Wednesday, April 30, 2008

Mini me's; Stan Lee

I've been perusing other comic store blogs, and I have to say, I'm not impressed.

Most of them are so obviously self-promoting. Which is understandable.

But worse, most of them are innocuous and boring, as though they are afraid to say anything that might offend, or is in the slightest bit, controversial. Worse, they compound the problem with cute little asides about their kids or cats, or something.

But worst of all, they are relentlessly upbeat; like little mini-me, Stan Lee's.

I've been trying to focus more on my store, and local issues as they relate to my store.

But if I have to be relentlessly upbeat, I'll shoot myself.

Look, business isn't all up or all down. It's phoney to pretend it is. I prefer a little more reality.

I'm more interested in the nuts and bolts of operations, and into whatever insights I have, whether negative or positive, that I might possibly come up with, right or wrong. Indeed, expose them to the world so I can get feedback.

One of the inspirations of this blog was a blog started by a guy who was opening a comic shop. Riot Comics. I thought his theories were off base and condescending, and I suspected he was going to have his head handed to him by the real world. But, he wasn't afraid to expose his ideas, and I watched with interest as they played out. Sure enough, he failed within a year or two.

But it was very educational to watch him realize that some of his assumptions were wrong, and to confirm other assumptions, and so on.

I learned a lot from that blog, both from his successes and his failures.

Some of these other comic store blogs are pretty popular, so obviously their tone is what many people are looking for. But, I'm just going to check them out every few months or so to see if they've changed, otherwise....I don't think they have much to tell me.

In the Black.

Yesterday, I paid off every little bill, wrote off the bigger quarterly checks for payroll taxes, and took out my calculator. Turned out that I was still in the black. Not only that, but I had enough left in my backup account to pay off three times more than I borrowed last month.

This kind of thing usually only happens twice a year; end of summer, and end of Christmas. And here I was firmly in positive cash flow on a down month, 2/3rds of the way through the slow season. I've paid off one credit card in full, and I'm one third paid off on the other credit card, with every intention of have a zero balance by the end of June.

Very satisfying.

One thing I've learned about myself in this downturn. I don't take the slightest bit of satisfaction in the fact that what I predicted is happening. I'm still kind of anxious and concerned, even though my personal situation is pretty good. I've found out that I much prefer when everyone is doing well, not just me. Good to know, at least to myself, that I'm not too much of a crow.

I'm halfway through my budgetary process. If you remember, I had decided to take two week off reordering, then reorder for two weeks, then take two weeks off, and so on, alternating every two weeks for the period of March, April, May and June.

The positives of this regime are beginning to compound. I saw twice the benefit this month as last, and expect to see the benefits of my restraint even more next month and so on.

Right into summer, where I will resume my previous every week reordering scheme, but at a strict budget. (No exceptions.)

All I seem to be missing is some of the 'marginal' product that no one is exactly demanding, like stand-ups and jokey toys. And I think I'll be able to squeeze those in by the beginning of the tourist season.


It was nice to have an article about Free Comic Book Day. I wrote that sentiment in an entry last Sunday, and then followed it with a little bit of....."Yes, but....." I decided to save the second half of that entry until later, because it seems a little negative and I didn't want to seem unappreciative or anything. (By the way, it's coming up this Saturday. I'm hoping to allow every visitor with 3 to 4 comics each.)

But my post is still valid, so I've decided to tack it on to the end of today's entry:

To wit:

Every little bit helps.

If it sounds like faint praise, well, it kind of is. I'm happy for the publicity and I'm happy whenever there is an event that brings people in the door. But I try not to get too excited.

I know you're thinking, "Confound the man! Does nothing satisfy him!" (The answer is no, but that's not my point.)

I've just learned not to make too much of these events.

There are a whole series of Spring Happenings. The Iron Man movie opens, followed by a series of moves that are obviously comic oriented (Hulk, Hellboy), as well as movies that would appear to be comic related (Hancock) and others that actually are, but no one will realize (Wanted); there is the next quarterly wave of Magic arriving; and, of course, FCBD.

One of the weirdest things is how little effect movies have on my business. But, except for the actual product that ties in, (we sold a ton of Sin City books, 300, V for Vendetta) it doesn't seem to move the meter much. Super hero movies have even less effect-- except that I do have a couple of major customers who came back to the hobby because of them. But, overall, it's not what you'd think.

Again, every little bit helps.

I actually expect to sell a whole bunch of the Watchmen graphic novel (often considered the best graphic novel ever done) between now and the movie opening next year. It's going to be a real, big budget movie -- and going to surprise people. It might move the meter toward acceptance of comics as a real art form.

Iron man? Not so much.

Here's the problem. I have the current Iron Man and stories from the last five to ten years, in graphic novels, but the original conception (which is what the movie is based on) was done in 1963; so we're looking at extremely expensive, extremely rare originals; or very expensive color reprints (about 50.00 each) or cheaper black and white reprints.

Theres also this weird Catch-22 when it comes to kids comics. Comics actually designed for kids (really designed for parents) don't interest the kids because they can just tell it's designed for them. But the regular comics, which sell to my 30 year old customer base, isn't what the parents want to buy for them (though many are just fine, just not what they're expecting.)

Comics originally weren't really designed for kids, per se. Kids just happened to pick up on them, and if their parents disapproved, so much the better.

What happens most often -- and it happened with Spider-man, and Hulk, and Daredevil and so on -- is that I try to show the current offering, the material I actually have in stock or can get, and the customer will look confused and say,

"This isn't what I remember....."

But, heck, if they hadn't watched a T.V. show in 20 or 30 years and turned on the Telly today, they'd be just as confused. What I do is show them the comics from 10 or 20 years ago, and often that will satisfy them. I'll just be darned if I know how that is going to turn them into 'current' comic readers.

So, I'm happy about the Iron Man movie, and I'm happy about the FCBD coverage....but....

How to explain it.

Spring movies and other spring events aren't the real start of my business uptick. The real start up of business for my store -- and the rest of Bend, for that matter -- is the start of summer.
I'm driving a two ton car down the road, and I'm still heading up a steep hill for the next two months, and then at the top, around June 15 or so, I'll be rolling down the other side of the hill for two or three months.

These special events are like a strong tail wind. Nice to have, but not really pushing the two ton car up the hill.

But I'm grateful for any activity in the meantime.

Wow. Reading this over, I see how good I am at making lemonade back into lemons.

Let me put this a different way; I think all these events are going to lay the foundation for a great summer, and a much better spring than I otherwise would have had.


Ordering comics in the Real World.

To follow up on yesterday's blog about ordering: How ordering works in the real world.

When Marvel went to a 12 month rolling discount, they also instituted a Final Order Cutoff Date, or FOC. Sound it out, and that's how I felt at first. Totally, FOC'ed. But after awhile, I kind of started to lay back and like it.

Here's how it used to work. Say, just for an example, that I order 10 copies of a #1 of a new comic. By the time that issue showed up, I probably would've ordered 8 copies of #2, and 6 copies of #3.

This sort of downward progression is the norm in comics. People pick up #1's, give them a try, and maybe 20% don't continue, same with #3, until the title stabilizes. Usually, if they've stuck at that far, they'll keep going.

The opposite is rarely true. That is, I rarely sell 10 of the #1, and have a demand for 12 of #2, which makes sense since people aren't going to start with the second issue.

Which is why I tend to gamble a bit on #1's, figuring that whatever level I order, I may be locked into. But then I tend to ameliorate that risk with the next issues.

Why not reorder?

Because up until the last few years the system discouraged that.

Let's say I order 10 copies of #1 and sold out in an hour. I used to get on the phone and order a quick 10 more copies -- but they wouldn't arrive for a couple of weeks, and often by then the steam had dissipated. But what was worse, I'd try to up my orders on #2, and often (because everyone saw the same thing and reordered quickly) I'd not get them. Everyone on the east coast is 3 hours ahead of me, or more. Bigger shops, the ones most likely to reorder tons, get their comics a full day ahead of me (don't ask, subject for another day.) So now I've enticed a possible 20 people with a #1, but can only deliver on 8 copies of #2, thereby disappointing 12 possible customers, which is worse then never enticing them in the first place.

This is then compounded by #3, which you might every well get, but because nobody could get #2, nobody wants.

When you add in the risk of the sellout of #1 being a fluke (which happens more often than not) it almost doesn't pay to do reorders. Spend your money on graphic novels and/or the next big title in the system.

But Marvel's new FOC made it possible to up my orders up until about 2 weeks before the arrival; thereby allowing me to insure that I'll get the right number of #2's and #3's. Not only that, but my reorder of all three issues counts toward my discount rate. So if I started with 20 buyers, I could insure that I could satisfy demand even if it was twice my original order.

Which is why, outside the quality of their offerings, Marvel has surged ahead.

Tuesday, April 29, 2008

Urban Bend Corridor

I noticed the City of Bend has put the Urban Corridor plans on hold.

Let's put it this way: I'm not surprised.

I used to watch the grandiose plans discussed on the local cable access channel and wonder how they thought they could pull it off. I'm not against redeveloping the Third Street access to downtown, Greenwood and Franklin. It could use the help. But I thought -- as someone who actually has a business on the corner of 3rd and Greenwood, that they were pretty cavalier toward existing businesses.

