When you first walk into the Sentry Box, it’s hard to believe Gordon Johansen started his business out of the trunk of his car. At 13,000 square feet, it’s the largest game store in North America.
With this kind of space, Sentry Box boasts a dizzying array of games—role playing games like Dungeons & Dragons, military war games, “Euro” family board games, historical games, and card games. Sidelines include metal military, science fiction and fantasy miniatures, Japanese anime, the largest selection in Canada of science fiction and fantasy books and a huge selection of specialized military books.
The Sentry Box occupies three different levels; the ground floor includes the main retail area for games and books, with military merchandise housed in its own room upstairs. A 3,000-square-foot mezzanine is set up with tables as a public area for game playing. A 1,200-square-foot room with a separate entrance provides an after-hours space for club and game meetings.
“It was basically just a love of games that got me into it,” Johansen points out, noting he started out as a power engineer, working in boiler rooms. Tired of shift work, he kept his eyes open for other opportunities. After a chance meeting with a game distributor at a convention in 1978, he began to bring in games to sell to his friends. A year later he started a wholesale business. One store he sold games to was called the Sentry Box, a tiny, 250-square-foot shop he was able to purchase in 1980. Until about 12 years ago, he kept a dual retail-wholesale business, but sold the latter to his behind-the-scenes partner, Leonard Halmrast.
Overall, he has always preferred retail business to wholesale. “I think it was more interaction with the people that made it a little more fun,” he says. In his first year in retail, sales doubled. Although he had no business experience or training, his knowledge of and love for games made up for this. He grew up playing popular board games like Monopoly and Risk, moved on to war games in junior high, then played Dungeons and Dragons when it came out in 1974. He enjoys games to this day, particularly the new “Euro” games because they fit into his busy schedule.
The current location of the Sentry Box is its fourth. From the original 250-square-foot store, it grew to 450 square feet, to 2,800 square feet and finally, eleven years ago, to its massive 13,000 square foot freestanding location, a former electrical supply warehouse which Johansen owns and rents out a portion of to an information technology company.
While he needed space to expand into, he didn’t really plan to buy such a large building. It was, however, the only one available in the right location, which, for a destination store like Sentry Box, needed to be central. With only a tin roof, cement floor, and brick walls, the building required major renovations.
While he describes the process of having the building renovated with its delays and frustrations as “a particular hell I wouldn’t wish on my worst enemy,” he believes it was worth it. “It was tough to do,” he explains, “but once it got done there was a certain amount of the ‘wow’ factor. We still have people come in from places like Toronto, L.A. or New York and they just kind of walk in the door, lean on the railing, and stand there for a couple of minutes with their mouths open, because there’s no other gaming retailer this big.”
While he needed to relocate to accommodate the store’s need for more space, Johansen has found owning his own building is essential to the business’s success. “I couldn’t be in business if I had to pay rent,” he muses. “This kind of space here now would go for $13-15 per square foot minimum. And that’s a lot of money.”
He suggests any independent retailer buy their own building if at all possible. “The game business is not going to make me rich. The building will be what makes the money. If a large chain tries to run you out of business, you will be more likely to be able to compete. The real estate is what keeps you going and it’s a retirement fund anyway. You’ll have a lot of short term pain, but it pays in the long run.”
When asked if the space is too big, he laughs. “As pathetic as it sounds, I’m running out of space. There’s just so much that comes out in this hobby, it’s a natural progression of more and more stuff, and if you don’t cut lines, which we tend not to do very often, you just need the space.” While he has recently cut levels some, the store still has $900,000 worth of inventory.
“And that’s a lot of inventory,” he smiles, explaining that the store is well-known for its extensive selection. “Odds are, if we don’t have it people can’t find it.” Johansen considers having some inventory that doesn’t turn around quickly as an advertising expense as it boosts the store’s reputation as a comprehensive source.
Like its growth in size, Sentry Box’s expansion into different genres has been gradual. For example, science fiction books were initially brought in to fill an empty shelf, but have become an integral part of the business. Most of the new kinds of merchandise however, have been brought in and expanded due to customer demand.
Johansen believes it’s essential to keep his finger on the pulse of what his customers are interested in. “It’s being aware of what’s selling as things get bigger or smaller, and you just have to adjust. I think one of the things that helps me, even though I don’t do a lot of the selling day-to-day now, is that I do my own books. I’m entering my invoices and I see what’s coming in from the companies. I don’t read them line by line, but as a rule I’ll know what lines may or may not be selling. But a lot of it’s just listening to customers. You hear what they like, and you create your own market to a certain degree. I think one of the reasons we’re big is because we’ve been here so long, and so we’ve almost built gaming in Calgary. I’m now in my second generation of customers. The kids’ parents used to come in, now their kids are coming in. Dads might come in and play with their sons.”
