Elevating Brands 004: Surviving Retail

Len Sullivan:
So Pieter, on a scale of one to 10, how much would you like to be a proprietor of a retail shop right now?

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Pieter Bickford:
Oh, man. Probably, you know, I'm an optimistic guy, Len, so I'm going to turn everything of – I think you want me to say three or four – but I also know that we're going to be talking about how we turn challenges into opportunities, but yeah, right now is got to be really, really difficult when you're in the retail world.

Len Sullivan:
Well, you were about to undermine my clever setup there. You know, I think we've kind of hit the format for the show. But yeah, I did expect you to say three or four because surviving retail is really hard right now. In fact, the pandemic has made it even harder, you know, in a situation that actually required a lot of work, the pandemic even made it harder. So one viewer writes in and says – specifically talking about us – we do a lot of high-end marketing and talking to bigger companies, but it was more like I listened to you guys talk and it all sounds good, but what am I going to do? You know, as a person who is trying to market on a smaller scale.

Len Sullivan:
So we figured that we would address this target of our audience. Now, it doesn't necessarily mean that what we're about to talk about doesn't apply to anyone who's larger, just kind of breaks it down to the really basics of what you need to do from a marketing standpoint. So on this episodes of Elevating Brands, we are going to be addressing surviving retail. My name is Len Sullivan and joining me as always…

Pieter Bickford:
Pieter Bickford.

Len Sullivan:
And, well, you know, we think that at HighRock we are marketing experts, but we are not proprietors of retail shops. So, we thought that we were bringing in an expert, someone who has been doing this for somewhere around most of his life, 25 years or something, and has been very successful, and he is actually the owner of Games and Stuff, a store that we've worked with in the past. His name is Paul Alexander Butler, and this establishment just, let's just be clear, this is not a small establishment, this is a multi-million dollar single retail outlet.

Pieter Bickford:
Wow. I didn't even put that.

Len Sullivan:
Let's just be clear. And Paul has always subscribed to the ‘you need to spend money, you need to know your product, you need to order smart, and you cannot sit back and just profit, you gotta work for it.’ So with that in mind, welcome Paul.

Paul Alexander Butler:
Hi, how's it going?

Len Sullivan:
Good. Good. Now...

Pieter Bickford:
He's got the first two things down, be energetic, and have an amazing background.

Paul Alexander Butler:
Fair. Fair. Not many people have dragon heads behind them, full sized dragon heads behind them. So, yeah.

Pieter Bickford:
I think it's fantastic.

Len Sullivan:
So, and, and this is one of the things that I always find is kind of funny. So, Paul is my kind of unusual client in the fact that a lot of people are like, hey, that guy who has earrings and tattoos is, you know, pretty smart about retail. So, let's talk about the first part of that, Paul, knowing product, 'cause I want to get into experiential retail, which is what you have really been an expert at.

Len Sullivan:
But ordering smart, it has always been one of your things, and, you know, a lot of people that own retail establishments they sort of sit back regardless of what they are, whether they're – I use hair salons a lot –or, you know, a mom and pop shop that sells yarn. They kind of sit behind the counter and just do stuff, but can you kind of tell us about why, what, how the approach that you take in knowing products?

Paul Alexander Butler:
So, yeah, so, first of all, for folks who are listening, Games and Stuff is a tabletop hobby game store, right? So, we're board games, card games, role-playing games, miniature toy soldier war games, stuff like that. At the end of the day, you figure you really need to kind of identify your demographics and purchase with particular types of customers in mind, while also trying to put things in front of customers that they might not necessarily know about but be interested in. Which is to say, you need to have passionate people on staff that are engaged with what it is that you're selling, while at the same time, you're always looking for things that could appeal to those same consumers that aren't necessarily part of your main product mix.

