Entering the world of entrepreneurship by starting your own game store can be a thrilling adventure filled with endless possibilities. Whether you’re a video game enthusiast, a tabletop hobbyist, or simply passionate about business, this industry has a niche for everyone. If you love all things related to games of any kind, opening your own game store may be a great way to turn your passion for and knowledge of games into a business. You can do what you love, talk about what you love, and make a living at the same time.
Our comprehensive guide aims to provide you with a detailed game plan to be set up for success.
Starting a game store entails establishing a retail business where you offer an array of gaming products. This can range from video games, gaming consoles, and accessories, to board games, trading card games, and role-playing games. The store could also include gaming-related memorabilia and apparel, depending on your target market.
If you are thinking that just because there are no other gaming stores or a Gamestop in your area will make your business successful, be sure to look at indirect competitors as many hobby stores, comic book shops, and of course stores on the internet, Amazon, and eBay sell games too. Your competitive advantage is more likely going to be the community built around playing games, so be sure to have this strategy mapped out. Customers of game stores tend to be very loyal and not price-sensitive than other types of businesses.
Before starting your business, consider attending the GAMA Trade Show, as most manufacturers and distributors of games attend to show their products and services. Here you will be able to meet other game store business owners and really learn from the people who are doing what you want to do.
The gaming industry has grown immensely over the past decade, with an ever-expanding community of gamers worldwide. While digital sales have been driving growth in recent years, physical stores still play a significant role, particularly in serving enthusiast communities and hosting in-person events.
While it’s undeniable that e-commerce is a dominant force in retail, there are still compelling reasons to consider a brick-and-mortar store as they provide a physical space where gamers can explore new products, seek expert advice, participate in tournaments, or simply interact with like-minded individuals. This experiential aspect, coupled with a carefully curated product selection, has allowed many game stores to thrive in spite of digital competition.
It’s worth noting that some game stores are franchises, and some are independently owned.
While data for the general game industry is hard to find, there is information for the video game industry. According to IBISWorld, in the last five years, the video game industry grew 3.9% each year to reach $106.8 billion in sales. In 2023, the market is expected to increase by a whopping 9.4%.
Starting a game store is a perfect blend of passion and entrepreneurship. With an understanding of the business requirements and industry landscape, you can navigate the challenges and seize the opportunities that this exciting industry presents. But, success in this venture requires more than just technical gaming knowledge; it requires an adaptable business strategy that responds to ever-evolving market trends and customer needs. A few trends to be aware of includes:
- Rise of Esports: The esports industry has exploded in popularity, encouraging a surge in demand for gaming hardware and merchandise. Capitalizing on this trend, game stores can host esports tournaments or viewing parties, and stock related products.
- Virtual Reality (VR): With more affordable and advanced VR technology, there has been a marked increase in VR gaming. Offering VR gaming sessions and selling VR equipment could be profitable for your game store.
- Board game renaissance: Contrary to the digital trend, board games are experiencing a resurgence, with consumers seeking tangible, social gaming experiences. Stores can cater to this demand by offering a wide range of board games and hosting game nights.
- Personalized experience: Consumers today value personalized shopping experiences. Utilize customer data to provide product recommendations, personalized discounts, and targeted marketing.
- E-commerce integration: As online shopping continues to grow, integrating an e-commerce platform with your physical store is critical. Offering customers the convenience of browsing online and picking up in-store can enhance the overall shopping experience.
The target market for a game store can vary depending on the specific focus and offerings of the store, but generally, the following groups are often the primary target audience:
- Gamers of all ages and genders
- Video game enthusiasts and collectors
- Board game and tabletop game enthusiasts
- Families and parents looking for games for their children
- Casual gamers and hobbyists
- Competitive gamers and eSports enthusiasts
- Tech-savvy individuals interested in gaming accessories and peripherals
- Individuals interested in game-related merchandise and merchandise collectors
- Local gaming community groups, clubs, and organizations
- Students and young adults interested in gaming culture and events
With a wide range of potential customers, it’s important to conduct market research and tailor the target market based on the specific demographics and preferences of the local area where the game store is located.
Checklist To Start A Game Store
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Starting a game store can be an incredibly rewarding experience, but it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help create a winning strategy.
