a box that looks exactly like a box in a chain store but which costs 5 times more money, which do you think Grandma is going to buy? She's not going to look to see that there is only 20% of the packs.

Or that I have to pay 5 times as much, for the privilege of carrying a the minimum amount.

The best example of exclusivity I have is an old one, back when Fleer was first selling basketball cards. They had packs that you could buy at the mass market that had "exclusive" Rookie Sensations. For the hobby, we had the "exclusive" Foreign Stars.

So you could buy from a grocery store, a Rookie Sensation Kobe Bryant, or you could buy from me, a Foreign Star Detlef Schremf. You can imagine how that worked out.

A really good example of both advantageous packaging and exclusivity is when Marvel -- probably my biggest supplier of material -- created Marvel Masterworks in two editions.

These were the original Spider-man, Hulk, Daredevil, etc. silver age comics everyone remembers. The comic store version was hardcover and 49.99. The softcover version was 14.99 -- and available only through Barnes and Noble. Nice.

This kind of thing isn't 'competition' unless you think bringing a knife to a gunfight is competition.

Packaging and exclusives are almost always in the favor of the chain stores. Even if they weren't, their sheer volume ends up making those the items people are looking to complete.

Not coincidentally, both of the above examples are products that generally don't have a printed Suggested Retail Price -- which means the mass market can price less and I can price more -- and it's acceptable either way.

Much harder -- if not impossible -- to carry anything above the SRP. Books and comics have suggested SRP, and that's what I sell them for. People may understand they can buy them cheaper from Costco, but they aren't usually outraged that you're selling them for regular price.

You just don't sell them much.

So that's the direction I've been moving into. Carrying mainstream product as regular price and hoping I can make enough to make it work. Because of my location, I've needed to move as close to the mainstream interests as I can get, and that has been books and boardgames.

At the same time, keeping the specialty product than no one else carries.

I think this is going to be the model for specialty stores in the future -- independents are going to need to compete both at the mainstream level, and at the same time look for niches that they can exploit.

It's a very fine line between popular and uncompetitive, and obscure and uninterested.

Competition.

Out of curiosity, I started counting the number of competitors I've had in the last 25 years, running up to the first of this year. Not counting current competitors. I came up with a quick 20.

I'm sure I could come up with more with a little thought, but these 20 stuck to my brain enough that when I leafed through the years I remembered them.

Some were more direct competitors than others; but all had some impact on my business, or competed directly with one of my product lines.

This really isn't all that many. I know at one point that Grants Pass, for instance, had something like 12 card shops. For whatever reason, this didn't happen in Bend.

O.K.

First off, I want to make clear that I had little or nothing to do with the demise of the other stores. Competition doesn't work that way.

What happens is that they siphon some of your business away, create business of their own, and then give you back a little when they close. Generally, more inconvenient than brutal.

What caused the demise of all these stores wasn't me, but their own decision-making. Mostly, their decision to open a specialty store in Bend, Oregon.

Sometimes there is enough business in a specialty to warrant a shop, but if there is that much business, then the chain-stores have jumped in, I guarantee you. The chain-stores are responsible for the demise of most small businesses, not competition from other small businesses.

If the specialty is left alone, either it isn't much of a money-maker, or it is a very difficult market to suss. Such as comics.

Mostly, though, all these specialty products, games, toys, cards, books and so on, have popularity arcs and what usually happens is that the specialty store opens toward the top of the arc.

Where the arc settles, however, is a whole nother story.

Wait a minute, you might say, Bend has grown by leaps and bounds. And I'd agree that if you have a specialty that has demand, and the town is growing, you might be successful during your arc.

But it is constantly changing.

My answer was to keep adding product lines, add specialties together, until I had a comfortable range. No one product line accounts for more than about 35% of my business right now, and most are in the 10 to 15% range. It helps smooth the rough spots.

It doesn't make me immune to competition, but it helps.

I always say, a specialty store will always beat me in the short run. Hell, if I was a magic player, I'd probably go to a store where the owner played and gave me a space to play and so on.

But I'm much more comfortable being a generalist. I may not know everything there is to know about any one product line, I may not make all possible sales in one product line, but I have a mix that seems to work.

Hell, at least 3 of the stores were doing a much better job than me when they quit.

But, well, I'm in it for the long run, and I'll adapt to whatever circumstances come around.

Competition is all right with me.

I got this comment to yesterday's reveal that my card games sales were down and my board games sales were up.

From Mark:

"I'm glad to see your game sales doing so well, but with the new game store downtown, I wonder if your boardgame sales may soon fall like your card game sales have.

Your new downtown competition does a lot more than you do to support card games (weekly in store Magic tournaments, etc). Maybe he is gaining some market share in card games.

