A new strategy to replace B&M

[Orrinocco]

OK, so pretty much everyone seems to believe that the B&M stores are dragging GW down. I see quoted figures of 70% of their revenue / profits (people seem to mix these up which confuses the accountant in me as they are very different things) going into supporting the B&M stores.

GW say they need the stores to attract gamers in and advertise their product.

WHat I'm asking is, is there a better strategy for GW to achieve the stated goal of the B&M stores?

Would they be better off ploughing more money into supporting gaming groups, doing demos in schools and saving money on the amount of stores? Let FLGS have the fixed costs. Maybe keep a few flagship stores of their own in the very busy areas that justify them (for example, my local store seems fairly empty most of the time when I go by, so maybe should close?)

Come on, there are some very intelligent people on this forum, we must be able to come up with some good ideas *8-)

[New Cult King]

They would do very well to drop some cash on advertising in the right places. Pimp their webstore. Get the web-savvy kids involved.

[Geep]

OK, so pretty much everyone seems to believe that the B&M stores are dragging GW down.

Is there any actual proof of this? GW spends a lot on the stores- but how much revenue comes from the stores?
The answer to that is probably more difficult to work out than you'd think- It's not just a case of 'how much gets bought in store', but also how many people have been introduced to the game through a store (even if they now by through other methods).
My local GW is on a fairly commonly used walkway, and people come in all the time. Just yesterday I saw some kids walk in, completely new to the game, and they walked out of the store with almost $300AU of stuff bought by their parents. Service didn't stop at buying either- after the purchase, the staff sat down with the kids and assisted in model assembly, painting and running through a simple game. Parents were impressed and I'd ve very surprised if the don't spend at least another $300 sometime in the near future. Even if they become 'net savvy' and order from cheaper overseas places GW will at least be making some profit still.
Another nearby store sells GW stuff, Warmachine, comic books- everything really. That store is tucked away up two flights of stairs, with staff members who barely have a clue about 90% of what they sell. That store never gets casual walk-ins and I'd be very surprised if they've ever manage to enthuse kids enough that the parents will fork out a lot of money.
I don't follow the finer points of finance and business practices, but to me it seems GW's method of B&M stores, with dedicated staff, is a good idea. Of course anecdotes mean nothing, so if people have more solid numbers feel free to share.

More advertising in other ways is still probably a good idea, but it has to be done right. I can't see a TV commercial doing much other than reinforce the 'nerd' stigma. More web advertising is probably best.

[iamfanboy]

OK, let me churn the numbers for you as they existed in 2009 - that being the last year they actually STATED the split between their retail and independent store sales.

Specifically, the split was 50/50; this was gross income (not profit) mind you, meaning it was around 55m from their retail stores and 55m from their independent store sales.

Now, that year they spent 60m (yes, sixty million) pounds on their retail chain. Not their manufacture, shipping, or admin costs (those are separate), just their retail chain.

In other words, their retail chain ate up every pound from its income and even tapped into the income from the independent stores to maintain it.

A healthy portion of their gross profitability for that year came from licensing; that Warhammer MMORPG was released that year, along with another Dawn of War game.



Now, in next year's income report, they did NOT state specifically the split of gross income between independent and retail. However, that year they implemented several new income-saving measures regarding the retail chain (specifically, one-man stores), and if those had worked they would have held up the split of gross income as a sign they knew what they were doing.

They did not.

Ergo, the pie chart didn't favor their vision, so they removed it.

However, we do know that they also closed down over half of the US stores in that year as well, and the profitability from North America went from 700k to 2.6m something pounds.


It's just... all the signs are there... but it's like they don't want to read 'em. Oh well, it's fun to pick it apart from the outside anyway.


What I'd propose to 'replace' B&M isn't so much replacement as evolution. Realize that what gamers want, more than anything else, is a place to gather and play games and brag. I had plans for an internet cafe/light restaurant/gaming store for a while, but I dropped 'em when I realized that I did not want to set down roots in this town.

[lanrak]

Hi all.
From GW plc official fiscal reports.
GW plc gross margin is 76%.
This is the gross profit on product EXCLUDING retail and logistic costs.

Assuming an average logistic costing of about 10 to 15% of gross.
This leaves 60% gross profit before the cost of retail,(B&M stores ) is removed before the final net profit of less than 15%.

And as the break down of sales ,(independant retailers, B&M stores, internet.) We can assume that thier own stores are not selling more stock than these other retail methods.

