How to Start a Video Game Retail Business

The video game industry is booming, raking in $21.3 billion in 2008, according to the market research company NPD Group. There is no better time to open up a video game retail business. Of course, intense interest in video games isn't a guarantee that your retail store will be packed the moment it opens. After all, you'll be competing with Xbox Live, which allows users to purchase certain video games from their home. You'll need to provide a great location, demonstrate excellent video game knowledge and customer service, and provide a fun atmosphere.

Things You'll Need

• Video game kiosks
• Storefront
• Video games
• Accessories

Instructions

1. Select a location within a mall, shopping area or other high-traffic area. Unless you intend to offer more than video games (such as music and movies), your store will be relatively small, no more than about 1,000 square feet. Without some anchor stores nearby, you may not be able to draw the traffic.

2. Check with your local building department to ensure that the location is properly zoned. You shouldn't need a new building permit unless you intend to alter the structure or occupancy requirement. Apply for a business license, sales tax permit and federal tax ID.

3. Consider buying and selling used video games. Most wholesale games are purchased for about $48 and sold for $60, allowing a potential profit margin of $12, or 20 percent. Used games, however, will see a profit margin of about 50 percent. In addition, consider selling action figures, playing cards, posters, gaming consoles, gaming accessories, energy drinks and gaming magazines.

4. Contact Sony, Nintendo, and Microsoft to ask them for a list of distributors. Visit retail stores, check eBay and contact manufacturers to find cheap action figures and playing cards. Contact store managers at your local Ross, Marshals and T.J. Maxx to see if you can get first dibs on action figures if you agree to purchase them in bulk. While they may not go for this, it doesn't hurt to ask. Always be looking for closeouts at toy stores that are going out of business.

5. Consider purchasing an arcade machine only if you have the extra space and can get it for a great deal. Although arcade games are on their way out, kids still enjoy playing classic games such as Pac Man, Streetfighter 2 and Galaga. If your business is located near a residential area, you may be able to earn profits or garner more traffic by being the only place in town where kids can play arcade games.

6. Purchase video game kiosks for each gaming console. Purchase flat-screen televisions, a counter, registers, display cases, display stands and shelves. Purchase energy drinks, a vending machine, snacks and candy.

7. Hire an outgoing and knowledgeable staff. Consider having a diverse staff so that can appeal to each type of gamer.

Tips & Warnings

• Purchase liability insurance and worker's compensation insurance.

References

• Video Game Announces Record Revenue
• Video Game Manufacturers May Pressure Resellers
• Why Gears of War Costs $60

Resources

• Read this Article in Spanish