Let's get durable! Durable!
There are two paths through economic trouble, and today we'll talk about one of them. The second is coming next week.
I apologize for the lateness of this, but Thursday is normally writing day, and yesterday I was a little caught up in events of the world, anxiously awaiting a billowing white smoke. I have thoughts about the election of a new Pope, and if you would like those they're on my personal Facebook page as a public post, but that's not what this blog is about, so that is where those will stay.
As always, we begin with a disclaimer.
Everything you read on this website is the personal opinion of John Stephens, the author. It may not reflect the thoughts, ideas, opinions, or belief systems of GAMA, any member of the GAMA staff, or any other member of the GAMA Board of Directors. It may not reflect the opinions of Mr. Stephens family, his business partners, or the government and flag he swears allegiance to.
On with the show!
Today I want to talk about durable entertainment. I think of entertainment as being of two different types; durable and transient (or ephemeral). Transient entertainment are things like a concert, or going to the movie theatre and seeing the new Avengers film. Transient entertainment is temporary, and much of it is very expensive.
If I want to see The Thunderbolts tonight it's $36.00 for two tickets. By the time we add a giant bucket of popcorn and two drinks, the trip to the movie for two people is over $60, and the movie last two hours, that's really not a great entertainment value, and entertainment value is the most important thing in an economic downturn.
And a downturn we are having. I'm spending a lot of time hearing from store owners who are down this month, or down this quarter, or down this year. This isn't coming from brand new stores, but veteran owners who have been doing this a long time and are experiencing their first down quarter or down month since 2020. The tariffs and economic uncertainty are hurting people I consider colleagues, friends, and mentors, as well as newer stores that are feeling the pinch as well. The fed recently announced that interest rates will stay at the current levels for the time being, because economic uncertainty does not lead to the lowering of interest rates. The tariffs that are in place one day, and then being negotiated the next, and might or might not go away tomorrow are another important factor in this.
The cost of eggs is still high, the cost of fresh fruits and vegetables is rising. The United States imports food products from more than 170 other countries, and more than fifty of them are each a billion dollars or more in imports annually. Yes, we can talk about our industry and how tariffs affect it, and we certainly should, but we need to also understand how widespread tariffs will affect the ability of a family to put food on the table.
This brings us to durable entertainment. My store opened in 2009, and the housing crisis was in full bloom. The overturning of Dodd-Frank, the selling of subprime mortgages, the massive bailout to the automotive industry, and the failures of numerous large financial institutions led to the DOW hitting its lowest point only three weeks after we opened. We not only opened during this time, but we grew rapidly in this time, so quickly that we expanded from 1,200 square feet to 2,700 square feet only one year after opening.
We trucked along, showing slow and steady growth, until COVID hit, and then we experienced explosive growth. People couldn't leave their houses, so they stayed home and played games; games with their families in the bubble, or games with a few roommates in a bubble. My Games Workshop sections were devastated as people said "Well, I've got free time, guess I'll learn to paint finally", and when we reopened for play, those people brought in their new armies and looked to actually play the game.
Now, tariffs have sent us plummeting into what could be another recession. (Recession has an actual definition, a recession is defined as three straight quarters of negative GDP growth, so while this is technically devastating already, it's not a recession, we have to suffer through Christmas for that.) If things continue on this path we're in for a second Great Depression, the economic impacts in April of the tariffs were worse than the Great Depression were over three years.
But I want to assuage your fears a little bit. Consumer studies tell us that the first cuts will be to entertainment services, especially tertiary ones. If you use Netflix 20 hours a week, and Apple TV+ only 10 hours a month, you'll drop Apple TV+. Things like Hulu Live might end in your house and you'll watch shows on Hulu the next day with commercials, and you'll hate those commercials.
The second cut is eating out, and ephemeral entertainment. Why go out to a steak dinner? If you want to splurge you can make steak at home and save money. You may no longer take the kids to McDonald's once a week, but once every other week, or once a month, for their special treat.
The value per dollar becomes something that Americans unconsciously begin to think about during economic downturns; how many hours of entertainment do I get for my limited entertainment dollars? This thought process is good news for your stores, and gives you an opportunity to permanently grow your business.
Some of the best entertainment values in the world are in our stores. A family of four can buy Wingspan and play it over and over for about half the cost of taking four people to a movie theatre for two hours. A family with young kids can grab Zombie Kidz Evolution and get way more entertainment value (and some education) than they would taking those kids to see a Disney movie.
Role-playing books might look expensive, but then think about the hours of playing that RPG you get from that book?
Organized play can provide entertainment and social interaction for a relatively low cost, and if your community is in its nascent stages you can do organized play for less expensive things; like a Magic draft, people can build their collections, get three or four hours of entertainment, and in most cases do it for less money than going to a movie alone.
In times of economic trouble, lean into the fact that my favorite stores are also top-notch third places. The world sucks, this isn't really all that new, it's just exacerbated right now. If you can be the place where the world doesn't suck, where customers feel like friends, and friends feel like family, you can come through this better on the other side.
Remember, your strength is that you don't sell things, you sell experiences, but a durable experience lasts longer than an ephemeral experience. Lean into your durability, and together we'll make it through this more shitty than regular version of reality.
Next week, I think we're going to talk about another thing you can do to help yourself get through an economic downturn, and it comes with a little slogan.
"There are no tariffs on used merchandise."
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