Like saying to a homesteader -- "Hey, I think it's great that you fought off the elements for the last few years and staked your future on an uncertain time and place -- but we had something more impressive in mind."

Here's the thing. They weren't just talking about an urban tax district, no they were talking about a grand, unified plan under their control.

Downtown Bend, in contrast, became a vibrant area again because of an urban tax district that didn't cost the taxpayers nothin' and which was used over a long period of time. But mostly it was brought back by one business owner and one building owner at a time. Organically, if you will. Naturally. (Though there was nothing inevitable about it, though it may seem that way now.) I remember many times when it was nip and tuck.

But it was driven from inside, mostly, and not some grand plan from the outside.

But most importantly, Downtown is a relatively small area. The Urban Corridor they're talking about, in contrast, is huge. It was going to be magnitudes more expensive and tougher. Not a simple matter of turning Bond and Wall into one way streets, for instance, but actually narrowing the streets, landscaping them, and turning one traffic flow into 3 or 4. With hundreds of businesses affected -- businesses that may not be glamorous in the city council's eyes, but functional businesses nevertheless.

The danger I saw was that they'd drive away modest and functional businesses in exchange for fancier and more expensive types of businesses that aren't going to get the kind of business they need.

But there was a chance that all they'd succeed in doing is creating a empty, soulless urban concept. It isn't just cosmetics that keeps that area of Bend from thriving. It also has to do with traffic flows. And I'm sorry I just don't buy the idea that planting more trees and narrowing the streets and whatever is going to significanly increase the foot traffic enough to make a difference.

In other words, they'll attempt to get the traffic flow diffused, and the trade-off is supposed to be that people will walk and bike more. But what I see are two roads, Greenwood and Franklin, that people use to get from the east side to the west side; and one big road, 3rd Street, that people use to get from the north to south, and I don't see that really changing.

It reminds me of the big plans they had 30 years ago about turning Downtown Bend into an outdoor mall. It look mighty impressive in the drawings.

But ask Eugene and Coos Bay how THAT turned out. Downtown Bend is thriving and vibrant partly because of the traffic. People complain, but the more the traffic the more the business.

And as a business owner, it seems to me the bottomline is how the businesses are doing, not how many flowerpots there are.

Monday, April 28, 2008

Diamond Comics and Unintended Consequences.

I just sent off my April Diamond orders, for product arriving in June.

It was 15% higher than the last few months.

I'll explain why. It's great example of the Law of Unintended Consequences.

A few years ago, Diamond offered us fixed discounts; Marvel, and DC, had their own discount levels and all the rest of the publishers fit into an overall discount level.

Marvel's medium discount was easy to reach. DC's was a bit harder, but not too hard. The next levels up, which represented about 3% to 2.5% respectively, were a bit more difficult. Marvel's next level, in fact, was so much higher I wouldn't even try.

A quirk of the ordering discount system is that it only counted preorders -- that is, orders in advance done all on the ordering form. Anything else -- reorders, bumped up orders -- weren't counted.

But I had arrived at a 'Just in Time' method of retail many years ago, because of my experience of almost being drowned by a deluge of sports cards that were late and no longer salable; and a couple of years later, a deluge of comics that were late and no longer salable.

Not accepting shipment of them isn't an option, especially in comics where there is a de facto monopoly. Burn your bridges with Diamond, and you're gone. Nor do I really want to burn my bridges with the wholesalers in games, cards and books, some of whom I've had good relationships with for years and years.

In exchange for this safety valve, I probably pay a couple percentage points more in cost of goods, and the equivalent of another couple of percentage points in postage.

I've played with this scenario over and over again. Not doing direct ship reorders each week; or bumping up my preorders; or doing a reorder every other week (my current budgetary mode.) But, ultimately, I prefer getting the product faster. I prefer being able to tell my customers, "I'll have it for you by Thursday" and then seeing the look of surprise in their eyes when I actually do it.

Here's where it gets tricky. DC has always had an excellent back catalog of graphic novels. It was usually possible for me to include enough of these in my preorders to qualify for the next level of discounts. (Sometimes I'd end up with multiple copies, but they always ended up selling.) Like I said, I didn't even try for the next discount level with Marvel. (Who, strangely, had a pretty bad back catalog of graphic novels.) As a result, I was getting a couple of extra points from DC than I was from Marvel.

Then Marvel did something unexpected. It more or less opted out of the structure created by Diamond, and said; "Never mind -- from now on, your discount will be determined by your overall purchases over the course of a year -- preorders, advance reorders, and reorders alike."

This didn't help me at first -- like I said, their level was so much higher than DC's that I didn't really try. But part of their new deal was that I could actually lower my comic levels up until 2 weeks before arrival, or increase. And most often, I increased.

A strange thing started happening. Marvel got better at creating a backlog of good graphic novels, and -- this is most important -- they started actually rewarding me for making reorders on their comics. My discount level started to rise without me really paying much attention.

DC meanwhile, froze their discount level at a fairly high level.

Over the last three years, I've been rewarded for making higher orders from Marvel, and haven't been penalized in the least for making smaller orders from DC. As a result, for instance, I've made all my graphic novel reorders on the weekly ship, instead of in advance.

This week, DC finally announced their new discount levels. And they are considerably higher than I've been ordering. The new levels count reorders, and they will have to total all those up, so I'll have to wait until next week to find out where I stand. It's going to be close, but I think I'm going to fall back to the medium level, effectively losing 3.5% discount. I knew this was a danger, but as month after month, year after year passed with no penalty, I started to trend toward lower orders from DC. It wasn't intentional.

The one saving grace is that their rolling discount will be based on a rolling 6 month average rather than a rolling 12 month average like Marvel, so I can correct the problem fairly quickly.

This month, for the first time in several years, I was incentivized to make higher orders from DC.

So the two companies have flip flopped. I'm now a full 4% better terms with Marvel than I am with DC.

Next shoe to drop; the overall discount level from Diamond. There I believe my reorders will be enough to keep my level about the same.

This is all in preparation for the new Point of Sale system Diamond will -- supposedly, eventually -- offer us. It's looking as though this is the year I'm going to be dragged into making much needed upgrades in my technology. Time for a bigger and deeper internet presence. More on that later.

Sunday, April 27, 2008

Free Comic Book Day

Free Comic Book Day.

What a scary thing to wake up to -- the big floating, toothy grinned face of Duncan, like some sort of Halloween mask. (Does that look like a comb-over? I hate comb-overs!) Linda liked the picture, though, so maybe it's O.K.

This kind of publicity is worth ten times the advertising coverage. But you can't just ask for it; it has to be the Bulletin's idea. Anyway, I remember seeing Dave Jasper last year around this time and mentioning that he ought to do an article on FCBD. But I was surprised when he took me up on it.

FCBD is one of those rare examples of a proactive idea from the retailers actually being picked up by the rest of the industry and pushed through. These are quality comics, that we pay a nominal fee for, and hand out free. I've always had lots of leftovers, which I then give away to any kids throughout the year who show the slightest interest.

One quote Dave left out; he asked me if kids were buying comics, and I said, "They do when they're FREE!"

Saturday, April 26, 2008

More Pegasus, less Real Estate.

Talking about comics and comic shops on another blog, and told them to come here. Then read over the last number of posts and realized I haven't been much discussing comics.

It's there, folks. You may have to dig a bit further back.

And another reminder to me that, fascinating at the Bend economy is to me, it don't mean nothin' to everyone else.

I'm am a bookstore, and that's the unique hook that grabs people. There are plenty of kooks talking about housing bubbles.

Deerf#%ch###er, starring Robert DeNiro

Wow. The 'Serial Deerkiller" story just keeps getting weirder.

This from the KTVZ. com.:

"He (Livermore) faces 22 charges, including one that alleges he did more than just kill deer.

"The last count is attempted sexual abuse of an animal" said Crook County District Attorney Gary Williams. Asked if he could elaborate on the charge, Williams said, "There is nothing I can say on that count."


I'm doing just fine, Thank You.

You're on the street and you meet an old friend.

"How you doing?" he asks.

"Pretty good, but I have this really bad cold."

"Well, I hope you get better!"

A few days later, you see the same friend and he exclaims,

"I thought you were dying!"

I have just got to stop talking about business at the store: when someone asks how I'm doing, I need to say, "Fine!"

Customers don't hear the nuance, the yes, buts.... They don't know from sales versus profit. If I say, "Things are slow, business is down because of the recession," they apparently hear, "Things are dreadful, we're doomed." If I say, "I have made adjustments, and we're doing fine," they apparently hear, "I'm taking this medication that is experimental."

Oh, well. It's a lesson I just needed to relearn. If enough time passes between incidents, I forget. I can sort of understand it: when most businesses won't acknowledge the slightest weakness, the fact that you mention any kind of negative is alarming to them. They don't realize it's a personality quirk that signifies more my running off at the mouth than it does real weakness.

I think its O.K. to say something like, "Well, you know it's the slow time of year," or something innocuous.

At any rate, I'll explain here once again -- sales are only one measure of health. And in fact I'm making more profit now than I was during the boom years. So there...

I've always said, it's the businesses that don't talk about it who are the most dubious; but really, I don't think talking about it or not talking about it is a true measure. Unless it's the end of the road. Then businesses DO tend to talk about it, either because they are giving up, or in a forlorn hope that they'll guilt people into spending.

