Derived Demand and the Collapse of Hastings

Derived demand is the concept that business make purchases because of demand for a product or service that is caused by another source. In its basic form, stores buy merchandise for resale that they believe their customers want to purchase. This is why one store stocks WarMachine while another carries Flames of War, while one store has a fantastic selection of independent graphic novels, and another has almost none. Stores purchase products based on what their customers tell them they want by what they purchase.

Case in point Cardfight Vanguard. A number of stores in the St. Louis area do well with it. We do not. I think we have sold one pack in the past 2 months. Every once in awhile we get someone who asks for tournaments and we tell them that we will happily host them when sales show there is a demand for them. So far, demand has not justified any more support for the game. We would like to run tournaments for it and Force of Will and DBZ and Arkham Horror and Flames of War etc. but the sales for them just don't justify us putting in the effort. 

Derived demand is one of the problems that led to Hasting'sbankruptcy. As I understand it, headquarters ordered much of the product for the individual stores and did not take into consideration individual demand for pop culture products, especially POP figures and comics, by customers at the stores. Sales of those need very close monitoring else a store can develop a bad case of inventory creep, with product sitting on the shelf instead of turning into cash. A wall of POP figures looks impressive but each one represents money tied up in inventory instead of in the bank account.

Derived demand is also the driving force determining whether a store offers a large number of tables for gaming, with ameninties such as timers, play mats and store provided terrain for miniatures, or just a single table with half a dozen chairs at the back of the store. If customers come in wanting to use playspace, and sales justify making the space available for it, stores will provide the space and upgrade it based on customer demand. Of course, if customers come in and ask for play space but do not purchase the related product to support it, the store will reduce or even do away with tables, opting to use the space to display product and/or services for which there is more demand. It all comes back to the customer.

The Power of the Package

I had the opportunity to try a game designer’s newish card games earlier this month. The games played smoothly and in general, I liked the card art. However, I opted not to bring them in for one simple reason:  the only packaging was a strip of plastic shrinkwrapped around them holding the cards in place. No box, no clamshell, nothing, so I passed on it.  If you want to sell any product (with the possible exception of live animals), you need packaging.

Packaging serves two basic purposes: functional and promotional.  The functional purposes of packaging are to allow the customer to transport it, protect its contents and give needed information about them.

Consider consumer products. Could you transport liquid laundry detergent or toothpaste home from the store if it did not come in a bottle or tube? This is the first function of the package, to hold the contents together conveniently. While carrying home an RPG like 13^th Age or FATE is relatively easy (though try getting one home without that handy binding), imagine taking home a board game like Settlers of Catan or Zombies! without the box. Pieces and cards all over the place!

The second thing the package does is protect the contents. Even something as simple as a deck of Once Upon a Time cards needs a package. If you just put them out on the shelf, they will get dirty, shelfworn, even torn. The box, or clamshell, or case, protects them from normal damage.

The third functional thing the package does is provide information about the contents. In the case of toothpaste, the customer wants to know how many ounces, is this tartar control or whitening formula, does it contain fluoride? Consumer protection laws for consumable items require a list of ingredients as well. You find that information on the package. Though ingredients are not necessary, in the case of a game, the customer wants some basic information: how many people can play, what ages are suitable, how long should a typical game take, what is inside the package?  This last is important because the customer typically cannot open the box to see the contents and stores may not want to open it if they do not have a shrinkwrap machine (If a store does not have a shrinkwrapping machine and the customer decides not to buy, the opened game is now worth less in the eyes of the next customer).

In terms of promotion, packaging can do two main things: make your product stand out on the shelf and sell it to the customer. Steve Jackson Games is a prime example of using packaging to make its products stand out, purely though box size. As I mentioned in previous columns, I used to think SJG was wrong for packaging Munckin in such a large box. Time proved me wrong and over the years, SJG has moved away from the small tuck boxes in which it packaged Chez Geek and Illuminati. Today, those games, and others, come in boxes the size of the Munchkin box, the easier to stand out on the shelf.

