Retronomics: Independent Store Survives Against The Big Boys

5:20 PM on 03.01.2010   |   Sean Carey

67 comments

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The retail games industry is no different than any other business battleground. Life in the (mostly) free-market economy is many times a matter of survival of the richest. When the Gamestops and big chain sellers of the world have enough clout to shape the opinions of the consumer, many people stop looking for alternatives, if they're even aware they exist.

Being a gigantic fan of the underdog in most scenarios and entrenched in my hometown's (Austin) mentality of supporting originality, the local economy, and independent ownership, I was happy to find recently that my city plays host to one of the exceptions to the casualty statistics. Searching online for a place to find older games and systems locally, I stumbled across the Web site for Game Over entirely by accident.

When I discovered that they were independently owned and had survived for five years, I raised an eyebrow in curiosity. When I found out that they had expanded from one location to three over that time while Game Crazy had lost four locations in that same period, I raised the other eyebrow in surprise. And when I walked into their main location recently and saw that their store contained games and systems from every generation, hosted retro game tournaments and events, and has a videogame museum in the back complete with a Power Glove signed by Fred Savage ... let's just say that something else raised of its own accord.

I was immediately possessed with questions. In a world that crushes the little guy, I just had to know exactly how this local retail rebellion was not only surviving but thriving in a cutthroat market during the worst economic downturn in recent history.

I was lucky enough to convince the owner of Game Over, David Kaelin, to take some time away from fighting the good fight to sit down with me and shed some light on exactly what the secret of his success is. A transcription of excerpts from that interview follows below!

David Kaelin in the videogame museum, rightfully proud of his signed Power Glove and copy of The Wizard.

SC: David, I really appreciate you taking time to talk to me about your business, and let the folks who are reading know more about what you're doing and why you do it.

DK: Thanks! We appreciate any exposure we can get. Running this kind of business is an uphill battle for any industry, any person. And we certainly appreciate that, and strive to overcome all those hurdles. And so far, we've been here five years, so we're doing pretty well.

SC: So, I'd like to start by springboarding off of what you said. You mentioned hurdles. What are the hurdles that have gotten in the way of you growing your business?

DK: I think more in general, just starting a business is really hard. You know, people are trained to go to the GameStops and Walmarts and a lot of times they think that's the only option. So, even if you don't find the old games you wanted at GameStop, you still go there first because that's pretty much the only game store there is. And, people need to take the time to research and find those little out of the way places in whatever town they live in. They're still out there; there still are some independent stores out there, and they need the support more than GameStop does.

In this area, our stores have done really well because we not only have gone the independent route, obviously, but we specifically target everything GameStop doesn't have. You know, everything people hates about Gamestop, we do the opposite. We have tournaments on classic games. We have fun events, like concerts. We have a videogame museum in this store. We carry every single type of game and console ever made. You can sell every single game and console ever made here for cash or store credit. So, anything you're looking for, it's worth checking in this store.

At a GameStop, if you're looking for something that's like an older title or more rare title, odds are, you're not gonna really find it there. And then t-shirts and keychains and all the collectible things that we sell -- the imported type items -- we have videogame sound tracks and DVDs. Just anything cool about videogames, we try to take part in that. We're just more about the culture and the fans of videogames than the people who just want to buy Madden 2010.



I purchased the green Atari shirt from the bottom center, because I'm old. (also, see avatar)

SC: Fair enough! So, you began in 2005 with one location, and now you've spread out to three locations. You've been able to capture those things that GameStop hasn't done. Is that a unique thing to Austin, this kind of retrolust? Or do you think this kind of business model would be transferable to another city, another place?

DK: I think it's definitely transferable. I think every city out there needs, and can benefit from somebody selling retro games. I think there are places out there. The problem that a lot of people run into is, those places are pawn shops, or those places are independent game stores that are not run well, that are not merchandised well.

Maybe they have some old games, but they don't run it like a business. They run it like a hobby shop, like, it's just an independent owner, and the same guy's in the store every time you go in, and it's just his little collection of games. Sometimes you get a deal, sometimes you don't, but normally the shopping experience and the selection is not worth the trouble of finding that independent store and going in there.

We try to run ours like a GameStop in just one sense -- we run it like a chain. Each store has the personnel, the customer service; everything is always alphabetized, priced clearly, and merchandised well. We take pride in the fact that we're an independent, and that we're a small company, but when you come into our store, there's nothing unprofessional about the way you're treated or the way that the store looks, and the experience you have.

So, it's not just some little shack of old games in a stack with no price tag, and you have to ask the guy "how much for this game?", "I don't know, I'll go check the book or check in the back and ask the manager". You know, everything's clearly marked and we run it like a business.

SC: So you mentioned running it more professionally and more of a business as opposed to an enthusiast or hobby type shop. With that in mind, how do you go about setting pricing in terms of what you take in? Are you basing that on what your competitors are doing, and using that as a model for trying to bring in additional business? Or, is there a 'Blue Book' standard? What resources do you draw from to set that pricing?

