Those watched by zdashamber

Posted by Gary Ray

http://blackdiamondgames.blogspot.com/2025/06/talking-to-myself.html

 AI: Hey Gary, sounds like things are going well. You mentioned being up 20% last month and 25% year-to-date—that’s some serious growth. Are you feeling optimistic?

Gary:
Yeah, overall it’s been a strong year. We’re firing on all cylinders. That said, I’m seeing growing issues with product availability. A wide variety of board and card games are just missing. Not from lack of demand—but from lack of supply.

AI:
Interesting. Is that mostly China-based stuff, or broader than that?

Gary:
It’s both China and Europe. And I didn’t invest in the European products when this started. I had to make a choice and leaned into games from China when the tariff hit 145%. I didn’t do that expecting sales—I did it to hedge against unavailability.

AI:
So it was a supply continuity move, not a demand one. Have those hedged games started selling faster now that availability’s drying up?

Gary:
Not yet. I think they’re still in the pipeline—on store shelves, in warehouses. But once that inventory is gone, I expect a sharp spike in demand. It could also be that we’re seeing a broader consumer slowdown and my sales are outperforming what’s happening elsewhere.

AI:
Right, your “normal” might be stronger than the rest of the market, so you’re not seeing the same signs. Have you seen any distributor signals that a major wave of product shortages is coming?

Gary:
Distributor communication is usually vague, so not much there. But availability is murky enough that I suspect it’s post–Lunar New Year disruption and shipping shortfalls. Products just aren’t showing up.

AI:
That lines up. A lot of freight lanes were disrupted, and smaller publishers probably didn’t have the cash to rebook space. Are you seeing this reflected in pre-orders or early solicitations?

AI:
Not directly. What I am seeing is a lot of Q1 board game clearance, and a larger-than-usual glut from that post-holiday period. It feels like board game demand pulled back earlier this year and we're still dealing with the overhang.

AI:
That could definitely be the case. If that dip started in January, and you're seeing it now as empty shelves + clearance, you’re probably looking at a lagging demand signal. Are you still seeing strong sell-through in other categories?

Gary:
CCGs are still the engine, especially sets like Pokemon: Destined Rivals and Magic: Final Fantasy. Those are "high" normal releases for us, but I can’t adjust my orders close to release, so I’m locked in. That’s where the bulk of our budget went. If there was a real slowdown, my Open to Buy would show a surplus—and it hasn’t.

AI:
So the budget’s fully utilized, but inventory is disappearing in some areas and still healthy in others. That suggests the system is stressed, not necessarily demand. Any worries about where that money gets reallocated?

Gary:
That’s the issue. My Open to Buy doesn’t discriminate by category, so if board games vanish and RPGs are available, money shifts there. But that’s not a 1:1 demand swap. The RPG audience can’t absorb 50% more product. We risk over-investing in available categories that aren’t necessarily the strongest performers.

AI:
That’s a subtle but dangerous trend. If inventory starts chasing availability instead of demand, it creates imbalance that could hurt you in Q3 and Q4. Have you started capping some categories?

Gary:
Not formally, but I’m watching it. I'm cautious about restocking low-velocity categories too aggressively just because they’re in stock.

AI:
Good call. Have you adjusted prices much this year?

Gary:
We’ve mostly passed on increases. Where we’re already above MSRP—like with paints or sleeves—we’ve absorbed some of it. But overall, the expectation is to raise prices where it makes sense. It hasn’t been a big change yet, though.

AI:
That’s a smart balance. Hold the line where customer sensitivity is high, pass it through elsewhere. Have distributors changed anything about allocations or terms?

Gary:
Not really. They're just out of a lot of stuff. I threw what money I could at high-risk inventory, but now the second- and third-tier products are gone too.

AI:
Let’s talk publishers for a second. You mentioned some scary numbers—25% may go out of business, and half may shift to DTC?

Gary:
Yeah. The industry survey results were grim. A lot of publishers won’t survive the tariffs, at least when they were surveyed at the 145% level, and those that do might bypass distribution entirely. And there’s no domestic production solution waiting in the wings—nothing scalable. We’re probably looking at a permanent reduction in the number of SKUs available to hobby retail.

AI:
That’s seismic. You’re not just managing inventory anymore—you’re managing the slow collapse of part of the supply chain.

Gary:
Exactly. And there's no elegant way to solve it. If publishers disappear or bypass us, the game changes. Even if demand holds, we won’t have product to meet it.

AI:
Sounds like this is the summer to tread carefully. 

http://blackdiamondgames.blogspot.com/2025/06/talking-to-myself.html