Economics and Comics: Talking Shop

Economics and Comics: Talking Shop

Higher gas prices, rising food costs, a housing slump, the threat of a credit crisis -- the latest news on the U.S. economy hasn't been good. And as today's consumer confidence index is expected to confirm, Americans are gloomier about the economy than they have been in 15 years.

As financial reports warn that economic worries will cut into consumer spending, what looms on the horizon for the comic book industry is tough to predict. In an industry that numbers show has experienced double digit sales increases in its top titles when compared to five or 10 years ago, the same numbers show that the cost of those comics has also increased. Trusting that consumers will pay a higher cost for their comics in a tougher economic situation seems risky, but some analysts claim that entertainment industries like comic books aren't as affected by negative economic trends as other products.

In an effort to find out what the latest news about the economy might mean to the industry, Newsarama took the issue to comic book retailers as part of our Talking Shop feature. And while some retailers have seen customers cut back because of economic concerns, the attitude from most retailers was that even during an economic slowdown, people are still willing to pay for entertainment -- as long as that entertainment is high quality and low priced.

"For the most part, people respond in stark terms to polls that subtly stress negativity in the economy, but over the past 30 years, very little of that has significantly reshaped the buying habits of our comics customers, whether during the heights of the Misery Index under Carter, the fuel crisis and related price increases of the early 1980s under Reagan, or the highest tax increase in history under Clinton," said Cliff Biggers, owner of Dr. No's Comics & Games Superstore in Marietta, Ga. "I don't see this time as being different; for most customers, their budgets allow for a certain amount of entertainment each week, and we have to work to make sure that there are good comics on our shelves to offer them reason to spend that entertainment money with us."

Craig Lopacinski, owner of Neptune Comics in Waukesha, Wisc., said he believes the sales increases that the comics industry has experienced over the past few years can't continue in the current economy, but the year will end up being flat because customers still enjoy their comics. Lopacinski echoed what several retailers said -- during tough times, people turn toward entertainment options that provide an "escape."

"In the past, when the economy has taken a downturn and people have fallen on harder times, they turn to entertainment like comic books to have an escape from their daily lives," Lopacinski said. "With people traveling less because of higher gasoline prices, they will turn to things like comic books and games for something to do."

Others countered that while comics were able to survive economic problems of the past, they were a lot less expensive back then. "That was when we were selling cheaper entertainment," said Matt Price, owner of Speeding Bullet Comics in Norman, Okla. "I think we could see some slowdown, but I think what's more likely is we'll see slowdowns in particular categories. For example, it seems as if $300 statues could become a harder sell. And I do think people could become more frugal about sticking with something out of habit."

Some retailers also pointed out that while they may only be seeing a small effect so far from the economic slowdown, there are shops closing that are unable to stay open in this environment.

"I think that most comic shops are already seeing the effects of the economy and the consumer lack of confidence. Discretionary income is drying up. People are constantly cutting their pull lists down, and I've lost a number of large pull list subscribers to job loss, gas and oil prices," said Ralph DiBernardo, owner of Jetpack Comics in Rochester, N.H. "New England has seen a large number of comic shops close in the past year (six or so at my last count and those were ones that I personally knew), and I don't think we have seen the last of it. The reality of stores closing is that customers don't always head on into a different shop. There are always a number of people that take that as their time to get out of comics."

Many retailers said they've started hearing customers talk about how they need to cut back on the comics they purchase because of economic concerns, although some said that's a worry they hear from customers all the time.

"I have heard first-hand from some who have lost their jobs or had them reduced in recent months," said Joe Field, owner of Flying Colors Comics & Other Cool Stuff in Concord, Calif. "Obviously, those working in the mortgage business have been hardest hit."

"We have all lost a lot of customers who are too busy trying to pay mortgages they can’t afford and working to stay above water in an ocean of debt. Their weekly comic fix is no longer a priority," said Mike Malve, owner of Atomic Comics in Phoenix.

"We've seen a few people drop files, and a few cut back, but people should always buy within their budgets, and they should always trim titles they no longer like from their lists," Price of Speeding Bullet Comics said. "Sometimes economic tough times remind people of what would be a good idea to do, anyway."

One cause for discussion right now in the industry is that higher costs might mean publishers will raise their prices on comics. Retailers already pay all the freight costs on their comic books, with some saying it makes up about five percent of their net cost -- but that cost (and percentage) is rising along with gas prices. If the costs associated with printing and shipping are passed along to the consumer with higher cover prices for comics, all the retailers we polled thought that would end up being detrimental to sales.

"Comics and books are heavy, so of course there's an impact to our bottom line when shipping costs go up," said Field of Flying Colors Comics. "The increasing cost of shipping (which includes shipping of raw material to printers, too) could lead to pressure to raise prices. I hope that doesn't happen because from the consumer feedback I get regularly, higher prices will only lead to consumers being even more selective about their purchases... something no one in the comics marketing chain wants to happen."

