One Run at Halo

Continuing our Halo kick, I heard the disturbing (to me) news this week that the Halo graphic novel was a one and done printing in the hardcover format. From all reports there was a sizeable overprint and reorders should still be available for at least a few more weeks (and there will likely be some available through bookstore distributors for awhile after that) but I can only draw two possible conclusions from this news. Either Marvel plans to go to a fairly quick paperback printing (as in the next 3-4 months) or else Marvel is unconcerned that this material could be unavailable for several months. Somehow I doubt Bungie would be very happy with the latter option so we'll likely see a trade paperback in the near future, which I think ignores the potential legs a hardcover edition of this materials has (although it's entirely possible that the costs of publishing this book as a hardcover are simply not worth another print run).

Maybe I'm simply being pessimistic (I've been told as much by a few readers of this blog) but I'm worried that a book with enormous crossover potential like Halo is going to be damaged long term by the traditional business approach Marvel employs, an approach that has been tailored to promote ongoing series in the direct market (much like Dark Horse hampered sales of the Serenity trade by allowing it to be out of print for months because they expected it to behave like a periodical). I may be completely off base and Halo will do much better as a paperback than as a hardcover graphic novel and it may lead to great sales on a continuing series, bringing in customers who will then transition to reading other ongoing series as well. Maybe I'm being pessimistic, but I doubt it.

Why MacGuffin Loves Joss Whedon

It's not the fact that he does incredibly entertaining work in TV, film and comics.

It's not the almost guaranteed weekly sale of an Astonishing X-Men trade or hardcover.

It's his contributions to the hilarious first couple season's of Roseanne.

It's not even my guilty pleasure love of the Buffy movie.

No, its the fact that in the span of 45 minutes on Sunday we had two women (entirely new to MacGuffin) separately walk into the store, spend 15-20 minutes browsing and purchase Serenity while asking my thoughts on Whedon's other comics work before leaving, excited about their visit (particularly the new to them information that Buffy was getting an 8th season in comic form).

This is what we need more of, true crossover comics that succeed for both new and long term fans. Joss Whedon is a name that fans will follow to just about any project, particularly those that are similar to his previous work. I have yet to encounter a single individual who was a fan of Buffy or Firefly that has not purchased or read the Serenity book. From there it's an incredibly short hop to Fray and Tales of the Slayer not to mention the various spin-off Angel and Spike books. These aren't licensed properties trying to cash in on potential crossover appeal, they are the evolution of the story into another medium, guided by the original creators and caretakers of the property.

All of which brings me to Halo. I was excited to see Bungie and Marvel decided to release this book as a standalone graphic novel since I find it much easier to introduce a new reader with a complete story rather than part one of 6 (especially when there's no guarantee when part two is coming). This is another example of a property transitioning from one medium to another under the supervision of the primary creators (my understanding is that Bungie pretty much brought the completed graphic novel to Marvel to publish). On the day of release we had two new customers come in specifically for Halo not to mention a few of our regulars adding it to their other purchases. It's a bit disheartening to hear that Halo will continue as an ongoing monthly since I think the format works particularly well in this case, but hopefully by using the graphic novel as an introduction it will be possible to transition those new readers into following the monthly book. Otherwise, they can simply wait for the inevitable trade. Either way, we've gained five new customers in the last week from just Serenity and Halo, four of whom left with more than just the one book and impressed by the store.

Restructuring Diamond Discounts

Two big and directly related stories in the world of comic retail that I haven't seen much mention of recently.

First, DC has announced that as of their August solicitations (i.e. the Previews that arrives on Wednesday) they will be implementing an FOC (Final Order Cut-off) system similar to the one that Marvel has been using for several years now. This is a big step in the right direction in terms of helping retailers since it makes all DC comic orders fully adjustable up until 3 weeks before release (approx. 4-5 weeks for trades and graphic novels). The obvious benefit here is the opportunity for retailers to be more nimble in adjusting to sales trends, rather than ordering 2-3 months before an issue hits shelves, allowing for much better planning and resource management. Marvel's FOC helped us avoid selling out of the Halo GN on its first day of release. We'd had no pre-orders or interest expressed when initial orders were due at the end of May so we ordered a few copies for the shelf, but over the next few weeks interest built to the point that it has outsold everything but Eternals, Civil War and its tie ins this week. Of course, DC already allowed retailers to increase order up until 4 weeks prior to release, but the ability to decrease orders has allowed us to adjust to 52 leveling off at a level below what we were hoping for.