The Sentry Box has never relied on advertising to increase business as most business is generated by word-of-mouth. Johansen says he has tried advertising, but found it to be a waste of money. He adds that word-of mouth can come in different forms, both locally and from people communicating on the Internet. “I think customer service is the big thing that gets the word of mouth out there,” he says, adding he believes the store’s free gaming and meeting areas are helpful in fostering good community relations as well.
The Internet not only is a source of word-of –mouth referrals, it’s become a part of the business. While it has always taken mail orders, today this accounts for about 10% of the store’s business. “It’s stuff that people just can’t find,” Johansen explains, but warns of the limitations of Internet sales. “I think it’s a good sales tool, but it’s not the be-all and end-all. For us, it works because we have a market for a lot of weird stuff. If you don’t have something specialized, don’t put a lot of money into it. As it is, I wonder if our mail order department makes any money, because I have to have somebody full time there and it’s a lot more work to sell things mail order.” While he admits it’s a good way to move product that just doesn’t sell in the store, he states, “it’s more of a service than a real profit centre for us.”
In Calgary’s tight labour market, Johansen is the envy of other retailers because he has no trouble finding and keeping staff. The store usually has approximately fifteen staff, with four to seven working at any one time. The average employee stays with him two to three years, a low turnover rate for retail. While he has two employees leaving at this time, he says this is unusual, and that he has more than enough qualified, interested applicants to fill the positions.
So why do employees stay with the Sentry Box when wages are low (average starting wage is around $8.00 / hour) and there are so many other jobs available? “They like the hobby” Johansen replies, “we hire people who like games. The work environment is generally pretty good, you get to sit around and talk games, and there’s lots of work to do too. Some people think you sit around and play games all day, but that’s not really the case. At least you can talk to people about it because it’s what you like, that’s the biggest advantage. It’s a safe place to come and work in a position you enjoy while you maybe get your head around what you want to do with the rest of your life.”
Johansen believes it also helps to offer a good medical and dental plan, adding that the cost is not that great if it’s split with the staff. Employees also receive a substantial (30%) discount off store merchandise, an attractive bonus for game fans. He also feels his own attitude towards the job is an important part of the store’s ambiance. “If you don’t like coming to work, they’re not going to enjoy coming to work for you,” he explains.
Over time, Johansen has noticed an increase in direct competition. He estimates there are at least ten other gaming stores in Calgary. He believes this is partly due to the city’s explosive growth. “But that’s o.k.,” he says, “because it means there will just be more people getting into the hobby, which means that when they want specialized stuff they tend to come to us. But we don’t have to worry about too much big competition.” The games enthusiast explains that there is really only one large chain in the industry which has had a negative impact on sales, a company from England, which has opened two stores in Calgary.
Johansen adds that, while specialty independent retailers are less likely to encounter competition from the big chains, they are having to deal with cutthroat competition from Internet dealers. “Online discounters sell at 30% off. You can’t compete with that. It’s only in the service. That’s the biggest thing.” Another issue he has had to deal with is rising fixed expenses. Overhead costs like utilities and wages go up due to inflation and increased volume, while the declining U.S. dollar has dropped prices, resulting in a 5% reduction in sales.
In spite of these challenges, Sentry Box has achieved amazing success in an unlikely business. Johansen admits his approach has been unique. “Not every standard, approved business model is the one that works. We are not a business model that should work. We don’t carry only the popular stuff. I probably still have some stuff I had when I started.”
With so much success, Johansen has had many requests to franchise or open other stores, but his answer is always no. “I won’t do it,” he declares, “I have enough problems dealing with the store I’ve got, and I would lose the hands-on aspect that I really enjoy. I know some people would want to expand the company, make it big, sell it, do the franchise thing, but I don’t think so. It would just take too much time away from my family.”
“Gaming isn’t a big business for making a huge amount of money. You either like it or you don’t. And I still like dealing with the customers more so than anything.” As someone who has unearthed opportunity, taken a chance and experienced success, Johansen adds his own perspective on running a retail business: “enjoy what you do. If you’re not enjoying it, why are you bothering?”
