The gamble with having a game room is that the increase in gamer activity it generates will encourage more sales than if you filled that space with more merchandise or if you had chosen a smaller space and filled all of it with inventory. You’re hoping that it’ll “supercharge” the more conventional part of your retail store.
The good news behind this strategy is that a room full of tables and chairs is much cheaper than a room full of merchandise. The bad news is that the upper end of the value is usually less than that of the merchandise. However, the difference in cost might make it more profitable. Most often, it breaks down to a personal preference. Some people think a game room is an absolute necessity, while others think it’s a social nightmare and more headache than it’s worth. This discussion isn’t about whether a game room is a good idea but about how to use it if you have it.
You could spend $30,000 on inventory, fixtures, and signage. You might expect that merchandise to earn $50,000 to $100,000 in additional sales, depending on what you stock. Or you could spend $1,500 and hope that the space increases the sales of inventory you already own by some amount each year. Assuming a cost of $19 per square foot plus a convenient figure of 1,000 square feet, your game space needs to increase your retail space sales by about $40,000 per year to cover the $19,000 in cash flow. If your store is otherwise doing $200,000 a year in sales, you need to increase your sales by 20% to see that much gain. Is that a reasonable expectation?
Like so often, it depends.
I’ve mentioned in general terms about how game room events encourage sales. I strongly support managing the activities of your game room rather than just allowing open play willy-nilly. Knowing how to leverage events maximizes your gain and gives you the best chance of reaching the figures you need to pay the bills.
A customer plays a game. If he has a good time, he’s more likely to buy it. It’s one of the core principles behind gaming retail.
Demo games require a heavy labor investment. If that investment doesn’t pay off, demos can be a huge resource sink. A sign on your wall doesn’t take up a lot of time per customer. You spend 15 minutes making it, and it increases the chance of a game to sell slightly. Demo games have a higher cost, and a higher conversion rate. How high is higher? Because of the heavy investment, you need to maximize your chance of a sale or sell something that’s so expensive that even a low conversion rate is worth your while. Let’s take a quick math break.
If you spend 6 hours painting up minis for a Warhammer 40k demo table, open up a couple of terrain pieces, and set up a demo table, you might be out about $100 or so in materials. We’ll use minimum wage for the labor. That rounds your initial cost up to about $150. If you do a 10-minute demo 3 times per day, you spend another $560-ish in labor over six months.
After that six months, you’ve invested $710 in 40k demos between your initial and ongoing costs. With a gross profit margin of 45%, you need to sell about $1,578 to break even on cash flow (we’re only counting immediate sales for right now). You should be able to sell a new 40k customer about $125 worth of stuff. He gets a starter box, glue, the basic paint set and spray primer, knife or sprue cutter, an army book, etc. At that rate, you’d need to convert at least 13 customers to break even. Out of 540 demos, that’s a conversion rate of about 2.4%.
Three percent might not sound very high, but compared to the rate of return of mass mailings or TV commercials, it’s very high. Is it possible?
Sure. GW’s entire retail business model depends on math similar to this.
How do you to min-max this demo to give yourself the best chance of success?
- Make demos short. Use quick-start rules for RPGs. Play only a few turns of a card game or a miniatures game. Try to make board and card games less than 10 minutes. Five minutes is better.
- Set up a pretty table. No Coke cans for towers. Use a real tower.
- Have stuff in stock. You can’t sell Settlers if you have no Settlers.
- Participation prizes. Let players keep the minis for an RPG (you used commons, right?). Give out singles for CCGs.
- Support games that support you. If you can get a demo copy from a manufacturer, that tips the scales in favor of that game.
- Support games with a high buy-in. 40k is an excellent example because the average player spends so much money. If you invest the same amount of time and effort into a $40 board game with no expansions, you’d need over 3 times the success rate of your demo to break even.
- The same applies to RPGs. D&D players are easily worth 10 times as much as Amber players. Even if your chance of success with Amber is twice as high as D&D because you think it’s a “better” game, you lose by supporting the smaller game because your efforts don’t generate enough return. (I know Amber’s OOP right now, so just replace “Amber” with whatever one-shot title you like. The math’s the same.)
- Let the wookiee win. Carefully stage game play so that you don’t obviously throw the game. Customers who win like a game more and are more likely to buy it.
- Use volunteers. Having manufacturer-compensated volunteers run demos saves you a cost. Use them when you can.
- Close the sale. Once the customer is fired up about the game, put stuff in his hand. You need this, this, and this. Cash or credit?
Demos work best for minis and simple card or board games.