The Three Pyramids

I order biblically.

It was the Jews of Alexandria who first translated the Old Testament into Greek in the 3rd century BC. Alexander the Great had conquered most of the Ancient World and invented ice cream by then, and Koine Greek had become to lingua franca of its day.

This version – the Septuagint – became the standard disseminated text throughout Europe, until the theologian Jerome translated the Bible into Vulgate Latin around 400AD. It then took a thousand years of monks and gospels and psalters before anyone had a definitive English language version – John Wycliffe, in the 14th Century.

When you translate a text errors creep in. Before Miles Coverdale’s version of 1535 they were hand copies. Coverdale wasn’t the first translator to use William Caxton’s invention of the printing press to – ahem – mass produce – that would be William Tyndale in 1526. At every stage bits were left out, bits were put in, words and the meaning of words were changed. Numbers in particular.

The number 40 appears 146 times in all. 40 days. 40 nights. 40 spies. 40 years. To our ancestors 40 was a short hand way of meaning ‘many’. A long time. A big amount.

One. Few. Many. That’s how I order.

Last week I spent forty hours wandering the halls of Essen Spiele, looking for the many. I sell a lot of games, but I don’t sell them evenly. The more complex a game, the more niche a game, the more expensive a game the fewer I will probably sell. Remember crisp theory from my earlier blog post? Sometimes it helps to look at what we sell and how we sell it and who we sell it to as something those Hebrew tribes who wrote down the first Bible were intimately familiar with in the years before Moses and Exodus.

Three pyramids.

The first is our customer pyramid. Not all customers are created equal. At the base of the pyramid are casual players. Normal folks to whom playing games is a thing that they do – a pastime. They have heard that games are fun and they like the idea of fun. These people want a game buying experience that is as close to the buying experience of every other store they visit – clean, well designed, tidy, bright, happy friendly staff. These are not ‘destination store’ folks – they are main street folks.  

From the 8 billion people on the planet, these are the 20 million people who own Catan. The 12 million who own Ticket to Ride. The 275 million who own Monopoly.

A casual boardgamer might buy a game or two a year. In Germany, where boardgaming first broke through into mass public consciousness, that number is far higher. It’s much more common an activity – a pastime – that people just do as an entertainment option of an evening alongside the cinema or Netflix or a meal out.

Above the casual pastime tier is the hobbyist tier. The hobbyist buys more. Often a lot more. Now the problem becomes price sensitivity. If you are buying one boardgame a year – and it is Wingspan – you don’t care that you could save $20 online. If you buy one monthly, that soon adds up. Weekly? That’s a thousand dollars a year.

There used to be an adage that as soon as your casual magic players discovered competitive play, you lost them as a customer. You lost them to the online guys, the folks selling boxes out of car boots outside any Grand Prix, because they needed to be incentivised to shop with you.

Many retailers think this is unfair. We still provide the same degree of goods and/or services. Folks should pay a fair price. MSRP is that fair price determined by the manufacturer. But the hobbyist feels that they have invested time, emotion and money in their hobby. They are skilled. They spend more. And that this loyalty – to the hobby, and potentially to your store – should have a worth.

And they are right.

Many stores discount Magic but not boardgames. People say ‘but it’s a $150 purchase – I need to discount it’ but many boardgame hobbyists spend far more than that far more regularly. None of us can compete with price against online. I know there are online deep discounter folks in the UK who cheat tax. I know there are online deep discounter folks in the UK who are multi millionaires who run their businesses at a loss because they get off on crushing their enemies.

I don’t like that, but I have to deal with it.

At Fan Boy Three we do 10% if you buy three or more boardgames or expansions. We’ve also knocked a bit off the more expensive items – usually around 10%. It’s not a deep discount level of deep discounting, but it’s an agreement to meet our most engaged customers half way, without them needing to worry about stock availability and shipping.

Many people consider that the hobbyist is the top tier. But that is reserved for the cogniscenti – ‘those who know’. These are the alpha gamers – not enough for them to buy games, they have to buy games first. They have to fly into Essen and get the hotlist. They are the Kickstarter superbackers, the day one pledgers. These are the players who know all the designers personally, who have top range gaming tables that you could row across the Atlantic in and games rooms with library shelving.

These are probably not your customers. They go to source, not because they can’t pay but because they have to be first. They are validated through their hobby, through their knowledge and through their hobby knowledge.

I back lots of Kickstarters, because the cogniscenti don’t always call it right, and the id wants what the id wants. These are the apex of the pyramid, the capstone, the 1%. But if you run a top flight game store, these are the people most like you. And like Professor Slughorn, if you woo them they’ll often happily share their knowledge.

The issue is that the knowledge is often cogniscenti flavoured. Gloomhaven might be the number one game on BGG but I can’t sell it to granny at Christmas. And granny isn’t subscribing to Jamey Stegmeier’s industry blog.

I’m sadly going to have to do some actual work.

One. Few. Many. The customer pyramid roughly maps on to the stock pyramid.

At the base of the pyramid is the many. These games share common characteristics – they are fun to play, easy to demo, often reasonably cheap. Very few ‘many’ games break £50 – that’s a sacrosanct price point. Your brain is doing price point calculation subconsciously – we know that 99p is a fallacy – a way of tricking the brain into believing that a product is cheaper than it really is, because that penny doesn’t really have meaning individually. But your brain does the math anyway.

