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Old 11-20-04, 03:07 AM   #1
nickdawgy
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Thinking of opening a video game store like Gamestop or EB....pros, and cons?

Ok so I was toying with the notion of opening a store like Gamestop or EB that not only sells games but also DVD's, and maybe some other stuff.

So I figured I'd ask and see if any of you guys had any advice.

How much would it cost for something like this? How much does it typically cost to rent a space, and then do you go through distributors to get good deals on games and movies?

Would it be best to just stick to the recent stuff like Xbox, PS2, and GC and ignore older consoles? What about movies? Just DVD's or VHS also?

Seeing the thread about the video game cafe awhile ago made me think of also having a few TV's set up for games or whatnot.

I live in a smaller city, sure there's a Gamestop and an EB in the mall, but other then that, it's a few hole in the wall video game stores around here.

Also, providing that the actual store is too expensive or too risky to open, what about an online only store to start?

Anyway, any advice is greatly appreciated
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Old 11-20-04, 05:32 AM   #2
NitroJMS
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It's incredibly tough to break into a saturated market like video games. Not only are you competing against other speciality stores like GameStop and EB, but also the major big box retailers like Walmart, Best Buy, Circuit City, Target and KMart. They all have name recognition, major marketing, and the ability to sell games at a loss since most of those stores also have other businesses that are much more profitable (except EB and GameStop).

The online route is much easier as you could simply use a site like Amazon to build your store and you would earn a commission from them. If you eventually got enough business, you could eventually switch to your own inventory, but it is costly and risky. You may buy 100 copies of that latest hot RPG to sell and end up sitting on most of them because another retailer is able to undercut your pricing due to their volume.

If you have little experience with retail gaming, I'd suggest trying to get a part time job with EB, GameStop, BB, or CC to at least learn a little more about how things operate, see what's popular in your market, and get a general grasp of the local gaming fans.
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Old 11-20-04, 11:36 AM   #3
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You may be able to do better (profit wise) by specializing in older consoles, or harder to find games. From a business standpoint it will be VERY difficult to compete with the stores you mentioned because they will be able to beat you on price all day long. You would have to focus on providing the consumers in your area with something that they can't get from the large retailers.
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Old 11-20-04, 12:29 PM   #4
TheMadMonk
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Agreed, very tough market to compete in.
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Old 11-20-04, 02:48 PM   #5
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For lack of a better word it would be suicide.....
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Old 11-20-04, 04:34 PM   #6
nickdawgy
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What about places that don't PM like EB and Gamestop? I could offer to PM by 15% or some gimmick. PLus, places like Best Buy and Circuit City hardly ever have new releases on sale the first week or two. It's always full price, and maybe you get something free.

Just brainstorming
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Old 11-20-04, 04:40 PM   #7
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Im not against telling people to follow their dreams.

But, if you decide to do this, know what the chances are.

80% of businesses go out of business in a year.

You are going into something which is a higher risk which makes your chances even higher of failing.

I would say it has about a 5% chance of working out. But, if you are absolutely determined like never before and plan on putting every single ounce of strength you have into it, it could work out.

I mean it worked for Starbuck in coffee. You just have to make very sure it's something you are willing to work extremely hard at. Harder than anything. Even then, you might still fail.

Be sure you are willing to take a very high chance and that you have plenty of backup money.
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Old 11-20-04, 06:32 PM   #8
blakwngbrd
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Quote:
Originally posted by nickdawgy
What about places that don't PM like EB and Gamestop? I could offer to PM by 15% or some gimmick. PLus, places like Best Buy and Circuit City hardly ever have new releases on sale the first week or two. It's always full price, and maybe you get something free.

Just brainstorming
The problem with that is that it will most likely cause you to take a loss on those sales. The policy only helps you if you're either a) still able to make a small margin on the discounted games, or b) able to take the loss in order to build up a clientele that will come back to your store and buy stuff at full price in the future.

The problem these days is that people are too savvy and aware of the bargains available on the market for that type of approach to work anymore. See the article on Best Buy "devil customers" for details. Ironically, for the most part they're talking about people who read forums like this one.

In my opinion, it's really time for the stores (major chains and mom 'n' pops alike) to find a new approach to acquiring customers and retaining their business. Loss leaders, coupons, price matching, they're all great for the customer and terrible (now) for the retailer. The smarter the customers get, the worse it gets for the retailers.

You need to come up with a way to get people into your store and BUYING, not just hanging out...that's a problem that a lot of cybercafe/comic book stores have, kids love 'em but they typically spend hours and hours in the store and leave without actually buying anything at the end of the day. But if they're only buying the stuff that you're taking a loss on, it's worse than if they weren't buying at all.

I don't have an answer for you on this, but my advice to you would be to think long and hard about a way to differentiate yourself to achieve these goals. What do you have to offer that Best Buy, EB, Target, GameStop, etc. can't (or don't yet) compete with? Create a sustainable competitive advantage and you'll really be on to something.