That's probably why my being honest is so alarming -- because they connect it to that phenomenon.

There is some small measure of benefit from being straight-forward, but probably not worth the misunderstandings.

Had a sport guy in yesterday. After explaining the difference between 'hobby' and 'retail' brands; how baseball has cleaned up it's act and rookies are now rookies, and brands have been winnowed down, and how cards aren't released until spring training; and how the newer cards are better than cards from 5, 10, or even 15 years ago, I sort of gave up on him.

I could tell he was having none of it. Sports card collectors have been burned so often that they have built in B.S. detectors. I wasn't him, but he couldn't know that.

So, instead, I started talking to another customer, and mentioned that sales were down 11%, and that I attributed it to the recession, and so on. I could see the sport card guy perk up; it was as if I had shown I was credible.

He ended up buying a box of cards.

Interesting reaction.

But, overall, I'd be better off saying, "We're fine, thank you. How are you?"

Friday, April 25, 2008


Rereading the last post, it makes it sound like I'm a real slacker. Which is pretty ridiculous when I really count the hours and probably shows what freaking workaholic I am. I'm still working about 65% of the available hours. If I want to take the weekends off, then I'm really only not working about 12 of the remaining hours, which I'm paying Patrick for if I'm there or not. I'm still going to work 5 days a week. I'm still spending 10 hours a month at home on the orders; and I'm not going to count the hours and hours of perusing the web in service to the store.

It may be a bit more noticeable because I'm not there on weekends. But weekends are the best time to take off, because there are more casual customers then, and less regulars. Being the 'boss' works best with regulars.

Besides there are subtle advantages in having an employee there half the time. People enjoy the banter, the store seeming more active. Any good employee develops his or her own group of customers. (Hey, if you don't like me, you can always come on days when the employee is there.....) The employee is a different, younger age, and that may appeal to some people. And an employee is going to mix the product sales -- have his own favorites, or be able to sell something that the owner wouldn't automatically try to sell, and so on.

What's ridiculous over mooning of the hours is that, as I've often said, I worked almost 7 years straight, 7 days a week. I may of turned middle age in that timespan anyway, but I'll always blame those years for turning my hair gray. I wasn't always a happy camper during those years, either.

So the biggest advantage to an employee is a well-rested, jollier owner.

Happy Bratton Day!

Happy Bratton Day!

(Stole that from Marge.)

Pegasus had a great first half of the month, and a lousy second half, which is a typical pattern for me. Not exactly sure why.

A little confusing. On the plus side, I seem to have fairly high foot traffic still. I have plenty of people walking into the store who say they just moved here. And just bought a house! And most interesting of all, the friends I have who are selling houses are succeeding; not having to give them away, either.

On the other hand, I have had a fairly large number of cancellations of shelves -- almost all people who are leaving town for better jobs.

So I'm gaining browsers, and losing regulars, not exactly a good tradeoff.

My sales at the store are probably down 10 to 15% overall; Linda's sales are fine. A few months again I was dividing this decline by 5% less product, 5% recession, and 5% slowdown in comics.

Now, I'd have to say that the 'less product' part has stopped affecting us, and it's more like 8% recession and 7% slower comic sales.

And, my unscientific survey of parking spots, traffic noise, job inquiries, cold calls, and people trying to sell me 'old' comics or cards is still in the negative.

It's about what I expected and planned for. But I still don't like it. Instead of being stressed about bills, as I would have been in the past, I'm more disappointed that I'm not making as much cash profit as I hoped. I'm making progress toward debt elimination and cash reserves but it's slower than I hoped.

Still, this has shown me just how fundamentally strong the store is compared to past slowdowns. But like using the air bag in your car, you'd rather not ever put it to the test.

The final factor, if I'm being honest with myself, is that I'm not there at the store as much.

But this is intentional. A store that exists only because I'm there is not going to be very functional. Pat is as good an employee as I've ever had. I need to find our how much the store generates without me there doing all the heavy lifting all the time. If it were to drop near some sort of danger point, or course, I'd be back in a flash. In the meanwhile I'd like to ascertain whether the store makes money on it's own.

I'm not sure I'm such a big factor. I suspect we'd be having about the same level of sales with or without me. But, if I wanted to be totally safe, I'd be there....again. But a store that is maintained through sheer willpower of the owner alone -- especially after so many years -- in some ways still isn't a mature store. It would be harder to sell, someday, certainly sell to someone in an ethical way that says to the buyer, yes, this business is worth buying.

Pat called in an emergency, so it looks like I'll be working all day anyway. This is the default position in my store, the place I always know I'll end up back at. I'd like to take off time while I can.

Thursday, April 24, 2008

Pronghorn gets it's fifth extension.


Meanwhile, the headline on the U.S.A. Today is: New-home sales plunge to lowest level in 16 1/2 years.

Nothing in the Bulletin, but the Oregonian seemed to miss the deadline, too, so I'll choose to believe they aren't burying the lead.

Ironically, though, tomorrow is April 25, the day that Dana Brattan announced that Bend would lead the country out of the housing slump.

So that will be the perfect headline for tomorrow.

According to our pet real estate agent, Marge, over on Bend
bubble2, these are the current stats:

As of 4/23/08
51 Sold @ $270k Med

Same period in March 08
67 Sold @ 293k Med

Same period Apr 07
106 Sold @ 349,500

There is a letter in the Source from a supporter of the BAT drivers and their demands, who more or less accuses the management of being bozo's. Who are the clowns here? I'd have to say it's the drivers' union making demands just as the transportation district is going to voter's for tax money. Would it have hurt them to wait?

It seems like everywhere I turn, some big corporation is asking for an extension, or more tax breaks, or some other kind of assistance. But the smaller you are, the less pull you have, I guess.

I don't speculate or invest in comics or cards or toys or anything else. I've got 28 years experience, so if anyone should know how to do it, it should be me. But I think it's more or less pointless. I've decided I'm the bartender, I'm the pusher-man, I don't get hooked on my own product. I try to enjoy the stuff I sell for it's own merits, just as I live in the house I live not as an investment but as a home.

But everyday I'm asked, "What should I buy? What's worth money?" I don't know how to answer that question. It's illogical. If I thought what I was selling you would be worth twice as much in a month, why would I sell it to you?

Antiques Roadshow aside, it's extremely difficult to make money by collecting. If you already own something worth money, that's different. But to set out to do it is much, much harder than anyone realizes. Sure people get lucky, but it's not a way to try to make money.

Who should know better what comics to buy, or what brand of cards to collect, than me? And I don't have a clue.

But I'm told by people who have one little smidgen of the knowledge I have that somehow THEY know how to do it; ebay, or shows, or they got a friend. I usually shrug my shoulders and say, "Have at it."

You know, there is always the possibility they know something I don't know.

No there isn't. Truth is, I can't force the issue. I've already said my piece. It's way more difficult than it looks, even if you spent all your time doing it, and unless your time isn't worth anything, you might be better off gambling in something else.

I know this sounds ridiculous to them; (just as I realize it probably sounds ridiculous to you readers). I probably benefit from this illusion to some extent -- though not with my active hyping -- but I do know that most people chose not to believe me. After all, there are entire industries built on the concept of collector value; price guides, conventions, shows like Antiques Roadshow. I won't argue with you. I'll just say this: I have tons of experience, and access, and inside knowledge -- and I DON'T SPECULATE.

However, if you want to read comics, or collect cards, or play with or decorate your desk with toys. Then I've got what you need. Hopefully, this is the majority of my customers.

This slowdown had me thinking for awhile that it might be an opportunity to make money in real estate. That maybe -- if I had some cash in hand -- I could invest in some commercial property, for instance.

That possibility is starting to fade, because the same dreadful conditions that might lower commercial prices to within reach, also are going to impact on my chances for profits. I'm beginning to think that I'll get by, again, maybe better than any other slowdown, but not so's there will be a pile of money at the end.

And I think I'm O.K. with that. I think, despite my supposed negatively, I had stars in my eyes about the possibilities of profiting from a bust. But I forgot that every bust I've seen in my store -- beanie babies, pogs, comics, cards, whatever -- has never really presented an opportunity for huge profits after they burst. No matter how much cash I might have. No matter how much experience. Slow is slow is slow. What remains is an afterglow, and illusion of it's former glories. Other people buy into the illusion that comics are worth money, or cards are going to go up in value, but not I.

So why should real estate be any different? Historically, real estate hasn't been that great of an investment. Not to rubes like me, because that's what I would be. I'd be the equivalent of those people who come in my store who have a closet full of 'old' comics or 'old' cards and think they're rich.

What really brought this to a head, was a comment by someone over on the Bendbubble2 board that it might be time to buy a 'cheap' house and 'rent' it until it became worth something again.

The resident real estate agent over there, Marge, said:

Dudes, Rental investments haven't made REAL sense in Bend since the early 80's. I don't care if you pay cash or 30% down there is no sense in todays prices.You never make your maintenance and PITI. Now it's even worse. If you have bought or are buying in years 2006 to date, you are screwed. The only way you make money is by selling. Since the prices are going down for the next 3-4 years and will be held down for years after that, the only thing you gain is depreciation. If that works with your income , jump right in. Otherwise jump ship. I ask, why do people consider a house anything different than any other purchase that you have to maintain, that goes down in value as soon as you own it? Why should one expect a return on the investment? You use it, many don't maintain it, you but it like a car. It's not a diamond that may go up in value like gold. What is the point of the unrealistic expectations. Answers?

