Friday, January 12, 2007

I talked a little yesterday about how a monopoly can be a good thing. A 'benign monopoly' is like Plato's 'benign tyrant', as long as the owner is a 'philosopher merchant,' if you will. Especially if the monopoly entails a very diverse product line that sells in small amounts.

For the first 5 years I was in business, I carried baseball cards. I was the only guy this side of the mountains in Oregon carrying them. Because of that, I was able to carry just about every brand, in just about every format, (singles, sets, boxes and packs) with all the extras. I had vast knowledge, (watching sports center every night, reading the box scores every morning, etc.) and provided every service available. I carried reference books and odd supplies that sold slowly, because I thought of my store as a 'full service' store. I was willing to buy or trade for every card that came in the door, because there was a very good chance that I had sold that card originally. I was even able to keep the prices down, because the volume of sales was pretty high.

I could make the case that this was the best of all possible worlds for both me AND the customers. Eventually, the big guys noticed how well cards were selling, and so did the fly-by-night little guys, and competition became suicidal. (If you try to compete with a suicidal competitor, you're just killing yourself.) I always liken it to a 'name that tune' game where the other guy is making guesses with one note. You just can't win.

There has always been this misunderstanding that the way you compete with Walmart is by providing more service and selection and knowledge. All the extra's that I talked about. In fact, the opposite happens. All those extra's cost time, space, and money which you no longer have because you are no longer selling as much. What actually happens is that you cut everything that doesn't help the bottom line, and you cut your prices to as close to Walmart's price as you can get without losing money. Meanwhile, ethics and honesty evenually will win out over the fly-by-nights, but not until you've taken a real beating.

So I ended up carrying only the best selling brands, at higher prices. I no longer have the knowledge base, or the odd sizes of supplies, nor do I devote extra times, space and money keeping up. Cards are truly a sideline, where I do only the parts that make sense. The customer? Pretty much on their own, these days. Even though I get a phone call or a visit just about every day asking if I'm buying or trading, I just give out a flat 'No,' without explanation. The sport card industry, itself, is but a pale shadow.

What happens to the customer with these types of high interest, low selling products is that they become trained to buy where ever they see it, because they know they may not see it again. You'd think, for instance, that a store like mine could do well with cult items like Dr. Who, or Nightmare Before Christmas, but instead, I can carry a fairly large selection and still , more often than not, don't have that item the fan wants or hasn't bought yet.

The granddaddy of all cult items is Star Trek. Without even trying, I probably have 50 or more separate ST items in the store, which rarely sell. The Star Trek fan will almost always say, "I already have that," or "I wanted that in a different color, size or shape..." To the point where I won't carry Star Trek anymore, unless I get a deal. (Unlike Star Wars, whose fans will buy anything they like, without all the crazy specificity.)

Not coincidentally, Star Trek has had at least 6 different comic publishers, 5 different toy makers, 4 different card makers, all of which have failed. The last TV show failed. The last movie made so little money, they haven't been in a hurry to make another one. The fan has become TOO picky, and has almost destroyed what they love. Luckily for them, the illusion that Star Trek sells well is so strong, that there always seems to be someone else ready to pick up the franchise.

I had a funny example at Christmas. I happen to love Edward Gorey art. (He's the guy who's art they based that little victorian cartoon at the beginning of PBS's Mystery Theater, where the frocked gentlemen are playing croquet, and the woman on the cornice lets go a hankerchief.) I set out to get every single Gorey book available, eventually assembling 14 different books.

I had a woman come in and ask if I had Edward Gorey. I proudly showed her my selection. "No," she says, "That isn't what I'm looking for...." and walks out the door.

I wanted to shout out, "'re looking for the Edward Gorey Store down the street!"

Seriously, I'd be willing to bet good money that at that moment I had more Edward Gorey in stock than ANYONE IN THE COUNTRY! Including Powell's, or anywhere else.

As a merchant, I'm often misled into believing that a product line is so specialized, so obscure, that I'll be the only one carrying it. And in a 'benign monopoly', I could carry just about every manga book, or every anime, or every Warhammer, or every.....whatever. The customer would benefit, I would benefit. Instead, the effort is diffused into many stores, none of which can really do the job well.

But that is the free market, I guess.


RDC said...

If someone is really a serious collector or fan these days I would suspect that their primary source is the Internet, instead of some retail store.

When it comes to stores like yours I would think that the Internet has impacted buying patterns more that the big box stores.

Walmart for example focuses on inventory turns and product velocity which gives them price cutting power.

Other big box stores may be less efficient there, and carry a larger selection in their area of specialty, but still are bound pretty tightly to inventory turns.

Between that and the demise of the smaller stores, the modern reality is if you really want to find a specific item or are an avoid fan or collector you almost have to use the Internet as your primary source.

Duncan McGeary said...

True, but it didn't HAVE to be that way. I was doing a great job for the customer; I doubt even the most extensive internet card site is doing what I was doing back then...and certainly, it is much more difficult to have a nice conversation about cards, or ask simple questions.

Back then, it was the chainstores that did me in, because cards proved to be a commodity -- in pricing at least -- and the customers proved that price was more important than anything else.

As you say, nowadays, it is the internet that keeps me from really trying to carry a full line of NBX toys, or Dr. Who, or Dick Tracy, or whatever. I carry a sampling, and snag the occasional customer passing by.