The more important of the two stories, though, is the impact this change will have on discounts, both for DC and for Diamond in general. There's an obvious loophole created when retailers are allowed to adjust their initial orders after discounts are set by ordering ridiculously high numbers and then cutting them via FOC while keeping the higher discount. Marvel adjusted their discounts by working on a rolling average of all orders over the previous 12 months, making for a much more static discount (a benefit of which being that fewer retailers are tempted to order more product to hit a new discount level, almost always a mistake). Since we employ a just in time inventory strategy (wherein we stock a low level of a very diverse array of graphic novels and replace each title as it sells), the best part about this rolling average for MacGuffin is that it includes reorders rather than just initial orders. Between 1/3 and 1/2 of our monthly purchases are reorders and at present only those from Marvel count towards any sort of discount.

That changes with DC once they institute their new discount structure (particularly important since close to 1/4 of our weekly reorders tends to be Vertigo titles). Remove DC and Marvel from discount calculations, though, and Diamond is a much tighter spot. They have to develop a new set of discount tiers that is revenue neutral for them but equitable to retailers. Of course, we don't really have much alternative but to accept whatever we're given. If DC's discount becomes completely independent of Diamond's discount (as Marvel's already is), though, Diamond would be relying on many fewer exclusive publishers to set each retailers standard discount (for example we order over half of our non-Marvel and DC graphic novels from other distributors). Details are still being released (I haven't been able to track down a press release yet and Diamond's site is being a bit wonky today), but Diamond has indicated that it will be freezing current discounts based on a 6 month average and developing a system that takes into account all product ordered rather than simply initial orders. Likely we'll see everything at Diamond employing the same rolling average discount that Marvel has been using.

There are certain to be more details and analysis to come out in the near future and I'll be back to post my thoughts on those as they hit.

Broadening Horizons

Over at ICV2, Stephen Bennett has a regular column in which he advises retailers on how to improve their stores. While he has some nice thoughts, I wouldn't exactly call it progressive to push retailers to go out on a limb and carry books like Johnny the Homicidal Maniac and Asterix (although to be fair, he doesn't exactly call it progressive either). He speaks directly to stores that operate on a model wherein the majority of comic sales and therefore the financial base come from weekly regulars buying primarily singles from Marvel and DC. Those sales are then supplemented by perennials like JTHM and Asterix. Unfortunately, this leads to a certain level of myopia based solely on what one sees on a day to day basis (of course the same applies to me based on the sales phenomena we see at MacGuffin). We believe it is much healthier for our shop and the industry in general to develop those perennials (including books like Maus, Sandman, Strangers in Paradise, Bone and on and on) as the stores sales base and supplement those sales with new graphic novels and singles. While we may see our weekly regulars more often, we do not make more money from them as a group.

More complicated, though, is his follow-up essay, in which retailers are warned to expect the inevitable Civil War burnout among customers. When a store's health is predicated upon a specific group of repeat customers, it is very easy to see a quick upswing in sales with an event like Civil War, followed shortly by a contraction to the original level of sales (or worse if customers burn out on these events). Yet, to approach this opportunity as at best a zero sum proposition (at least in the long term) ignores the potential to broaden a store's customer base.

What really got me thinking, though, were two lines:

Ordinarily I say it's a closed system, but something like Civil War was designed from inception to draw in new readers.

and

But these readers aren't no how permanent; they're "drop-ins" stopping by to check out what all the noise is about, and sure, we'll happily take their money, but chances are they won't be around that long.