You know what? That has the ring of truth. That sounds like the sort of thing I say to my customers.

So I think I'll stick to what I know.

Wednesday, April 23, 2008

I have just GOT to quit visiting economic blogs. I know the rest of you probably wish I would too.

See, I first started focusing on the housing bubble, cause...well, I recognize a bubble when I see one. I have a Doctorate in Fadology.

But I admittedly don't know a whole lot about financial markets, or credit markets or any of the rest of that, because....well, see the title of my blog.

Visiting the economic blogs is scary and depressing. I was trying to work my way through a huge list of them to bookmark just the relevant, but it is such a steady drumbeat of negativity that I could only do about 10 per day.

So finally, I work my way up to the D's, eliminating any site that is too jargonistic, or too conspiracy minded, and all the stock market blogs (if I ever invest in the stock market, I'll be using a dartboard technique.)

Oh, here's one. The Daily Dose of Optimism. That sounds promising. Look -- he's saying that despite the bad news, the stock market is only down 6.5% for the year. Wait....

This doesn't look right.

There's no date, but the log entries stop in August of 2007. (Coincidentally, my first down month in 5 years.) It's funny, because there is no hint where he went. No followup whatsoever.

Wonder if he got hit by a bus. Or fell into a depression. Or became a Sith.

In a way, there is almost too much agreement how bad things are, or are likely to get. Makes me doubt it, because it's just too easy.

But then I remind myself that almost everyone I talk to on an everyday basis is blissfully unaware. It doesn't impact on their day to day lives, or so they think. They haven't even begun to consider the idea, for instance, that their house could actually be worth less.

How they can be unaware is a mystery to me -- but I suppose if they never read the paper...

And if I really need an antidote to all the scary news, I need but watch Fox and or CNBC or CNN, and they'll lull me right back into complacency...
I left the front page of yesterday's Bulletin in the bathroom, and Linda (who usually won't read the paper because she takes news to heart) read the article: POLICE ARREST PRINEVILLE MAN IN WHAT THEY SAY WERE SERIAL DEER KILLING.

(First of all, a MUG SHOT! Love those KTVZ mug shots and I wish the Bulletin would do them everytime too.)

This was just a really weird story in a whole bunch of ways. That he seemed to target "pregnant" deer. That he had a "sawed-off...rifle". That he had a "homemade silencer". Most alarming, because it's what the Washington snipers did, he had a "specially designed compartment in the trunk of his red Subaru."

Wow. Was he practicing? Or was he some kind of ninja deer killing assassin? The scourge of deer -- as in, I am Legend? Or just really pissed off at the entire species (especially the breeders) for eating his garden? Maybe a gang of them broke into his kitchen and ate all his lettuce?

But I think the Bulletin has it right. "Serial" as in "Serial Killer." I hope they check into any suspicious disappearances of friends, family or neighbors.

But the clinching weirdness: He left the deer carcasses on the side of the road because...

...I can't believe he said this.... can't make this stuff up....

"...he wasn't interested in deer meat because he was a vegetarian." !!!!!

Tuesday, April 22, 2008

I've said before, I think the most important attribute for a small business owner is the ability to think for yourself.

A couple of more confirmations of the time lag between what I see at my store, and news of what is happening in other stores.

Most stories I've read talk about a retail slowdown happening sometime in December, 2007 or even later. But turns out that J.C. Penney (I think it was them; or someone in that league) was talking about a slowdown way back in September, which more fits my observations.

Secondly, turns out the the comic market has had it's first slowdown since 2004; about a 7% drop in sales. Which is also something I noticed when I finished up my first quarter numbers. But I hadn't really heard anything about this from anywhere else. So here it is, with April almost done, and only now is there any news that it was slow Jan/Feb/March.

I've mentioned before that I go to a Bulletin Board that is full of other retailers. Which is great, and I learn a lot. But I hardly ever hear any of them mention a slowdown, and if one happens to let slip, ten other stores will immediately pile on about how great they're doing. I don't think it's a deliberate attempt to deceive, or even a pollyanna reaction; these are the savviest, most aggressive dealers in the country, for one thing; and for another, the most active posters are often relatively new stores which are still in the growth phase.

So confirmation that comics have been in a bit of a slowdown, and analysis that it was from 'event fatigue' the same reason I came up with, and that it's very difficult to top a high. Last year we had huge events from both Marvel and DC.

Anyway, since I've already ordered into June, it's just another instance of not waiting for the news to make decisions, because the news reports what's already happened, and by then it's too late.

Unless there is an outside factor (say new competition) or you know in some way that you have been dropping the ball (not making timely orders, or something -- something you know you're doing) it makes sense to trust your own figures. Chances are, everyone else is seeing the same thing, but you won't know that until months later.
I've been trying to branch out in the financial blogs I look at. For instance, I was curious if there were still any bullish blogs about the housing market and the credit crisis. (Not bullish about the stock market, there are tons of those sites...but the stock market seems to exist in it's own fog of numbers.)

Sure enough, there are a few financial blogs that seem to be able to create graphs and interpret statistics in a way that makes my head spin. Up is down, and white is black. Some of them seem to be even saying that the whole slowdown is an illusion. (Damn my cash register -- how did it get hypnotized?)

But more often, I'm finding sites that are even more gloomy than me.

There is only one site I've found so far that really talks about the subject I'm most interested in right now: the commercial building market, especially retail.

Those of you who miss the Cassandra screeching days of old, read on. There is still some doom and gloom to forecast. Those who think it's all overblown, please pass along.

Go check out the graphs and comments about commercial space at the blog: Mish's Global Economic Trend Analysis. Check out the rising vacancy rates, but even more importantly, the lag time between construction and the spaces coming onto the market. There are very few loans being made toward new commercial buildings; but there is still an avalanche of new commercial office/retail coming onto the market.

Especially check out that graph of Architect's Billing; it looks like the Cliffs of Dover. A complete drop off.

Figure that Bend is going to be all that much later coming online and that when it hits its likely to be an even bigger percentage. Meanwhile, subtract all the office space that is about to be vacated by 'consolidating' banks, mortgages, real estate, and builders. And then take out some of the retail businesses who are oriented toward the building trade.

Bend is going to be horribly slammed. Some of the employment numbers coming out are looking weak; and they don't include all the 'contract', or under-the-table workers. This is just the beginning. There was a whole wave of workers who slid over into commercial building, but once the stuff being built is finished, I doubt we'll see too many new projects.

The optimistic job market talked about in yesterday's paper was "6-8" years out, and I've always thought Bend would probably recover nicely by then, but you'll notice also that most of the jobs mentioned are in retirement and hospitality. What do we call those people who serve others, including the elderly? Oh, yeah. Servants.

The crux of the problem, is that in Bend the housing glut is only half the problem.

In a sense, we doubled down. Not only do we have the same problem in housing as many of the overbuilt areas like California and Florida, but we have a sort of unique problem. Unlike many areas that are just overbuilt bedroom communities, (live on the outskirts, but go shop in the big town down the road), because of our isolation, we also built all the services and retail space. Just drive around. Go one block over from any major road, and there will be new, bright, shiny and totally random businesses. Who is going to find these places?
Who is going to shop there?

What's happened is, there aren't enough good paying jobs here, and if you moved here for the amenities, you certainly aren't going to accept any loss of status job. So what do you do? You start a new business. Just like the kind of business back home you always dreamed of, and which in your estimation Bend doesn't have; or more likely, we have, but you think you can do better; or most likely of all, you didn't put any real thought into at all.

I mean, how hard can it be?

But if you open a business in a location with high turnover, or a business who's format has already been tested over and over again; well, maybe Bend isn't ready for you yet. There are plenty of people who pull it off, course. But even in the best of times, and in towns with much more population to pull from, opening a business is a risky proposition. This creative destruction, this equity sinkwell, has certainly benefited the Bend economy up until now. But what happens if that equity money stops coming to town?

Timothy has questioned whether I understand capitalism and the creative destruction that takes place. Well, you've got Silicon Valley who's capital destruction rate amazes the Japanese; but the payoff is huge for the successes. But you also have small town America, where often a failed business not only affects the owner, but everyone else in the community as well. Sometimes the whole town becomes a bit of a failure.

Bend is somewhere in-between these too extremes. It can handle quite a bit of turnover because it's growing -- or at least has been growing up do now. But what happens if that equity money quits coming to town?

It appears to me, as well, that many of these newcomers are sinking more money into these businesses than they can ever extract. I mean, not only do they need to be cash flow positive, earn the owner a real profit, but at some point the original invested money needs to be taken back out. When you lose a job, you don't also lose your nest egg. So the landlords may very well be seeing a bunch of that money at the beginning of the leases, but very little of it may be making it to the end.

We in Bend bought into the idea that we were exceptional; that is already not proving to be true in housing. I don't think it was ever true in retail either. We are isolated, with no interstate, no real 4 years college, no major industry, and a limited population. We've been subsisting on the new money in town from the boom, supplemented by tourism. The boom forgave a multitude of sins; but now we're standing before the Pearly Gates and no excuse will do.

