A new strategy to replace B&M

[bobafett_h]

There are far cheaper and easier ways to advertise than setting up stores everywhere. For a start they could produce merchandise other than hobby related items such as T-shirts, belt buckles, USB flash drives, etc. and distribute those kinds of things in various places such as Think Geek. They could even stop being snobs and allow film makers to actually produce feature films or TV shows/animated series related to their IP. Transformers would never have been as popular as it is now if it wasn't for the original animated series helping to sell the toys, and vice versa, several comics, cartoons and movies would not have been as popular if it weren't for the toys and other merchandise to sell that media.

GW's marketing sucks...

They certainly should not close all of the stores, but the number of stores does certainly need to be culled. Their retail model needs to be updated as it is simply too archaic and no longer works as well as it did 10 or 20 years ago. GW just needs to be smarter with how they do things if they want to gain more recruits and increase their profits...

[Omniassiah]

GW does not have the stores to make major profits. That comes from 3rd party sellers. The main role of the store is to get new customers. It is, their advertising. If stores make big losses ( a sign they are not recruiting players) they may close. But the core role of the stores is not blitzing sales, but recruiting new customers.

If a store is losing money it shouldn't exist in the first place, Sorry, but its reality. I could understand if you said well this store isn't making the kind of money that we want it too, but it really helps gather business for the other sections of the sales. If the area can't support the store then the chance that it is truly bringing in enough customers to make it worthwhile is not likely. Kids are notoriously not patient, they want something they want it now, parents tend to sadly buy kids whatever they want as soon as possible. So with that general reasoning most of the sales from recruiting the target age group should be coming directly from the store and then the sales evaporating when the kids interest dies out. so I doubt you see much turnover from churn and burn to their webstore or indies. You may see that more in the US but thats only because you probably just saw the GW store while on vacation and will never see one again for the rest of your life.

[iamfanboy]

I'll put out one good reason why GW stores work in the UK:

Every mother I have ever met knows what warhammer is. None of them have the foggyest what napoleonics is. Nor Privateer press, nor infinity, nor any other brand outside of dungeons and dragons, and magic the gathering.

That is the power of the stores: To bring warhammer to the knowledge of the public in the way that indies could never afford to do. (We rarely ever exist on main highstreets, its too expensive).

Recruitment is everything to GW. Lets assume that 50% of GW players were recruited by a friend. Where did the friend learn? The stores.

Oh, and also, I call BS on the idea that the UK GW stores cost as much as the whole profit for europe. There is no way a company would be so rediculously stupid with its money. Loss leading is one thing, devouring £42 million of profit is not something any company does.

The numbers are from their own financial reports.

Now, teasing out the numbers ain't easy; in their overall financial reports, they always separate the cost of sales (shipping, manufacture, management, support to trade accounts, customer service) from the cost of their retail, but regional numbers lump it all together, probably spreading the admin expense equally between regions. In fact, I suspect deliberate obfuscation; an attempt to make the numbers look good at a cursory glance.


In 2008-9, the UK (and Northern Europe, which had been freshly lumped into the UK segment) had 50% of their stores. Their income was overall 126m (as already mentioned). Their cost of operating the retail segment that year was 84m. 50% of 84m is 42m.

Their income that year from the UK/NE from customers, retail indie and direct, was 33.6m, and only 53% of that was from their stores. A little over 16m, then.

They admit it right there in their financial statements, no matter how they try to hide it.

Now, next year and year after that, they started reporting their numbers differently. Still can't weasel the sense out of it. but I'm trying!

[canberraguy]

If a store is losing money it shouldn't exist in the first place, Sorry, but its reality. I could understand if you said well this store isn't making the kind of money that we want it too, but it really helps gather business for the other sections of the sales. If the area can't support the store then the chance that it is truly bringing in enough customers to make it worthwhile is not likely. Kids are notoriously not patient, they want something they want it now, parents tend to sadly buy kids whatever they want as soon as possible. So with that general reasoning most of the sales from recruiting the target age group should be coming directly from the store and then the sales evaporating when the kids interest dies out. so I doubt you see much turnover from churn and burn to their webstore or indies. You may see that more in the US but thats only because you probably just saw the GW store while on vacation and will never see one again for the rest of your life.

