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40K and its fluff have a strong resonance with a lot of gamers. That is what has let GW get away with their pricing and in some areas low quality for so long. If people want to play 40K with 40K models rather than another background and models that are cheaper and better, then they apparently are prepared to pay high prices for the official books and kits.

How much is that due to the strength of the IP versus the ubiquity of the game?

Or the fact that for a long time, it was the only game in town?

It's not hard to inflate the value of 40k, and imagine it as 'all that, and a bag of chips' when it's all you know/are familiar with, and when you've consequently overinvested in that one ip as a result..

Well, 40K is a Jonny come lately for historicals players.

It seemed to grab the imagination of a new audience for which it was perhaps their first exposure to tabletop wargames. It was in my opinion sustained for a long time by those people and the other newcomers they brought in.

However this thread is about GW, not 40K. I don't think WHFB or 40K could have grown so large without the GW retail chain's support. But GW's retail chain perhaps cannot live off only WHFB and 40K.

 Kilkrazy wrote:
But GW's retail chain perhaps cannot live off only WHFB and 40K.

To be honest, I don't think the retail chain is able to survive management's decision to marginalize it. The current structure is a model that will likely transition GW out of direct retail, if management isn't completely stupid that is.

Edit:
Direct, physical retail I mean as web sales are a form of direct retail.

GW is pathetically mismanaged.

So much so, in fact, that it makes me wonder if anyone in their corporate division has even seen a business school.

Their retail section is losing money. As in, it actually has a deficit. Not a huge one, but still. Their entire profits are more or less equally distributed between trade accounts (i.e., sales to independent retailers) and online sales.

That their 'hobby centres' are losing money is not the end of the world. Look at Apple Stores, for example. Super expensive locations and a horde of staff. I can't be bothered to look at Apple's financial reports, but I'd gladly bet their stores are losing money. But, that loss isn't really a loss. It's advertising expenses. You spend an hour talking to some dude in a blue t-shirt, then order your iPhone from some online retailer having a sale? Great. You're meeting up with your friends downtown? Where do you meet? Oh, on Nanjing East Rd, in front of the Apple Store. Good times.

What does GW do? All of the wrong things.

They want repeat customers to buy from GW's own online store instead of wherever it is they're buying. Of course. Higher margins. Any company would want that. No problem so far.

They remove availability of kits from physical stores to direct only (more than 1000 of them). Nothing wrong with this. You can't have low selling products taking up valuable shelf space. Of course, the idea of restructuring your production strategy when you, as a small/mid-size company, have 1000+ products that aren't selling enough to justify their space on the shelves seems like it's to complicated to understand for them.

Their loss-operating stores? Write it off as advertising expenses? Hell no! That gak is otiose in a niche. Better run away from the high street, move to one-man-stores, and count on that to provide growth. Wait... Growth? Yep, their stated business strategy is that divestment in location and reduction in staff (and opening hours) will lead to growth. It seems like they've forgotten about the problems of central overheads and shrinking revenue, with regards to that growth of theirs. Nevermind the decreasing revenue channels through new customers being led to the high margin outlets (online store) through outreach (bnc stores).

Hey ho! But there's still the trade accounts, right? One third of revenue, half of the profits. Let's make sure to make them all hate you! [insert the 'Haha! Business!' meme here] Micromanaging trade accounts, severing ties with outreach-potential-rich partners (stores that take in a small percentage of their revenue from GW products, and the rest from products with a similar target market). Choo-choo! Let's piss off an entire sales region while we're at it! Losing 20% revenue there two years in a row? Otiose! Pokemon! Pogs!

And then there's the products themselves.
You know these apologicisms GW white knights throw around on the internet? "Of course they nerfed the old models and gave the new stuff super-OP rules! GW's a business, man! They need to make money!" Or; "Screw balance, you WAAC loser, 40k isn't about competitive play, it's about forging the narrative!" And, you know how they recalled a bunch of Dreadfleet (and whatever other failures they've brought out) for destruction instead of having a massive sale? Or how they never have any sales ever? Yeah. To avoid devaluing their products. GW do both these things simultaneously. Can you see the paradox? They're willfully forgoing revenue to avoid product devaluation ('cause it's a Space Marine Ferrarri, bro), which is fine on its own, while devaluing their product through purposefully making it inferior.

If you could ask any super-successful business-mogul what the first rule of business is, what would they say? Not specifically about their company, but just as a general question. What's the first rule of business?
Don't make it hard for your customers to do business with you?
Have a great product, have the best product?
Forget your pride, do what works?
Embrace the web?
Treat business partners, customers, manufacturers with respect and make them want you to succeed?
Understand your market, and your target audience?

These aren't cherry-picked to fit my point, these are real (well, paraphrased) priorities from people who know what they're talking about. And they're also things GW completely and utterly fail at.