This is about the equivalent of mid-2006 of the housing boom, when it comes to retail. Lots of stores opening, lots of commercial space coming aboard.

How can anyone say it's slow in the face of that? But just as mid-2006 was the height of the boom and probably not a good time to buy if you were investing, landlords don't seem to be in a frame of mind to think there is going to be any downturn in demand. If commercial is being talked about at all, it's because of the opening of Trader Joes and imminent construction of new malls. And indeed, the big box stores will be fine and are just positioning themselves for 5 or 6 years down the road. But how many wannabe's are going to be able to wait that long?

Unfortunately for me, it looks like I'll be negotiating my lease at just about the cusp -- and it'll probably be difficult to convince any landlord that things may get dicey about halfway through any new lease so please be kind. I mean, I can't protest too much without casting into doubt my own viability. Just like most homeowners, landlords like to charge 'comparable' rates, and probably aren't much interested in getting ahead of the curve, at least not downwards.

It's a real catch-22 situation; if the economy goes so bad so fast that my landlord is willing to actually come down, it means things are dreadful. Which I don't want. But if spaces downtown are still renting within a month or two every time they come open, they probably will actually want to go up.

I suppose it doesn't really matter that rents will probably get much cheaper a couple years later, as long as I think I can pay the rent I do have. Rent isn't even the most important of the many factors in my business. Just like it may not really matter what your house is worth if you are actually living in it as long as the monthly mortgage is O.K.

Still, I guess I'll be envious of those whose luck in their timing of lease negotiations was better, and figure it all evens out in the end.

Monday, April 21, 2008

The following were in my comments section. (Hell of an ego to keep commenting on your own commentary, huh.)

Bilbobustbart calls me on the repeat nature of my posts, over on Bendbubble2.

"Even Duncan, while I have begged for over a year that he focus on his business, still blogs daily, he too could focus on fixing Bend, rather than writing the same insipid shit every fucking day, over & over. For dunc, everyday is ground-hog day."

Which really made me laugh. Serious belly laugh, which are hard to come by. He has a way of cutting to the chase.

But, sadly, I'm not writing this for Bilbo's edification. I'm writing this strictly for me. It's my way of psyching myself, of saving my wife's ear of the same damn message day after day. (She calls me Wiley Coyote because I always think I've figured a new way to catch to Road Runner but ending with the same stupid look in my face.)

Besides, what can we do? This is a market correction -- or, another way of putting it, this is just reality.

Too many houses, not enough jobs, prices too high, credit too sucky, and so on. Ain't nothing to do but hang in there.

I said from the outset -- I'm just an observer. That's what I do. But hell, isn't that what all of us do?

Writing this IS MY WAY of getting involved.

While it's probably true that it's boring and pointless to talk about the housing bubble now , I'd like to point out that in my experience most of the damage happens after most people stop paying much attention to it.

That is, the spectacular busts are not the end, but the beginning. The implosion of comics in 1995, followed by the bankrupcy of Marvel and the consolidation of distributers,was followed by years and years of downturn and scraping along the bottom. 80% of the damage happened AFTER the news. Same thing with sports cards.

So this downturn is something that business people will be dealing with for years to come....but I predict it will become boring to cover and some other crisis will hit the news instead.

But most of the damage will happen after, when people have quit paying attention.

Old news.

So in other words, it will be a daily grind dealing with the problems, and probably the main focus of a whole lot of businesses, but nothing exciting to talk about and probably boring to hear about.

New Orleans is still in pretty bad shape, for instance, but how much do you hear anyone talk about it?

A nine day wonder of, what are we doing about the poor? and then, how about them Red Sox?

So Bend's housing bust is going to be at the basis of every business and government and financial decision from here on, nuts and bolts stuff, and none too exciting.

Anticipation was so much more fun, wasn't it Buster?

Limbo, limbo.

It's not all straight up or straight down, you know.

Why is it so hard to guess the top, or the bottom? Why do you only know in hindsight where the graph goes?

Once again, I turn to sports cards. Cards pretty much turned permanently downward for me around 1990, though I didn't know it until much later. But here is how it happened in real time.

Down month, down month, oh, oh, no wait a minute, a good a good month, another slightly good month, must have been an anomaly. Down month, down month, down month. Oh, crap. Up month! Up month! Oh, no, I'm running out of material! Down month, down month, down month, maybe I should start cutting orders (and yes, after 6 years of exponential growth, it took me a year to finally really start to react.) Down month, down month, and 6 more down months, and then 4 more and then,...boom, Shaquille O'Neal mania. Up months for 6 straight months!

Wait, fundamental problems haven't changed. Cut back. And then.....15 years down, down, down. Going from 85% sales to 5% sales.

And this happens with every boom and bust.

Eventually you get enough experience to ignore the minor upticks and minor downticks. You bet on a trend continuing.

That's where I'm at right now. It isn't so much that good news is outweighing bad news, but that there isn't enough conclusive news.

Well, yes there is, if you ignore the strange little starts and stutters that happen in every market.

Things of course are complicated by local conditions, both Bend and downtown, conditions in each of the industries, national conditions, personal positions, and most important to my figures right now, seasonality.

But you can't get distracted from the essential, core conditions. This is where sticking to your guns is most important. It's a huge advantage of experience. You can't let all the inexperienced people, who outnumber you probably 10 to 1, dissuade you from what you know in your gut.

So, I still think Bend has a couple more years of downturns, at the least. But there will be plenty of distractions along the way.

Sunday, April 20, 2008

Forbidden Kingdom. You know how Once in a Time in the West was the culmination of all Spagetti Westerns? This is the ultimate Kung Fu movie. (I swear it even had Morricone riffs.) A tribute to all kung fu movies, starring two great stars in Jackie Chan and Jet Li.

It has elements of Wizard of Oz, Lord of the Rings, and Karate Kid. Crouching Tiger, only not as serious.

Sorry, to use so many other movies as examples, but that's pretty much what it is. I went to it without reading any reviews, because I thought the fantasy elements would be strong from the previews, and Linda is a Jackie Chan fan. So I was a bit surprised by it's quality. (Now I'll got check Rotten Tomatoes and find out everyone else hated it.....)

Even the love story worked.

And of course there was like a ten minute fight between Jackie Chan and Jet Li.
Sticking to a strict budget this time around has been relatively painless. Hard to start, but once I started seeing the results, not so hard to continue. It shows how much I've stocked up over the last 3 or 4 years that we have plenty of merchandise to sell.

There might be a week lag in getting evergreen product back in stock, but hell, at one point I thought of doing it this way anyway, just to save on postage. Nothing is so important, it can't wait a week.

The spot shortages, such as they are, are in the margins. Things like Star Wars Standups, or Death Mints, or sports supplies.

But the thing about margins-- they are as endless as the universe. There is never going to be a time when I can fill in the margins, because the stuff outside the core is unlimited.

But even if I count everything I have ever had in stock as core, and everything I haven't carried as margin, I should be able to add; I just have to do it seasonally; at the beginning of summer and just before Christmas.

Just thinking outloud.
Not to be cynical, or anything, but why does it take so much money to run for city council, a position that pays basically nothing? Makes one nervous about their motivations and intentions, doesn't it?

Green Fatigue? Well, yeah, since nothing really seems to change. Putting on fun masks and dancing may have magical results, I suppose. We had our chance in the 70's with the energy crisis, and then we cozied right back up to big oil and big cars.

Intoxicated bicyclist hits car. Who says we aren't a resort town? Everywhere else it would be the opposite.

Even for an oldtimer, this is one cold spring.

Affordable housing. Wouldn't it make more sense to somehow convert some of the existing inventory into affordable housing than building more houses meant to be affordable?

Normally, I'd be sympathetic to a union, but with the BAT already dubious, this may not be the best time to be making demands. If we pass the measure, we can probably expect an endless number of such negotiations, once they have tax money in hand.

Spring lull on the housing front. But no worries, I'm pretty sure there will be plenty of fodder when the results are in. This fall, we'll all be pointing fingers and saying, "told you so!"

Saturday, April 19, 2008

I've got one full time job, right now. No, it isn't working at Pegasus. That's just hanging out. I'd probably do that for free. Besides, I'm letting Patrick work a lot of the hours these days. Why?

Because of my other full time job.

Which is....NOT spending money. Not being near order forms is not being near temptation.

You know how when you seriously diet, or try to quit smoking, or something equally hard it becomes your full time preoccupation? It's like that. I've thrown dieting into the mix just because if I have to suffer I may as well get it all over with at the same time.

Hi, I'm Duncan and I'm a spendaholic.

Hi, Duncan!

I've got 4 days of not spending under my belt. I fell off the wagon a little last week because I had a customer who special ordered a Tigrus and Euphrates game and the only one in stock was in the eastern warehouse and it would've taken more money to ship it than it was worth unless I got to the 300.00 free shipping level and I needed some other stuff for the store anyway and besides I was going to order all that stuff in two weeks anyway so if I don't spend the 300.00 in two weeks no harm done and if I get through next week without spending it would be like only drinking one...o.k. maybe two beers....and you can expect perfection after all I told myself I would be willing to lose a few sales but I wouldn't lose a customer and this guy has been back twice looking for the game and...

