Economics of owning a Comic Book Store

In My Humble Opinion
1

I am not sure if anyone can help me with this but I am curious as to how well an independent owner of a comic book store does these days. If we assume the following:

Located in a moderate to large city (1 millions +).

In North America.

Independently owned and operated with a reasonable lease in a mall or city shopping area.

What sort of revenues would such a store bring in? What kind of income could the owner derive from the store? What are the biggest costs to the owner (rent & inventory)? Any thoughts, questions or comments would be most appreciated. Thank you.

2

I don’t really know any economic details, but the local comic book store in my city of ~50,000 has been in business for 18 years now. The owner does everything himself - no employees to pay. He seems to make a reasonable living from his store. Not extravagant, but comfortable and satisfactory to him.

3

Well, I’ve never owned a comic book shop, but I have a friend who worked in one for several years and is now fixing to buy his own, as soon as he can raise the money. I’ve also attended a discussion panel with him at the San Diego Comic-con regarding the nuts and bolts of starting a retail comic business.

What I can remember:

Rent is definitely your biggest expense.

The comic book market is foundering a bit at the moment (as opposed to, say, 15 years ago), so it’s difficult for even the successful stores to turn a huge profit.

There’s really only one comic book wholesaler from whom you’ll be ordering your inventory (Diamond), and they can be a bit expensive, furthor cutting into your profit margin. And they don’t take credit. :slight_smile:

Competition is fierce, and location is everything. In a moderately sized city such as you describe, you’ll probably be competing with several other shops. I think my friend has a good chance of being successful because he lives in a small town (~80,000 people) with nothing resembling a comic book shop within 50 miles. In order to get their comics, baseball cards, games, etc., people either order by mail or take an hour-long drive.

Most of your revenue (from comics) will come from new issues and trade paperbacks. Unless you’ve got the room, back issues are a waste of space.

Most successful comic book stores have needed to diversify in order to stay in business – they also sell sports cards, games, action figures, clothing, and other collectibles. Some are branching into the field of web-based mailorder, since it’s a relatively cheap thing to do, especially if you have a bit of computer knowledge.

As for startup costs, I can’t give you a concrete figure – you’re going to need to figure that out yourself – but as a general rule you shouldn’t go into the business unless you can afford to lose money for at least six months. In other words, six months worth or rent, inventory, and any other costs you can imagine. This can be 20K or 120K, depending on location, store size, etc.

As for income, I haven’t the slightest idea how much you could make, but I’m sure it all depends on how well your business does and how long you can stand to be in the red before you actually start making money.

That’s all I can think of at the moment. I apologize if I sound like a wet blanket, but any small business is a risky investment. A wise thing to do would be to talk to a few comic book retailers in your area and learn from their experiences.

4

A lot will depend on demand. It seems to me that a comic book store would do a brisker business in a smaller town, preferably with a large college nearby.

5

You don’t sound like a wetblanket at all! Thank you, all of you, for taking the the time out to answer some of my question. With full disclosure, the store in question is (or will be) in Chicago and I have been asked to invest in it. I have been doing some research and there are a goodly number in the area (though not as many as I would have suspected). Perhaps one of you knows a decent website or a good “FAQ” for comic book store ownership? I have a lot of time for the fellow who would be running the store but I am anxious to get a better overview of the business and not just rely on his business plan.

6

FYI, I’ve seen quite a few comic stores go under. Now, that might be because the market isn’t so hot right now, it might be because the owners knew a lot about comics but not so much about running a business, whatever, but the fact is that there’s a not inconsiderable failure rate there.

7

I know a gal who owned a comics shop in Chicago back in the 80s. She and her husband lost their shirts on it. Chicago has a lot of comics shops in it, and it’s worth asking what it is you’re offering that the other places aren’t.

Here in the DC area, there’s kind of a glut of comics shops around the Beltway (though not within DC itself). The more prosperous ones know their customers’ tastes very, very well and know not to buy thousands of copies of “The Gruesome Death of Superman” on a non-return basis. Know what makes a “hot” comic hot (Hint: A guest appearance by Wolverine doesn’t always do the trick anymore) and order accordingly.

8

I talked about the economics of the comic book business several years ago with the owner of a store. During the boom (80s-early 90s), he said it was pretty easy to make a profit, but after the bubble burst, it was difficult. You had to know what was going to sell, and try not to overorder or underorder. Not easy, especially since you had to look at each issue on a business basis. You might love a particular book, but you need to know if it would sell.

This was also before the Marvel/Hero’s World fiasco*, which squeezed everyone. Last I heard from him, he had to close a second shop at that time because it was more profitable to close it than to keep it open.

*Hero’s World was a small-time comic book distributor that Marvel bought up. Prior to that, there were two main distributors: Capital and Diamond. A dealer could play one off another to get the best price. Then, one day, Marvel annouced that all Marvel Comics would be distributed exclusively through Hero’s World. This was a disaster. First of all, the more comics you buy, the more of a discount you got, so suddenly you were buying fewer issues from Capital or Diamond and paying more. And since you couldn’t stay in business without selling Marvel, you had to buy from Hero’s World. DC, in response, made a deal with Diamond. Capital had nothing to sell (it’s hard to keep in business if you can’t sell either Marvel or DC) and went out of business. In the meantime. Hero’s World was too small an operation to handle the increase in sales. Things got ugly (I’ve heard the story that someone called their customer service line and was put on hold. 24-hours later, no one had picked up). Eventually, Marvel went back to Diamond, but the entire fiasco was a disaster for comic book stores and fans.

Ron Perlman is scum.

