Wednesday, March 29, 2017

Retail Apocalypse (Tradecraft)

There is much talk about the demise of retail. We have Sears, JC Penneys, Macy's, Radio Shack, K Mart, GameStop and many other big chains closing shop this year. It has been described as an apocalypse, with over 3,500 stores closing. But what's it all about and what does it have to do with specialty retailers?

The first thing to know when assessing the victims of the Apocalypse is the number of stores starting out. According to the National Retail Federation, there are 3.8 million stores. This bloodbath of end times stores therefore accounts for .09% of retailers. So why the hyperbole and rush to declare retail dead?

Business reporters are only interested in publicly traded stocks. Unless the entirety of retail were to be feeling some sort of stress, they'll focus instead on companies with well known stock tickers. Nobody cares about my store because you can't make a buck buying from selling bits of it. You can't predict the future by reading my annual report. My CEO compensation is definitely not worthy of a social justice meme. So no, this is not a condemnation of retail and I don't even think it's condemnation of the venerable shopping mall. It's a failure of UVP.

UVP is Unique Value Proposition. These stores lack one. In fact, they're so far away from a UVP, the concept of UVP isn't even used in the conversation. Unique is instead changed to Useful. They need to have a useful Value Proposition (uVP), with a small "u." While their online competitors battle it out for Unique, they struggle for relevance, for Usefulness. These legacy stores are unable to come up with a uVP, and are simply waiting to die. They are so big, so entrenched in the 20th Century, they actually take a long time to expire, like a dying star going supernova. The only question is whether they'll become white dwarfs or black holes.

The main reason they're not useful is they've failed to change with the times, something specialty retailers are especially good at. Millennial customers, in particular, are about experiences rather than acquisition of goods.  Specialty retail has embraced concepts like Third Place Theory to take the experience economy into account. Barnes & Nobles is known for Third Place too, with their in-store coffee shops, but with a 30,000 square foot store footprint, there is no way to use specialty store tactics with big box real estate. If Barnes & Nobles was 5,000 square feet, sure, but they're doomed with 30K and a business model that can't adapt fast enough.

So no, retail is not dead. Business reporters like to report to their investor community, meaning we (the public) are not the target audience for apocalyptic visions of the future. As specialty retailers we need to stay nimble, stay useful, but aim for unique.

Sunday, March 19, 2017

Competition (Tradecraft)

Here's the thing about competition, a well run, well rounded store is shielded from direct competition. You can't generally steal customers. It doesn't work that way. If you could steal customers, game store owners would have endless online debates about their favorite Zippo lighter style rather than preferred brand of point of sale machine. The tool would be fire. Just burn down your competitors store and voila! Instant customer base. Instead, we see this figurative burning down, petty back and forth bickering and low ball giveaway events, between small stores.

This is because a poorly run, narrowly focused store is entirely vulnerable to having customers stolen. Customers will be taken and their store will die. If all they sell is Magic, their tool chest consist of a calendar and price. That's not even a tool belt, more like a pair of hammers in your back pocket.

So the same customer base runs back and forth between stores as each store owner races to the bottom with customer appreciation events for unappreciative customers. Here's a tip, run customer appreciation events after customers have shown loyalty to your store, rather than trying to constantly bribe them. What a clown show.

I know all about this because we experienced the clown show first hand. I had competitors open to steal my customers because of their superior pair of hammers. However, because we were well rounded, and sold many other things, we shrugged and waited for them to implode. When they imploded, the competitive Magic community came back (which were really perhaps half the people who bought Magic). You can't build a game store with a pair of hammers.

If you're looking for a solution to this problem, it's pretty clear. Your construction skills are weak. It's not about pounding with your hammer. A solidly built, diversified game store is built to weather the storm of the ups and downs of the game trade, as games and customers ebb and flow. If the need to succeed at any one game or the need to cater to any one community is enough to sink your store, you are a slave. Your stated goal to run a small business and be independent is a lie. Put down the hammers and start building value for yourself and your customers.

Thursday, March 16, 2017

A Path To A Middle Class Income In Five Years

I've been writing the book since the last blog post. As you might expect, it's a lot of work. It is not a bunch of blog posts turned into a book, although the core of it is a re-written and expanded section on how to start a game store, complete with numbers and examples.

A bunch of meat is then hung off those bones, such as marketing, selling online, third place theory and the cafe model, and similar themes you've probably read here before, completely re-written. A blog post is a nugget of ideas, but it's rarely a starting point for writing a book chapter. In fact, it has messed up my writing style quite a bit. Lets just say I'm brief.

The book is essentially two parts, a how-to book on opening a successful game store, and a narrative portion of my personal experiences doing so. This is stuff I only share with close friends and fellow store owners. According to my buddy who has written a personal finance book, the book could have the sub title: A path to a middle class income in five years. That's kind of sexy in a mass market way. You've got a path towards a real, sustainable future in this book, and you've got a narrative that hopefully makes you think twice before starting. Or maybe I'm just crazy and you'll see that on display.

The narrative parts are the behind the scenes of starting a small business, the fear and loathing, the sense of freedom, the crazy things that happen along the way. If you already own a store or are just curious about starting a small business, this narrative part is likely the appeal of the book. I honestly can't read a book on starting a business without falling asleep. The narrative portion should cure your insomnia. When I ask people outside of the trade, they want to hear more about this stuff.

I've been posting teasers on Facebook. Here are some of the sections I've written. Most have been re-written after posting, but I'll post the draft versions for now. I've completed most of the how-to and I'm about a third of the way through the narrative. Then it will likely get thrown in a blender and re-written to some degree. That's my guess. I hope to finish by the end of April so we can have a book by the end of the year. Gameplaywright is my publisher on this. They're a small publishing house in the game trade.