Paul Alexander Butler:
To give you an example, we mostly sell games, but we do books and I'm never going to compete with Amazon or even a Barnes & Noble or something, or even an independent bookstore, but because I've got a couple of bookshelves of books that are very specifically curated for pop culture stuff or whatever the current genre TV show hit is, I can kind of tap into those impulse purchases so that you're defining your customers, or at least the different types of customers in your mind and playing to their passions, and also tapping into things that might overlap with those interests and passions. And I get that not every retail establishment is passion driven. I mean, what we do is very much disposable income. What we're doing is selling fun in a lot of ways, but we're trying to provide experiences that connects to those passions of our customers.

Len Sullivan:
Right. Absolutely. And I mean, that's actually kind of important 'cause I think one of the things that you do really well is sort of that shop around the interest of the customer...

Paul Alexander Butler:
Sure. Yeah.

Len Sullivan:
...Which, you know, I think that actually takes a lot of thought, especially for someone who, and I always, kind of think of outside examples, but on the spur of the moment, it's really hard. The hair salon, right? There, they're going be selling shampoo, but are they considering books about how to do your hair at home, maintenance of your hair…

Pieter Bickford:
Le- Len you brought up hair salon with Paul.

Paul Alexander Butler:
I mean...

Len Sullivan:
Oh, yeah.

Paul Alexander Butler:
...This is the recent development.

Len Sullivan:
Yeah.

Pieter Bickford:
Okay. Got it.

Paul Alexander Butler:
I mean I sold hair dye and crazy, crazy hair care products for years too, so.

Pieter Bickford:
Okay. There you go.

Paul Alexander Butler:
Yeah. Yeah. I used to be known as the guy with the blue, blue dreadlock Mohawk, so.

Pieter Bickford:
So you know all about hair color.

Paul Alexander Butler:
Oh, yeah.

Len Sullivan:
Yeah. I guess hair salons, again, we've had this –I guess with two balding men and, and one person who shaves his head, it's probably not inappropriate kind of thing to talk about. But I mean, it is interesting that you cannot – the reason I said that is basically because shampoo seems an easy sale, but there are other products that you probably could look into if that was your thing. I mean, how many restaurants sort of sell cookbooks about their own – you can make this sort of at home – you're never going to do it as well, but people might be interested in sort of picking that up. And not that I'm saying that you should really do that, but I mean, kind of that level of people, when people visit your establishment, the assumption is they have money to burn.

Paul Alexander Butler:
Sure. Well, it's interesting. I want to circle back 'cause I don't want to put too fine a point on that, you know, that margin of diversification, right? So obviously my customers are mainly here for games and game accessories. And while I'm selling things on the margins of their interests, I don't necessarily want the whole conversation to be about that because you asked me about smart buying, and I do think that being aware of your core product mix is really important, and it depends on what kind of industry you're in, right? But you kind of need to know what the trends are in your retail mix, what current, titles or items are currently generating, whether it's buzz or whether it's an evergreen long item with a long tail it's been around forever, it's going to continue to sell.

Paul Alexander Butler:
I used to teach a class to other retailers in my industry about not just putting stuff on shelves and expecting it to sell, because frankly we'll never compete with Amazon in that regard, they will always have the best price and a better selection. And instead, it's about curating the things that you have on the shelves specifically for the demographics you've identified and the interest in your customer base that you've identified, but also making the conscious decision to say, this is a thing that I believe in, and I'm going to make it a success, which again will depend on what kind of industry you're in, but there are frequently a new product will come out and I don't know that it's necessarily gotten the push from the publishers and for marketing or awareness, and I decided it's going to be a hit, so I make it a hit.

Paul Alexander Butler:
And it's a difference between bringing in a couple of copies on the shelf and bringing in 40 and 50 and really making it a core push for a month or two. Which isn't to say I push things that I don't believe in just to sell stuff, it's stuff that I'm excited about as a consumer, that I try to expose more people to. That all sorts of ties in, it's like you're exposing your customers to things they may not necessarily know about, but you've determined through that whatever special sauce you've got, this is something that they would be interested in if only they knew about it.

Len Sullivan:
Yeah. It strikes me that's so crucial because yes, we know that Amazon is less expensive and it's getting more and more convenient because they'll deliver to you quickly, but you don't get that authenticity, you don't get that expertise that someone like yourself has been in the business and is passionate about the business, gives to their clients, gives to their customers.