Not only is that an incredibly pessimistic attitude, it's one that simply reinforces the "closed system" model of diminishing returns. The solution is not simply in helping regulars avoid burnout but in simultaneously cultivating these new faces as comic readers. Sure there are a few who will buy anything with Civil War on the cover and nothing else and after it's over they'll vanish into the ether. But what I've found is that there's not really enough to Civil War yet to satisfy these readers. They can't wait for the next issue, but since they have no choice, odds are they'll settle for a good Wolverine or Spider-man trade (or even maybe Preacher or Sandman) to fill in the back story in the meantime. It's one of the hidden avenues for success built into the singles model, wherein the natural desire for instant gratification does battle with the necessity to wait for the new issue. It's just a matter of helping the customer find a book to satisfy the immediate impulse.

The point of all of this is that there have been several recent releases with wide appeal and the potential to bring in new readers. Civil War is one and the media attention will likely make the new Batwoman another. Just on the horizon is the Halo Graphic Novel, which is our most pre-ordered graphic novel or trade to date, most of those coming from customers new to the store (and many completely new or returning to comics). Then there's Fun Home, which David Welsh points out has hit a certain media saturation level so that non-comic readers may search it out. Our job, of course, is to find what's next for these" "drop-ins" so that we're not just taking their money but instead converting them into repeat customers, whether it's buying two graphic novels a year or returning every week to check out the new releases.

In Search of Controversy

Despite the best efforts of Rich Johnston and Alan Moore and a helping hand from the BBC & the Great Ormond Street Hospital there doesn't seem to be much of a furor building for Lost Girls. From my (admittedly limited) vantage point, there seem to be two basic assumptions about the reception this collection will receive: either it's going to cause a huge stir because of its subject matter and lead to some retailer getting tossed in jail or else its appeal will be so limited as to be ignored once the initial porn vs. literature arguments die down.

What might be a bigger story, though, is its eventual sales potential, since this has long been discussed as a niche product in a niche market despite Alan Moore's name on the cover. As of today it ranks at 2,300 among all books on Amazon's sales charts (it was up to 1,600 a few days ago). We've had a few customers check to make sure that we will be carrying it (though at $75 they're all holding off on pre-ordering it -- or else buying the signed version from Top Shelf). Now, let's be honest, Amazon is the place to get deluxe format books like this based solely on the fact that they can afford to offer at least a third off of the cover price whereas a moves like that would put us out of business. And I've seen it postulated that this book will sell online but not in stores based on both the subject matter and the idea that customers for a book like this will seek it out rather than purchase it on impulse. Excellent and completely valid points that may hold true but I'm becoming more and more convinced that Top Shelf is going to make a killing on this book not because of controversy inflated sales but simply because it is something of a curiosity in the field and people are always looking for something new (not to mention something new from Alan Moore).

With consumers set to get a look a the book at San Diego and we may not have to wait long to see what sort of demand there ends up being for this and if Top Shelf has printed enough to meet that demand.

Mid-Year Report Card: Performance Review

My last post provided a breakdown and thumbnail analysis of our sales breakdowns by department and graphic novel category for the last quarter and year to date.

We're seen significant growth over the last three months in every area, but it was nice to see singles begin to catch up to graphic novel sales. We call ourselves The Graphic Novel Bookshop for a reason and anticipate that GN dollar sales will always outpace dollar sales of singles, but the nearly 3% increase in sales of singles over the past three months compared to the year to date brings sales more in line with our allocation of inventory dollars. Our inventory at the moment is almost exactly 2/3 graphic novels versus 1/3 singles. One issue, though, is that our purchasing over the last quarter breaks down at 37% singles vs. 63% graphic novels, which is not far off from sales and inventory breakdowns but definitely mirrors the trend towards greater sales growth among singles than graphic novels. That is, however, what we would prefer to see. The business model for MacGuffin requires fairly stable graphic novel sales as a basis on which to build other departments. While singles are certainly selling well right now, their growth is much more volatile and easily impacted by an event like Civil War which has sold far better than any other series thus far.