The packaging also should sell the product to the consumer. Tell them why they should buy it, why they are going to have fun playing it, how play works. While the FLGS probably has someone who can tell the customer about the product, if a game makes it to the shelf of a Target or B&N, no staffer there will work to sell it.  The poor game package is on its own. Bland doesn’t attract attention, bright and attention getting does.

How To Get Your Name Out There

WOTC has been doing a pretty good job of weekly disseminating both basic and novel ideas used by other stores to keep their customers coming back and making customers feel special. However,  even though it is far easier to generate additional sales from existing customers, at some point you need to get your name out in front of new potential customers and get them into the store. Without a flow of new customers, a store will eventually tap out its existing customer base and see flatlined sales. I wanted to suggest three ways to get your name in front of new customers. As a savvy store owner (or publisher) you are likely already but just in case you’re not:

1.       Social Media—the great thing about social media is that it is free, to start. Set up an account on Facebook, Twitter, YouTube, Pinterest, maybe even Vine, Snapchap and Instagram.  Unfortunately, due to the ways in which the various social media sources have tweaked their software, you now really do have to spend money in order to get your name and posts out in front of potential customers. The great thing about social media it that you start out for as little as 5 bucks to boost a Facebook post and have a lot more control over who will see it than you would with advertising in traditional formats. Facebook, and other forms of social media, allow you to have friends and friends of friends see your boosted posts or you can keep them from seeing them and spend your money to reach a targeted market that’s not already familiar with your company. I know stores spending 4 figures just on monthly boosting of social media.

2.       Join Civic Organizations—Become a member of organizations like your local Chamber of Commerce or Rotary Club or Kiwanis or Jaycees or Main Street. Not only do they work to better the community, and he better your community is doing , the better your business will do, but becoming a member allows you to take advantage of the services the organization offers. For example, as a member of our local Chamber of Commerce, I can send out promotions and notices to all other Chamber members , many of whom would have no idea what the store sells. Also,  if you have some sort of negative event take place, a position as a recognized member of the local community  helps mitigate the effects of bad publicity.

3.       Press Releases—The local media is always looking for local news and your store (or company) is newsworthy, whether you are hosting an event, are hiring new staff or even have a list of the top 5 games in your community for the year. This last one is one we sent out and we got a spot on local TV as well as mentions in two local papers, all for about half an hour’s work and another 5 minutes or so emailing them to the local media. Remember, you may not follow local news much but there are a lot of people that do, people who may not know you exist but have money to spend on what you are selling. Don’t know how to write a press release? Search for “sample press release” on the interwebs or hire a local journalism student to write one for you.

Kickstarter Retail Model

This week's ICV2 column looks at the increasing number of companies including a retaier level in their Kickstarter campaigns.

GAMA Trade Show

This week's ICV2 column looks at some things of note about this year's GAMA Trade Show as well as some marketing thoughts on Route 66.

Selling More Stuff

This week's ICV2 column looks at ways to sell more stuff in stores.

Girl Scout Cookies

The Girl Scouts will be at the store on Saturday selling cookies from 11 a.m. to 3 p.m. so stop by and satisfy your thin mint craving. The store will donate 5% of their total sales to the Girl Scouts so if they sell $400 in cookies, we will donate an additional $20 to the group.

Three Seminars I Want to catch at the GAMA Trade Show

This week's ICV2 column looks at next week's GAMA Trade Show

Yes, Gloomhaven is Worth That Much

In case you missed it, Gloomhaven released in verrrrry limited quantities about two weeks or so. The people who backed it on Kickstarter got their copies and then a fairly limited number of copies of the game made it into distribution with an allocation of less than 10%. Meaning that if you ordered 10 copies, a store could reasonably expect to get one.

Currently, unopened copies are selling online for anywhere from $250 to $500 for a game with an MSRP of $120. Are people getting ripped off? No, for two reasons:

Reason #1:  Supply and Demand. As noted above, there is a very limited number of copies of the game available for sale and the law of supply tells us that, when there is a restricted supply, the price increases, as long as there is sufficient demand to drive the price up.

Reason #2:  Nobody is making anyone buy Gloomhaven. The people paying the increased price are doing so because they feel owning the game is a better use of their money than doing other things with it. If you don't like the price, you don't have to buy the game.