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Last year I moved from a place where I had two card shops within 10 minutes of me to one where the nearest shop was about 15 minutes away. One of the closer shops to me was located in South Minneapolis and was, from the perspective of myself and others, slowly dying.
Time was when the shop attracted 30+ people FNMs, but at the Khans of Tarkir pre-release the sealed events barely fired. I believed that poor networking played a role in the shop's failings, but the location wasn't great either. The shop was located in a windowless building with a very small parking lot in a residential area.
Recently the shop moved to a location with more space, lots of windows, a bigger parking lot, and a spot just off of a busy street barely off of the highway. The Dragon's of Tarkir pre-release attracted 20+ players for all but one of its flights.
It's true that more and more competition has been moving into the Twin Cities area over the past decade, but if this weekend was any indication then the ever-growing player base of Magic provides more than enough players for the the growing number of hobby shops.
The big step between having a profitable hobby and supporting yourself off of Magic more financiers involves vending on a large scale. For some this means renting a table, for others this means moving in on something brick and mortar. Just remember that even in the age of information, location is everything.
Location is pretty important, but actually running good events and keeping a nice looking storefront is more important. My LGS is in the basement of an office building with no windows aside from ones that look up at shrubs, and in the last 3 years, has grown from a handful of folks drafting and doing prereleases and gamedays where everyone who shows up gets the top 8 promo by default to a store with consistently firing standard, modern, draft, sealed, and EDH events, and prereleases where people I’ve never met show up. That last bit is pretty relevant, since I’m typically there 3 nights a week managing their tcgplayer stuff. Stores get big by word of mouth that they run good events, have pleasant management, and smell nice.