Step 1: Conduct Market Research
Understanding the demand for your game store is critical because it directly impacts the feasibility and success of your business. If there’s insufficient demand in your selected location or target market, your store may not generate the expected sales, resulting in potential financial losses. Conversely, if the demand is strong, your business has a higher chance of success and profitability.
To research whether there’s enough customer demand to start a new game store, here are some strategies and resources:
Market surveys: Surveys can help you understand the consumer landscape, including the types of games people enjoy, how often they purchase new games, and their preferred shopping platforms. Online survey tools like Google Forms or SurveyMonkey can be used to distribute surveys widely and cost-effectively.
Online forums: Online gaming communities, such as Reddit, Steam forums, and dedicated gaming sites, are excellent places to gauge the interest level and preferences of potential customers. You can observe discussions or post questions to understand what gamers want in a game store.
Social media: Platforms like Facebook, Twitter, and Instagram can provide insights into gamers’ interests, preferences, and behaviors. Look for patterns, trends, and comments to see what’s missing in the current market that your store could provide.
Google trends: This tool can provide insights into the popularity of specific games, gaming consoles, or gaming accessories over time. High and sustained interest could indicate a strong demand.
Local meetups: If you’re planning to open a physical store, attend local gaming events, conventions, or meetups. These can offer firsthand insights into the local gaming community and its size, interests, and habits.
Competitive analysis: Investigate existing game stores in your targeted area. Note their product range, pricing, and customer service, and try to identify any gaps that your business could fill. High levels of competition could indicate a strong demand, but also require you to differentiate your store effectively.
By using these resources and strategies, you can gain a clearer understanding of the market and make an informed decision about the viability of your game store.
Step 2: Create a Business Plan
Creating a business plan is an essential step in launching a successful game store. It serves as a roadmap for your business, detailing your goals, strategies, and the specific steps you will take to achieve these objectives. Without a well-structured business plan, your game store may lack direction and could struggle to secure financing.
Investors, banks, and other potential lenders will often request to see your business plan before they decide to fund your venture. They use this document to assess the viability of your business model.
For a game store seeking funding, beyond the conventional business plan sections, there are certain areas that can be particularly important:
Market analysis: This section, which provides an overview of the market you’re entering and your target customers, is crucial. It demonstrates that there is a demand for your game store and that you understand the needs and behaviors of your potential customers. A thorough market analysis can convince lenders that your business has a substantial customer base and growth potential.
Competitive analysis: Detailing who your competitors are, their strengths and weaknesses, and how you plan to differentiate your store is vital. This shows that you’re aware of the competition and have strategies to stand out and attract customers.
Marketing and sales strategy: Your plan for attracting and retaining customers should be robust and well thought out. This can involve traditional marketing strategies, online advertising, social media campaigns, hosting in-store events, or partnering with game manufacturers for launches. A sound strategy can reassure lenders that you’ll be able to generate consistent revenue.
Financial projections: Detailed, realistic financial projections are key to securing funding. These should include projected income, cash flow statements, and balance sheets for at least three to five years. For a game store, be sure to factor in specific costs such as inventory, lease/rent, equipment for in-store gaming, and licensing fees for certain game titles or merchandise.
The more specific and detailed your business plan is, the more convincing it is to potential lenders. It shows that you’ve done your homework, understand the challenges ahead, and have strategies in place to overcome them, increasing the likelihood of securing the necessary funding.
Related: How to write a business plan
Step 3: Search for a Location
Choosing the right location for your game store is a critical decision that can significantly influence your store’s visibility, accessibility, and overall success. Begin by identifying your target demographic and considering where they’re most likely to shop for games. High-traffic areas, such as shopping malls, downtown areas, or near universities, can often be advantageous. However, these locations may also come with higher rental or purchase costs.
Consider the size of the premises and whether it can accommodate your plans for inventory, gaming areas, and customer movement. A site visit is vital to confirm that the space suits your requirements.
Don’t forget to evaluate parking availability, local competition, and zoning restrictions. Make sure that the location is zoned for your type of business, as some areas may have restrictions on certain types of commercial activity.
Once you’ve identified potential locations, estimate any renovation costs required to transform the space to meet your needs. This could include interior modifications, installations of gaming stations, display areas, signage, and more. Remember, substantial renovations can significantly add to your startup costs and should be factored into your financial planning.
