When Bob Dylan wrote the seminal, “The Times They Are a-Changin',” he had much weightier issues on his mind than sports cards, issues like race, politics, and social equality. However, what Dylan sensed was that things were changing and they were changing seismically. He predicted that things would not be same again, and he was right. At the Industry Summit this week, many predictions were being made as well. A few of them were powered by optimism – new consumers, new releases, and sustainable growth. And a few more dire predictions were informed by decades in the hobby, and the reality that our hobby is buoyed by an inherent volatility that drives engagement, value creation, and risk, all at the same time. Regardless of the hopes, fears, and dreams, one thing is for sure, the hobby is rolling and winning the hearts of new and lapsed collectors while keeping the old collectors on the bus. Three key themes played throughout the weekend and will be interesting to observe over the next few years.
Allocation – Very few shop owners and breakers are happy with their allocation of product. Demand is exceeding supply, which is driving product shortages, aggressive pre-release price increases, and potentially putting collectors at severe risk of being disappointed. Nick Matijevich, Senior Director of Product Development at Panini, summarized the risk for collectors well – “…if secondary market prices exceed suggested retail pricing by too much, then collectors will feel cheated on the return from that product.” Panini seems to understand this risk very well, and seemed genuinely concerned about secondary market pricing ruining the experience for collectors. I think this concern is particularly relevant to lapsed collectors that are finding their way back to the hobby. The manufacturers, are in a unique pickle– if they make too much, prices compress and products don’t hold value, but if they make too little which seems to be the consistent problem of late, then the “ripped return” on product will not have a chance of meeting the price value equation hurdles driven by high secondary market prices.
Breaking – Based on the sentiment in the room, breaking is here to stay and really good for the hobby. However, not all shop owners feel like they need to break to have a healthy business. Breaking is serving two very important roles in the hobby – price accessibility and entertainment. Breaks offer a lower cost alternative to participate in new releases, which allows more collectors and investors in the hobby, and can be hugely beneficial to player and team collectors. Even more importantly, breaking shows offer consistent content to drive hobby engagement and interest. It is very analogous to the plethora of sports news shows and podcasts that drive fan engagement throughout the season. If you’re a manufacturer, then you love it, because you have between 25-50 unique shows on every night talking about your brand and products. Breakers, particularly those with large, community-driven followings could make the argument they are much more valuable to manufacturers that even the largest of hobby shops.
Direct to Consumer (DTC) – E-Commerce has driven impactful, structural change in almost every consumer hard good category you could name. It has changed how consumers shop, what they expect from their retailers, and even reframed price/value equation for longstanding categories (see books, batteries, etc.). And like many retail categories, it has also reframed back-end supply chains for manufacturers. Distributors, which play a large role in our industry, are necessary, but also margin decretive to manufacturers. Whether you are Panini, Topps, or Leaf, your goal is to strike the delicate balance of supply, demand, and interest while protecting product margin quality. When selling directly to consumers, manufacturers have a better chance of achieving that goal by more intimately producing to demand and controlling relative price. That being said, the DTC model will need more time to mature. Hobby shops, mass retail, and distributors still play a key role in the hobby, but it is hard to argue with the success that both Topps and Panini have seen with their DTC efforts. Whether you are an established shop, or a new one, the importance of you growing and maintaining an vibrant in-person and digital community is more important. As we’ve seen from Best Buy and Circuit City, you cannot let consumers gradually discover they don’t need you.
I want to personally thank Beckett, Panini, Leaf, Magazine Exchange, Onyx, and other event sponsors for the support and appreciation they showed shop owners and breakers, both new and old. As a tiny start-up hoping to find our footing, I learned a lot that I hope reapply to our business. We haven’t released a Buy, Sell, Hold column in a few weeks, but hope to be back soon. In the meantime…
Buy: Justin Verlander Rookie Cards particularly high-grade, condition sensitive.
Sell: Ben Roethilisberger – His career is not over, but he will be returning to a Steelers team next year that is in rebuild mode. Long-term, his cards will continue to have a firm place in the hobby.
Hold: Lamar Jackson. Can he do it for at least 10 games? How will the league adjust?
If you missed our recap of the NATIONAL, please click here.