He says he plans to do similar things with boardgames. He hasn't quite figured out which board games to stock yet (he has good graduate level stuff, but not many entry level "hooks"). If/when he does figure this out, and follows through on his plans to sponsor in-store gaming activities, I don't see much advantage you will have in this category either.

And if he ever gets a sign up ... whoa baby!"

My first response was a bit flippant:

"And here I was thinking I'd probably get a lot of the magic sales back...."

I don't want to appear threatened or defensive. (I detected a tone of aggression in his comment, but I really don't think we have to fall into a "either him or me" posture....)

I've found that the most mentally healthy way of dealing with competition, is to wish them all the luck. And to offer the hand of cooperation. I've been freely sending people his way, and I'm hoping he'll return the favor.

He has every right to open a business. I'm sympathetic to the desire. I understand why he'd want to be in downtown Bend. Life is way too short for territorial cat fights.

Because competition always arises. Always. No sense getting all worked up every time it happens. I just tend to my own knitting.

My second answer to was to say, it may turn into a a moot point since I think the Big Boys are on their way:

"By the way, I think the chainstores on are the verge of diving into this category, making it moot.

Had a guy yesterday who "Just can't Understand Why Walmart Doesn't Carry Ticket to Ride!!"

He thought they could sell them all day at 40.00 instead of my 50.00.

I'm pretty sure he's right. So...it's probably only a matter of time."

To extend that even further. If it so happens that the competition sells the hell out of boardgames, more power to them! Nothing could be better for our culture than to have families turning off their T.V.'s and video games and sitting around a table for a little friendly social interaction.

But as far as competition goes, local competition is nothing compared to the big box stores. Anything they decide to fully carry is something that then becomes difficult for me to fully carry. Simple as that.

If it happens....I'll just sell something else.

But I also think the concept of competition deserves more of a serious answer.

So here it is.

1.) It doesn't have to be a antagonistic relationship. No reason we can't co-exist. I don't believe it's a zero sum game.

2.) My experience is that competition doesn't usually take all your business - despite what the public thinks. There is usually a downturn at first, but it picks back up again after a certain time. (Same is true when they leave, by the way, there usually is just a small boost in sales, nothing more.) It's the new kid in town phenomenon, and you can't fight it. But like I said, after a certain time, probably because each store creates its own customers, sales trend back to normal.

3.) In theory, by doing what he's doing, he could create new customers, some of who will spill over to my store.

4.) Downtown business is walk-by business, mostly. I'll get a share just by being on a busy street.

5.) If you've read my blog for long, I've always maintained that specialists gain a short term advantage, but generalists will be more solid in the long run. Even if that isn't true, I'm more comfortable being a generalist.

For instance, if a store owner spends all is time and energy and space and money on Magic he can get a very good result.

But if he adds Warhammer to the mix, that adds to his time, energy, space and money commitment, as well as splitting his focus.

Add role-playing games, and the focus get split further.

Add boardgames, and it splits further.

How about cribbage and chess and such? I'm getting constant requests for them, but I don't have the room.

Like I said, nothing's easy. It all costs one way or another. If he chooses to use his space for game play instead of inventory, there are advantages and disadvantages. If I choose to use my space for inventory instead of game play, there are advantages and disadvantages.

If what he says happens, it's a fairly easy thing for me to put my attention into one of my other 8 product lines; sports cards, toys, comics, graphic novels, dvds, used books, new books, a different line of games.

Or something completely different. The world is full of compatible product. I have limited space, but not limited opportunities.

For instance, let's say that Boardgames are selling on a scale of 1 to 10 at a 9; and lets say that anime and sports cards are selling at a 7. So I chose to support boardgames to a larger extent than those other categories.

If boardgames stopped selling well, first of all I don't have to buy as much. Secondly, I can put my money behind anime and sports cards, and perhaps push them back up to an 8, say.

In other words, I'm diversified so that I always have options. I'm always keeping my eye out for other things to sell, for other opportunities. Some things get put on the back burner, some get put on the front burner.

Or I can even decide to carry another selection altogether. I've been looking even more at the Kid Robot type toys lately, for instance. Or like I said, go ahead and bring in cribbage, and chess and backgammon and such. I can think of half a dozen other things I could either bring in or support.

I was once 85% sports cards, and last month they were 2% of sales.

I'm nothing if not adaptable.

I'm hoping we can stay on friendly terms. I've been sending people his way. It's not a very pleasant experience when everyone starts taking sides.

Shop either place or both places. That retail.

5.) We all live by the same retail laws: overhead, margins, inventory, promotion, store design, etc. etc.

I've been doing it for 30 years. I'm feeling pretty good about things right now. I'm feeling pretty confident in my ability to change to fit the circumstances.

6.) Finally, What's with the sign? It's been six months...