OPINION: Loss-leading at its smartest

Christopher Dring
OPINION: Loss-leading at its smartest

If you think it’s hard getting games to stand out amongst the Christmas blockbusters of FIFA and Call of Duty, try being a retailer.

Each year there appears to be another outlet or two trying to muscle in on a market already crammed full of competitors. This year Bee.com is getting its first, full Christmas, while GameStop.co.uk is determined to make its mark. Both join a raft of stores desperate to secure a slice of that ever-decreasing boxed games pie.

Loss-leading is a way to grow market share. Yet, the discounting that took place for Deus Ex last week was far from lazy retailing.GameStop.co.uk’s eye-watering £20.97 deal only lasted hours. But it grabbed headlines, boosted the firm’s Twitter followers and was the most popular offer on HotUKdeals. It was a marketing triumph.

Tesco offered Deus Ex for £30, as long as customers pre-ordered an upcoming title. Not only would it boost the grocer’s advance order numbers, it promoted the fact Tesco is now accepting pre-orders in the first place. Loss-leading at its smartest.

Yet the side-effects of a price war are starting to show. Consumers now expect to pay less, publishers are being asked to reduce their prices, margins are squeezed right across the supply chain and specialists are forced to focus on pre-owned.

Konami’s Kunio Neo was a man of few words during our interview, but one mention of the UK set him off. Our country may be No.1 in unit sales, but it is territories such as Germany that are proving more profitable.For years UK?publishers have been arguing that price wars devalue the market. And now, in 2011, those arguments are being proven out.

CHRISTMAS COMES?EARLY

Deus EX represents far more than just another hit game to retail. It has been an atrocious summer for games. Only two weeks ago UK games retail was worth £9m.

Square Enix’s new shooter represents the end of that bleak period. Today there’s Driver:?San Francisco and Bodycount, the week after Resistance 3 (backed by a £3m marketing campaign), next up Gears of War 3, then F1 2011, FIFA 12 – the hits just keep on coming.

The Q4 retail sales boom has started early.Christopher Dring

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Tags: Retail , Opinion , loss , leading

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