A Golden Model
published in Joes The Big Picture column for Comics
& Games Retailers
magazine, no.148, June, 2004.
Herb and Marion Sandler are the co-chief executives of the highly successful Golden West Financial Corporation. For 35 years, that company's earnings per share have compounded at an average annual rate of 20 per cent. Astonishing, especially in the grind-it-out business of thrift institutions. Golden West survived and thrived through the savings and loan turmoil of the '80s. Of the 20 largest institutions operating then, only Golden West remains in current operation. Asked how they have managed to remain successful through such upheaval in their business category, Marion told the San Francisco Chronicle "We are very focused, very disciplined, very analytical. We have a successful model, and we're always asking if there is a good business reason for deviating from that model."
Sounds like good advice comic book specialty retailers really need to take to heart.
We live in exciting and precarious times. Some of the good stuff going on? There are new and exciting projects coming out almost weekly. There are far more opportunities for outreach than ever. There's an increasing interest in all things comics-related and that should continue to mean strong interest from consumers in what we have to sell. High profile new comic projects are being met with a steady up-tick in advance orders meaning retailers are anticipating, if not already realizing, higher sales.
Peril is all around, though. The mass market is courting the major comics' publishers and some are playing up to the new suitors. That could lead to making our sales channel a lot less exclusive and a lot more difficult for retailers unwilling or unable to adapt to the new market dynamics.
In some cases, such as Marvel's deals with Barnes & Noble for soft-cover Marvel Masterworks and the massive 1000 page $40 Ultimate Spider-Man hardcover, specialty market retailers have essentially amortized production of those items with our orders for previously published, more expensive versions of the same contents.
Then, there's the explosion of manga. Every publisher seems to want into the manga market. Some numbers I've seen estimate a 40% growth rate in the number of releases from Tokyopop in the next year. The insufficient sell-through data in our market seems to show sales trending up but nowhere near the growth in new offerings. A dramatic increase in new product offerings coupled with modest sales growth is a formula ripe with risk and unsold product.
So how do retailers stay focused, disciplined, and analytical? The simple answer is to stick to what you know best while working to learn the parts of this business you know least. Know your system and regularly work at refining it. Know your market to better build your customer base. Build relationships with colleagues, customers and suppliers because you will learn something important from each of them. Stay hands-on and be an information sponge from everyone you come in contact with. Work daily on incremental improvements to your business. Watch expenses as closely as you track sales. Build a war chest for the difficult days. Look outside our market for keys to understanding the broader economy and its effects on your business. The most successful businesses are the most prepared for whatever happens.
Since merchandise purchases are the bulk of expenses for comics' specialty retailers, it's perhaps the most key area in which to develop a regular analysis.
Here's a checklist for analyzing each new merchandise purchase:
Relative Exclusivity --- In these days when the walls are down between the specialty market and the mass market, exclusivity is a loaded word. However, there are products in both the comics and games categories that are next to non-existent in the mass market. Some of those may be worth expanding in your operation. There is also relative exclusivity when you consider your market area, the distance your core customers travel to your store and what other stores in that path may carry similar items.
Customer Satisfaction --- By listening to your customers, you will know whether they are happy with certain products. Since your customers are among your best outreach tools in finding new business, their satisfaction with a product can go a long way toward making it successful in your store.
Measuring Shelf-life --- So much of what we're offered I classify as "get it in, get it out, then move on" merchandise. Two months from now or a year from now, most merchandise will look dated or stale, so beware of merchandise with a limited time appeal.
Promotion --- Two sides of the coin here: How does the new merch lend itself to in-store promotion? And how is the manufacturer promoting its product?
Compatibility --- Will the new merch create add-on sales or siphon sales away from existing inventory? Does it fit your store identity and focus?
And with every move you make, ask again "does this deviate from my business model?"
(Joe Field was a janitor for Golden West Financial in the '70s and now runs Flying Colors Comics & Other Cool Stuff, 2980 Treat Blvd, Concord CA 94518. E-mail is joe@FlyingColorsComics.com. Your comments and suggestions are always welcome!)
|Last updated: 06-Aug-2005 4:05 PM|
2005 by Flying Colors Comics and Other Cool Stuff, All rights reserved.
Website designed and hosted by A3Consulting.com