Following up on last week’s column on the trends in the Game Industry that I spotted at the Alliance Open House, there were a couple of additional ones that came to my attention while talking with publishers at the show (see "Rolling For Initiative -- Wizards Puts Its Money Where Its Mouth Is and Other Trends" and also, "Rolling for Initiative -- Three Reasons I Attend the Alliance Open House"). They are as follows:
Maintaining Pricing (for now). As you probably know, if you read this column regularly, tariffs imposed by the Trump administration in its ongoing trade war with China could impact the Game Industry significantly (see "Rolling for Initiative--Talking Tariffs 3: Tariffs from the Publisher's Viewpoint"). So far they haven't, but if negotiations with the Chinese trade delegation do not bear results to the administration’s liking, we could see a 10% or more tariff imposed on board games and related products by mid-December. Happily, the administration has scheduled the tariffs to take effect (if enacted) around December 15, after all production and most retail orders have shipped for the holiday selling season. Ergo, if the tariffs are enacted, the game industry would not expect to see any effects until Q1, and then, primarily on board games.
I was curious, so I spoke with several board game publishers at the Open House, and publishers unanimously indicated that they would not follow implementation of tariffs with a price increase. There are two caveats that should be applied to this informal survey. For one, this was a convenience sample. I didn't ask every publisher there, not did I attempt to randomize it, so I would not generalize it to every game publisher. Secondly, the publishers could cut the gross margin offered to distributors and retailers to counteract the effect of the tariffs on their bottom line. Wizards of the Coast has done this with Magic: The Gathering in the past by increasing the price charged to distributors and retailers without a corresponding MSRP increase. Yeah, I know WOTC has eliminated MSRP on its products, but $3.99 is still the expected price on most Booster packs in the current Standard rotation and few retailers can get away with increasing it beyond that amount.
Out of Stock Disconnect. My primary distributors are Alliance and Southern Hobby St. Louis, and I have noticed several items out of stock with both of them for months. I was left somewhat nonplussed when I mentioned this to several publishers and heard, "We have plenty of that in our warehouse," and that I could readily order it directly from them if needed. If this is indeed the case, there is certainly some sort of disconnect (with the exception of Asmodee products which I have found in stock over 90% of the time when I ordered them) between publisher stock levels and distributor stock levels. I'm also not sure if it is due to publishers not contacting distributors to make sure they have restocked their merchandise or if distributors are not following up with publishers when an item goes out of stock or a combination of the two. I like ordering through distribution since it allows the store to order one or two of an item at a time to maximize turnover, rather than case quantities from the publisher which can really cut down on turnover. At the Open House, Pandasaurus Games announced they were in discussions for a flooring arrangement with Alliance [corrected from "they had entered" on October 1, ed.], which would drastically cut down on the company’s out of stocks at distribution (see "Rolling for Initiative--Addressing the Out of Stock Problem: Flooring and Reshoring (and the Importance of a Name)"). Meanwhile, I hope to see both publishers and distributors contact each other more and maintain a steady in-stock of popular product lines.
Next week, I will address one more trend that I feel warrants discussion.
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