Paul Alexander Butler:
Yeah. And especially with seeing new stuff. I mean, it's one thing somebody comes in and asks for my opinion on product X, but it's something else entirely when I show them product Y and they've never seen it before, they never would have searched for it on the internet. I'm showing them something that's new, and then they're going to equate shopping in my store with being exposed to new things that they wouldn't have otherwise been exposed to.

Pieter Bickford:
Sorry, Len. I was going to say my wife is a librarian, and so whenever we travel anywhere we go to the local independent bookstore. And what we love is when you go in and they have their staff recommend books…

Paul Alexander Butler:
Yeah.

Pieter Bickford:
...Because you want to know what. When you're a reader, you always ask what are other people reading? And I'm sure you're the same way when you're a gamer or you're in your industry, what are other people playing and what do you like?

Paul Alexander Butler:
Right. Yeah. I think the staff picks are always such a great thing for almost any store, right? Like who doesn't want to see a little handwritten note that says, Bob thinks this is fantastic, or whatever.

Pieter Bickford:
But there's an added element to that that is actually kind of fun too, is you kind of, as a consumer, when you see something like that, not only are you going, oh, Bob has good taste, right? You're making a judgment call but you don't know Bob for anything, but you, you're assuming that Bob has good taste, but there's always invariably someone that you're like, oh, John is picking really horrible books. Like John sucks. It's almost like a game. I dare say it's a little bit of a reach, but that kind of comes back to it, it's an experience, right?

Paul Alexander Butler:
Well, sure. It's 'cause you start to identify those employees who, who have similar tastes, and then suddenly you can have conversations that are more meaningful. And I'm at the point where I'm on the, flip side of that, where I have customers who know damn well that my taste is not as good as theirs, but they trust I understand their tastes and they will come to me anyway.

Pieter Bickford:
Interesting.

Len Sullivan:
That's a new take on it. I want to back up a little bit, 'cause Pieter mentioned authentic. I just kind of liked that word and I latched on to it. One of the things that you've done, Paul is, what percent actually, let me ask a quick question first. What percentage of your store would you say is dedicated to your event space?

Paul Alexander Butler:
Half.

Len Sullivan:
Okay. So, you've dedicated roughly, and it's a very large square footage area, I know that. Do you know that number off the top of your head?

Paul Alexander Butler:
Yeah. I mean, I'm 7,700 square feet. It's not exactly half, but roughly split in half. Half of it is retail, half of it is event space.

Len Sullivan:
And that's a lot of space to give up for…

Paul Alexander Butler:
Sure.

Len Sullivan:
...But events were very important to you…

Paul Alexander Butler:
Absolutely.

Len Sullivan:
...And the model is very similar to even more so, you kind of dove in headfirst on the – if you run a framing store, have events about how to frame or have art classes or, and…

Paul Alexander Butler:
Sure.

Len Sullivan:
Yeah, you've kind of ripped it off of that and really kind of dove in headfirst. Give us a little background about why heavily investment into experiential.

Paul Alexander Butler:
So, I'm going to need a little background on my industry first. So, if you go back, you know, let's say 20 years, game stores were not that dissimilar from the stereotype of a comic bookstore, like the comic book guy that you might see on the Simpsons, right? It's a hole in the wall mostly occupied by dudes, and there's a guy behind the counter that's going to look down his nose at you because you don't like whatever Superman or whatever, right?

Paul Alexander Butler:
So, along comes a competitive card game called Magic: The Gathering, and it was such a hit and tournaments were such a thing that people that were running games stores realized they need to start providing tables for in-store tournaments. And that was a slow growth so that by the time we sort of call the board game renaissance started about 10 years ago, people were realizing they needed to start providing space for not only card game tournaments, but casual board game stuff and people playing D&D and whatnot, Dungeons and Dragons that is.

