Thompson, who has seen the inside of thousands of stores all over the country, concurs. "The traditional comics store has a marginal location in a marginal part of town. It's dirty; it's dark. All the windows are covered with posters." Buddy Saunders, owner of the eight-store chain Lone Star Comics, based in Arlington, Tex., agrees: "In many ways we're a very backward industry." There are very few trade journals, and the only one to offer business-management advice, Comics Retailer, is barely a year old.
It is precisely the industry's backward reputation that propels Schwindinger and Mullen forward. Mullen views it as an engraved invitation: "There's so much opportunity, and so much that could be done." They are both convinced the American public is ready to support a national chain of comic-book stores.
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Comic Attitudes opened its second store, 972 square feet bathed in neon, in New Jersey's upscale Menlo Park Mall in September 1991. Last year the store's revenues were $474,400, compared with $338,000 for the New Brunswick location (called Kilmer Square), or $488 versus $243 per square foot. The national sales-per-square-foot average for all mall retailers is $275. The rent for the Menlo Park store, even in what Mullen concedes is the worst location in the mall, costs $51.72 per square foot, nearly four times what Comic Attitudes pays in Kilmer Square. The buildout, even at the lowest bid, cost $142,500. "I imagine you're standing in the most expensive comic-book store in the world," says Schwindinger with a wince.
The Menlo Park store is the model Mullen and Schwindinger plan to replicate nationwide. Every detail has been calculated. The storefront windows, designed to resemble the front panels of a comic book, are filled with icons like Batman and Disney characters. Throughout the store, as in comic books, a four-color scheme predominates: red, yellow, blue, and black. The wall space above the racks is covered with Velcro, to which posters of superheroes and fantasy characters are affixed with peelable tabs (enabling the merchandise to be sold as new).
"In general, merchandisers don't consider anything above your eye level as specific retail space," says Schwin-dinger. "We decided right off the bat we wanted to open the ceiling up. We wanted to create something interesting and visual in what would normally be considered dead space, to promote or sell things."
The ceiling treatment continues the comic-book theme, with the lighting fixtures shaped like dialogue balloons. Neon Spider-Man and Superman fixtures hang from the ceiling. Below Superman lies a particleboard New York City skyline.
To offer something for everyone, Mullen and Schwin-dinger have taken the smorgasbord approach to stocking Comic Attitudes: new comics make up 35% of merchandise; magazines, price guides, trade paperbacks, and graphic novels, 16%; back issues, 15%; role-playing and strategy games, like Dungeons and Dragons, and their accessories, another 10%; 4,000 titles of science-fiction and fantasy paperback books, 4%; supplies for collecting comics, 3%; and what Mullen and Schwindinger dub "sidelines" -- an eclectic product mix that includes non-sport trading cards, Japanese animation videos, T-shirts, posters, original comic artwork, a variety of pewter and ceramic fantasy figurines, and even Danish lottery dice -- the remaining 17%. The merchandise mix is based on previous sales, and tinkering with the percentages is still an ongoing process, says Mullen.
Gross profit margins on the merchandise vary considerably, ranging from 45% on some sideline products to a rare but achievable 1,000% for a back issue. Those margins, particularly for back issues, can be misleading, cautions Thompson. A back issue purchased for a dime can be sold for $2, "but the turnover rate for back issues is abominable," he notes, "between one-half and one turn per year." The inevitable result is an inventory that balloons out of control, sucking away at retailers' cash flow. Mullen and Schwindinger know that all too well. Currently lining the entire back wall of their 1,300-square-foot office/warehouse are 10 storage racks holding 20 boxes each of back issues, for a total of 50,000 to 60,000 comic books worth approximately $40,000.
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Compounding the problem is the fact that for comic-book retailers, inventory is nonreturnable (which is not the case for book retailers). Eighty percent of the distribution market is locked up by two multimillion-dollar giants, Diamond Comic Distributors, in Baltimore, which has a 55% market share, and Capital City Distribution, in Madison, Wis., which has a 25% market share. The remainder is occupied by 10 small operators. Distributors receive new titles, which are typically discounted 61% off retail from the publishers (the extra 1% covers damaged copies, which are also nonreturnable and must be swallowed by the distributors), and turn around and sell them to retailers for anywhere from 40% to 57% off the cover price (with 55% being the standard discount). The system is very efficient: distributors get a product on retailers' shelves within 48 hours after it's released from the printer. Hot titles typically fly off the shelves in a matter of days (or hours, in the case of Death of Superman).
There is a catch to that scenario, one Mullen and Schwindinger are quick to point out. Like many of the superheroes showcased on their shelves, the retailers need to have the power to divine the future if they wish to survive. Because the inventory is nonreturnable and must be ordered two months ahead of time, the retailers "take on all the risks," says Mullen. Unlike many stores, adds Schwin-dinger, Comic Attitudes never orders to sell out. "Our goal is to be in stock for the entire month," he says. Not only do retailers need to be up on the latest titles, plot twists, and events in the lives of the fantasy characters, but they need to be enormously educated about the buying habits of their customers.
"Your success will depend on your knowledge and intimacy with the product," says DC Comics publisher Paul Levitz. Product knowledge is even more critical in comics than in other retail fields, he says, because of comics' short selling window (of which consumers are very aware) and the lack of an effective mechanism for selling off unneeded inventory. Whereas clothing retailers can move their slower-selling goods to second-tier stores or discount outlets, with comics "you have 30 days to make your value from them or they're pulp," says Levitz.
