As a frequent visitor to many game stores I very often find myself asking this same question. In this article I will look at 2 major video game retailers game stores (a major UK retailer) and GameStop.
The first store I will look at is GameStop, during the recent recession the retailer lost up to 38% of its stock value and even more recently in October 2009 director of the company Leonard Riggio sold over $60 million worth of shares leading many too believe that this was a sure sign of poor financial news to come.
Games stores in the UK operates just over 100 stores and it too has had a poor showing on the stock market with shares falling from a recession high of £3.01 down to 96p as it currently sits today. What surprised me most is just how little profit after tax this large retailer actually makes the consolidated income statement on their parent company's website shows that for the calendar year of 2009 the 100 stores made between them just £85,440 out of a revenue of £1.9 million.
With such poor results for each company I want to look at what has changed at these retailers since their respective high points in 2008. I'm going to do this in point form to simplify the reading.
Special offers:
Both stores have previously offered many special offers on their pre-owned games including buy one get one free and 3 for the price of two on many games. A sweep of each company's respective websites shows that this type of offer is a thing of the past with both retailers instead choosing to focus on trade-ins as part redemption for newer releases.
Game has chosen to go with £5 extra credit on any trade in when used against the value of new releases
GameStop are offering army of two for $19.99 when you trade in 2 titles from its list of games.
Neither of these offers any real value to the buying public as both stores currently offer very little for their trade-ins and with GameStop the offer is limited to newer titles like Batman: Arkham Asylum, Tekken 6 and Demon Souls.
Trade-ins:
Both stores at the moment currently offer very little in the way of value for your trade-ins. Game for instance will give you a meager sum of £17.50 for your copy of COD: Modern warfare 2 and £14 for your Left 4 dead 2. Buying them back however is a different story as these games will both set you back £37.50 in the pre-owned section.
In the past this service has been a great reason to visit your local game store in the hope of getting rid of your older games and acquiring yourself maybe 2-3 pre-owned games at a bargain, nowadays it's only useful as a last resort to get that new release you want when you're low on cash.
Treatment of customers:
This is an important one for me. As a customer I expect to be treated respectfully by staff yet both the aforementioned stores have policies that infringe my rights as a consumer.
Game stores have policies in place that say that they will not accept a refund unless the packaging and the security sticker is intact and that I should return it to the distributor when this is clearly against the Sale of Goods (Amendment) Act 1995 and indeed any pushing on your part will get you the refund but why should I have to argue with the store over this at all?
Even worse is GameStop's employee checkout policy which allows GameStop employees to take home and play any new retail release two weeks after release, these are the games that you and I buy as brand new for full price. If I bought a car as brand new I wouldn't expect there to be 500 miles on the clock just because an employee brought it home for a week and why should it be any different for video games. You won't even know if this as happened as GameStop remove every game from the box and store it separately.
So the stores have changed more often than not for the worse but what else has changed outside of the stores to increase the decline of the video game retailer?
Competition from large chain stores has hurt sales badly for many game retailers with stores like Tesco and Wal-Mart now using their considerable buying power to muscle in on this ever growing market and offering a wide selection of new releases at a discounted price. Stores like Xtravision in the UK have also muscled in on the trade-in games sector many times offering much more value for your game and retailing the pre-owned games at a better price. These stores using their existing infrastructure have been able to attract quite a few potential customers away from these dedicated game stores.
Another factor bearing down on these high street retailers is the gradual push towards games on demand with download services now on each platform such as PSN and Xbox live offering downloadable games for console users and services such as steam on the PC offering full titles for download right from your living room couch. The market has even seen new consoles emerge which have excluded the high street by only supporting downloads such as the PSP go and in the future the Onlive service.
These stores do have a few positive points however they both offer a wider selection of games than any other high street retailer and both offer reward schemes which do offer incentives for customers. However with the recession looming over us like a dark cloud and shoppers being more careful than ever with their hard earned money can games stores continue to sell games at the RRP while smaller retailers and supermarkets continue to offer bargain prices for the new releases and pre-owned games?
I for one don't think they can and unless they adapt to the current buying trends and push for a more competitive stance they may go the same way as all the Music stores and gradually fade from our high streets forever.
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