I'm back on the wagon, though.

A full time job.

(I'm sort of kidding. I've always stuck to budgets. But it can be hard to change habits....)
Suicidal competition. Sports cards went off that cliff, where they lay twitching on the rocks below. Comics went off that cliff, but caught their suspenders on a branch half way down, and since the competition quit throwing rocks at them, they crawled back to the top of the cliff, where they lay gasping and hoping they don't get noticed.

Bookstores and record stores are hanging by their fingertips at the top of the cliff, while the Big Box stores stomp on one hand, and Amazon stomps on the other.

Card games sit at the edge of the cliff, hunkered down, hoping no one notices.

And so on.

And to what end? Barnes and Nobles and Borders succeeded in garnering a lion's share of the book business, and both are in trouble. Amazon has succeeded into doing to them what they did to the independents.

But here's the kicker. Amazon has a long plan. Good enough. I won't argue whether they are currently profitable, or whether they've been profitable enough to make up for all the years they weren't profitable. I'm talking about the supposed endgame.

Because in my experience, there is always a surprise at the end of a long plan. A long plan only gives the universe a chance to come up with something unexpected.

I'm sure Borders twenty years ago never saw Amazon coming. They thought their long plan was the one that would work. But the world turns, and things happen. Murphy's Law is just as deadly to the big guys as the little guys.

So....what happens if something even cheaper and easier and ultimately unprofitable to most of the industry comes along and knocks out Amazon?

And so it goes.
Spent way too much time last night trying to google up a distant article I remember about Bend being the "second most over-retailed town" but my web-fu wasn't up to the task. I tried "over-retailed"; "Too many stores" and "Retail Square Footage" (and variations -- Average Square Ft. etc.....)

About the most interesting thing I came up with was a graph that showed that Americans have 23 sq.ft. of retail devoted to them, while most Europeans have about one tenth that much. Not exactly sure what that means.

At any rate, in one of the comments yesterday, Carl asked: "Why pillory the Big Boxes?"

Well, that's the question, isn't it? In fact, it is one of the main themes of this blog. Certainly not something that can be answered in a pithy phrase.

But in another discussion with a customer yesterday, I mentioned that there were roughly 3000 comic shops and 3000 independent bookstores and 3000 independent games stores and said;

"Strange how that 3000 number keeps popping up."

And indeed, it's more an anecdotal number instead of hard statistics. More of a median number. A number that can stretch rather dramatically from 1000 to 5000, but you get the drift.

So I'll throw out one idea today.


Small stores foster a sense of community. One of the real epiphanies I've had in my business was the realization that I was selling a sense of belonging as much as I was selling product. The Cheers Bar phenomenon of knowing your name., or at the very least, your face. And greeting you. A very big part of my job is to greet you by name as you walk in the door, and look happy to see you. And since I can't fake that, it usually means I AM happy to see you. And if I don't know you, my job is to make you feel welcome in the local community of whatever it is you're interested in.

The 3000 number is the number of stores that the people in each hobby or sub-culture or community are willing and able to support.

Not that they are always aware that's what they're doing. They just know they like popping into the store on a regular basis and talking about games or comics or books or sports. (Or beads, or knitting, or quilting, or cigars.....)

Sometimes they don't miss it until it's gone. They mistake getting 'cheap' product as the main goal of their activity. So they don't support the local focal point of their community. And then they wonder one day why isn't as much fun anymore and why it's so hard to get a group together. In answering Carl yesterday, Jeff said this:

Imagine you get some utility from having a vibrant downtown of independent shops. Then a Wal-Mart opens up on the outskirts of town. You begin shopping at the Wal-Mart because the prices are cheaper and you can still walk through the vibrant downtown when you like. But with everyone buying things at Wal-Mart, the downtown stores can no longer afford to stay open and the center of your city turns into an empty husk. You'd prefer to have the vibrant downtown to the Wal-Mart, but nobody ever gave you that choice ..

And that is exactly what I think I see; people don't abandoned small Mom and Pop by intent. They are enticed by the bigness, the cheapness and the newness. But if you asked them, they'd probably say they want both experiences. I think that would be possible if everyone could manage to divide their purchases, but of course that thought never occurs to them.

Meanwhile, the internet is even more a danger to that irreducible 3000 shops number than the big box stores are, especially over the long run. Because people can get the same sense of community online; it may be a virtual community, but it feel pretty close to the real thing.

But still, in the end, if there is to be any hope at all, if there is indeed an 'irreducible' number of shops, it will be the personal touch -- the community -- that keeps the Mom and Pops in business.

Friday, April 18, 2008

One of the more frustrating elements of comics is the time lag between the solicitation, the promotion, and the actual arrival.

Someone was asking about a late title the other day, and I pulled out the Weekly Update to show him the usual list of 'late' titles, and discovered that it covered the entire page.

Add to that the internet and the advertising and articles in magazines like the Wizard, and the reality rarely matches the hype. I go to at least three comic 'news' internet sites a day, and they'll show wonderful pictures and interviews of graphic novels; and I have no idea if they have already come out and I missed them, or if I have already ordered them, and even, sometimes, if they are more than a gleam in the creator's eye.

It doesn't help that each section of the catalog has it's own time line; comics are usually around 2 months down the road, but can be as soon as 3 weeks or as late as.....well, years. Toys are more like a quarter to half a year, and so on.

With 200 pages of short solicitations every month, over 5000 items, and with odds that the product will show up on time at about 50%; I simply refuse to answer people when they ask my when "something is coming in?" Because even if I spend 5 minutes tracking down the ship date, there is a half and half chance it won't show up even then! I can try to keep track of about three months worth of material at any one time; last month, this month, and next month. If it is a product that is being offered two months from now -- I put it out of mind.

It's hard to explain to customers that this isn't bad service or laziness, but simple triage. Let's say I was to spend 30 seconds thoughtfully considering each item offered in just one month's catalog; learning what it is, the content, putting it into my memory banks, deciding on whether to order it, how many to order, and then looking at the date. (a lot to do in 30 seconds). 5000 items would take-- 42 hours. Multiply that by all the active listings, and -- it's like one of those energy experiments where it would take all the energy in the universe to teleport something a few feet.

Of course, I make the effort when I perceive a real interest, or when there is a good question. But the casual, "when is the next X-Men coming out?" usually gets a shrug and the comment, "It'll come out, when it comes out."

Then....sadly, I have to explain why I won't give them more of an answer. Remember, I get something like 2000 individual items from one distributer per week alone!

Wizard Magazine is especially egregious about this; they trumpet titles that are far in the future, and even titles that never get produced! (One hint; a comic being 'optioned' for a movie is almost meaningless. Dozens, probably hundreds, of titles are 'optioned' for every one that gets greenlit.)

When I'm actively in the hunt for new, interesting material, I'll write titles down, go to the store and research when or if something was offered, whether I've already ordered it (if it intrigues me once, it will probably intrigue me twice -- except the presentation on the web may make it look better than the presentation in the catalog, or vice versa), and when or if it has shown up.

A lot of work for titles, that most often, aren't really in high demand. I KNOW I've ordered the product in high demand; that was in the catalog.

So I've all but thrown up my hands. It's the wild west.

I still get kinda irked when someone tells me something is 'out', and I go online to check only to find out it 1.) doesn't exist. 2.) was just offered. 3.) was offered years ago and is long out of print. 4.) is coming out NEXT week (most often -- publishers really do themselves harm by publishing too early, too optimistic times).

But, by god, the customer generally will believe the web and not me. The unicorn over the internet is more believable than the schlub at the store....

Anyway, with the store currently dealing with evergreens and high demand only, I just watch the parade of interesting graphics on the internet every day. Once in a while one is so intriguing I'll still track it down, but otherwise I just sort of notice them and think; if it's meant to be, it's meant to be.

Thursday, April 17, 2008

By the by, I'm not letting the locals off the hook in this process. My Dad was probably typical in that he loved the arrival of Walmart.

But I remember he used to love going into Masterson's St.Clair Hardware and chatting with the guys. They treated him with deference, called him "Doc", and exchanged dirty jokes with him.

Somehow I doubt the clerks at Walmart would call him anything but "Hey, you," and probably wouldn't exchange dirty jokes. In fact, I suspect they'd be fired for exchanging dirty jokes.

But I don't believe that Dad ever once thought that his two loves might be incompatible.

"Hey, Honey, sorry I haven't seen you for awhile.... You know I love you, but you're really expensive and high maintenance. I've found this really cheap tart that gives me everything I need. But you hang in there, Baby. I like having you around...."
As you can see, the main focus of my ire is the 'mass market.' I'm not unhappy with newcomers except insofar as they were enablers of this process of blanding of Bend. A Trader Joes to me is nothing more than a fancier McDonalds. It's same Trader Joes anywhere you go, and has nothing to do with the uniqueness of Bend.

So we have more big stores full of cheap merchandise that we don't really need. Big stores that look exactly the same no matter where you go. Pull a curtain around them, and you wouldn't know where you are.

I'm sad that downtown Bend has turned into a quaint, touristy, high priced 'village by the river' which most native Bendites won't go near unless they have to. It wasn't so long ago that we had functioning department stores, drug stores, stationary stores, and hardware stores.