Paul Alexander Butler:
So, that's about 10 years ago the industry made a real hard push towards, if you're not providing event space, then you're probably not a real serious game store. It almost became the default model. Now, not everyone does it, not everybody devotes such a percentage of their square footage to it that I do, but I do believe that about 10 years ago the push was really, you need to have event space. Now the challenge became that a lot of stores became so focused on those consumers, those very passionate, what I may call an alpha level consumer, that they neglected the more casual consumer, and they sort of only reinforced those kinds of comic bookstore vibes. And again, not all comic stores of course, but the bad stereotypes where it was just a bunch of dudes in the back playing games.

Paul Alexander Butler:
And it's an interesting mix to try to determine how many of your customers are devoted or are going to be part of a literal community that are playing games in your store every day or every week, and then how much of your consumer base is just coming in to buy board games, go home and play it on their kitchen table? And it's an interesting balancing act. I do feel that when we moved to our current location in 2013 and we decided to invest so heavily in event space, we realized that the business model had shifted from a game store that had some tables for events, to an event center that supports and is supported by a retail store.

Paul Alexander Butler:
Now in the intervening time since 2013, we've pivoted back a bit to really focus on those customers that would never set foot in our event center to make sure that we're catering to those people as well. But I mean, it's a whole different challenge. I mean, it's half my square footage, which has been closed for over a year at this point because of COVID.

Len Sullivan:
Well, and that's a very difficult question for a lot of people that run retail establishments is, services versus product, and what are you at that point? I mean, it's the same model that movie theaters kind of go through and that they are typically an event space that sells product. And obviously the best part about experiential marketing that services oriented is that you have a captive audience for an X amount.

Paul Alexander Butler:
Sure.

Len Sullivan:
Now, one of the things that you've kind of always done is, or at least kind of espoused, is really you've thought it, and again, I'm probably speaking for you so you'll…

Paul Alexander Butler:
Sure.

Len Sullivan:
...Have the opportunity to correct me is that discounting is sort of the cheap way out and it's something that really makes no sense. You want to kind of expound upon that?

Paul Alexander Butler:
Yeah. So, I think most people that discount with any regularity, which isn't to say I'm against having periodic sales, sales are a thing that drives consumers, they have since forever, right? But there, there are a lot of people in my industry that do discounts across the board on a regular basis. 10% off this product line all the time, or 20% off, or we'll match Amazon pricing. At the end of the day, if you're trying to compete with Amazon, it's a losing proposition, you're never going to be what Amazon is. Amazon is quick, click and get it in your box, get it in your mailbox, at a sizable discount pretty regularly. You need to have a unique value proposition that's providing something over and above just the cheapest price.

Paul Alexander Butler:
If you want to chase price, you're always going to be chasing whoever's the cheapest, and you're going to teach your customers that price is what matters, and that, I think, you'll end up creating a consumer base that's driven by your cheap prices and not necessarily about the other things that you provide. And by not discounting, you're also putting a value on that other stuff, whether that's expertise or whether that's events, or whether that's a welcoming community. And I mean, retail is hard already. If what you're doing is just chopping out the bottom line, your net sales, you know, it becomes a complete different equation.

Len Sullivan:
Yeah. I mean, that's actually a really interesting point that you just made because I could order three games off of Amazon and not know exactly what I'm ordering, and probably have three duds that never get used, whereas if I go to an expert, an expert says this game is going to be good, the likelihood that I'm going to walk away with something I'm happy with. So in the end, are you really saving money?

Paul Alexander Butler:
Yeah, right? And I also tell this to other retailers quite frequently: if you're always trying to, the people that are searching, the people that are motivated by price, they're not really your customer…

Len Sullivan:
Hmm.

Paul Alexander Butler:
...Because if their only loyalty is to price, they're going to go somewhere else as soon as it's available cheaper somewhere else, which will inevitably happen. So you need to provide some other value for why they feel like they want to contribute to your business. Does that make sense?

Len Sullivan:
Yeah.

Paul Alexander Butler:
Yeah. I tell people frequently, those people that are chasing prices are not your customer, or those shouldn't be your customer, you should be focused on the other people that value what you're providing. I never do price matching. I occasionally do seasonal sales or special promotions, and of course I have a loyalty program. But chasing price is a losing proposition. There are people that would argue with me.