DK: Well, it's a lot of different things. We can't go into too much specific detail on that, obviously, but generally speaking we take trade-ins, so you can sell any game here. You get a cash or store credit value -- store credit's higher. The difference between what you get for it when you trade it in vs. what we sell it for, there's obviously a gap there that in some cases is significant. But, it just has to be that way. Our standard is, we try to be at or below our competitors for a similar item, which, when we carry everything, makes it kind of hard to use one standard.

For current gen games, we use kinda the GameStop model. We try to pay a little more than they do for stuff, we sell it for at or below what they sell it for, so that way those customers that are into that generation of games -- there's no disadvantage for shopping here. You know, a lot of independent stores either by choice or by force end up selling new games for, say $5 more than everybody else, and then they wonder why their shop goes out of business. New games are not extremely profitable. So, if that's all you've got going in your store, that's probably just not a good idea to be in business. We have all the different systems and so, new games aside, looking at the older games, then you have to compare it against what people can get those games for.




Plushies - you break 'em, you buy 'em. Harsh policy.

We also use eBay and Amazon as a kind of benchmark. Say for example, an old PlayStation 1 game, you know, nobody else sells it anymore, so we can't price check a store in town. But we'll see what it's going for on eBay or Amazon, including the shipping, and we'll try and be at or below that. So if it's $40 on eBay, with $10 shipping, we might sell it for $50. It's not more expensive than it'd be if you bought it online, but it's not dirt cheap, necessarily. We try and do a fair trade price and a fair sale price, you know, I feel, for everything we have [smiling]. That being said, of course, nobody is really happy with the trade-in price.

SC: EVER.

DK: Whether you're at GameStop or with us at Game Over, or anywhere else in another town or a pawn shop or whatever, everybody has that mentality of "I paid $50 for it, I should get at least $49 back!" It's like, no, because now we're selling that game for $15, so, we can't give you even $14, we might only give you a couple of bucks for it. Then after a while, your stock builds up, and there may be certain games that we may have 20, 30, 40 of -- systems too. PlayStation 1s, N64s, some of that generation of systems we have ... tons.

When you have a couple hundred of something, your desire to pay a lot of money for the 203rd is, you know, not very high. So, it's based on competitive markets; eBay and Amazon for the older stuff, GameStop for the newer stuff, and also based on, you know, how much we have. It's really the only fair way to do it.

SC: So, you mentioned eBay and Amazon. Obviously that's a large percentage of your competition for the used consoles and older games and systems. I noticed that you're offering a lot of your stuff online now. How recent is that? How successful has that been for you, and what percentage of your business comes from the online store as opposed to the physical store?

DK: Yeah, that's a good question. I mean, our competition is definitely more online than it is GameStop or anybody else because that's what we do -- the classic stuff. That being said, we have a Web site, but we haven't had a webstore before last December. That's when we first remodeled our Web site and got the webstore up.

We still have not really aggressively promoted that yet, because we're still kind of tweaking the inventory on it. We're still adding pictures, so it's not what I would call a finished product yet. Right now, we're a drop in the bucket next to eBay.

SC: What percentage of your business is serious collectors who are looking for specific items to complete a set as opposed to regular old retro enthusiasts who are looking to just experience the nostalgia of an older game or system?

DK: I would say the majority is just the casual enthusiast, honestly. We do have, maybe 20% or less who are hardcore collectors. Those, we refer to as "the people with lists". They come in and they have a list, and they like "I'm looking for these 7 NES games." and the implication is that they have the other 600, 700.

Depending on if they collect all the unlicensed ones or not, it could be 700 to 800 games, and yeah - there was someone in our Round Rock store last week, I was visiting up there, and while I was there a customer came in and they had literally 7 things on their list. And they're like "This is all I need for NES.", and we had like 2 of them! So that was nice.




Wall to wall games in this place. Every system you can think of. I was wise to not come on payday.

SC: You've stated that getting the word out is one of the difficult parts of running a successful independent store -- is community building how you do that? Does most of your advertising consist of word of mouth?

DK: Yeah, that's probably the hardest thing for any small business. Getting the word out that you exist; what we do, this store, in fact, with the video game museum and the events that we put on are really exciting and people want to come participate in them. Letting them know that we have them is the hard thing.

We do some print ads, we do some radio ads, we do TV commercials, but only on a small scale, because the expense is just astronomical. Yeah, social media, internet, email, and word of mouth is how we really get the word out. We just had a rash of donations that we've done lately, for school fundraisers, things like that. We have one going on this weekend with the Make-A-Wish Foundation.

That's a way we can double up with giving back to the community in a charitable way -- I want us to be a friend of the community and reach out in that way, but obviously it also gets our word out about our stores and who we are. Somebody may see the item up for auction at a fundraiser and say, "Oh, Game Over? What's that?" and go to the Web site and say "Oh, that looks pretty cool." and then they come in the store and say "Oh, that's REALLY cool!".




You stand before the portal to retro heaven. What do you do?
> OPEN DOOR


SC: You've got a little bit of everything in here. Is there one system or era that generates the highest volume of trade-ins or purchases?