I said if it was losing major money it would be closed. But GW is not a normal retailer. It sells product in it's own stores and in 3rd party. Kids get recruited in store, often start buying elsewhere and some continue to play. GW are happy for people to buy in 3rd party stores as they make more money from these sales.

[canberraguy]

Bobafett.

Do you seriously think that a few flash drives and buckles would generate even 1% of the same amount of new players as dedicated stores, with staff that teach you to play and paint? That is ridiculous. Would a tv series or movie create more players? Absolutely. But either studios think it is too niche to buy the lisence or it would cost too much to produce.

[Sgt John Keel]

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.

I'm not sure if that's true. While the product has historically often been unavailable at big electronics retailers, specialised Apple Authorized Resellers have been plentiful in number around the world. And of course the success of the Apple Retail business have had many of them complain about underhanded tactics and second-tier support from Apple, Inc.

But, I think, the difference is that the Apple Retail segment made $3.3 billion in profit on $14.1 billion in revenue (about 70 times more than the revenue of GW plc.) last FY. With fewer stores than GW.

I'm not sure the frequent comparisons to Apple are relevant to GW. They play in somewhat different leagues. Isn't it better to look at a successful retail/manufacturer company the approximate size of Games Workshop and see what they did right?

[bobafett_h]

Do you seriously think that a few flash drives and buckles would generate even 1% of the same amount of new players as dedicated stores, with staff that teach you to play and paint? That is ridiculous. Would a tv series or movie create more players? Absolutely. But either studios think it is too niche to buy the lisence or it would cost too much to produce.

Probably not, but it helps increase brand recognition. I would personally love to be able to easily buy officially licensed t-shirts with double headed eagles and icons of Khorne and things like that on them. Mostly just the current fans would buy that kind of stuff, but it is another way of building on word of mouth when someone asks what a certain image on a t-shirt means...

I'm not sure if that's true. While the product has historically often been unavailable at big electronics retailers, specialised Apple Authorized Resellers have been plentiful in number around the world. And of course the success of the Apple Retail business have had many of them complain about underhanded tactics and second-tier support from Apple, Inc.

But, I think, the difference is that the Apple Retail segment made $3.3 billion in profit on $14.1 billion in revenue (about 70 times more than the revenue of GW plc.) last FY. With fewer stores than GW.

I'm not sure the frequent comparisons to Apple are relevant to GW. They play in somewhat different leagues. Isn't it better to look at a successful retail/manufacturer company the approximate size of Games Workshop and see what they did right?

You are right that there have been Apple Authorised Resellers in the past, but there were far fewer than there is now. Also, the requirements for becoming an authorised reseller has traditionally been difficult, but is now not quite so hard.

My using Apple as an example is because they were fairly strict in regards to how their product is sold like GW has traditionally been, but since Apple branched out to new selling methods, their profit, brand recognition and market saturation has surged. Apple's current retail model also serves as an example of how a business does not need a huge number of stores to market and sell stuff if you have other ways for people to learn about and purchase your products.

Smaller companies certainly can successfully adopt marketing strategies of bigger companies who deal in unrelated products. There are many business and marketing strategies that do actually scale really well while others should be used no matter what size you are...

[Trasvi]

Perhaps simply multiplying the percentage of UK stores by the total retail cost is not necessarily accurate. For example, a GW employee in Australia gets paid about twice what a UK employee does, factoring in the exchange rate.

[Reinholt]

Keep them in the UK.

In Europe and the US, the problem is more complex. You need some kind of physical distribution channel other than the internet, but stores selling only GW product are tough because in many places, the population density and penetration are not there.