Len Sullivan:
Well, I certainly wouldn't be one to argue with you, and I actually think that that's a great call-out for this entire thing is how likely, 'cause this is also a discussion that we have when you've actually used the term that we use too, is people that are chasing prices with coupon discounting, those are often your negative social media influencers the bad reviews and the…

Paul Alexander Butler:
Yep.

Len Sullivan:
...You know, because they're looking for something very specific, those are the ones that are typically the ones that can actually end up hurting your business in terms of social presence.

Paul Alexander Butler:
Sure. I mean, the number of times that I often advise my staff, anytime you've got a cranky customer, nine times out of 10 they're not really your customer anyway, they're complaining because you're not providing them with the price or you’ve done something that eliminates their ability to, you know...

Like right now, Pokemon is hotter than ever, and people are buying out stores and scalping it. They're buying it to resell on the secondary market, and most of the customers that are upset by the policies that we put in place for Pokemon are those people that aren't really our customers anyway, and they're just looking to make a buck.

Paul Alexander Butler:
So I try to advise my staff not to get stressed about it because those people aren't really our customers, they're just here because they see an opportunity and they think they're going to take advantage of us, and when they realize we know the value of something and suddenly we're not the mark that they thought we were.

Len Sullivan:
So, by limiting a hot product you're basically…

Paul Alexander Butler:
Exactly.

Len Sullivan:
...Giving supply to your actual customers who…

Paul Alexander Butler:
Right.

Len Sullivan:
...For what they wanted it for. So that kind of brings us to – and I do want to talk about one more thing before we wrap up here – is one of the things that you've done really well is social media grouping, which is putting your customers in touch with other customers, and in effect, they're the ones that are actually running and scheduling events at your store, in which case, and in fact doing the work for you.

Paul Alexander Butler:
I'm glad you think we're good at it 'cause I always feel like we're not as good as we could be.

Len Sullivan:
Well, the numbers, I think a lot of people, especially people in retail, would gladly switch your profit numbers with theirs…

Paul Alexander Butler:
Sure.

Len Sullivan:
...In a heartbeat. So, I would argue that I love the idea that you can always be better, but I'd argue that you are successful at it. So, can you tell us a little bit about why may be on the fast track to kind of getting customers connected with customers and then…

Paul Alexander Butler:
Yeah. So…

Len Sullivan:
...Events.

Paul Alexander Butler:
...So yeah, an interesting thing about my customer base is that they're often in silos, like they're often, interested in some portion of the store to the exclusion of everything else. If they play competitive magic cards, they don't care about board games, or if they play with the toy soldier war games, they don't care about dungeon and dragons, which isn't to say there aren't people that cross all over, but many of them are only interested in one particular thing. So by creating, mostly in our case, groups on Facebook for the different communities, we enable them to all connect into have, the signal noise, to noise ratio becomes much more favorable as they can talk about their specific interests and help organize events when we were having events regularly.

Paul Alexander Butler:
Or even a place where if, as the store we run the group, we can post in there about new stuff that's arrived, that's specific to their interests, or new initiatives that we might take with events, it's much more effective than even like targeted email marketing. Um, you know, we're, we're basically creating these sub-communities where these people can associate with others that have their own specific interests. Uh, the challenge of course is that, you know, social media moves at the speed of light, so, you know, we're in, we're using Facebook groups at the moment, but a lot of the communities have already moved on to other platforms. So, trying to figure out when it's worth it to bounce over to something else and create alternate parallel communities. It’s a challenge, not everybody uses Facebook.

Len Sullivan:
But I mean, it can also create a, kind of full circle, it can also create buying opportunity. If you're a bookstore and you have historical readers at John's books, and then you also have romance readers at John's books, you're creating these spaces and inviting customers to make recommendations that can also influence your buying decisions…

Paul Alexander Butler:
Yes.

Len Sullivan:
...If some book that you're not aware of.