To me, the mass market homogenizes and brings Bend down to every other town; Walmart is ugly. Big Box stores are ugly and bland and uninspired.

Pay no attention; I'm a disgruntled local.
There was a recent comment on Bendbubble2 of someone who was suspicious of Paul-doh's motivations. Personally, I think he's just an opinionated bastard who wants to world to hear his opinion. Just like the rest of us.

Anyway, the writer implied that only "disgruntled locals" were reading his blog.

I plead guilty to "disgruntled local" .

But not for the reasons you might think. I'm not disgruntled because of the growth and the congestion and the attitudes. Like I've said before, without all that I probably wouldn't have a business or a livelihood.

No, I'm disgruntled because this growth can't be sustained. Because it was built on hype and promotions, instead of real jobs. Hype permeates this town; from over-blown businesses (and too many of them); to overblown developments with overbuilt houses with unnecessary gates; to a city council who has overreached in public transportation and Juniper Ridge; to residents who have pristine hummers and SUV's that are twice the size they need to be.

Meanwhile, Mirror Pond will be allowed to fill with silt; the roads will be hastily patched; free parking will be taken away; white elephants like the Tower Theater will continue to sit; money is going toward lawsuit settlements instead of police and fire services and so on.

Because the self-important, over blown exceptionalism that pervaded this town, by people who made no real effort to understand the history or ethos of the area.

You tell me every time you sing the praises of Trader Joes that you would really want to live in Bend, California.

Everyone of you who says this is coming from a town that had a Trader Joes. Which means that you want to turn Bend into the town you left. You want to move to Bend, and pull the mass market in here after you.

That's what makes me disgruntled.
How liberating. Until yesterday, I hadn't even realized I was feeling restrained.

I feel better now. When even Bilbobust thinks I'm too negative, I think I've finally positioned myself where I belong. I've always been more comfortable being a contrarian. Makes me nervous when too many people agree with me. And I feel silly being the voice of reason.

It did sort of clarify how I really believe. I'm tired of looking for reasons why the economy of Bend might not get as bad as my gut instinct tells me. Thank god for Publius and the following comment:

I think your sky-is-falling attitude is both overly pessimistic and inaccurate. From what I can see Bend is doing very well. Within a block of my house two homes are being built and another is being remodeled. The stores I shop at are busier this Spring than I've ever seen them. Traffic today, a mid-week weekday, was more congested than on a summer weekend. Where I work we're overwhelmed with business. Bend is booming and prospects are good.

Yes! That's the yin to my yang I've been looking for! I want that kind of disputation -- no I need that kind of disputation. I know the sentiment exists, because I run into it every day at my store. Not from the construction people, anymore, I have to say, but the average newcomer to Bend.

Weirdly enough, that's what tells me the opposite. As long as I hear the 'boom' talk, I know we still have a ways to go. It's when everyone is on board that we've finally busted that we will have hit bottom.

About 8 years ago, the card manufacturers started putting more and better cards in the 'hobby' boxes -- the 'retail' boxes at the mass market were still cheaper. So, I'd very carefully explain the difference to the customers; and I could see in their eyes that it just didn't compute. Customers wanted cheap, not nuance.

But over the last two years, even the most casual of card customers quickly nod their head in agreement. Enough of them had bought a box at Walmart and found it half empty to finally understand.

Like I said, I went back into sports cards because I perceived them to have finally hit bottom.

Because the excesses don't get sweated completely out of the system until then.

Same thing with the Bend economy. As long as the illusion exists that nothings really wrong nothing will really change.

Publius's comment got me to start wondering about finding a new way to explain why small businesses in Bend are due for a world of hurt.

In my own particular corner of the retail world, I have less small competition that I did 18 years ago. Indeed, I'm last man standing. Taking into account expenses and costs, I'm probably making about the same income per product line as I was 18 years ago -- I've just adapted by having twice as many product lines.

Yet there are four times more people here. How can that be?

One easy answer -- the mass market has more than filled the void in competition.

I keep wishing someone would do the research on this; but there was a Wall Street Journal or New York Times (I sure wish I had saved it) about 5 years ago that claimed Bend was the Second Most Over-retailed Town in America. (Las Vegas was first, and no doubt will ALWAYS be first.)

So I'm just going to lay this statement out there and let someone prove me wrong: Bend is the most over-retailed (normal) metro area in America.

So how do I explain all the small businesses all over town? I think the influx of boom money is responsible for almost all that, and if that boom money is drying up, so will a whole bunch of businesses. It's not the 'high-end' shops who are going to avoid this, either. In fact, I believe they'll be the first casualties.

Still, Publius, I'd love to know if you think that it is smart for the builders to be building two houses on your block. I'd love to know what businesses you think were busy. And what business you are involved in that was "overwhelmed."

Details, please.

Wednesday, April 16, 2008

A year ago, if somebody told me they were moving their business to a new location, it was a new, improved and larger location. This year, it's to save money.

A year ago, if somebody told me they were moving to a new job, it was a because it was an advancement, with better pay. This year, it's because it's the only job they can find.

A year ago, if I asked a furniture salesman, or a spa salesman, or any other kind of sales business, how they were doing, they'd say, "Great!" and mean it. This year, they tell me it's horrid. And mean it.

And so on. I think it has begun to sink into people's consciousness what is happening. Faster and deeper than even I expected. I've been cutting back on expenses for almost a year now. I can't imagine how the new businesses are going to be able to cut back quick enough if they're only starting now. I can count on one hand the number of business owners downtown who experienced the last major downturn in the 1980's. They are going to be stunned and shocked.

Last fall, I mentioned that I thought it was important to set a benchmark in advance. I do this in my business planning, because it's too easy to rationalize away results of the moment, or conversely, make too much of them.

Selling less than 100 houses in March, was the benchmark I mentioned back in November as a sign we are in deep trouble. We sold less than 100. It's possible over the next three months we may sell a bit more than that, but we really needed to sell bunches and bunches more than that.

Actually, I think the number of houses for sale is under reported, the prices are over reported, and the under the table deals, desperation sales are happening completely unreported.
Of course, most businesses aren't going to say a word. Most are like the business of a competitor of mine last year who was talking big, but who I found out yesterday closed at the beginning of March. I'm sympathetic. I could wish people wouldn't listen to the media or cut back at all.

Still, I started this blog with the intention of being real. I suppose, if I was really hurting, I probably wouldn't post this. I did have to sleep on it. I thought about just storing it, and then springing it six months later saying, "Look! I was right!" But then, the opposite possibility is there that I don't post it because I was wrong, and that seems a cop-out to me.

If I'm going to do this blog at all, I need to say what I think. The entire context of everything I might say about Pegasus or Bend or my own personal circumstances come from what I really think. If I was anonymous, I wouldn't think twice about posting this. And the clincher, I'm making my decisions based on these conclusions, so I may as well share them. Otherwise, nothing will make much sense.

I think the Heloc removal has turned out to be a good thing, if unsettling. I really thought I was going to be immune to a downturn. (Silly me. I forgot one of my rules of thumb; downturns hurt everyone.) It has really firmed up my suspicions, and made me act more aggressive toward cost cutting and debt removal.

I think a whole lot of 'back up' capital is going to be spent this spring and next fall to keep up appearances. (And of course there will be many exceptions; businesses that do well despite everything.) So you may not see much cracking on the outside, but behind the scenes.... I am already hearing customer after customer tell me they've been laid off or their hours have been cut. And this is the busy season for the housing market, and we're headed into the busy season for the tourist business.

I still get pretty good tourist business -- after all, most of the north of the U.S.A. doesn't have it as bad as Bend, Las Vegas, Arizona, California and Florida. It's going to hit the valley too, eventually, though not as bad as here.

And I still get the customers with steady jobs. Any of you folk ready this who have solid jobs, just ignore this entire post!

My sales are down, but not more than I predicted and allowed for. More alarming to me is that I'm seeing volatility I haven't seen in years. Horrid day, followed by gangbusters day, followed by average days, followed by gangbusters, followed by horrid....followed by that. The averages are still there, but it's a bit more stressful getting there. The thing that is encouraging is the broad range of stuff I'm selling -- just like I hoped and planned.

And I really want to emphasize that Downtown is really proving out. The foot traffic we get downtown is so high, that it can take a downturn and still be much higher than anything I am used to. It will probably be the last place in town to feel it. Yes, the rents are high. But, then again, we actually get customers.....
I'm totally psyched that my diversification efforts over the last five years are really paying off. Having 10 product lines, fully stocked, has fueled sales that simply wouldn't have been there before. This is the situation I've been planning for. But it is getting a big ragged around the edges, enough for me to think it will get worse. I've adjusted my orders accordingly.

As I've said before, knowing in advance that someone is going to sock you in the jaw, doesn't make it hurt any less. We'll work our way through, but it will be work.

I want to emphasize that I think Pegasus is going to weather this just fine. Remember, I always talk this way --have for the last 28 years. This is the most solid we've ever been. I just hate to see us have to cut back at all. One way to put it: While sales are down, profits are actually up. It's weird that way. I'm more or less harvesting the fields already tilled, rather than planting new crops. When things are good; I tend to expand as much as possible, increase sales as much as possible; in preparation for times like this.

