Articles & E-books

Is the Direct Market Under-Stored? (Part 1)

Posted: April 30, 2004 06:16 PM
Brian Hibbs wrote a column recently where in passing he felt that the United States and Canada had too few comics retail outlets.

(c) 2004 - All Rights Reserved

Brian Hibbs wrote a column recently where in passing he felt that the United States and Canada had too few comics retail outlets. A member of a comics retailing forum posted the following messages (which I have edited to hide their identity):

"O.K. I have had a store in a geographically isolated area. Ten years ago the population was probably 100,000 people, total, in a two hundred square mile area and most of that population weren't frequent customers. On the other hand, there were considerably more comic customers in those days. Still, the only way I kept my store alive in those years was because of baseball cards.

Nowadays, we have about 100,000 people in our official 'metro' area. We have a huge tourist population in the summer and at Christmas because we are a resort town. I am extremely well-stocked with books and new comics, and have rooms full of back-issues. I sell t-shirts, art books, cards, games, toys, used books, DVD's. Comics account for 60% of our sales, and they usually average just UNDER the average sales as shown by the Comic and Game Retailer. We make just enough to get by, and as I said, that is because have that wonderful bonus of tourist business.

I was submit that it takes AT LEAST 100,000 people in your shopping zone to even begin to have a decent shop, and then only if you carry other product and have a further draw (outlying areas or tourists or internet sales.) I'm not sure Brian is doing future retailers a favor by encouraging them to jump into comics. (Or current retailers if someone opens a store too close.)

Of course, I could be doing such a horrible job that I'm significantly under-performing. I don't think so, I try to have a little 'gem' of a store. We've been around for 20 years, and I've probably invested TOO much into my store and not into my bank account; but it is possible I'm missing something. But I'm afraid I really believe there are probably just about as many stores in existence as there SHOULD be. The market forces have reached an equilibrium these days, and we do see new stores opening here and there, which is healthy. But I doubt the market is being underserved by much. If there isn't a comic book shop somewhere, it's probably because the local population didn't keep a store in business.

The business I do have is steady and solid and growing slowly in both grosses and profit. That's the kind of business I count on and expect to build on. I guess I believe there IS a glass ceiling to the number of solid, long-term customers per thousand, whether it's one or ten or twenty or more, I don't know. I believe that there are times when the numbers of interested customers are much higher than that, but not usually because I created them, but because some 'macro' event created them, and very often only a few of those customers stay customers after the excitement dies down. I have decided that each and every customer I have is important, because those customers are the most likely to create new customers.

I've had stores in both a busy mall, and currently in a 'happening' downtown, and I cater to the casual walk by traffic by carrying all kinds of things I think will interest them...I have succeeded after many years of creating a business that most people feel comfortable in, from young kids to old women, but very few of them BECOME comic customers because of something I said or did. I guess that is where I've become fatalistic, because I actually have large numbers of non-comic customers coming in and buying Calvin and Hobbes, or Zits, or Archies or Melancholy Death of Oysterboy, or fantasy art books, or toys, games, cards, used books, etc. and very few of them become comic readers no matter how I present them.

I'm a very persuasive guy when I set my mind to it, but COMICS have such a bias in the minds of most non-comic readers that its very, very difficult to overcome. In other words, having more locations, or more comics won't help unless there is a population who is open to them. Currently, 20% of my comic sales are manga, for instance. (I have to carry 1500 volumes to get there.) I have purposely put Elfquests, and Sentinals and Powerpuff girls, and every manga sized American book I can get my hands on in the same area. But manga is what the boys and girls want, and manga is what they buy. I could always do better in promotions, (not my strong suit), but I'm not convinced I could change the dynamics dramatically. "

Mel Thompson’s Comments:

Actually, if you deduct Canadian stores there's about one "comics" store per 100,000 population or 1 per 40,000 households.

At current levels of consumer awareness, their town can't support more than one "comics" store that's at all profitable. But this isn't because consumers wouldn't buy comics and related products. It's because 98.5% of the households in Bend most likely have never gone inside the store.

This has nothing to do with the merchandise mix, operational ability or the owner’s personality.

It has everything to do with accessibility, visibility and consumer shopping habits/patterns.

The "typical" store is supported by 300 to 800 customers, depending on volume and some other factors. Most of these customers come from a three-mile ring (generalizing furiously for suburban locations), and the remainder come from literally all over.

A supermarket, on the other hand, gets 70% of its volume from within 1-2 miles of its location and achieves 90% of its mature sales in a year after opening. A "comics" store takes 3-5 years to reach maturity (depending on the quality of its location) and gets anywhere from 30-50% of its sales from a 3-6 mile ring around its location!

Another way to look at things is by expenditures. Typical annual expenditures for "comics" customers range from $250-$2,000 annually, which is typical of customer expenditures in other hobby markets. But average household expenditures for "comics" for map sections range from ten cents to perhaps ten dollars PER YEAR.

Does this give an idea of just how low the Direct Market's ability to penetrate the consumer marketplace really is?

Even within the census tracts within the 3-mile ring that produce the highest levels of customer penetration, the percent of the population visiting a typical store is pathetically low - 2-3% of the households wouldn't be far off.

So when Joe or Josette Newcomer opens the comics store of their dreams, they face an uphill battle. They have got to attract enough new business to survive their first year of operation. (Taking business from existing retailers usually doesn't work out well as a business strategy).

They've got to have a wide enough merchandise mix to attract a wider range of customers into returning to their store again, once they've come in for the first time.

And somehow they have to get the word out to the community that they exist and are open for business. That's a tough act to bring off, especially given lack of capital and business experience.

We'll be discussing "limits to growth" Saturday at San Diego. Lack of awareness is a killer. The Direct Market is one of the very few retail sectors where the retailer is forced to assume nearly all the burden of general market promotion.

Free Comic Book Day is a great idea, and I believe that if the industry keeps doing it, it'll cotinue to grow in importance and power. Fortunately, the retailers who are most likely to support and participate in FCBD are likely to have more presentable stores.

Quality store locations and intelligent use of cable advertising (as often discussed elsewhere on this Forum) are IMHO the best ways to increase awareness in a market in a short period of time. But they cost money that most retailers don't have, certainly when they are starting out.

As was pointed out in another post, the major comics publishers aren't likely to be doing any significant promotion, nor are the distributors.

As the King says to Anna, "it is a puzzlement".

I believe that there are some retailer-based solutions to this problem, but they are only applicable to retailers with larger sales levels. They are not generally applicable to 85% of the retail community, and will not ever be.

If any of these solutions are ever systematically applied, they will primarily benefit those who implement them. The vast majority of other retailers may benefit to some degree, but it will be only as a by-product of change.

Mel Thompson