GW have great models, but let's be honest, the rules aren't exactly flawless. Why?
GW don't pay attention to market trends and what competitors are doing to be successful, nor are they allowing their trade partners to maximize their success in their own local areas. Why?
GW treat the internet as inconsequential. Why?
GW have a significant portion of their customer base and potential customer base and former customer base hating them. Why?
Market research is otiose in a niche. Jibber-jabber! Wham-wham! Business! "Our customers' hobby is purchasing our product." Brilliance, straight from the Little Dumb Book of Merrett, under oath.

@Thud.
Customers,and potential customers do not 'hate ' GW.

Some are frustrated with the stupid way Kirby and co do business.

Some are angry that incompetent corporate managers are destroying the game and hobby they are/were heavily invested in.
With short sighted short term money grabs that are destroying the long term future of the GW games, the GW hobby and GW plcs long term future.

Some take offence at the way GW plc attack the fan sites and independent retailers that want to support and promote GW products.
Many are ashamed to deal with GW after the Spots the Space Marine fiasco.

However, most are just disconnected from GWs '..we sell toy soldiers to children.. ' corporate mind set.
And or dejected by the way GW treat customers as 'a necessary evil that holds the money they want to take.'

In sort they treat GW with a similar level of apathy and contempt , GW plc show to their customers...

40k is almost totally unknown here in the states, mostly due to awful (and frankly non existent) marketing and poor web presence.

You can't make that sort of statement without data to back it up, I'm afraid. Otherwise it's simply anecdotal and subjective, and given both the numbers and distances involved in assessing the impact anything has in the States, essentially meaningless.

I mean, I could say that everyone I know knows about GW/Warhammer, because most of them have some inkling I'm involved with it, but it doesn't follow that this scales up to a national picture.

I'm by no means saying you're wrong, but it's an unsupported statement with no hard info to back it up.

I'll second minimal general knowledge of Games workshop and 40k/Fantasy stateside. Considering people that I didn't tell about the hobby very few people in my entire life have known about it, very few could have produced or recognized the name Games Workshop. I've lived in NY and WI and noticed no difference. I would be shocked if greater than 1% in the US recognized 40k and or Games Workshop.

Given how often people mistake GW stores for video game stores, that sorta says enough about whether they're a household name.

In my own experience, I found that Warhammer is a name that was vaguely known in the UK, but Games Workshop itself definitely was not. So far, here in Australia, I've found that neither are particularly well known. Anecdotal, aye, but it does suggest that GW/Warhammer might not be as widely known--even in the UK--as some are wanting to suggest.

The same is probably true in the UK to be fair, it is a very niche product. I live in Nottingham, and not that many people are aware of it.

 Thud wrote:
Look at Apple Stores, for example. Super expensive locations and a horde of staff. I can't be bothered to look at Apple's financial reports, but I'd gladly bet their stores are losing money.

I would take that bet and win. Apple stores are filthy profitable (if I remember correctly they are the most profitable stores in the world) for them and the genius bar gives people confidence to buy Apple's stuff because they get free tech support included (even without the add on insurance).

But overall I agree with what you said. I read a study some time ago that compared retail store performance around the 2008 depression (± a few years) and the stores that slimed down essentially lost profitability (not matter the industry) because people didn't get the service they are used from stores and spent their money elsewhere. Stores that stayed the course or even increased their employee count became more profitable.

Of course of you are GW and need to cut expenses in the short term then you can't invest into your stores for the long term.

Akragth wrote:
Given how often people mistake GW stores for video game stores, that sorta says enough about whether they're a household name.

Well if GW goes forward with their store re-branding policy, customers will never have to worry about wandering into a store that doesn't have what they're looking for!

"What do you mean you don't sell any warhammers? How else am I supposed to defeat the Targaryens and take the Iron Throne for myself!?"

 Thud wrote:
GW is pathetically mismanaged.

So much so, in fact, that it makes me wonder if anyone in their corporate division has even seen a business school. ...

Possibly. They may have also seen The Producers in either its play and/or movie format.
There comes a point when Hanlon's Razor gives too much benefit of the doubt.

 Thud wrote:
Otiose! Pokemon! Pogs!

. Jibber-jabber! Wham-wham! Business!

I was already guffawing whilst reading the rest of your post Thrud but these two lines both sent me into a maniacal cackle which I am glad a customer did not witness. Thanx for the (maniacal) laugh.
EXALTED!

You're not the only one, mind you kirby is doing his laughing all the way to the bank.

28th of july, eh? Seems a bit late compared to normal, oh well. I'm expecting revenue to be down again, continuing the diagonal line down it has been for the last couple years. The thing is, the cost cutting has done wonders for propping up the bottom line, and barring anymore 4million websites their profit will look tidy again. Not good for the long-term health of the business, but who's interested in that, really?

Maybe so they can say something about the WHF Reboot from the 4th, to say how strong the upcoming year looks?

Their FYE was 31st May, same as always.

It does take time to prepare the report, this year's isn't noticeably later than other recent reports. Last years was uploaded on the 29th.