So, not only do I think we'll be fine, I think some opportunities are going to open up. I know how to do this; it feels really familiar. Not so much because of past recessions, but because at least 4 or 5 times, I've seen major product lines completely dry up overnight.

Part of the trick is recognizing and accepting that it's really happening. I've hedged my predictions until now; I wanted to hold out hope. I was afraid of looking foolish if I predicted a severe downturn, and then it didn't happen. But so far, every prediction I've made, no matter how negative, has been undercalling it. I may be wrong -- I hope I am wrong-- but I think this is the real deal.

So I'm calling it. The country may be in a mild recession, but we in Bend are headed for a deeper one.

If I had to pick one factor that I think is unavoidable, I'd have to say that the inexorable declines in California and Vegas and Phoenix and Florida are going to have consequences to places like Oregon and Colorado. I don't see how we can escape that.

That's why I think all these people who are still spouting the Pollyanna lines of "Bend is different. People want to live here" are going to pay a steep price for not being realistic. I'm not mad at them. I feel sorry for them.

I think Bend is already getting it worst than the rest of Oregon. And it's happening two full seasons before I expected it. (I was thinking it would really sink in this Fall.) I don't think we are headed for Road Warrior territory, as Bilbo would have it, but an occasional vacancy, that lasts more than a few months..... Look at Greenwood, which went from almost no vacancies to about 16 big vacancies over the last year..... (Obama just filled one, for the next few months....) Landlords are having the same problem as house owners in adjusting their rates downward.

So yeah, I think we are losing jobs at a rapid rate. I think locals are already cutting back. I think we are already beginning to lose population. And I don't care what the statistics are saying, I'm seeing and hearing it every day. Tighten your belts, folks.

If I was involved in the real estate, building, or financial services business in any way, I'd be looking around for a way to supplement my income. Because, I'm beginning to think that our feeder market from California is going to grind to a halt; and the majority of sales we'll be seeing are short sales and foreclosures. (Which don't profit anyone but the buyer, I believe.) It will, as I said, obscure the truth.

I know how it feels. Years ago, I would have a decent looking month on the balance sheet. But I'd look back and see the Perils of Pauline; making a lucky sale, here; cutting a deal there; doing an aggressive sales pitch here; giving up a prized product for less than it's worth there.

You make what you need, and from the outside it looks fine. But it isn't the same as just asking and getting the price you want.

That's the kind of market I think we're headed for. I wouldn't mind in the slightest being wrong. But if it's like I think it will be? Thank god I've had lots of practice....
"Core" inflation as measured by the government does not include food or energy?

That's absurd!

I've just got to quit reading these damn financial blogs. I had no idea we were this far off the road.

I think I'll just concentrate on my own -- anecdotal -- observations for awhile.

Looked out the window while talking to a customer and commented, "There are 8 empty parking spots in front of my store! I haven't seen that in years." A minute later, there were 12 empty parking spots on my block.

It seems like I should be able to develop some measure of economic health that compares job applications, cold calls, people trying to sell me product, and empty parking spots.

Seems about as accurate as government statistics.

Tuesday, April 15, 2008

Boring personal stuff.

Linda was in Portland over the weekend, visiting the kids. I thought I'd drink some beer and hang out at home, do some gardening, and just relax. Friday night, said, no, I want tomorrow clear. Left the beer alone. Then proceeded to do nothing but watch friggin' golf all day.

Next day, I make a deal with myself. Read 10 comics and dig up 15 sq. ft. of sod, and the rest of the day you can slack. Watch golf, but do book work.

Late in the afternoon I went out to do my 15 ft. and spent the next 3 hours digging around in the dirt. Went in, took a shower, and stared at the beer in the fridge. No, I want to do more gardening tomorrow. I want to be clear.

Next day, blogged and napped, napped and blogged and did nothing. Still no beer.

Linda called yesterday afternoon, and the sound of her voice just lifted my spirits. House felt empty all weekend. Panga went into her office and just meowed for an hour. It's good to have my wife home.

Came to work this morning feeling good and clear, and wishing I could go outside. Just have to get through the day without doing reorders, and I'll consider it a success.

Going to do another 15 ft. of sod tonight. (Only 250 ft. to go....)

So routine. I love the routine. Boring and safe. Have lost 5 pounds this month, so far. Have managed to save bunch of money at the store. Outside gardening and planning the next couple of decades of landscaping (knock wood) and reading my books and doing a bit of writing.

So boring. If I could, I'd be even more boring. I'd create a room with nothing but a mat in the middle. Go in there and sit. Not meditate, I hate clearing my mind, but letting it drift. No outside stimulation at all. No noise, no colorful graphics, no people.

I haven't turned on my (c.d. ) record player in months. If I just weaned myself of the T.V., I'd have nothing but time.

Mr. Excitement.

Monday, April 14, 2008

At the start of my second two week moratorium on reorders. I plan to do this for four months total. First month was painful. But I expect it to get harder and harder as the spring wears on. I will be making 'special orders' for customers, so no request will go unfilled. But anything speculative or experimental is going to have to wait until summer.

The two weeks of reorders each month I do make, is calculated to make sure that inventory holds up, and evergreens are replaced.

I would have been doing something like this no matter what. The outside economy has given me more motivation, to be sure, but I was needing to do this anyway. After five years of expansion, and spending, it is time to consolidate. I pretty much ran out of room late last year, and ever since I've been trying to refine the mix, rather than just buy more, more, more.

Sometime over the next year, I'll need to start renegotiating my lease. I have no reason to believe that my landlord won't treat me fairly -- we have a 27 year history, after all. But, just in case, it would probably be prudent to have less debt and more cash. Which is something I should do anyway. I intend to stay, unless it's impossible. But cash gives me options.

An irony, as always, is that I tend to make actual cash profits when sales are flat or declining. I seem to just be more disciplined and focused.

Meanwhile, also a strange little thing that seems to happen -- I tend to diet during the same months I'm doing tight budgeting. Never consciously, just seems to go together. Getting my own habits under control.

And finally, the following article has made me feel a little better about my disappearing HELOC.


Gretchen Morgenson
New York Times, April 13, 2008

"The latest example of this is in the mass freezing of home equity lines of credit going on across the country. Reeling from losses on their wretched loan decisions of recent years, lenders are preventing borrowers with pristine credit and significant equity in their homes from tapping into credit lines that they paid dearly to secure." (Italics are mine.)

Sunday, April 13, 2008

Rolling recession.

Something I noticed about Bend again and again is that we seem to benefit from surges later than other places, and we seem to be affected by downturns later as well.

Even in this modern, interconnected world, I think that still holds true.

For those who are paying attention, it's a huge advantage. You can watch what's happening elsewhere and gear up in time to take advantage. Again and again, I would get word of a hot product, magic, or pogs, or whatever, and I'd go out and get some and set up supply chains and then watch the product sit there and gather dust for a few months. I'd call my wholesalers and complain; "Are you SURE this is Hot?" Don't worry, they'd say. Everywhere else it's selling out.

I remember getting pogs in a year early and just getting blank looks. At the beginning of the following summer, I at least started getting inquiries, so I set up a nice display and sold a few. And then, one day a few weeks after school started, I walked in the door and there was a huge line at the front of the pog display. Boom. We rode that wave for all it was worth.

But exactly six months before the boom ended, indeed at the very peak of sales in Bend, I started hearing how it was dying in San Fran and Seattle; three months later, just as a pog store was opening in the mall (I kid you not), I heard it was all but dead elsewhere.

It gave me the chance to start cutting back at the six month point, which took some real courage when sales were still so strong, and all but stop ordering at 3 months from the end.

I'd say the recession in Bend is about where pogs were then. Still enough plausible deniability to make you doubt yourself. Still some activity. That same pattern has held for just about everything. We get the benefits later, we drop later....and the downturns last longer.

Jesse Felder's local blog, My Back Pages, has printed a revealing map graph:

"PMI Group, one of the largest mortgage insurers in the nation, officially categorized Deschutes County as "highest risk" for future home price declines, along with areas such as South Florida, Southern California, Las Vegas and Phoenix."

The graph pretty much shows large swathes of Florida and California and Arizona in bright red.

And up north, a strange little square of red smack dab in the middle of Oregon.

It's what I've been trying to say all along. We are getting plenty of warning. It's a huge advantage to us -- to be able to read month after month of very dire happenings in Florida and California and to able to prepare for it. The national Housing Bubble Blog was replete with comments from realtor's and bankers, almost the exact same words we hear now from locals. It's like getting flu shot.

It can be hard at this time of year to stay focused. I'm trying to keep my eye on the dangers, and not get swayed by the strange lack of news or comment. Like the eye of the storm. It takes but a half an hour for me to spend so much money on my store that it will takes months to repay.

So I'm trying to stay patient and alert.

Paul-doh always seem to find enough material to write one of his rants, which is always refreshing to me. But even he got 'just' a little over a hundred comments last week (maybe twenty pertinent comments....)

But again, this strange quiet is familiar. It happens in every downturn, and there isn't any way around it. The truth, the real situation' won't come out for months, about the time when it doesn't matter anymore. In other words, you can't wait for confirmation, because by then it's too late.

So far, so good. I know what to do, I just have to do it.