By then everyone was rushing towards nostalgia brands. People laid off from their jobs were opening Pokemon stores in the bedrooms and garages. Distro loves new accounts, because a new account needs to totally outfit their store, rather than top it up. Suddenly Sports Direct are selling the Asmodee Top 40.
The money you lost during the pandemic needs to be made up somehow. That’s how big business sees it.
When commodities are scarce and shipping is expensive, prices rise. You can only soak a rise for so long. Then the rubber band snaps reality back into focus.
During the Credit Crunch of 2007 I was at GenCon. The pound was in freefall but I didn’t know it. I passed on completing a Reaper Minis order – something we were one of only two stockists in the UK for at the time – because the pound had dipped below $2. Lizard brain Dave doesn’t get out of bed for less than $2 a pound.
By the time I got back to Britain it was $1.70. Then $1.40. People talked about parity… All the MSRP’s for all my games was going to double.
That Reaper order? Leisure Games had placed theirs. They had the full range at what was now my buy price. I couldn’t complete the order and hope I could sell it in time because my stock would be double what somebody else’s was in the market, and that’s a very bad look.
In a cost of living crisis.
The credit crunch also meant cheap credit was no longer available. There was no way of guaranteeing access to more money if you needed it. Surviving crises is always going to require cash reserves, but if you suddenly wake up and you are Zimbabwe – or Moscow right now – your money is rapidly evaporating like the morning dew.
Turns out both a cost of living crisis and a global pandemic could be partially mitigated by having stock, and lots of it. And cash reserves and lots of that too. These are mutually exclusive positions.
Having traded through 2007 here was what I learned.
One, people still want to treat themselves. A booster is for life, not just for the three minutes it takes to sip your latte.
Two, you will still sell high end games. Frosthaven at $250? It will sell.
Three, hobbyists are predisposed to continue to hobby… And ours is undeniably cheaper than snowboarding. Not gaming is like having a phantom limb, that will always itch and remind you of who you were.
(Sorry – I know that’s a bit ableist of me, but I can’t really think of another way of describing it. Compulsion makes it sound like it is too negative a thing, like a flaw that should be curable by therapy. I don’t think that hobbyists are in need of ‘fixing’ – that somehow we would be better, more acceptable people if we didn’t play D&D or whatever).
Four, …no matter what the cost. Yup, they will eat pot noodle for a month if it doesn’t mean missing out on playing that Magic prerelease. People cut down rather than cut out. They cut back rather than go cold turkey. They gravitate towards perceived value brands – either games that aren’t going away (Magic Commander, say) or where the barrier of repeat play is low (most boardgames and obviously D&D).
In store D&D saved my business in 2008.
But I promised you futurology, and this is just me raking over the coals of the recent and distant past. Let’s put another box of Fallen Empires on the fire, stoke up the flames and practice some pyromancy.
All things are pointing to a cost of living crisis like we have never seen and none of us have lived through. Oil, petrol, heating, electricity, food – everything is likely to be in freefall. Or, the opposite I guess. When prices are rising rapidly, it means the value of money is falling rapidly. This means interests rates will rise. Money or access to money will not be cheap.
In all previous to 2007 global economic crises interest rates go through the roof, because hyper inflation is a way of rebalancing individual economies. But in 2007 it was artificially forced the other way. This papered over the cracks of capitalism and allowed lots of landlords to keep their property empires.
Boo hiss, amirite?
The pandemic has left brick and mortar business in a perilous state. I walked through Guildford High Street yesterday and half of the stores were empty. They ran out of cash or energy. The rest fell into two categories – high end designer stores with one or two attractive staff and no customers, and the ones desperately looking for staff. These were the big high street brands – Boots, WH Smiths, Marks & Spencers. Their stores look sad, because nobody felt the need to renovate or modernise for the last two years and now nobody has the money to renovate or modernise.
Its the Seventies all over again.
In an estate agent I noticed a flat cost £3250 per calendar month. Nobody can do that job in Boots and live in Guildford. Or anywhere else in the South East of England.
You can solve this easily right, by paying people more. Only… you can’t. Nobody is shopping with a store because they pay folks a living wage – not that we even know what that is in Guildford. Seems to me that a flat that costs £3250 PCM isn’t going to be miraculously affordable with an extra pound a week, just like skipping your turmeric latte isn’t going to let you buy a house.
My store is in Manchester’s Northern Quarter. When we opened eighteen years ago it was all drug addicts and prostitutes. Do you know how long it takes for urban decay to move in to a city centre where half the units are empty? A hell of a lot quicker than the eighteen years it took to regenerate the Northern Quarter into the beating artistic centre of the city. The graffiti – not the cool kind that tourists photograph – is already here. The most recent guy to deface my windows used an acid based paint to etch them permanently.
Times Square in the Seventies had been Times Square in the Forties and the Twenties.
Like NATO we all need strong neighbours.
A lot of businesses that are non-viable during a pandemic become non viable during a cost of living crisis. The fact that one has run into another? Well, it’s likely terminal for a huge swathe of businesses in leisure and hospitality. A rising tide raises all ships, but an ebbing tide starts beaching them.
And that tide goes out quick.
There is a threefold problem here. Staff, goods, and cash. You need the first two to generate the third and you need the third to pay for the first two.
Traditionally rents do not go down. Your landlord would prefer their unit to stay empty, because an empty unit with a high listed value is part of a portfolio that money can be borrowed against. If your landlord rents at half ‘market rate’, then they are effectively saying their property portfolio is worth half of what their lenders think it is. You can see how that can cause a panic if you were a lender. So they don’t. Rather some short term pain – your £50K a year is chicken feed compared with the fact that they borrowed against £500K on your building. My old landlord had a building nominally worth £7 million in which I was the only tenant paying £23K a year. If you can make the maths work on that I recommend a career as a landlord.
Already we see four simultaneous crises. How can we mitigate against each of them in turn.
The Quantum Retailer 