"[Higher prices are] already happening," said DiBernardo of Jetpack Comics. "Each month, Marvel and DC add more titles that have a $3.99 or higher cover price. They publish them as one-shots, but with so many of them coming out, it is really just an indication of what is to come."

"I only ask that publishers think before they act when it comes to raising prices on new comics," said Malve of Atomic Comics. "We are already having a difficult time getting new readers converted to regular customers. Having books priced even higher will only be yet another slap in the face to the consumers we already have."

Retailers also expressed concern about what they perceive as a glut of comics that don't live up to the hype surrounding them -- something that may lead to short-term sales increases, but long-term decisions by not only customers to cut back, but retailers as well. After all, retailers said that if they're feeling the effect of an economic slowdown, they will be more discerning on what they are willing to stock on the shelves, and if they can't trust the publishers to supply quality material, they won't be taking as many risks on their products.

"Publishers should be careful not to oversaturate the market with comics," said Lopacinski of Neptune Comics. "We have seen a large backlash on the Countdown crossovers that DC did late last year. If Marvel and DC continue on that trend in this economy it will not benefit themselves or the retailers because those tie-ins tend to be the first things people cut or simply do not buy when times get tight. They stick with the characters and story lines that they enjoy and do not pick up additional mini-series tie-ins. It is not a good investment for the publishers to create extra titles that people can't afford to buy."

"As Marvel adds more 3.99 to 4.99 one-shot and reprint books, it becomes harder and harder to judge which ones customers will be on board for. So the Thor one-shot sells out and King Size Hulk lingers on the shelf," said DiBernardo of Jetpack Comics. "More and more I am cutting my orders to reflect what my preorders/subs are. What I think I can sell and what I will sell are two different animals. Last year, I would buy on what I thought I could sell. This year, I am all about the sell out!"

As the economy is predicted to slowdown, most stores said they are also being a little more cautious about new expenditures this year.

"We started prepping for this about a year and a half ago. The writing was on the wall and no matter how hard we prepared for a recession, it’s just hard and you have to pace yourself to get through it. Tough choices are made and that is how a business survives," said Malve of Atomic Comics.

"We were considering a move to a different and larger location and those plans are on hold now while we wait to see if the economy gets better or worse this year," Lopacinski said of his Neptune Comics store. "The other way to deal with the slump is to adjust ordering - cut back on things if they are not selling because people are not buying. All retailers also need to be creative with marketing and promotions, not just when the economy slumps, but any time they feel like their customers are getting fatigued and loosing interest in comics and games."

However, Field said he's continuing to make improvements at Flying Colors Comics despite the gloomy forecasts in the news.

"In my 20 years as a comic retailer, there have been many ups and downs in the national economy, so I believe we are prepared to work through whatever happens. I do think there's hype about the way media reports any news, especially economic news in an election year," Field said. "Having just invested in store renovations, a new lease and continuing to look at other business improvements, it should be apparent I'm bullish on the comics' market. I believe direct market comic shops are still a real oasis from any potential hardships our customers may be going through---and I think it's incumbent upon all comic retailers to watch our numbers more closely, serve our customers as best as we possibly can, and continue to reach out to find new customers for what we sell."

Plus, as Biggers pointed out, he suspects the gloomier outlook by consumers is as much caused by the political atmosphere in an election year as it is the actual effect of economic indicators.

"For the most part, other than concerns about escalating gasoline costs, our customers as a whole seem to be relatively unimpacted. As always, we have some customers whose budgets are stressed, others whose budgets are booming, and many who fall in between -- and that never seems to change dramatically," said Biggers of Dr. No's. "Politicians with an ax to grind use the word 'recession' even when the evidence isn't in to support that conclusion."

Others emphasized that even if consumers spend less on comics during the slowdown, there is still a possibility for growth because of the massive untapped audience of people who don't read comics yet. Even if each customer spends a little less, there's such a huge potential for more customers, it's not necessarily a negative.

"People are still really excited by certain comics, and the box-office success of Iron Man, for example, at least indicates that people are interested in characters who came from comic books," said Price of Speeding Bullet Comics.

"I have said this for years. We are still in the stone age of this industry," said Malve of Atomic Comics. "There is so much untapped potential for us as an industry. We all just need to keep moving forward even during these hard times."

As for what else publishers could do to help the industry transcend any economic troubles, retailers said holding prices steady and stopping the glut of tie-ins and one-shots is a start, but it all comes down to quality. As Field of Flying Colors Comics said, consumer confidence indicators may say one thing, but the confidence of the customers who go to comic book shops is influenced much more by something entirely different: "My experience is that our sales are primarily affected by the confidence our customers have in the comics they are buying."

"All you need is to look at the movie and the video game industries. People are still spending money at a fever pitch," Malve said. "We as an industry have to make sure we are always delivering the consumer a good product and experience when they decide to make their purchase. Be it the quality of the comic they buy or the way we as retailers conduct our business, we must insure that this industry has a stable foundation to build for our future."

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