IMO GW plc has missed the boat for restructuring its retail operation.
GW plc took the simple option of relying on B&M stores to isolate thier target demgraphic from the other companies selling similar items.(As they thought the internet was a passing fad!)
Unfortunatley they coupled this with increasing prices to make up for falling demand.

Now ALL potential GW customers have acess to the internet and can simply compare products and make informed decisions.
(This is why GW plc sales volumes have dropped by nearly half !)
So isolationism is NOT working, the ONLY way to return to growth is to massivley improve the value for money on GW products.
Either by massive price cuts, afforded by dropping most of the retail chain.
Or improving the gameplay in thier games.
This can be achived by having an gateway skirmish game that can build upt to the current battle games of 40k and WHFB.
(WoTR has LoTR .)

But just increasing prices to make up for falling sales volumes is NOT a viable long term option.(But may last untill Kirby gets his golden handshake!)

[bobafett_h]

GW need to significantly reduce the number of stores that they operate. The few stores they do keep, then need to be improved. The level of service, amount of range carried, room for gaming and painting and all of that needs to be increased.

On the other hand, they need to significantly start SUPPORTING independent retailers rather than treating them like scum. Sell stock to them cheaper and give them more freedom over pricing. Meanwhile, they should be providing representatives who visit these stores on a regular basis to not only provide training and sales advice to the independent staff, but to also run game demos, events and other kind of promo material and other kinds of customer service.

This is just like what Apple is doing now adays. For many many years the only way to buy Apple computers was directly from them, but now there are numerous "Apple Stores" located within other retailers (usually just a single table with a few Macbooks and a couple of iMacs on them) in addition to their own official stores. GW should still be far less strict than Apple is though.

GW have to remember that their products are luxury hobby items that don't have anywhere near the same amount of usefulness as something like a computer or car. Continually raising the prices will NOT bring in more customers, it will only repel them further while alienating existing ones...

[EmperorNorton]

GW need to significantly reduce the number of stores that they operate. The few stores they do keep, then need to be improved. The level of service, amount of range carried, room for gaming and painting and all of that needs to be increased.

I agree with that, nearly all of the GW stores I have been to were small, cramped and uncomfortable. Not a place I would like to shop and hang out.

My strategy for growing the customer base would be to take a look at their games, which currently can be played at two different levels: the regular level with big armies and the Apocalypse level with huge armies.
I would add an entry level, a small, scenario-driven skirmish game similar to Mordheim and Necromunda, although it might be a good idea to use a board for playing. These should use (some of) the same game mechanics and the same miniatures (easy to build snap-fits, but usable in WHFB or 40K to encourage using these as a starting point for collecting an army) and be a good introduction to the fluff. Get these into regular toy stores and supermarkets and they could easily have the same effect on a new generation of gamers that games like Heroquest and Space Hulk had on my generation. Regular expansions could be used to introduce new factions.
Mantic are doing something similar with their Dwarf King's Hold and Project Pandora games, but GW could easily do it better or at least prettier.
GW can produce better plastic miniatures than their competitor's, they should use them to wow new customers.
Another great advantage for them is the success of the video games using their background material. Not a single copy of those games should be sold without a brochure about the tabletop game and a miniature in the box. Not a plain old Space Marine, either, as those are not overly impressive. At least at some bling and make him a captain.

[ted1138]

If I was in charge, I would sell off most of the GW stores as franchises, and then expand a handful of strategically placed stores into 'mini Warhammer worlds', where you could run events as well as present the hobby to parents in a more relaxed and complete way...

[EmperorNorton]

I would sell off most of the GW stores as franchises

To whom?
Who in their right mind would want to run a GW store as a franchise?
Gaming stores tend to struggle enough as it is even without the restrictions of franchising.

[ted1138]

To whom?
Who in their right mind would want to run a GW store as a franchise?
Gaming stores tend to struggle enough as it is even without the restrictions of franchising.

If a GW store isn't viable, then it should shut, if it is viable, then I'm sure there would be people willing to run one. It would also free up GW from paying rent on these stores, which they could then invest in building regional Warhammer Worlds and supporting those stores that are run by franchisees...

[EmperorNorton]

If a GW store isn't viable, then it should shut, if it is viable, then I'm sure there would be people willing to run one.

I agree with the first part, but if a store was viable, why would GW not keep running it themselves?
And if they wanted to move out of an area where a store is viable, why should somebody agree to buy a franchise rather than open an indy store?

