"Games Workshop: In Denial" Topic

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Delving into the segmental results in note 2, which are admirably thorough, it's easy to pick out a culprit from the line-up. Games Workshop's trade channel made an operating profit of £5.80 GBPm and its mail order channel made a profit of £6.20 GBPm, but its retail channel made a loss of £2.50 GBPm, more than double the loss it made for the same period the previous year.

So the new one-man stores aren't profitable…

This is a really interesting article – GW is a publically traded companies, that is larger compared to other hobby companies (actually, would be interested to compare to something like Tamiya)

So it's answerable to shareholders and shareholders want to increase the value of their money, compared to how other companies increase in value.

So if it is stagnant, the stock will get dumped and so fall in value, making shareholders unhappy – it has to grow at a similar rate to other companies with the same risk exposure

I have never been inside a GW shop, except for the original one near Ravenscourt Park so maybe there is some magic to it that I am missing.

There is a hobby store within 4 miles of my place that has a small GW stock and a very small gaming space, there is a store a little further away that has gaming spaces and a more comprehensive GW line

So what is the added value to a GW branded store ? I don't see it. They would be better off focussed on locations that they have that are successful – and they sure better understand why those locations are successful and others aren't.

They could put in stores in areas that don't have gaming stores (so long as there isn't a good reason there is no store) but otherwise I think the stores are a vanity project. They could spend more on marketing materials for (non GW) retail stores, such as displays and some co-advertising

I'm being a bit harsh calling it just a vanity project to have stores. Many companies get stuck in old thinking. These days, there is no value in a brick and mortar store unless it offers something you can't get online. That could be great service (very tough for a big company to be consistent), gaming space, painting clubs, intro sessions, whatever. If there is no value in a store ….. we've all seen it happen. No idea how you can do the above with a one person store.

In the US, the majority of cities don't have shopping areas where you can walk down and discover something new that you didn't know about. Nowadays people (perhaps people younger than most of us) find new stuff online. Viral marketing (i.e. putting out articles and demos and stuff) is a powerful tool

Sorry to ramble

John

I wonder how much cost is added to the products because of the store?

Could the models be less expensive if they did not have the overhead of hundreds of stores world wide?

If so, do online shoppers pay extra for the intangible extras the store provides while not gaining any benefit?

Just wondering aloud. I am no longer a customer.

I miss the old days when I could afford to buy their products.

I always assumed that GW retail outlets were part of the strategy to split the "GW Hobby" from the rest of miniatures wargaming and modelling. In a GW retail outlet they can create the illusion that there are no other alternatives to their products, and that the prices of their products are reasonable (measured in comparison with everything else in the store). In a FLGS customers can compare prices with similar products, and potentially spend their money there…

In the short term, to some extent, GW might have been effective with their strategy of drawing a line around "their" stuff – how many younger gamers (even age 30+) have you met who had no idea other miniatures games even exist?

In the longer term, I think maintaining the illusion that they're the only game in town isn't sustainable in the face of expanding online retailing. And I think GW's artificial exclusivity can be off-putting to customers once they realize alternatives are out there.

That said, I don't think GW's actions are from stupidity. I think GW is in the same bind many publicly traded companies face – their shareholders demand that they provide consistent short-term returns, which channels their options toward short-term sales tactics, but some of those short-term tactics limit opportunities for longer term growth…

For a while now GW's strategy has looked to me like they're defending a position (derived mainly from the IP and brand loyalty they had when they first issued shares) and the only way they can keep it looking consistently strong on all fronts (maintaining returns per share) is to shrink the size of the perimeter (by getting rid of innovative, but smaller revenue, offshoot games). They'll probably hold out for a long time yet, but I do wonder what the returns would be if they break out of their fortress and engage the wider hobby market with more broadly appealing products. They have the resources to compete on price with anyone – they could be a shark among minnows if they decided to.

The bulk of GW's shareholders are pension funds afaik. They're more interested in dividend payouts than anything else.

@Pattus Magnus,

Your response is very interesting, in particular with regard to what you said about GW trying to separate themselves from the rest of the hobby – I remember at some point, I think it was in White Dwarf Magazine, maybe starting about the year 2007 or so? I could be off on my timeline by a few years either way.

At that time you began to see appearing in GW's publications the phrase "The Games Workshop Hobby". As you said, it was GW's attempt to make you feel like not only did they make excellent miniatures, games and hobby supplies to support them, but that their brand was worthy of being called a SEPARATE HOBBY unto itself that set it apart from all other wargaming on the planet.

I think to a certain degree this hurt them in some ways. I always have and always will love GW's Old Worlde setting and the miniatures and games they made for it. They are still my favorite miniatures company.

But be that as it may, I have always had to sort of uncomfortably cringe any time I would see GW attempting to brand itself as being so unique that their company is supposedly an entire hobby genre all on its own.

Your post also reminded me of something that my friend and I spotted in a White Dwarf magazine from around like 2003 or so. In one of their hobby articles, in which of course they, like always relentlessly push their brand of paints, brushes, and basing materials, as they always have – in a corner of the one of the photographs you can see one of GW's official professional painters/terrain builders' work desks.

Sitting amongst all the GW paint pots and GW spray paints, you can spot some cans of Tamiya spray paint, which were obviously being used on GW projects.

Oops, lol. I always found that amusing, even GW can't hide everything, even they use other brands of stuff if it's good.

Kind of underminded their whole "we deserve to be a hobby in our own right" business model.

Here in the San Francisco Bay Area the GW stores ended up cannibalizing all the small FLGS and then failed and closed, leaving only a handful of hardy FLGS. Fiasco.