Tuesday, May 17, 2011

An Open Letter to GW

An Open Letter to Games Workshop,

To whom it may concern,

My name is Joseph Girard, I have been in the hobby since 2002 when I came across your store as a teenager fresh in college. I have been a loyal and continuous purchaser till this very day. The reason for my letter is to bring to your attention the feelings I and many other hobbyist have about your business decisions regarding the trade terms in the European Union, and the price increase that is slated for the end of this month. This will be your third price increase in as many years without providing additional value for the products that are being affect. This most recent increase is highly concerning as your company has embarked on a cost saving measure to recast many of its metal miniatures into resin a notably cheaper material then raw metal.

Having gone over your financial statements made public over the last two years I have noticed a trend of sluggish sales and a higher cost of goods sold. The cost of goods likely being a twofold problem of increasing cost of your primary raw material tin and oil based plastic as the oil market has spiraled out of control. The other factor was far more stunning the sluggish sales and the relative lack of movement of product resulting in excess inventory. Now typically, at least according to my old professors in economics and business when supply is high the price of something should go down to compensate. However your company has very cleverly decided that my professors were wrong and the correct course of action is to increase the price. Now over the short run this approach will help you maintain profit with a smaller sales base, but the goal of any company is to grow sales. Your current pricing structure in an economic environment we have currently is going to force many of your core and new customers to rethink their buying habits. Thus likely reducing the amount and volume of their purchases, resulting in a glut of supply for your product of which demand is reducing. Now I'm not saying you're wrong but looking at your situation objectively I would say that a price increase is a short sighted practice that will have long term consequences on the health of your financial statements.

A company must have customers in order to exists. Your pricing decisions are forcing many to look at other gaming systems that are providing products that are approaching your standard, and in some cases exceeding it. While it is up to each individual to decide what provides them with the most value for their dollar, your structure is causing many to decide GW is no longer for them. So why may you ask do I care to inform of this. The reason is I love the hobby and I really enjoy the universe you have created, however your pricing is making my enjoyment of that universe lessen and make me no longer willing to grow the hobby for you. You have limited marketed and most of your customer actual come because a veteran of your hobby sold them on it. If you lose your veterans and your entry cost remains as high as it is, you lose your new players, then who will pay the light bill, and more importantly who will I game against.

Now as to the business of your new retail trade agreements that force stores to only sell to their own areas. You are within your rights to do this, however I think the bigger picture is being lost. We live in a world that technology and rapid and cost efficient shipping exists. Also many of the developed nations in which you have customers have access to the internet and information regarding pricing and currency exchange rates. Your current regional pricing structure hasn't recognized the changes in relative value of currency in the last 10 years, this has resulted in our gaming brothers and sisters in Australia to pay nearly twice the price that a customer in London England would pay for the same product. A similar inequity exists between the gamers in Canada and the United States where Canada is paying nearly 25% more than a United States customer despite the currency being equivalent over a five year period.

Your new trade terms restricting the sale of products means that consumers in Australia are forced to pay over fair market price for your product. Now many of them will have access to relatives, or other means of acquiring models at a fair market value. However your move also blocks many retailers who depend on third party vendors to stock their shelves at a lower cost than they can get from you directly. Ultimately wither the product is sold in England or Australia your company profits from the sale, however if your able to force your pricing on Australia you stand to make substantially greater profits from that. However what your doing is gouging one nation and restricting their access to what the actual price of the product should be.

Many gamers in Australia are simply saying enough is enough and are leaving you. Others are going to reduce their spending or not start new projects. Overall this move will result in a lowering of sales not only in Australia but in England as well. You are entitled to create the trade terms you would like to create I'm not one to judge. I will say you can fleece a sheep many times but you can only kill it once. And the reaction your moves have stirred shows this move may have been a kill shot for many in the community as a whole. Again why do I care, because I hate seeing a company shoot itself in the foot especially during these economic times and I like playing your games with other people.

Personally I speculate that these moves will lessen your overall position in the market place as many disillusioned and now priced out fans will seek other game systems for them to spend their limited disposable income. As your entry cost continue to rise I see other game systems priced in the startup niche that your proud company once dominated grabbing the next generation of war gamers and setting into place the roots that will erode your market share. GW was once a great company, your recent moves have shown that you will willing sacrifice the community pursuing short term fixes to problems that were caused by short term fixes a few years ago. The problem is after three years of getting stepped on many are getting up and I wonder if you can sustain their lose or the people they would have brought over to your hobby. Instead being heralds for a different company or a different hobby all together. I do know we live in interesting times GW and I do honestly hope that you Find what you are looking for.

Your Friend

Joseph Girard

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