[ted1138]

I agree with the first part, but if a store was viable, why would GW not keep running it themselves?
And if they wanted to move out of an area where a store is viable, why should somebody agree to buy a franchise rather than open an indy store?

Do you overthink everything...

[DarkLordBelial]

If I was in charge, which I'm not - yet!

I would actually start selling non-GW products in the stores - something that would probably send a shiver down the spine of the current management.

[SotF]

I agree with that, nearly all of the GW stores I have been to were small, cramped and uncomfortable. Not a place I would like to shop and hang out.

My strategy for growing the customer base would be to take a look at their games, which currently can be played at two different levels: the regular level with big armies and the Apocalypse level with huge armies.
I would add an entry level, a small, scenario-driven skirmish game similar to Mordheim and Necromunda, although it might be a good idea to use a board for playing. These should use (some of) the same game mechanics and the same miniatures (easy to build snap-fits, but usable in WHFB or 40K to encourage using these as a starting point for collecting an army) and be a good introduction to the fluff. Get these into regular toy stores and supermarkets and they could easily have the same effect on a new generation of gamers that games like Heroquest and Space Hulk had on my generation. Regular expansions could be used to introduce new factions.
Mantic are doing something similar with their Dwarf King's Hold and Project Pandora games, but GW could easily do it better or at least prettier.
GW can produce better plastic miniatures than their competitor's, they should use them to wow new customers.
Another great advantage for them is the success of the video games using their background material. Not a single copy of those games should be sold without a brochure about the tabletop game and a miniature in the box. Not a plain old Space Marine, either, as those are not overly impressive. At least at some bling and make him a captain.

With games there could be some rather interesting promotional options there. Buy Space Marine and you get a mini of Titus and a card included in the box with a stat line for him would push more people to getting him. You could even mix it up a bit, having pairs of minis with different systems getting different ones. You might need to go with a prepainted option for this sort of thing, but that would still give options though pewter ones with an ink wash wouldn't need it.

Bringing back the older games would be great as an introduction game as well. When the WotC Star Wars minis game was in full swing, there were three 80+ players that stayed around. Two were there because the Axis & Allies tournament happened after the Star Wars one, and the last originally started playing because her grandson was staying with her for the summer, but she kept on playing because she liked the game.

[lbecks]

If I was in charge, which I'm not - yet!

I would actually start selling non-GW products in the stores - something that would probably send a shiver down the spine of the current management.

I would do that too.

[eron12]

If a GW store isn't viable, then it should shut, if it is viable, then I'm sure there would be people willing to run one. It would also free up GW from paying rent on these stores, which they could then invest in building regional Warhammer Worlds and supporting those stores that are run by franchisees...

But surely any store that would be viable as a GW fanchise would be even better off as a true indy store, where they could sell all the GW products they wanted plus other manufacturers, CCGs, RPGs, and TTGs.

[Steve54]

Even in the UK I'd slash the number of GW stores, there is no need for every town to have a store. One of the guys at my local store was sent to a small-town derbyshire store for a week to cover holidays and Monday-Friday had 11 customers.

I'd close the vast majority and instead have approx 20 Venue stores - think mini WHW, so wide range of stock, 20 tables, small restaurant etc. So people would travel to them like WHW, spend the day there etc. Rent+costs per store would obviously be higher but that would be a drop in the ocean compared to the savings from the 100+ closed stores

[f2k]

Even in the UK I'd slash the number of GW stores, there is no need for every town to have a store. One of the guys at my local store was sent to a small-town derbyshire store for a week to cover holidays and Monday-Friday had 11 customers.

I'd close the vast majority and instead have approx 20 Venue stores - think mini WHW, so wide range of stock, 20 tables, small restaurant etc. So people would travel to them like WHW, spend the day there etc. Rent+costs per store would obviously be higher but that would be a drop in the ocean compared to the savings from the 100+ closed stores

I was talking to a friend of mine some time ago about what it would take to make a business out of this hobby.

Some years ago we were actually offered to buy one of the stores where I was freelancing, but we just couldn’t see how to make it work. Besides, we were both still in uni at that time so it would have been a major chance to take.

Anyway...

The one solution we came to was exactly what you suggested. Survive by have a dozen or more tables with terrain suitable for many different games, a small bar/restaurant selling drinks, light meals, and snacks, and then (possibly) a small corner with models – strictly to satisfy Games Workshop’s demand for a brick’n’mortar store – but selling the majority of models at a discount over the internet.

