Archive for April, 2009

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View from the Counter

April 22, 2009

So that didn’t work then did it….

Over the last five years, my brother and I tried to grow Playtime into a profitable business by opening a new store every 6-12 months.

Why do that? I hear you ask – well, it was a defense mechanism as much as anything else, the bigger you are the more we could benefit from economies of scale – marketing with publishers, buying professional labels, carrier bags etc, professional branding and merchandising in-store – the list goes on. Five years ago, we also saw the bigger indies doing well – Software Store and Eplay were winning awards and seemed to be going from strength to strength.

So why didn’t it work? Well, we were going well until last summer, then some American banker invented the words “Sub-Prime” and “Credit Crunch” and by the time we came out the other side of Christmas, we just weren’t selling as many games as we needed too. That it meant we had to shut the business should come as no surprise really – we are in a recession after all.

It is ironic that of the 10 stores we had when we shut, nearly all would still be profitable – if they were run by an owner operator – like most other “indies” are.

We found that we could run a couple of stores fine on our own, but when you get more than 3 or 4, you need to employ managers to do it for you – and good managers cost money, and they need area managers to help them, and purchasing managers to buy stock for them, and marketing managers to support them, and personnel managers to advise them – and the list goes on.

When you have the costs of a head office to cover, you need a lot more than 10 stores to make it work. This is the crux – in retail you either do it all yourself as indies across the country still do – or you need to have national coverage, to cover the costs of running a full head office. From our experience, there really is no in-between.

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