9

Surprisingly, the people at Chicago Comics are extremely helpful at discussing owning a comic store (of course, the guy I know who asked has been going there since it opened and wasn’t planning on opening a store in the market), but it may be worth a shot. Windy City also has some nice guys working there.

Let me tell you that opening a store in Chicago is probably the worst idea one could have. As mentioned, there are already tons of freakin’ stores and between Alternate Reality, Chicago Comics and the Graham Crackers chain, you’ve really got your work cut out for your. There are a couple more chains (though small) scattered throughout the city and a number of independent stores that have been around for a ridiculous amount of time, so getting a new/steady clientele would be difficult.

There’s only one major college that doesn’t have a comic store around it that I can think of, but rents there are fairly high.

It is a difficult time for shops though, Alternate Reality (the Beverly/Morgan Park store which vies for coolest comic store with One Stop in Oak Park) which used to give some fairly big discounts recently (in the last year) stopped doing that, which should tell you something.

Anyway, the only advice I would give you is: really do some research. Two stores opened along the same block (!) in the same week (!) two years ago. Not only was that stupid*, but they opened two blocks away from the oldest store in the city. One was out of business before they finished unpacking (tho’ to be sure, they were really lazy) and the other was the model of what a comic store should be and they still only lasted about six months.

The new stores all seem to support themselves on HeroClix and Pokemon/Magic and hopefully they don’t loose too much money on the comics. Of course, during summer when the kids start going on vacation, they start losing money and then it’s a pretty quick death.

  • To be fair, I can’t think of how one would know what stores are thinking going to open up nearby…
10

Brian Hibbs does a (monthly?) column at Newsarama called Tilting at Windmills that discusses how he runs his store. It’s a useful read, although he doesn’t get into numbers. I doubt you’ll ever find anyone to talk about them.

–Cliffy

11

I can’t give you numbers, but my next door neighbor is part-owner of one. He owns a house (which he just added an entire story on to), and has three kids to support, so I guess they must make decent money. I work two jobs, and only have two kids to support and he appears to be doing a heck of a lot better than me.
Of course, his is pretty much the only comic shop within 75 miles so that probably makes a difference.

12

Um. What’s the connection here?

13

At the time of the Heroes’ World fiasco, Ron Perlman owned a controlling interest in Marvel and did things to make a short term buck that ran the company into the ground. Marvel even filed for bankruptcy, even though its sales and market position were the best in the industry.

Carl Icahn fought him for control of the company. I’m not sure who owns it now.

14

Lochdale wrote

I’ve invested in a number of startup businesses, and have run a number of startup businesses that’ve had investors. (although I know nothing about the comic book business).

My advice: First off, there’s a bigger question here than “Is the comic business a good business?”. And that is “Is the guy who will run this comic shop going to make you (and himself) money?”

Make the guy who’s pitching you do the work. Start with his business plan, and where there’s not enough detail, ask him.

  • He should have contacts in the industry that you can talk to. If he doesn’t, that’s a red flag. He should go get some before he continues.
  • He should have a financial plan: how much will he spend on rent, wages, inventory, marketing, etc.; how much will he bring in each month; when will he break even; how much up-front investment will be required to break even, etc? That plan (and all other plans) should have some reasoning behind them. Saying “I’m going to sell $1m/month because it sounds right” doesn’t work. You want to hear “I’m going to sell $1m/month because that’s what Joe on 43rd Street was selling when I worked for him the last two years. And here’s Joe’s number”
  • He should have a list of vendors, and should already have contacted them, and know prices and how their game works.
  • He should have a list of other potential investors you can talk to.
  • He should have references of other businesses he’s built, and relevent industry experience he has.

So, make him do the work. He should be educating you about how this all works, and why it’s a wise investment for you. If he can’t, it’s not a good investment. Also, by pushing him to do this work, you’re really helping him, dramatically helping him if this is his first startup business. Typically, a new business owner doesn’t know half of what he’s getting himself into, and you forcing him to get the answers for you forces him to get them for himself too.

15

Out of curiosity, which neighbourhood are you thinking of? We got nothin’ down here in Hyde Park, and I didn’t think rents were exorbitant around here. (There is, however, a relative lack of commercial retail space within a half-mile or so of campus.)

16

Worst. Thread. Ever.

Just kidding.

17

U of C was exactly what I was thinking of. I figured rents there were pretty high. I’m really surprised that there isn’t a comic store down there. Then again, I don’t know of any decent used book stores there either.

18

<derail>
From what I hear, the Powell’s at 57th & Harper is pretty good, although I have to admit that I’ve never been in there myself. There’s also an antiquarian book dealer across the street from that.

Plus, we’ve got the Seminary Co-Op, which rocks my cock.
</derail>

19

You may want to check out the website of James Sime and his San Francisco comic book store, the Isotope Lounge. It seems like Sime does everything right that a comic store owner could possibly do–he makes the store a hip, cool place (as opposed to a scary, evil, and dingy dungeon), brings in comic pros for meet-and-greet events with fans, and pushes GOOD comics (not necessarily the most popular ones). He is also a really snazzy dresser! Mr. Sime is a regular presence on several message boards, and I’m sure he’d be happy to answer some questions if you were to e-mail him with your ideas. Anyway, here’s the website:

http://www.isotopecomics.com/

20

Unless Diamond have changed their new account terms in the last few years, they expect the first year of a start-up shop’s orders to be pre-paid with the Order Form they send out with Previews … they may not insist on it for the full year, but it’s in the small print.

caveat - any knowledge I have is based on their UK operations…