In the US I would convert the chain to a premium gaming store chain to drive sales... and begin to sell the products of other companies as well as just GW. In short, partition off the US chain and turn it into a gaming retailer, not just a GW retailer. If the other products outsell your own, that should provide you with information that would be useful for GW's production company, as well.

In Europe, it might literally have to be a country by country solution to go with the UK or US model.

However, you also have to look at the overall GW strategy in this context: they need to lower the cost of entry for their games so that the stores can also be more effective recruitment vehicles. Part of the problem with retail profitability is poor corporate strategy overall, and the other part is just poor retail strategy. They should really address both.

[ehlijen]

If a store is losing money it shouldn't exist in the first place, Sorry, but its reality.

Advertisement never brings in money directly, it only costs. It still helps drive sales up. Is it so hard to believe that people learn about GW's existance from a store and then go buy their stuff on web? In which case the store still helped increase sales.

[canberraguy]

Perhaps simply multiplying the percentage of UK stores by the total retail cost is not necessarily accurate. For example, a GW employee in Australia gets paid about twice what a UK employee does, factoring in the exchange rate.

I don't think that is correct. GWstaff in Australia get paid the retail award minimum, which is about 35k a year the average wage in Australia is 59k a year.

[Trasvi]

Advertisement never brings in money directly, it only costs. It still helps drive sales up. Is it so hard to believe that people learn about GW's existance from a store and then go buy their stuff on web? In which case the store still helped increase sales.

You're missing the point.
(According to the analysis above) GW spends more running its stores in the UK than it earns in the UK.
(The vast majority of) People are not learning about GW from a store in the UK and then buying from US websites.
Yes, the stores are advertising. But if they spend more there than they earn, it is a bad advertising campaign and should be cancelled.
There are plenty of other ways to do advertising. Many/Most brands do not have their own dedicated stores, yet seem to garner mind share and market share without it.

I wonder if an effective form of gaining recognition might be to put starter kits (akin to PP's starter boxes) in stores like KMart.

[Trasvi]

I don't think that is correct. GWstaff in Australia get paid the retail award minimum, which is about 35k a year the average wage in Australia is 59k a year.

But UK GW staff get paid like, 16k GBP a year or something, which translates to 22k AUD. Converting the other way, and Australian staffer costs them 22k GBP a year.
So maybe not twice the amount, but still a great deal more.

[canberraguy]

But UK GW staff get paid like, 16k GBP a year or something, which translates to 22k AUD. Converting the other way, and Australian staffer costs them 22k GBP a year.
So maybe not twice the amount, but still a great deal more.

Yes, but you cannot equate money like that. 1 pound in England buys you a lot more than 1 dollar in Australia. GW products are the perfect example of this. Australia has one of the highest cost of living in the world. Our food, housing, clothing and pretty much anything else you care to mention cost far more than overseas

[Bloodknight]

I would personally love to be able to easily buy officially licensed t-shirts with double headed eagles and icons of Khorne and things like that on them

I never really understood why they stopped doint those. I still have T-Shirts with the AdMech logo (grey/black shirt front logo, on the back it said "Adeptus Mechanicus, Cult of the Machine) and the Word Bearers logo (with the "there is no peace among the stars, only an eternity of carnage and slaughter and the laughter of the thirsting gods"-quote on the back) that I bought in 1995 or 1996, I think. A fried of mine bought the Nurgle shirt back then, I guess he still has it, too. That was quality geekwear.

[EmperorNorton]

Oh, and also, I call BS on the idea that the UK GW stores cost as much as the whole profit for europe. There is no way a company would be so rediculously stupid with its money. Loss leading is one thing, devouring £42 million of profit is not something any company does.

It's not true because it can't be true, no matter what the official numbers say.
With that attitude you are perfect GW management material.

[f2k]

The problem with the stores-as-recruiters argument is that this is only true for the UK, not for any other part of the world.

How do you think the average Dane got into playing? It wasn’t through a Games Workshop store, I can tell you that.

