UK retailer GAME has had bad news coming in from left, right and centre over the last two weeks and is clearly struggling now it’s lost its credit insurance. And it’s not just GAME having a bad time, the whole retail sector seems to be struggling at the moment. With more and more games being bought digitally, either through services on traditional consoles or on smartphones, and with second-hand games under attack from publishers, retailers are facing an uphill struggle, especially if they don’t have a decent business strategy.
And I’m not sure GAME does have a decent strategy. Here’s GAME’s Group Marketing Director Anna-Marie Mason in an interview with Eurogamer yesterday.
One problem we hear often is how expensive games are at GAME versus how much they are to buy from the likes of Play, Amazon and other online only retailers. Could your GAME prices be cheaper?
It’s well documented. In a marketplace like video games, there will always be somebody that’s selling the game cheaper. That’s not what we’re about. We’ve never tried to be, or never wanted to operate like that.
What our customers get from us, whether they shop with GAME or Gamestation, is more than a sterile transaction. They get the opportunity to transact with us in the way they want and they get added value. Our customers will vote with their feet.
To me, it seems bizarre that GAME feel they can adequately add value essentially by providing interaction with their store staff. I’m sure GAME have a lot of committed staff, but negative comments about service are never far away on comment and forum threads about their business. And even if their staff were maximally helpful, how would their service add value for the consumer? Core gamers are possibly the most educated, well-clued-up consumers there are. They don’t need store staff for information. Slightly more casual gamers just want the latest Call of Gears and, again, don’t really require much assistance from staff. The most casual gamers are the group that gain the most value from interacting with store staff, but that’s a market that’s moving towards smartphones – and it’s not like casual gamers are necessarily less bargain- or price-conscious. Staff interactions don’t make GAME competitive within the retail sector either – all stores that sell games have staff, in fact I follow an extremely conscientious HMV staff member on Twitter.
GAME struggle to compete with online stores on price, but they already have an inherent advantage over online stores that they fail to sell adequately – with retail you get your game instantly, without having to wait for delivery. And when you think about it, it’s possible to put a monetary value on the benefit of this. If I were to order Mario Kart 7 on Amazon.co.uk, it would cost me a staggering £8.99 for their express one-day delivery option, and it would still take the game many hours to reach me. I might pay more for Mario Kart 7 when I buy it in-store at GAME, but I get my game instantly, an experience that we can attach a value of more than £8.99 to, even if it’s tempered by the fact that I’ve had to travel to the store and will have to travel home before I can play the game. Every time you shop at GAME you get an extra £8.99+ of value added to your experience, but GAME never tell you about it.
Although GAME can’t compete with online on price, they (and other retail stores) do need to keep their pricing within the realm of sanity. I’ve seen Ridge Racer 3D and Rayman Origins for 360/PS3 selling for £45 on the high street, long after heavy price-drops elsewhere. You can’t add over £25 of value to a mass-produced piece of software that’s identical wherever you buy it from. You just can’t. Retailers need to avoid having too many stores too close to each other. GAME had three outlets in Leicester’s city centre at one point, and HMV had three stores in Manchester’s city centre until recently. Retailers need to get rid of these stores and cut overheads so they can at least match the vague price tiers of online stores, if not the actual price.
I’m really not an expert in retail, so perhaps this whole post is hopelessly naive. Still, it seems to me like GAME are making some huge errors in strategy. For every online news story about a beleaguered business there’s a wealth of insightful comments from consumers explaining where things are going wrong and why they don’t use it any more. It’s not always a great idea to read below the line but I think some of the businesses struggling to survive in these difficult times would benefit from it.