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Mad Doc Grotsnik wrote:Actually, I think you'll find people esposuse PP being cheaper than GW as one of it's main appeals.

If I had a penny for every time 'people' said something I’d... well you get the idea. It is cheaper to play the game, because the game requires fewer figures. The cost of metal miniatures are often comparable in price when compared like for like

Mad Doc Grotsnik wrote:A single store has the same running costs a single store from a chain, depending on location. They still need Staff to, well, staff it. Electricity bills, business rates, insurance etc all the same... And most GW's will have more staff than an FLGS, so the cost is probably higher into the bargain.

I neither know what the current GW staffing levels are nor what the international average of LGS staff is, but just for you I'll go out on a limb ands say that they are comparable when balanced against average takings. Looking down the high street it is difficult for me to believe that a chain of stores has the same overheads in proportion to sales as a single store, I suspect they'd be less for a chain.

[edited for clarity]

Mad Doc Grotsnik wrote:Actually, I think you'll find people esposuse PP being cheaper than GW as one of it's main appeals.

It's been a while since I've played, but when I was doing it, 500 points was pretty normal, and could be easily bought for under $100. GW games are standard at 1750, which usually requires about $300-500. The models are often similar in price, the game is not.

Why not? They tend to have higher, as the go for prime locations. Look at GW for instance, very rarely do they end up on the main shopping street, most often it's off a side street neighbouring the main area.

The larger the chain, the better the location. The better the location, the higher the ground rent. Also, the bigger the store, the more employees and so on.

Sure, a chain can make savings on bulk buying their goods (Walmart for example with it's Stack It high, sell it cheap) but they still have higher static overheads.

I intended to put overheads in proportion to sales. I'll edit the origional post for claity.

I neither know what the current GW staffing levels are nor what the international average of LGS staff is, but just for you I'll go out on a limb ands say that they are comparable when balanced against average takings. Looking down the high street it is difficult for me to believe that a chain of stores has the same overheads in proportion to sales as a single store, I suspect they'd be less for a chain.

From my point of veiw as a owner of two stores in the US, one of which does some of the highest GW sales on the East Coast, I'd say that GW has a higher overhead than any LGS. They actually pay a higher salary on average, offer health benefits which few independent stores can manage, and put significant amounts of money into hiring, training, and drug testing, for each new employee. With a high turnover, (less than 1 year on average), they have to train a lot of new hires. GW also has to factor in the cost of administration above the store level. The costs of the pyramid of people that aren't in the stores staffing them has to be divided amongst the company and mail order. Rents, electric, and physical overhead will be similar, if not a bit higher, to your average LGS. Many independent shops are in worse locations than GW shops, and have significantly lower rents. (Less sales becuase of a poorer location, you get what you pay for. Location, location, location.)

A GW shop does have offsetting advantages in that it's cost of goods is lower than the LGS. An LGS has an overall COG, (cost of goods), of about 55%. A GW store has a COG of less than 40%, maybe quite a bit less.

An LGS sells far, far less GW than a GW store. Of course, it isn't limited to selling just GW. My stores have an overall gross higher than the two GW stores nearby, but the two GW shops sell more GW product than we do. Catch them eventually though.

Not to make you tip your hand, but do you think that the economy has affected
your sales overmuch?

Absolutely. Like any other business, if something affects our customers, it affects us.

You can break out the lost sales into a few different catagories of the people buying product:
-Customers that lose jobs, or have such a significant downturn, that they quit buying completely. Each store carries comics as well as games. With comics, we've seen half a dozen 'pull and hold' people just drop off the face of the earth. No returned calls, or they promise to come in, and never do. Lost sales going forward, and a 50-100 dollar stack of books going back on the racks. For game customers, we identified a few that quit playing, mainly because they traded in their armies and scenery for cash/credit. A lot of part time staff, especially people in the 16 to 20 age group, are being let go or given very few hours at their jobs. They come in to complain about it, and their lack of money to buy figures and paints.

-Customers cutting back, and sticking to a budget. Many cancelled pre-orders. Lots of "have to get that next month, over the limit for now". These were people that previously bought what they want, when they wanted it.

-General cutbacks due to lack of pocket money. "I need paint, I'll grab a few pots...oops, forgot I put my last 50 bucks into the gastank. sorry". Spontaneous small purchases were way down. No walking around money.

-Just not around. No money for gas, means no hanging out at the shop getting a game in, and maybe buying a few things.

Overall, October wasn't bad. Pretty even for the previous year. November sucked. Bad suckage. Even with a better than average black friday, the month was down 15% at both shops. First 10 days of Dec very flat, no buying. Finally picked up on the 11th and going strong now. If it continues strong, Dec could be a good month. I'm hearing mixed reviews from other shops, but generally, things are down, but not down like they are for some other industries.

mikhaila wrote: I'm hearing mixed reviews from other shops, but generally, things are down, but not down like they are for some other industries.

Thanks for the information Mikhaila.

This agrees with my expectations for the "most likely scenario" which I had been thinking of because it seems like in a recession that people will prioritise their hobby spending as much as they can on relatively small-but-fun items (stuff you can buy for £20 or less, as an arbitary definition of "small"), but once they run out of cash, they run out of cash and they stop buying. So "toy" companies like GW and PP and their retailers are cushioned from the worst effects of the recession (compared to say, the car manufacturing and distribution chain) but not exempt from it altogether like, say, a discount grocers.

What this means for GW's relatively fragile financial state, who knows?

Going out on a limb, I suspect that their results to 31st October, which will be published in January, should be fairly bullish - i.e. slightly up on the same 2 quarters in the previous year, but that the Q3 and Q4 results could actually tip them back into a loss for the year, overall.

The reason I say this is that GW have very little fat left to trim from their organisation, and so few savings left to make. They were gunning for improving turnover this year, but a tanking economy in the US, UK and EU will make that more difficult than ever.

To be honest though, no one really knows what the next 12-18 months holds in store for businesses in the UK and US, all we know is its likely to be BAD!

A small glimmer of hope lies in the way the £ is collapsing. This will make UK exports relatively cheap for a change. So purchases from US customers will be even more valuable to the parent customer. I suspect the full year's results will show large expansion in GW's US turnover - largely due to significant exchange rate gains. I also expect their UK turnover will continue to rise based on sales via UK-based independent retailers selling on to EU customers now that the £ has gone through the floor as well.

Mikhaila...with regard to your businesses, what sort of customer base do you have? By this I mean do you have a hard core of regulars who are on first name basis, or is it more informal, with faces you've seen before but don't really know?

I think this is one of the things which can affect takings and that. I think any fool can see that even in times of financial constraint, a loyal customer is worth two or three casual ones. The GW I worked in seems to be thriving like never before now. The Vets night are busy, the kids are less annoying (or I'm mellowing) and from what my former colleagues tell me, takings are healthy enough.

Now obviously, a GW Store has a natural advantage right here, and I was wondering how that pans out with FLGS? After all, a regular face is not necessarily a regular customer, and a regular customer is not necessarily a loyal customer, particularly when money is scarcer and bigger discounts can be had elsewhere?

My hobby funds haven't decreased, it's actually increased lately. I'm spending more on guns and ammunition to stock up than spending on GW stuff.

I know I can get more ROI on guns and ammo than GW stuff.

All I know is the world better not come to an end before I have a chance to paint some of those Forge World Dreadnaughts.

Well, it could mean something.
The banks are very cautious to provide credits over 50 Million Dollars to companies as they don't know whether they can pay back.