Michael Bahr: 3 Myths About Running An FLGS

April 25, 2018 | 3 min to read

By Michael Bahr, Managing Partner of Desert Sky Games

Everybody knows these things. How can you not know these things? Especially if you're going to run a game or comic store in the hobby trade. It's so obvious. Anyone will tell you.

 

And an awful lot of what they'll tell you is wrong.

A lot of myths have, at their root, a bad assumption about costs. Either the true cost is hidden, or the true consequences of avoiding one are. Or wishful thinking creates the expectation that some trick or gimmick can make a cost go away.

Expel such myths from your knowledge base.

Start with these three:

Myth: A point-of-sale system is a waste of money.

A POS system is essential.

Most of the retailers I talk to who don't use one cite the cost of implementing it. Or that their scale makes it unnecessary—they do everything themselves and they can manage inventory manually.

I question both of those points. But even if you assume they're true, even if you assume your small store will never scale up, even so much as adding a single employee whose transactions you need to oversee, a POS system is still essential to help create an audit trail.

An LGS owner has to be a lot of things without also being a CPA or an attorney. I have a law degree and I still work with both. Their services in conjunction with a POS system go a long way toward keeping me compliant with tax and accounting requirements in your locality.

The benefits of a POS go much further than that. In an industry where many POS solutions also process credit card transactions, administer store credit, inventory cards and so on, it is becoming increasingly difficult to lack a POS and still run a functioning business.

Myth: Rewards points programs are easy to move away from if they don't work out.

The idea of a rewards program is to make the customer's dollars go further with you than they would with the competition. It's not a new idea. Mass market implements it effectively, using huge amounts of data that we don't have access to in small specialty retail.

We also have a customer base that is younger, digitally engaged, and naturally skeptical of ultra-polished marketing techniques. They're also gamers. If you give them an earn-money game, they will play it to within an inch of its life.

And you can never make it fully go away. Give away so much as one stack of discount cards and you'll find those discount cards coming back to you over and over until the end of civilization and eventual heat death of the universe.

If you use a reward system, make it light, simple, and limited. And do all the necessary calculus to make sure it's worth it. If you're going to give away a piece of your margins, plus invest in the labor of administering it and the infrastructure to enable it, be absolutely sure you're rewarded for it.

Reminder: Customer loyalty or rewards programs can implicate a variety of legal concerns. Be sure to follow all applicable laws, ordinances, regulations and other governmental requirements and consider consulting with your attorney when creating any rewards program.

Myth: Snack and soda sales make up for discounts elsewhere.

Have you ever actually looked at the costs of concessions?

Your gross on a bottle of water is less than a dollar per transaction. The cost per unit on candy bars at wholesale clubs is around 60 cents. And labor goes into procuring them, transporting them, storing them, merchandising, selling, and replacing them. With all that, it had better be low cost-of-goods-sold!

And the biggest trap of this myth is when stores think snack and soda sales are covering for discounts on other products. As we just covered, they barely sustain themselves, let alone other subsidize product lines.

There's a good reason to stock concessions. But it's not to subsidize discounts elsewhere. It's to keep hungry players in the store. The goal is to minimize the hassle and get them to where they amount to a hedge fund, a way to build in a margin of error.

Robert Heinlein famously observed, "there ain't no such thing as a free lunch." Everything creates a cost, visible or hidden, that must be borne by somebody. If you fail to manage the entire cost of operating, those costs end up falling on you.

And that's a lot of candy bars you'll need to sell.

Michael Bahr is the managing partner of Desert Sky Games in Chandler, Arizona. He served four years as a Level 3 Judge, holds a law degree from Arizona State, and spent seven years in government health care administration.

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