Wednesday, December 10, 2008

Do you have.....?

Yesterday seemed to be my day for random, odd requests. "Do you have..." starts the phone call, or the guy in the door, and then the most specific item I can imagine.

Lots of calls for chess sets, cribbage, backgammon and go.

Too bad I hardly ever get calls for this stuff the rest of the year. (Would it work to have a large, diverse inventory of these games? I wouldn't know without investing a ton in very expensive, space consuming variety....)

Found myself doing what I hate to do, but really....the 17th volume in the Wagon's West series? Serenity PVC figures? I tell them to go 'online.'

Last year was my first year in carrying board games, and I sold out of the big three (Carcassone, Settlers of Catan, and Ticket to Ride) about 2 days before Christmas. I decided to go with the same numbers this year.

Have tried to warn customers that I could run out, but they just move along. Had a woman buy both copies of Ticket to Ride in stock, and not half an hour later had someone else want it. I have more coming tomorrow, but she didn't want to nail it down by pre-paying.

Still, I'd rather sell out than have leftover copies going into inventory time in January.

Again, I don't think people realize that most stores are probably pretty lean right now.

Oh, well. Just doing my part to drive business to the internet.

Tuesday, December 9, 2008

My first Recession, PT 2.

In my previous entry, I made the comment: "Most of it (the diversified half of my product lines) is much less dependent on regulars and much less of a cash-flow drain."

What's that mean?

Regular customers are both a curse and blessing. Or, maybe I should rephrase that: regular customers for whom I have to buy specific product to satisfy can be both a curse and a blessing.

It's great to have them coming in on the regular basis; to buy other stuff, hopefully, while they're here, to show other customers some activity, and to have a baseline of sales to work from.

On the other hand, I'm ordering this material months in advance, without any commitment on the part of my customers other than "Sure, I'll show up." Most of the time, I have only a vague idea of the content, and I can't count on the shipping date whatsoever, and, well, I love my customers but they do change their minds, they do quit unexpectedly, they do cut back suddenly, they do reject material that I was so sure they wanted that I ordered on spec.

I remember excitedly telling a bank loan officer about my subscription lists, and he asked for the details, and then looked at me with raised eyebrows: "We would consider that a negative, but we'll just put that aside for now."

It's a bit like having accounts receivable -- only without the legal obligation.
(I know, I know. I could have binding contract, or get their credit cards or something, but comics have always been just a little too weak for me to demand that, and I'm not sure I wouldn't still have problems.)

So for most of the first two/thirds of my career, I was dependent on selling product that became quickly outdated, buying it in advance, depending on my customers to come through.

The thing about games and toys and books is; I can carry a very good selection, but since it's impossible anyway, I can't carry everything. So...If I have a few thousand good classic books, I'll be able to make a sale to a book reader. I may not have a specific books, (since it's impossible for any bookstore to carry every book or even every good book) but I'll have something for the serious reader.

If I have instead of 2000 classics, only 1800 classics, I may lose a specific book sale but not a book customer.

Whereas, if I don't carry pretty much the full line of comics, I could lose not only a sale but a customer.

Customers are what it is all about.

So I can order books when I want to, instead of worrying about losing customers. Especially my store, which is in Downtown with lots of foot traffic and which probably sells 90% of my books and toys to people who just happened to come in the store.

That makes the cash flow situation much more comfortable. No unexpected large shipments, which are so late that no one wants them anymore, no more need to buy the 'hottest' title in bulk even though my customers aren't currently coming in.

Years ago, I remember my sport card supplier telling me: "Well, at least you can stop buying....as a distributer I have to get everything." Interesting that he thought so, because at the time it wasn't true. I had to pretty much buy most of the comics and cards that were coming out or lose my customer base.

Thankfully, for at least half my product, that is no longer true.

Monday, December 8, 2008

My first Recession.

This is my first full-on Recession (with a capital R). Because of other factors, I barely noticed the other (little r) recessions.

What about all my supposed expertise in downturns? Well, those were product bubbles, which is a different species of animal. The overall effect may have been similar, but the reasons and dynamics were isolated to my store (and stores like mine) alone.

As I've said, in some ways this feels very comfortable to me. But in other ways, I'm having to react differently and do different things in different order than I have in the past. I have experience, but this also so new and so big that I can't be sure I'm making the right decisions.

I want to see this as a new case -- not fight the last war.

Of course, I'll know I made the wrong choices if they come back to bite me. Whereas, making the right decisions may result in not much more than the status quo, or a smaller downturn.

Maybe that's all I can hope for.

I'm thinking there aren't very many Recession proof businesses; just businesses that are affected less than others.

So I'm learning things about Recession on a day to day basis. (Good reason for a daily blog, huh?)

The information was all there, but I just wasn't able to be able to focus on it.

I saw a big downturn coming, but I really wasn't sure how it was going to affect my business. Would comics prove to be Recession proof? Would Downtown Bend continue to get affluent customers? Would tourists continue to come?

I think I'm starting to get some answers.