If a game goes over £50 it probably halves its sales. I typically drop the prices to £50 if I can. Below £50 it is ‘less than £50’ and most customers aren’t that price sensitive. Below £50 my price points are usually £15, £20 & £35. Those price points are also value points – if it looks like great value in terms of box size at that price point, it will sell. If it doesn’t, it won’t – because its sat on a shelf next to a stack of games that have a more attractive price to component to fun ratio.

Demos sell games. When I spend my time trawling Essen for unknown gems I can sell many of I am looking for games that are eminently demoable. Fun. Elevator pitch games. I’ll be thinking ‘which of my staff will get a kick out of demoing this game?’ Can we demo quickly? Does it have table presence if we leave it set up? Does the box make it look fun? Is it actually fun?

These are the many.

Most games at Essen are hobbyist games. They are great, and I’d probably get a kick out of playing them. Some fill a niche. 18xx games fill a niche. Splotter games fill a niche. Rarely are these games a ‘many’ purchase, because my stock rooms are not infinite spaces.

If you wandered the halls of Essen you would think that these games WERE the many. Logically if my stock pyramid mapped on to my customer pyramid these would be the few.

But they are ‘the one’.

In previous years I would have taken a case of pretty much anything that made the hotlist. But we are all seeing too many games in this market at too high a price point. Traditionally we would remainder such titles in a sale, but over the summer we had a large sale which failed to shift some of our overstock, even at half price. The price point in the mid tier is now simply too high to remainder and it still not be too high for a casual sale table punt. I am literally paying people to take last year’s hotlist games away.

And these games are excellent. I wouldn’t buy them in case if they weren’t – in fact I wouldn’t buy them at all if they weren’t. And some are by my friends. But I can’t demo them and I can’t remainder them and often in the case of Kickstarter games they arrived a year after the buzz died down, late, after the game had hit distro and been deep discounted by online weasels.

Tough sell.

For me, cogniscenti games are the few. For me, cogniscenti games are like fine wine. I lay them down and wait. The bigger the customer pyramid grows, the more hobbyists it can support. The more hobbyists, the more will become cogniscenti. And then they want Too Many Bones. And then they want Kingdom Death Monster.

And I have them.

Because the market grows, constantly. This is the third pyramid – the ephemeral pyramid of public perception and market penetration tangentially linked sales and stock levels. Three pyramids intimately connected, like the three pyramids of Giza. Khafre, Khufu, Menkaure.

The gaming industry is pyramid selling.

Nobody buys a game which nobody plays. The more people play, the more infrastructure the hobby can support. Stores like us. Deep discounters. Boardgame cafes. Podcasts and influencers. The more companies. Once ‘the games industry’ was Parker Brothers and Avalon Hill. Once there were fifty game stores in the whole of the UK, and most also sold comics. Once there was only Snakes and Lattes.

As a quantum retailer I dislike extremes. A pure cafe model allows you to play but not buy. Even at capacity every night of the week with different people I could only service 1% of the population of Manchester. On the other extreme, deep discounter Cool Stuff Inc sells $25 million of games annually. While that sounds like a large number it only represents about 2.5% of the total US market. Don’t get me wrong – that’s big. But if the entire industry was reduced to CSI there would be immediate and catastrophic failure globally. Because nobody can lose 97.5% of their sales and nobody can grow fast enough to mitigate against that.

Increasingly we all lose market share to Amazon. Our distributors, our publishers – desperate to prostrate themselves on Jeff Bezos’ altar. But Amazon can’t recommend titles. It can’t demo games. It can’t be that bright, welcoming, inclusive space. That point of infection. Nobody browses Amazon and suddenly thinks ‘Oh that’s right, I have decided to play boardgames today for no reason’ – they shop for expediency, not experience.

Our stores are the base of the pyramid. The foundation stones for market growth. The foundation stones for market penetration. When somebody buys a game from us they play it with others. Gaming is a virus, like playing Pandemic. “Like Monopoly?” people say, because 275 million copies. Exposed, some of them look for places to buy. Places like us. We are the growth vector because we sell the growth vector.

Wizards had the right idea with Premium. Make your store light, bright and welcoming. Fill your shelves for the many, with the many. Scatter the few. Pinpoint the one. Getting it wrong and remaindering a $20 game to $10 is never as bad as having to remainder a $100 game to $50. Pick your publishers according to the ones that most align with your own in store ethos. The ones who can drive those customers to you to convert likes into sales, potential retail energy into kinetic.

The pyramids of Egypt have stood for almost five thousand years. It’s a pretty stable structure. But there are so many companies colonising the mid, hobbyist tier that the market is beginning to look more like a tower.  And we all know what happened to Babel.

The needs of the many always outweigh the needs of the few. The needs of the few always outweigh the needs of the one. Every pyramid begins by laying one single stone, but it’s never the capstone. There is no shame in being the base of the Pyramid.

That’s where the Pharaoh hid their treasure!

I wandered the Essen halls for forty hours to bring you this blog post. My name is Dave Salisbury and I’ve been the quantum retailer.