Good luck! Let us know how it turns out.
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Old 11-21-04, 12:41 AM   #9
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I ran for several years a Blockbuster Games store. This was sort of an earlier version of Gamerush except it never took off thanks in large part to Blockbuster. Now mind you the way our merchants were setup we did not get as good of a discount as possible, but our average markup was no more than 20% of the cost of the product excluding shipping, sometimes even less to be priced right. We were around until our lease ran out. We probably could have been successfull if Blockbuster had supported the store but in the end doing it on our own we just never made the money. Mind you we offered everything you are thinking about. We had at least one tv per console and every game available to try before you buy. We bought and sold used games. We also carried movies, vhs at the time, mainly anime and widescreen but cheaper than anywhere local.

So good luck. I was offered a couple of times from friends and family the financial backing to open my own store but after viewing the market the risk was too great.
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Old 11-22-04, 06:13 AM   #10
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I hate to add to the negative thoughts on this but another reason that videogames is a tough sell is that there is very little markup in games. Even if you buy at a huge bulk, you won't make more than $8 a game which makes supporting a business/workers/etc very tough to do. That's why just about everywhere has each game at $50. Those that don't are either taking no profit or a loss to sell that game.
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Old 11-22-04, 08:57 AM   #11
Trigger
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Wal-Mart will eat you alive as a business and then hire you to work for them and then ship you off to china so you can work in their manufacturing department and they can pay you less.

I would suggest an online only store and don't plan on marking things up very much.
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Old 11-22-04, 09:01 AM   #12
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You really can't compete on a level playing field with the Wal-Marts and the Best Buys. One thing that I would love to see in my town would be a videogame only store that not only sells but rents video games. Every video rental store in my town has the weakest selection and I hate the fact that I have to pay $5 or $6 to rent a game for 5 days when I would rather pay $1 or $2 and rent the game for 1 or 2 days. Another way you could compete would be to have import games and system available for sale. This is something that the Wal-Marts and Best Buys and whomever wouldn't be able to compete with and could possibly bring in some business. As mentioned previously buying and selling old systems of all types is also something that you could do.

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Old 11-22-04, 11:14 AM   #13
JT_97Neon
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I cant believe no one has mentioned www.actsofgord.com

It is a very funny read by a video game store owner. Check it out.

JT
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Old 11-22-04, 11:30 AM   #14
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One angle you could try is: Imports. There was a video game store near where I went to college that had a lot of Japanese video games (and could chip playstations, too). They got me hooked pretty hard.

Also, dealing in older consoles - hell, all the way back to the 2600, might be another option. Nostalga is big, you know. I see a pretty good turnover in classic systems in the few stores I frequant these days.
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Old 11-22-04, 12:10 PM   #15
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Quote:
Originally posted by NitroJMS
You may buy 100 copies of that latest hot RPG to sell and end up sitting on most of them because another retailer is able to undercut your pricing due to their volume.
This is what stopped me from starting a online DVD biz (ebay store)....You can't compete with Wal*mart, Target, or Amazon with prices.
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Old 11-23-04, 12:58 PM   #16
Abob Teff
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I share your dream Nick, I feel your pain, and I did not impregnate your cat . . .

Anyway, I too want to own my own secondhand video store (a decade long dream that has morphed from a rental store). My idea was to take the proven video game concept and move it towards home theater. Anyway, while I haven't fulfilled the dream yet here are some ideas that I have hatched throughout my research . . .

As everybody has pointed out, you need to find a niche. You cannot jump into what everybody else is doing, the corporations will slaughter you. Foreign consoles . . . dedicated product lines . . . something that your potential clientele cannot find elsewhere easily.

Of course we all like to say "I'll offer phenominal customer service unlike the chains." Well and good, but it won't get people in the doors. It may get them to stay, but it won't get them there.

One way that you can overcome this is to go work for one of the chains. Not only will this allow you to learn more about the business, but even more beneficial it will allow you to build up a potential customer base. I am not saying that you can go steal their company records, but any decent employee will develop there own customers, people who want to deal with them. This is time consuming, but you can do it. Develop a good clientele, keep your own records, and when the time comes and you leave extend the invitation to them. (The goldfish are coming with me, who else?)

Overhead is expensive. Find a place to piggyback off of. This is a stage that I am developing right now. Do you have a local independently owned video store? Propose partnering with them to develop your concept. Make sure that it is mutually beneficial . . . they help you start up (not financially, keep that seperate) and you help them grow their custoemr base and services. Even stores that you might not normally consider such as a secondhand bookstore have the potential to attract some of the market that you are after. A comic book shop would be ideal as well.

Drop me an e-mail and I'd love to discuss this with you further. Maybe we can set a support group! -grin-
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Old 11-23-04, 01:44 PM   #17
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Sell/rent porn on the side to make a profit.
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