Before making any commitment to a location, ensure you have a clear understanding of the lease or purchase agreement, including the duration, terms, and any restrictions. Importantly, do not sign any binding agreements before getting past the next step where you have secured funding. Even if you have identified the ideal location, prematurely committing to a lease or purchase could lead to financial complications if your funding does not materialize as planned.
Related: Choosing a business location
Step 4: Secure Funding
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a game store is another.
There are several common sources of funding that entrepreneurs often tap into when starting a game store. Personal savings or contributions from family and friends are typically the most accessible sources. These come with the advantage of potentially more flexible repayment terms and less pressure than formal financial institutions might impose.
Should additional funding be needed, most game store owners look to a traditional bank loan. These loans often offer competitive interest rates and terms, but they typically require a strong credit history, collateral, and a comprehensive business plan to ensure that you can repay the loan. In some cases, the bank may require a Small Business Administration (SBA) loan guarantee to make the loan less risky.
Last, some entrepreneurs choose to work with angel investors, often high-net-worth individuals and/or avid gamers, who provide capital for a business start-up.
Step 5: Register the Business
Once the funding is out of the way, the next step on the journey to starting your own game store involves several steps to ensure your business can legally operate within the boundaries of local, state, and federal law. While the specifics can vary across states, the following steps are generally necessary:
Forming a business structure: This is a crucial decision as it affects your personal liability, taxes, and administrative overhead. The most common structures for small businesses like game stores are Sole Proprietorship, Partnership, Limited Liability Company (LLC), and Corporation.
For many small businesses, an LLC is a preferred choice as it provides limited liability protection and is easier to manage than a corporation. However, it’s advisable to consult with a business advisor or attorney to choose the most suitable structure for your specific situation.
Related: Comparision of business structures
Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.
Business licenses and permits: Your game store will likely need to register for several licenses or permits. These could include a general business license, seller’s permit, signage permit, Employer Identification Number, and others.
Zoning: If you’re opening a physical location, ensure it’s zoned for your type of business and check for any necessary local permits.
Remember, these are general guidelines and the requirements can vary by state.
Step 6: Acquire the Location & Start Setting Up
The steps that we have covered involved a lot of work, and now that work starts to come together into something tangible as you can now get the keys to the store and begin preparing it for customers.
Here’s some advice on how to proceed in this section:
Layout and renovations: Create a store layout that optimizes customer flow, visibility, and access to products. Consider including areas for live game demonstrations or gaming sessions. Specialized retail design software like SketchUp or SmartDraw to assist in planning your space.
Remember to also account for renovations, which could include installing shelving, painting, or setting up gaming stations.
Inventory management: Curate a selection of products that cater to your target customers’ preferences. Use a reliable inventory management system to track stock and sales. Many point-of-sale (POS) systems have integrated inventory management capabilities which can be a boon for new store owners.
Technological setup: Install necessary technology, including a robust POS (Point of Sale) system, security systems, and equipment for game demos or tournaments. Many game stores find software like Square, or Shopify beneficial due to their POS, inventory management, and e-commerce capabilities.
In all these steps, aim to create an environment that stands out from online options and makes customers want to return. Your store should not only sell games but also offer a unique, engaging gaming experience.
Step 7: Source Inventory
When setting up your game store, one critical step in the process is finding and establishing relationships with reliable suppliers. The right suppliers not only provide the products that fill your shelves but also can offer valuable insights into market trends and potential promotional partnerships.
Establishing direct relationships with game publishers and manufacturers is a viable strategy. By connecting directly with the sales departments of these companies, you can inquire about their wholesale programs. It’s also beneficial to attend industry trade shows like the Electronic Entertainment Expo (E3) or the Game Developers Conference (GDC), which present prime networking opportunities.
Alternatively, you might consider working with wholesale distributors. Companies like Ingram Entertainment, Alliance Game Distributors, and GTS Distribution specialize in video games, tabletop games, and related accessories, and can provide you with a wide array of products. Just remember that they typically require a business license and EIN to set up a wholesale account.
Another avenue worth exploring is joining a retail cooperative, or co-op. These associations of retailers leverage their collective purchasing power to secure better terms from suppliers. Co-ops also often provide additional benefits, such as shared marketing efforts and business advice from fellow members.
Regardless of the type of supplier you choose, it’s crucial to negotiate favorable terms, including pricing, minimum order quantities, delivery schedules, and return policies. Once these relationships are established, ensure you maintain them through regular communication, prompt payments, and understanding.