First of all, the answer was sort of there in my memory banks. Mike Richardson started Pegasus Books in a little hole in a wall on Greenwood in 1980, within a year he had expanded into a space next to it that was 4 times bigger. And a year later he had shrunk back to the original space. And less than a year later he had moved Downtown. (Amazing to realize that all happened within a 3 year span -- it seemed forever back then.)

The Reagan Recession was the Bend Depression. Sales of comics and especially games fell off the face of the earth.

The other piece of information was observing my customers this summer. I started to realize that the bulk of my regular comic buyers were in their late 20's or early 30's and were heavily involved in what I call the 'growth' industry. This is the demographic that seems to me to be most vulnerable the economic shock: often married, with bills and debt. And sure enough, I've seen a very big drop off in this group.

So much for comics being Recession proof. I'm still not hearing that from other comic retailers, but the biggest drop off happened in September, so it may be too soon. And I know from the previous Armageddon in comics (95'-2000') that most shops won't admit to anything until it's too late.

Meanwhile, though, summer overall was pretty good, and it was obvious that affluent tourists were still spending money. I'm hoping that this will continue on into Christmas, though the news is much worse this winter and no snow would be a bit of a disaster.

I always say that knowing a downturn is coming is a lot like being told that a guy you see coming down the street is going to sock you. Forewarning doesn't make it hurt any less.

But the real kicker is to realize that I may actually get hurt worse than businesses that were less prepared and less knowledgeable simply because of the kinds of things I sell. This could be a bitter pill, I suppose, if I let it. But you know, what does it matter? More power to them. In a sense, if they keep making money they might just generate a little to go my way.

In fact, I'm not sure it does me any good to compare to other businesses. Pay attention to my own situation.

I can pat myself on the back for carrying the other 50% of my product. Most of it is much less dependent on regulars and much less of a cash-flow drain. Books continue to do well, and the card games, so I can be glad I'm diversified.

But I'm still learning new things about how Recessions work on a daily basis.

Thing about Christmas, I won't really know how the store is doing until the out-of-towners arrive in the second half of the month, and the big surge at the end; and by then, it's too late to make orders.

So I'm erring on the side of caution.


P.S. Noticed the Bulletin has dropped the Business section on Mondays -- because, you know, there's nothing going on in the world of business these days.

Much more news about kittens and puppies, I guess.

Sunday, December 7, 2008

The answer to all our problems....

I wake up Sunday mornings, pour myself a cup of coffee, and get the paper off the porch.

After shedding it's fat suit (the ad sections) the paper is much slimmer, but still slightly bigger than the daily.

And then I peruse.

Today, I discover that the Bulletin has the answer to our economic problems.

BUILD MORE WALMART'S!!

But of course! That would solve everything. More minimum wage retail jobs, a huge cavernous building, and lots and lots of cheap stuff.

Why didn't I think of that?

Oh, and traffic on the North of town to die for....literally.

There you go, folks. The answer to not enough retail sales is to build the biggest retail store you possibly can.

Really, why do we even put up with all these little stores? Walmart is so much cheaper. Downtown shops are really a waste of space. Plunk one big Walmart down there, and the problem is solved.

Think of the efficiencies. We wouldn't need a national health care plan, because we could all get Walmart's --no doubt -- generous health and retirement plans. Wages would be standardized: the Walmart wage.

Maybe Walmart could build us some cheap houses, while they're at it.

And surely, they could run a system of buses around town to make sure their employees --er, associates -- make it to work on time.

The government would only have to worry about collecting taxes from one store, and best of all, our product could all be Chinese made, thus ensuring that everyone gets access to the exact same cheap product.

This is Utopia, folks. The wide aisles, the Christmas muzak, my, god! Greeters at the door!

I think the Bulletin has hit on something, here. It's a Walmart world, and we all just live in it.

Saturday, December 6, 2008

Housing bust PLUS recession.

Sure one can be the cause of the other, but if you view them as separate events, it's becomes a much more dire situation.

Paul-doh has already mentioned that there are still people coming onto the Bend Economy Bulletin Board touting this as a 'great' time to buy.

Because prices have dropped.

Florida and California have been on this downward slide in housing prices for a couple of years now.

WELL BEFORE THE RECESSION.

You could make the case that the credit crisis arose because of the housing problems, which then precipitated the recession.

But if that's true, the places where housing has already been in bad shape now have a recession on top of what's already happened. That is -- all those bad, horrible, rotten things that have happened to Stockton have now had a big steaming load of recession dropped on top.

People have been trying to make the case that housing sales are on the rebound in California. Sure...if you count foreclosures. Which is sort of like telling me a store is doing really well because they have huge sales on the going out of business SALES.

But now the recession is here, acknowledged even by Bush, and you have to wonder if even those sales are going to go by the wayside.

Bend, on the other hand, won't even have the luxury that California and Florida had of a year or two of the national economy still being O.K. while our house prices drop. Our house prices are dropping right into the crater the recession has created.

The OB. (Original bubbleblogger.)

Since I don't have much today, I thought I'd reprint the comment by BEM yesterday, which, as usual, I thought was very astute. And my not so astute comment at the end. But, yeah, what HE said.