Only problem is, of course, that such an arrangement takes an awful lot of space. Space that’s not cheap... At all...

[lanrak]

The only problem for selling other manufactureres stuff alongside GW products is the current price disparity.

At my local LFGS , they only sell GW minis and paint, as the other GW hobby products do not compare well to the 'original' branded items.(Wisor and Newton, Excato, Humbrol ,etc.) (Some customers eeem to think you have to use GW paint on GW minis for some reason!)

GW plc will have to make some serious changes some time soon.
Maybe the next fiscal statment will make it imposible for GW plc to put a positive spin on falling sales volumes exceeding the recoup from 'unjustifiable' price rises?

I think most people agree that 'gateway games', and less emphasis on 'B&M stores' is the direction GW should move in.

I personaly belive the focus should be put back on to great game play.(By gamers for gamers.)
As this drives sales continualy and supports ALL minature ranges simulataneously.

If we look at other minature companies.(As GW plc say they are a minature company first and foremost.)

Sucessful ones, have a specific game to use the minatures with that provides a great gaming experiance.(Well defined rules written with brevity ,clarity and wit.)
AND/OR they provide great value for money.(This can be a bit subjective obviously.)

According to Jervis, GW plc develop thier games for collectors and hobbiests that treat the games as '...the icing on the cake...'.
So they write the rules and codexes for the customers that dont actualy play the games that much!
Why!
Because '...less than a third of our customers actualy play our core games....'

So lets get this right, the head game developer says GW plc writes the rules for the people that dont play the games that much , becuase not many people actualy play the games that much?

Yeah, car manufacturers do the same thing dont they. The dont bother making the car great to drive, as only 1 seat in the car is for the driver. They make sure the car looks nice and is nice to sit in for the passengers.(Comfy seats and on board entertainment.)

The fact that the driver , will let other drivers know how great the car is to drive , and therfore have a massive effect on sales is not lost on car companies.
Unfortunatley GW plc have forgotten how gamers are similar to car drivers in this respect.

They may make up a smaller percentage of the customer base, but if they are given a great gaming experiance , the positive word of mouth out strips a chain of B&M stores in marketing potential.

Looking back at the earlier yeas of GW , from 1987 to 1998 GW DOUBLED turn over every 3 years!Then the focus was on making a range of great games for gamers.

Since Mr Kirby decided GW plc were '...in the buisness of selling toy soldiers to children.'
GW plc has lost close to HALF its sales volumes.

If GW plc had kept its sales volumes constant they would have had a turn over of appx £230M.

[N1AK]

Yeah, car manufacturers do the same thing dont they. The dont bother making the car great to drive, as only 1 seat in the car is for the driver. They make sure the car looks nice and is nice to sit in for the passengers.(Comfy seats and on board entertainment.)

The fact that the driver , will let other drivers know how great the car is to drive , and therfore have a massive effect on sales is not lost on car companies.
Unfortunatley GW plc have forgotten how gamers are similar to car drivers in this respect.

Can we stop trying to shoehorn toy soldiers into completely unrelated analogies; especially ones which aren't even accurate. A car driver is generally the car buyer. A person buying models whether it is as gifts, to paint, to mess about or smash face in tournaments are all buyers. Rules focused gamers would, in this tortured analogy, be the equivalent of track day enthusiasts who need the car to perform just so, in conditions 90% of drivers don't ever go out in.

Secondly, running a physical retail location can be beneficial for a wider business while losing money as an individual unit. For example, because of improved customer retention, brand awareness and sales it drives through other channels. There is also the considerable benefit that comes from being the 'only game in town'. Generally a town with a GW store isn't likely to have another retailer due to the competition; so GW would be the first exposure to war-gaming many people get. Finally, GW also tends to give a lower discount to trade accounts than other manufacturers. This gives indie stores a big incentive to promote non-GW products. I know of 3 stores in a reasonably close vicinity to me that push other game systems or model ranges and effectively use GW products for some stable income and to bring in new customers.

None of the above means I want to defend GW's current strategy. I don't believe they have innovated enough and I think they rely on limiting competition rather than outshining it; which tends to go badly wrong when it goes wrong. That said the vast majority of people who are suggesting a large reduction in GWs retail presence clearly don't understand the core reasons why GW maintains it at present and the damage reducing that quickly would do.