Keeping an eye on the gaming market to identify emerging trends and popular products. This knowledge can inform your purchasing decisions and help you stay one step ahead of customer demand. Cultivating relationships with your suppliers isn’t merely about procuring products; it’s also about gaining allies in the gaming industry.
Step 8: Create a Marketing Plan
Marketing a game store effectively requires creative strategies that resonate with the gaming community.
Social media platforms, due to their vast user base and targeting capabilities, serve as a powerful tool for reaching potential customers. Through engaging content, game teasers, and special promotions, you can create an online presence that draws customers to your store.
Leveraging influencer marketing, by partnering with popular gamers or streamers, can also amplify your reach, particularly among younger audiences.
Additionally, hosting gaming events, tournaments, or launch parties can generate buzz and attract local gamers to your store. Collaborating with local schools, clubs, or community centers can create visibility and foster a community around your store. Offering loyalty programs or exclusive deals can incentivize repeat business.
Last, traditional marketing avenues like local radio, print media, or outdoor signage can still be effective, particularly for reaching a local audience.
Step 9: Hire & Train Employees
If you plan to hire employees for your game store, understanding the legal and administrative responsibilities to consider before bringing on staff is important. A few requirements include:
Employer Identification Number (EIN): Before hiring, you’ll need to apply for an EIN from the Internal Revenue Service (IRS). This unique number is required for reporting taxes and other documents to the IRS.
Worker’s compensation insurance: Most states require businesses with employees to carry Worker’s Compensation Insurance, protecting employees in the case of work-related injuries or illness.
Record keeping: You’re required to maintain accurate employment records for all staff, hours worked, pay, and more.
Compliance with Labor Laws: As an employer, you must comply with federal and state labor laws, including minimum wage, overtime pay, child labor, record keeping, and other fair labor standards.
Posting requirements: You are required to display certain notices in your workplace that inform employees of their rights and employer responsibilities under labor laws.
Getting prepared to hire employees involves a blend of selecting the right people, compensating them fairly, and fulfilling your legal responsibilities as an employer. It’s a significant step in your journey as a game store owner, and setting up the correct processes and standards from the start will benefit both your business and your employees in the long run.
Related: Hiring your first employee
Step 10: Prepare to Launch!
As you prepare to open the doors of your game store, there are a number of tasks that likely still need to be completed. These steps help to protect your business, keep your finances organized, ensure you can accept payments, and allow you to hit the ground running once your store is open. While every business owner’s journey will be different, the following areas are common considerations for most game store startups.
Business insurance: Acquiring suitable insurance is key to protecting your investment. General liability insurance and property insurance are common types, but you should also consider product liability insurance given the nature of a retail business. To get the best coverage and price, we recommend getting three quotes including local insurance agents and online providers like Coverwallet or Hiscox.
Bookkeeping setup: Effective bookkeeping is crucial to monitor your finances and meet your tax obligations. Consider using accounting software like Wave Accounting (FREE) or Quickbooks, or hiring a professional bookkeeper or accountant to manage this aspect of your business.
Bank account: Opening a business bank account helps to keep your personal and business finances separate. This makes it easier to manage your finances and provides a clearer picture of your business’s financial health.
Pricing: Your pricing strategy will directly impact your profitability. Research your competitors, understand your costs, and consider your customers’ willingness to pay when setting prices for your games and related products.
Payment processing: To accept credit and debit card payments, you’ll need to set up a merchant account or use a third-party payment processor. Look for solutions that offer competitive rates and reliable customer service. Some popular options include Square or Stripe.
Grand Opening: Planning for your grand opening involves advertising the event, preparing your store and staff, and ensuring you have sufficient inventory. You might consider hosting special promotions or events to attract customers.
These final preparations are crucial to ensure a smooth and successful start for your game store. Remember, each business’s needs will be different. Tailor these steps to suit your particular circumstances, and don’t hesitate to seek professional advice where needed. Here’s to the successful launch of your game store!
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Common Questions When Starting A Video Game Store
How much does it cost to open a game store?
Starting a game store can be a sizable investment, and costs can vary significantly based on factors such as location, size of the store, inventory, and more.
On average, starting a game store can cost anywhere between $100,000 to $200,000. This estimate includes the cost of securing a location, initial inventory, renovations, and operating expenses.