DK: Yeah, it's really strange the way trade-ins work, and in this type of store, we can get everything from Virtual Boy games to Wii games in the same day. Just a total mismash of items. Our general bestsellers tend to be Nintendo and Super Nintendo. Those tend to be the most collected, the most played by the retro gamers, and even the casual collectors and enthusiasts just want to play an old game of Smash Bros. or Mario Kart on N64.

SC: Mario Kart. Yeeeeeeeaaaah!!!

DK: [laughing] But yeah, it's amazing how much of it is just Nintendo and Super Nintendo cartridges, I mean, they truly created some classic games and system back then, in the 80's and 90's.

SC: Let's get to some more fun stuff. Out of all the stuff you have in here, what are your favorites? If you had to pick 3, what are your 3 favorite systems to play on?

DK: [facepalming] I wish I had time to play! That's my own personal torture, being surrounded by games, working in a game store day in, day out. From morning to night, all I do is video games, and there's not enough time left to play them. It's the curse of my life.

SC: "Water, water, everywhere, but not a drop to drink."?

DK: That's right, exactly. It's all salt water, kid! But, I would actually classify myself in the casual collector category, where my personal collection and my desire to play runs the full range. I don't have, probably, more than 20 games for most systems outside of Atari, NES, and Super NES. But, I like certain games on each system. Probably my fondest memories and my best experiences with games happened on the Atari 2600 and the NES, because those are the 2 I had as a kid.




Mario Monopoly? I really hope one of the properties is Rainbow Railroad.

SC: How has the recession impacted your business? Has it hurt your business, or have you actually seen more people walk in the door because they're looking for a gaming experience that they don't have to invest as much money into?

DK: I think both, actually. We specialize in used games, and used games are cheaper than new, so there's definitely a benefit to being in this business in a bad economy. If you're just buying for your kids and they just want something to mess around with and they don't really care if it's the latest and greatest, you know you can get some older systems at a bargain.

In that way, I think it helps, but as successful as we are, I know we'd be even more successful if the economy wasn't crappy. We're really looking forward to getting through this year, getting the economy back on its feet, and then we're looking to expand and we're looking to grow even more.

SC: What does that mean? More locations, more cities, all of the above?

DK: Both! I'd love to say that we'd be everywhere in the country, but it's definitely a slow process being an independent. We at this point, are wholly owned, so we're not doing franchising. Franchising would grow us a lot faster, but then you can't control as much. You don't want everybody who has a little bit of money or a few games to open up a game store.

We're looking to open at least a store a year for the next couple of years, and then we've got our online store, and we're looking to develop that into a destination type website to buy games. It's admittedly a very small selection right now, but we are adding to it all the time to bulk that up so that we'll compete on both fronts.

As I said, being an anti-GameStop ... nothing against GameStop ... just the opposite of a GameStop. I want to be really careful not to offend GameStop -- I love you GameStop! They do help us out, you know. I came from there, from that corporate culture of the games store on the EB side of it. I have no ill will towards them, but we just do a different thing, we go for a different customer.

SC: You've mentioned several times how you differentiate yourself from GameStop, and specifically about the experience you create in your store being one of the things that keeps building your customer base. How do you drive the focus on customer service and ensure it's better than your competitors'?

DK: I definitely think you've got to preach to it and make it a priority in your business. But I can't be in front of every customer, and I don't have time or want to watch every interaction, so getting the best employees is very important. All the employees first of all love games, and then they also love working at the stores, and I think that translates into how they treat the customers. We all have a stake in seeing Game Over succeed, and so I trust them to treat customers the right way.

SC: How do you get the best employees, and why do the employees enjoy working here?

DK: Well, on one end, we pay either at or above what GameStop pays their employees, and that means there's a lot of competition for our openings, and at the other end we're a much less 'corporate' environment. We still run it like it's a business, but it's about the love for games and I think we're more concerned with that then trying to drive profits up artificially. That makes people feel good about working here, and that's, you know, what drives them to treat the customers right because they believe in it and want it to succeed.

When a spot opens up here we get flooded with, like, 60 applications immediately. Most of our people came to us from GameStop or Game Crazy originally, and their friends who still work there can't wait to jump over and be a part of what we're doing. That helps make a great experience for our customers when the employees feel fortunate to be there in our stores.




Is it just me, or does the DK on the left have a different expression? OMG, they're becoming sentient!

SC: Is there anything else you'd like to share, or get out there, or wish people knew about what you're doing right now?

DK: Just being aware of us. If you're reading about this and you're in the Austin area, I think you'll find a better selection, better service, and better prices here than any other used game store. For the rest of the country, we're getting our website going, and if you live in a place where there's just no other option you can try and seek it out.

Check out pawn shops, check out eBay; if you have an independent store there you should at least give them a try. If they don't do a good job, or don't have good selection or service or whatever then you don't have to go there again. But those independent game stores who are doing it right really need your support, or else they're not going to be there.

It's the same way the music stores were 10 years ago. There was a used CD store on every street corner, and so they weren't that big of a deal. Then people stopped going there and they disappeared. You really need to support those local businesses, because they'll never get better and bigger unless people go there.

SC: David, thanks so much for being so generous with your time, and talking to me about all of this. I hope you get some time to actually play some games sometime in the near future!

DK: Thank you very much, I appreciate it!