Then we'll get to hear "but they're still making a profit! So...everything is ok. "
If a company is continuing to go down they either fail, level out or reverse. GW shows no signs of the latter two seeing as how they keep doing the same things without understanding anything on or around them

They seem content to try to get everything to fit within the company's four walls because any money not being handed to them directly by a consumer is competition.

"Success" by their main measure is dividends.
As long as they can do that, all is well.

You look at the comments in the financial report and all boils down to "Everything is going as planned and if what is planned is not that good, it is due to <initiate inarguable excuse generator> global warming <end> so not our fault."

<edit> An evil part of me came up with the thought: If you manage to get most of your sales all directly, is it not easier to cook the books if you want to?
Not saying they do, just that the option becomes a little more viable or tempting...

Book cookery would depend on the independent external auditors being fooled into passing the accounts. I very much doubt they cook the books. They do change the way they report fairly frequently, for instance last year they stopped reporting on a regional basis and started to report in channel verticals. This was justified by the elimination of the regional HQs and centralisation at Nottingham, which is not unreasonable but it does deprive the investor of information about where things are going well or badly.

Auditing's really about checking the principles of how you collate data are legal. Of course they spot check cuts of it, but it generally lacks enough depth to find something you're deliberately trying to hide unless it's pretty big and obvious (and I did work for a company where the FD got censored by whichever accounting body he was a member of for trying it on).

If the auditors feel that the construction of the accounts that you're drawing your shareholders' report from is sound, in all likelihood the report itself will get a pass.

I've always felt that if you restate data material to understanding the company's performance, you should be legally required to present 5 years of restated data at a minimum to allow shareholders a chance to understand meaningful trends.

Has anyone ever done an analysis of what would happen if the GW suddenly started dropping its prices back to, say, year 2000 levels?

Would the increased business make up for the potential losses? Would business actually increase at all? I'm guessing it probably would.

I read somewhere that a true businessman will look for fewer, higher value sales than lots of small, cheap sales. But in the UK, the cheap supermarkets selling crap quality products, such as Aldi and Lidl (it's not all crap by any means but it certainly isn't spectacular), are hugely outperforming Morrisons and Tesco, whose quality, and therefore prices, are noticeably higher. The smaller supermarkets are paying staff up to £10 per hour for sitting on a checkout, while Morrisons is not replacing staff who leave and Tesco's expansion plans are up a Snotling's arse.

Whether you look for fewer, more expensive sales, or higher volume, but lower price depends upon the market you are looking for, as well as the product you provide.

It is this dichotomy that puts GW at odds with itself.

It claims to want to wholly dominate the gaming market, yet at the same time claiming it wishes to be solely about providing luxury high-end collectables.

The Gamer Market is SOLELY about market saturation. It about selling at as high a volume as possible.

The Collector's Market is primarily about providing as high-end goods as possible.

GW claims to simultaneously be both of these while fulfilling neither goal.

It neither provides inexpensive, yet quality, goods to saturate a market, nor does it provide the best possible quality good for a luxury collector's market.

But in answer to your question, simple optimization algorithms would definitively answer the question of what would happen if GW reduced their prices IFF they did any market research.

MOST companies do such research twice a year to determine price adjustments.

HOWEVER... All of that aside... The basic assumptions of Price Optimization Algorithms tend to support the claim that reducing their prices slightly (just returning to selling a full 10 Marines per box, or 24 Infantry in their Fantasy lines) would more than make up for the reduced returns per item.

MB

 NoPoet wrote:
Has anyone ever done an analysis of what would happen if the GW suddenly started dropping its prices back to, say, year 2000 levels?

Would the increased business make up for the potential losses? Would business actually increase at all? I'm guessing it probably would.

Supposedly, GW have confirmed for themselves by releasing similar kits in different price points that the price doesn't really make a significant difference to sales.


Whether or not that confirmation is actually backed up by the data would depend on whether or not they also took into consideration all of the other reasons a particular kit might or might not sell, and the way those reasons differ between different kits...

 insaniak wrote:

Supposedly, GW have confirmed for themselves by releasing similar kits in different price points that the price doesn't really make a significant difference to sales.

Wasn't that something along the lines of, making cold ones a bit cheaper but leaving most of the rest of the army to cost a bomb?

So, have we started a pool about what kind of interesting statements might be in the next preamble?

The last one included the SAT word, "otiose." (I'm certain that 90%+ had to look that one up. I did, and I ranked in the 99th percentile on the verbal section of my GMAT last year.)

Any wagers on what sort of bombasticisms, hyperbole, or vocabulary test words it might include?

Saldiven wrote:
So, have we started a pool about what kind of interesting statements might be in the next preamble?

The last one included the SAT word, "otiose." (I'm certain that 90%+ had to look that one up. I did, and I ranked in the 99th percentile on the verbal section of my GMAT last year.)

Any wagers on what sort of bombasticisms, hyperbole, or vocabulary test words it might include?

"Our customers, with regards to our gaming rules, might engage in floccinaucinihilipilification, but is it true? Digimon withered and died, but Dylan went electric. Ding-ding! Another great year!"

- Kirbz