Paul Alexander Butler:
Yeah, well, that's huge, right? I mean, especially in my industry right now, particularly when we look at board games, board games have exploded over the last 10 years to the point where it's very difficult to keep up, and there are often things that get crowdfunded or stuff from some small little publisher that I'm just oblivious to, kind of being able to eavesdrop on these conversations that are occurring in these different spaces enables me to kind of pay attention to things that I might not otherwise have caught, especially if it's not coming through a normal distribution model, and it's some tiny little publisher that only sells direct. There's a lot of that happening right now.

Len Sullivan:
Awesome.

Pieter Bickford:
Yeah. I was just going to say just listening to this whole conversation, it's fascinating to talk to you, but what's really coming through to me is that there's a respect for your customers and they in turn respect you. And I think one of the really exciting things about where technology has come, where social media has come and, is that when there are these people out there that are passionate, like you said, in their silos, but they've found their people, they've found their tribe, and businesses like yours truly respect that. And so, I just love the idea that we've got all these people that have really interesting hobbies and they've been able to come together in businesses like yours and just see a mutual respect there that has to pay off for you.

Paul Alexander Butler:
Yeah, I mean before I was in this industry, I actually spent many, many years working for Hot Topic, the Hot Topic chain when they were at their peak, just after they had come to the East Coast, and one of the things I learned there very quickly was that they were very good at identifying regional and local trends, and we identified much as I talked about different gamer types at Hot Topic. We had different lifestyles, right? Back in the 90s, there were the punk kids, there were the heavy metal kids, there were the ravers, right?

Paul Alexander Butler:
So, being able to identify all those different lifestyles as we call them, but we also just straight up had a clipboard back in the day where you would write down a band that you'd be interested in seeing on a band t-shirt. So we would literally collect this information handwritten from customers all the time. It was just a clipboard stuck to the wall of shirts and they can identify regional trends and act on them.

Pieter Bickford:
Oh, that's fantastic. And I want to…

Paul Alexander Butler:
…That's something they still do. I think they're a bit more pop cultural oriented these days, but…

Pieter Bickford:
Len, what category were you in?

Paul Alexander Butler:
I'm all over the map. I'm a music guy, man. I was all of the above.

Pieter Bickford:
And I want to know what Len was.

Len Sullivan:
You know, I don't know. I was kind of all over the map as well.

Pieter Bickford:
Skater dude?

Len Sullivan:
Actually, the funny thing is you wouldn't know it by our appearance, but Paul and I have a lot of the same taste in music. So, those only we'll be able to see that, but let's just say that we're completely, we're probably opposites of the same age group, which is actually kind of funny. I'm ranking like I'm 80 and Paul still looks like he's 35, but...

Pieter Bickford:
I don't know, you have a cool factor. Len you have a cool factor.

Len Sullivan:
No.

Paul Alexander Butler:
I mean, he's got something going on, right?

Len Sullivan:
I think we better end this here before we devolve it down into any further. Paul, is there anything, 'cause obviously a lot of people are struggling out there with the pandemic, from the sound of advice of someone who's able to not only survive the pandemic but you've actually been thriving, and I know an added complication you've actually opened an online store for curbside delivery.

Paul Alexander Butler:
Well, I mean not for nothing, that was something that was not on my short-term goal list, and the pandemic sort of forced my hand. I will say this, I'm continually proactive about thinking about ways that the business can be better, and having that as sort of a mindset and an MO meant that being confronted with these severe challenges of 2020 wasn't that much of an apocalyptic event as it could have been. It was sort of like, okay, well, you know, normally I'm looking at what product line do I kill or what product line do I bring in? How do I change the store to make it better? I'm like, well, okay, now we've got some real challenges, how do we pivot? And being able to, just being willing and capable to adapt to circumstances is a huge thing. And because that's sort of my mindset all the time anyway, it wasn't as crazy as it could have been, I guess.

Len Sullivan:
Wow. I think that's a great way to end this. Paul, thanks for joining us.

Paul Alexander Butler:
Sure.

Len Sullivan:
We love talking to you, that's some great insights and, we'll see you next time.

Paul Alexander Butler:
All right. Great. Thanks for having me.

Len Sullivan:
Thanks a lot.