One, a fuel crisis. During the pandemic many people got to work from home. And they liked having more money and more time. These people didn’t want to go back to commuting anyway, and now their fuel costs are doubling or tripling there is even more incentive other than every day being no pants Monday.
This affects us.
If you are a destination store that people are going to drive to, you are a bit screwed if they can’t afford to drive. Anything that adds cost on to their trip makes your already more expensive games even more expensive.
But there is a panacea for that, and you are not going to like it.
Because it is events.
Demos, learn to play events, painting sessions, Pokemon league, tournaments, some kind of food option in store or nearby. Bums on seats baby. The more people aren’t popping in for five minutes, the more the cost of getting to your store is spread over the time they actually spend in it.
This is anathema to many of you, particularly since we are still in a pandemic. I almost forgot that for a second. Turns out our best mitigating factor is our biggest risk factor.
I guess irony and tragedy are natural bedfellows.
Now, crises are by their very nature elastic. Remember two and a bit years ago when you were all ‘what does this COVID thing have to do with me?’ Well, fuel adds to the cost of every part of a products journey – from component to manufacture to shipping to distribution to you and to online orders, that cost is a cost and tripling it can only be absorbed short term. By everyone in the chain and compounded by everyone in the chain. Suddenly everyone wakes up to fuel poverty and it becomes a significant inflationary pressure.
The biggest pressure is on couriers.
Business was great during the pandemic for couriers. And I am pretty sure they all really liked that extra money. Like the global shipping cartel, turns out if everyone tripled their prices that’s just what it costs now.
Cheap shipping – free shipping in many cases from discounters – has been a thing now for a decade or more. The actual cost of shipping has been obfuscated. If the fuel crisis continues, that obviously can’t continue. Because those shippers have shareholders who also like money.
(And it is global)
Two, a cost of living crisis. We are already seeing this. Fuel is a big factor in cost of living – many households in the UK were already having to find thousands of pounds more annually for gas and electric bills. One by one the decentralised companies who made their living selling somebody else’s cheap energy went bust, their contracts null and void. Somebody has to pay for the failures of an artificial free market economy.
Newsflash: it’s you.
Food prices are next. Do you have any idea how much wheat Ukraine grows? Yeah, me neither until three weeks ago. Globally food prices are set to rise, some predict by as much as 50%. That’s a big ask for folks one stop away from the breadline. Its literally affecting the bread in that line. In the UK the Independent Food Aid Network identified that 2021 saw a 61% increase in the use of foodbanks. Governments everywhere – strapped for cash and brassic – are trying to wean people off the COVID support money by ripping away every safety net.
This bleeds.
What happens to the poorest sector of society happens to the next poorest. It’s like being on the deck of the Titanic when it is sinking. Oh, there went Bob, into the drink. Sucks to be Bob. But that just means I am next, right?
In a cost of living crisis, discretionary spending dries up, and it dries up fast. Yup, you lost Bob and his family and all the families like Bob. But if we cut back on Netflix we can cling on longer. Everybody up the deck sees Bob vanish below the water. It’s too late for him.
Eventually we are all bob bob bobbing in the Atlantic.
In business this is the ebbing tide effect. One big discounter went bust this week in the UK – we think, hard to say. They’ve done it before – possibly more than once – each time refloated with another voluntary liquidation, each time with more debt ditched and bridges burned. And a marginally different name. Like if I borrowed money off you and came back tomorrow wearing a false moustache and pretending to be my twin brother.
No… there was never a Fan Boy One or Two.
It’s already too late. The tide is already going out.
Still, even in the silt sea of Dark Sun, people will still need entertainment. And cheap entertainment. And that’s something we do, and we sell.
We were good at it once.
We have to lean into this. And that means leaning into products and brands and games in general that offer a decent value proposition. For an impulse purchase.
The last recession the internet was not so prominently developed. On the one had, a fuel crisis means people are less likely to travel and more likely to buy online. But if that fuel crisis causes shipping costs to rise? The only people left will be Amazon. Because they are already diversifying into their own shipping.
You can see this as bad.
But most of the time Amazon isn’t cheaper than me. Because the folks selling on it have Amazon fees to pay and Paypal fees to pay and shipping to pay. And they like money too. It’s the clubhouse stores that I struggle with – even the multimillion pound turnover ones run by millionaires.
As we’ve talked about before, in a pinch hobbyists cut down rather than cut out. A snowboarder doesn’t have that luxury – they are either on the slopes or they are not. But a hobbyist doesn’t need to buy three games a month – a hobbyist average judging by the ‘look what just arrived’ posts on Facebook I see. It’s a brave hobbyist indeed who maintains that level of spending when their family can’t afford food.
Baskets remain unclicked.
We are all guilty of this – putting things in online baskets and getting to the checkout and thinking… do I really need another hundred pounds of terrain? I love making my characters in HeroForge and I really want to experiment with the prepainted plastic, just to see what it looks like but it was £70. Truth is, I don’t need to see how it looks like that badly.
In a stock crisis, your inability to ship a preordered Ark Nova is annoying. During a cost of living crisis its borderline criminal. Stores are taking money for goods and not delivering them. Some will be trading insolvently, with no intention of doing so. As it bites – and it will – store after store is beached on the rocks.
Consider Phlebas. Those were pearls that were his eyes.
The UK’s original deep discounter – Maelstrom Games – went bust spectacularly over a decade ago. You can use your turnover to borrow money when money is cheap. You can weaponise that against the little guys (like me). If you can’t guarantee stock but you owe money and you can’t complete orders? You don’t have the margin to trade out of your position. Sooner or later you will do a flit with that customer money, owing your suppliers hundreds of thousands of pounds too. Everyone is happy to run out the rope when money is cheap and living is easy.
Those days are gone.
Three, a monetary crisis. When interest rates are low, the best thing to do is to invest. I can buy something, sell it for more and reinvest a thousand times before a pound I put in the bank is worth fifty pence more. And if I need money I can borrow it at historically impossibly low rates. I could buy houses, or cars, or more stock, or live like an influencer in Dubai. I could Katie Price that shit.
But I don’t.
Because sooner or later I need to pay that money back. And in order to do that I needed to generate profit on it.
During a downturn risky investments are riskier. Luxuries are luxurier. There will still be plenty of people spaffing money up the wall, but for most of us it’s a time to retreat into safer harbours.
Deeper harbours.
The Quantum Retailer 