Bend Economy Man said...

There was a phrase bandied about a lot on the national Housing Bubble Blog that inspired me to create my blog: "revert to the mean."

I understood this to mean that once the excess credit leverage was eventually gone from the economy, you'd see the pre-boom economic situation establish itself (in housing, for example, there would be a correlation between median income and median house prices).

Bend is/was a highly leveraged place. You saw the terms "upscale" and "affluent" used all the time to describe newcomers to Bend but media outlets like The Bulletin and KTVZ could never seem to give an adequate explanation about why the median income in Bend did not reflect the new "affluence."

The Occam's Razor explanation of how a large number of "affluent" people could move to Bend and yet have a relatively small effect on median income numbers would be that the money was borrowed. Borrowed money doesn't show up as income. But The Bulletin ran stories attempting to reconcile the inconsistencies, where local economic boosters said that Bendites were, in effect, big capitalists rather than big earners: they had a lot more stock, real estate investments and other ASSETS, i.e., WEALTH, but not necessarily assets that spun off a lot of income, I guess.

Well let's assume for the moment that The Bulletin was right - that we had a lot of newcomers who were asset-rich but cash-poor. Aside from people who've lost their jobs and have NO assets, those are exactly the people who have taken the biggest hit. There's been huge losses of value in just about every asset class you can think of. You hear "I'm heavily invested in stocks and real estate" nowadays and think "ouch!" rather than "wow!"

So to me, "reverting to the mean" in Bend means that people are needing to live on the money they can earn working at a job. There's not a lot of money to be made wheeling and dealing right now.

The people who are sitting the prettiest right now, other than the TRULY rich who can lose large portions of their wealth and still be wealthy, are those with steady, high-income jobs. And Bend is notoriously short on steady, high-income jobs (a problem which should be priority #1 here to fix).

In short, all rambling aside, whether Bend's "affluent" class was (1) living on borrowed money or (2) asset-wealthy but not high-earning, it ain't good for those who cater to the upscale Bend customer in today's economy because either way those folks are hurting.

Bend has a small high-earning professional class (like doctors and lawyers) that is doing just fine. Other than that it's hard to imagine that there are a lot of people around here who would describe themselves as "affluent" today.

December 5, 2008 1:57:00 PM PST

Blogger Duncan McGeary said...

You always make sense to me, BEM.

That's what I read into too.

I had a nice tourist lady in the other day, and she said, "I shouldn't say this, but...parts of Bend are really ugly."

So much for Bend being exceptional.

Sure, it is. And so are lots of other places.

I just automatically suspect that when someone says we're different -- richer, smarter, cleaner and blonder -- that it's mostly B.S.

December 5, 2008 3:03:00 PM PST

Friday, December 5, 2008

All piled up, and nowhere to go.

Bulletin Headlines, today:

PILED UP AND READY: But ready for what? I have no reason to believe that snow won't show up, except the superstition and experience that when things start going wrong, everything goes wrong...

GUN SALES SOAR: It's heartwarming how we're all pulling together in this time of trouble.

SMILE -- TURNS OUT HAPPINESS IS CONTAGIOUS: By all means. But fake smiles are kinda creepy.

ADMIRING THE MORNING PERSON: Really? I just want to shoot them. With my new gun.

A HARD SELL FOR BIG 3 EXECS: Despite what I said last time, showing up in hybrid cars and offering to take 1.00 salaries no longer counts. Too late, bozo's.

SEVENTH MOUNTAIN FACES NEW LAWSUIT: I thought that last lawsuit ended a little messily. It's a crappy situation and probably irreconcilable in this economic climate. Besides....do time-shares EVER work?

GOTTSHALKS HAD LOSS: All because they came to Bend, I'm sure.

4 IN BEND ARRESTED AFTER SERIES OF THEFTS: A perfect circle jerk. The sleazy robbing the crooked and just all around mindless twittery. Mugshots in KTVZ and KOHD.

BEND MUST DO WHAT IT CAN TO SAVE CITY BUS SERVICE: Editorial. Which says, basically, that because she knows some people who need it, it should be supported. Which is a bit like saying, I know some people who can't mow their lawn, so we should create a massive bureaucracy, with lawn care employees and warehouse of lawn mowing machines, to take care of it.

There are always individual problems that need to be addressed, but not everything requires a government program. Not saying that it isn't needed, just that a few examples of people who need it aren't proof.

It's almost certain that the bungled managing of the buses doomed the measure. And, I think that is about as liberal a turnout as Bend is ever likely to get. So, I just can't see how they can count on the public ponying up for this any time in the near future.

BUSINESS DINERS TAKE A RAIN CHECK: Lately, I've been saying to people. Go back a couple of years; rich people were moving in droves to Bend, supposedly saving our asses from ever being in the wilderness again.

But the scenario I keep imagining is this:

Real estate agent takes rich client out to dinner.

Anyone want to guess who paid for the dinner?



So thank you, Bulletin, for your endless blog fodder. Without you, I'd be lost.