Overall, however, our department breakdown is roughly what we would expect and mirrors our inventory levels appropriately. We devote just over 1/4 of our display space to singles which is slightly less than we would like so we may make an adjustment to increase shelf space (which would alleviate some of ridiculous overlapping of covers we've been forced to employ). Even so, department-wise I'm pretty happy with where we are.

As for our category breakdown, there's a bit more at issue here, particularly when percentage of sales is compared to percentage of graphic novel inventory. Our category inventory breaks down as follows:

Adventure: 34.8%
Fiction: 25.6%
Sci-Fi/Fantasy: 12.5%
Manga: 9.8%
Mystery: 9.0%
Non-Fiction: 5.1%
All Ages: 3.2%

The most obvious thing that jumps out when compared with sales numbers is that the Fiction section is not really pulling its weight. That said, while we cut back a bit on orders for books that would be racked there, the books in that section tend to appeal to new readers in a way that many of the categories don't. Even so, the All Ages and Sci-Fi/Fantasy sections are outperforming their inventory levels which might necessitate a bump in what we're carrying there. Particularly interesting, though, is the Mystery section, we believed had more display space than it needed. We were considering cutting its shelf space almost in half. The way that the section is performing, however, seems to indicate that we should actually expand the number of titles to reach a higher sales potential.

The Sci/Fi-Fantasy section is driven by sales of Star Wars books and as we've expanded our offerings there sales have expanded as well. Even so, it seems that we could stand to carry more based on sales numbers and we should likely give it a bit more space since currently occupies less than every section but All Ages and Non-Fiction.

Picking apart our numbers can help show where we need to improve and where we're spending more than we should and it's a process that will continue over the next several weeks.

Mid-Year Report Card

It being the midway point of the year, I've taken the time to do some sales analysis as a means of determining where we're succeeding and where we could use some improvement, as well as provide a bit of a behind the scenes idea of how we judge our progress. The first area I wanted to look at is a breakdown by departments and then by category within our graphic novel/trade department. As a quick overview, here's a breakdown of our department sales as a percentage of total sales:

YTD sales dollar breakdown
Graphic Novels: 69.3%
Singles: 29.8%
Other (supplies, non-comic special orders, etc): 0.9%

April - June sales dollar breakdown
Graphic Novels: 66.2%
Singles: 32.6%
Other (supplies, non-comic special orders, etc): 1.2%

We're seeing faster growth in sales of singles than graphic novels, which corresponds with our increase in Reserve members. Our single issue sales are really where we're behind compared to our initial projections and we continue to lose money in that department although at a much slower pace than in our first three months. Still, it's an area that needs improvement as well as a more detailed analysis.

We currently divide out graphic novels into 7 sections: Adventure, All Ages, Fiction, Manga, Mystery, Non-Fiction and Sci-Fi/Fantasy. Sales for these categories break down as follows (based on percentage of total graphic novel sales):

YTD sales dollar breakdown (percentage of unit sales in parenthesis)
Adventure: 35.8% (32.9%)
Fiction: 21.0% (21.5%)
Sci-Fi/Fantasy: 15.5% (13.7%)
Mystery: 12.9% (11.4%)
Manga: 6.7% (11.4%)
Non-Fiction: 4.8% (4.3%)
All Ages: 3.3% (4.8%)

April - June sales dollar breakdown (percentage of unit sales in parenthesis)
Adventure: 35.9% (31.5%)
Fiction: 19.2% (19.3%)
Sci-Fi/Fantasy: 16.6% (15.2%)
Mystery: 13.3% (11.6%)
Manga: 7.3% (13.5%)
Non-Fiction: 4.9% (4.3%)
All Ages: 2.8% (4.6%)

There's quite a bit in those numbers that can be manipulated to say any number of things but the basic gist is that Adventure (which include the majority of our super-hero material) is a dominant category although its dominance did slip slightly over the last three months. More importantly, we've seen an upswing in Manga sales, to the point where we may have to adjust our inventory levels and merchandise layout to better take advantage of these numbers.

I'll be back tomorrow to dig into these numbers a little deeper and extrapolate on what we think they're telling us.