Location and renovations: The cost of leasing a commercial space can vary dramatically depending on the size and location of the property. A space in a popular shopping center in a metropolitan area will be significantly more expensive than a smaller storefront in a less densely populated area and the cost of rent can range from $2,000 to $10,000 per month or more. Renovation costs will also depend on the condition and size of the space but could range from $5,000 to $30,000.
Initial inventory: The amount of money you’ll need to spend on initial inventory can range significantly based on the size of your store and the breadth of your product offering. A modest initial inventory investment might range from $20,000 to $100,000.
Operating expenses: In addition to upfront costs, it’s crucial to have a buffer of operating expenses to cover the costs of running your business, especially in the early stages when you might not be turning a profit. This includes rent, utilities, employee wages, insurance, marketing costs, and more. Having three to six months of operating expenses on hand is a wise move, which can range from $30,000 to $60,000 based on the size and scope of your business.
Additional costs: Additional costs may include business licensing and permits, professional fees (for lawyers, accountants, etc.), and payment for POS systems or other necessary software. These costs can add another $5,000 to $10,000 to your startup costs.
Is a game store profitable?
The profitability of a game store can vary greatly based on factors such as location, size, overhead costs, and the specific niche of the store. Generally, the profit a game store owner can make depends on the gross profit margin of the products sold, the volume of sales, and the store’s operating expenses.
For instance, let’s consider a store that focuses on selling new and used video games. A new video game might sell for around $60, with the store’s cost being around $50, resulting in a gross profit of $10 per game. Used games often have higher profit margins, with a used game selling for around $30 and costing the store about $15, for a gross profit of $15.
Now, let’s say this store sells an average of 500 new games and 500 used games per month. This would generate a gross profit of $5,000 from new games (500 games x $10 profit per game) and $7,500 from used games (500 games x $15 profit per game), for a total monthly gross profit of $12,500.
Then, let’s estimate operating expenses, which include rent, utilities, wages, insurance, and marketing. These might total around $8,000 per month for a moderately sized store in an average location.
Subtracting the operating expenses from the gross profit gives us a net monthly profit of $4,500 ($12,500 – $8,000).
This example offers a basic estimation and the actual numbers could be higher or lower based on numerous factors. For instance, a store might make additional profit from selling gaming accessories, hosting gaming tournaments, or offering repair services. Also, costs can be lower if the owner operates the store themselves, reducing labor costs.
In conclusion, the profitability of a game store can be quite decent provided the business is well-managed and aligned with the demands of the local market. It’s crucial for prospective owners to carefully work out their specific financial projections based on their business model, location, and other factors.
What skills are needed to run a game store?
Running a successful game store requires a mix of industry-specific knowledge, business acumen, and people skills. Here are some essential skills that can contribute to a game store’s success:
Passion for gaming: Understanding the gaming industry and the products you sell is critical. Customers often turn to game store owners for recommendations and advice, so being able to share your knowledge and enthusiasm for gaming can help build trust and customer loyalty.
Business management: Running a game store involves many of the same skills as running any small business. This includes financial management, inventory management, marketing, and sales. You need to be able to create and stick to a budget, price your products competitively, and manage cash flow.
Customer service: Excellent customer service skills are essential in any retail business, including a game store. This involves the ability to listen to customers, understand their needs, and respond appropriately. It also includes resolving any issues or complaints in a satisfactory manner.
Marketing: You need to be able to promote your store effectively, both online and offline. This includes managing social media accounts, creating effective advertising campaigns, and maintaining a strong web presence.
Networking: Building relationships with suppliers, other local businesses, and the broader gaming community can be very beneficial. Networking can open up opportunities for collaborations, help you stay on top of industry trends, and enhance your store’s reputation.
Personnel management: If you hire staff, you need to be able to train, manage, and motivate them. This includes scheduling, conflict resolution, and ensuring your employees provide excellent customer service.
Adaptability: The gaming industry is fast-paced and constantly evolving. Being able to adapt to changes and trends, from the rise of new gaming platforms to changes in consumer preferences, is a valuable skill.
In conclusion, running a game store requires a wide range of skills. With a passion for the industry, good business sense, and excellent customer service, you can create a thriving game store that meets the needs of your customers and stands out from the competition.
What is the NAICS code for a game store?
The NAICS code for a game store is 451120, which is classified under Hoppy, Toy, and Game Stores.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?