No, we got into gaming through friends, clubs, independent retailers, and the internet. And I would assume that this holds true for much of the world.

So, having dispelled the myth of Games Workshop needing their store to recruit players, why do they maintain their brick’n’nmortar stores? Honestly don’t know. It doesn’t make much sense.

I have a few suggestions though...

They’re still living in the eighties and early nineties and still haven’t figured out just what a powerful tool the internet is, and keep on believing that brick’n’mortar stores are 1) vital to recruiting players, and 2) players will pay whatever the store asks without checking prices on the internet first.

This seems to be supported by the trade agreements they have with independent stores, insisting that stores have a storefront, tables, starter sets, etc.

But, even if we accept that the stores are vital to recruitment (personally, I don’t believe this), the question remains: why can’t independent retailers or franchise stores do this?

Well, here we get to another argument for the stores: they help isolate the customer, preventing them from discovering other, much better and cheaper, games.
Does this work then? No, it doesn’t. And here we’re back to that damnable internet that we all love and hate. These days information is just a few clicks away. You see other games. You see better prices. You see forums debating the pros and cons of many different games.

In short: you simply cannot keep the players isolated anymore – not even by saturating an area with your own brand stores.

So, in the end, we have a company that’s desperately clinging on to the golden days of yesteryear. They keep on trying to push their products through an horribly outdated network of stores, blatantly ignoring the influence of the internet.

What can be done then? Should Games Workshop simply close all their stores overnight?

Sadly, it would probably hurt them far more than we can imagine. They simply haven’t fostered the trust and cooperation with the independent retailers needed to do that. If they closed their shops down there would be no infrastructure ready to take up the slack. No independent retailers, no clubs, no veterans...

And that’s why I (and many others) have been lamenting the loos of the veterans for so long. Games Workshop has gotten themselves into a situation where the only “veterans” are the overworked and stressed out employees at the one-man stores.
Beyond that, they’ve lost almost all the goodwill they once had. Independent retailers have turned to other products. The disgruntled veterans have turned to other games and the internet.

In the end, we have a situation where Games Workshop is damned if they do and damned if they don’t. They cannot keep their brick’n’nmortar stores afloat and they (probably) cannot survive without.

What they need to do is to get the independent retailers up and running again. Offer hefty rebates, support for local tournaments, support for in-store events, support for intro-games, etc. That’s the most important thing – they need someone to take up the slack once they’ve closed their own stores.
At the same time, and just as important, they desperately need to bring their prices down – way down. They’ve been bleeding customers left and right over the last decade and kept on rising their prices to cover it. It’s become a death spiral; every price hike chases customers away and makes it harder to recruit new ones. To cover this, they have to raise their price again and so the spiral goes on and on, until the inevitable end...

[iamfanboy]

It's not true because it can't be true, no matter what the official numbers say.
With that attitude you are perfect GW management material.

Damn you - every time I laugh I start coughing uncontrollably because of my allergies, and you almost killed me when I read that.

[xxRavenxx]

It's not true because it can't be true, no matter what the official numbers say.
With that attitude you are perfect GW management material.

No. I'm a realist. No large company, with management, stock holders, etc. is capable of spending more money on running its stores than what it earns in a year without a huge scandal. It just doesn't happen. The accountant would bring it up, and Wells would be publicly executed for pissing away the companies money.

Can you not imagine the board room conversation?

What did we earn this year? £38 mil. And we spent? £42 mil. You're fired.



Having gone and looked at the report, 49% of their sales were through their stores in 09. That seems pretty substantial. As for the numbers, I can't see the ones you've quoted Norton, so Ive asked a financial accountant to look them over. I'll get back with what he says when it comes in.

[EmperorNorton]

Damn you - every time I laugh I start coughing uncontrollably because of my allergies, and you almost killed me when I read that.

Nonchalantly putting irritating critics to silence - heck, I think that makes me perfect GW management material.