Squabbling over trading terms could result in supply troubles for a third of UK retail
MCV understands that UK publishers are increasingly wary of pushing stock through EUK ahead of the Christmas rush - and are considering cutting out the distributor entirely.
The mayhem began on September 17th, when the Woolworths Group PLC reported a £100m loss for the first half of the year.
Two of the games industry’s biggest credit insurers – Coface and Atradius – allegedly pulled cover for products being sold through the Woolworths Group, with the third and final insurer, Euler Hermes, reducing its cover.
With publishers left in the position of shelling out for their own insurance on titles sold into EUK’s retailers, some were left questioning the value of the firm’s distribution supply chain.
Previously, EUK had a period of around 60 days credit to provide payment to suppliers. But some publishers are thought to have now begun demanding immediate payment for stock – an ultimatum EUK has apparently found it hard to meet.
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Concerned publishers may now even hold back stock from EUK and its partners, such as Asda, Morrisons, Sainsbury’s, Zavvi and WH Smith.
That could mean a stock crisis for these retailers this Christmas – but a bumper festive period for GAME and indies, as publishers squeeze as much product into these channels as possible to make up for the shortfall within EUK’s high-profile accounts.
The boss of one huge global publisher told MCV: "The publishing community feels very exposed by this situation. EUK is telling publishers that everybody else is being flexible but we know damn well it’s not the case, because we all talk to each other. We’re waiting for the timebomb to explode, and we can’t diffuse it."
A UK publisher boss added that his firm is likely to join those demanding immediate payment for stock from EUK – but that it was also striving to set up a direct relationship with its supermarket partners.
"We need to have a relationship with some of the biggest players in the market – which include Morrisons, Asda and Sainsbury’s," he said.
"EUK isn’t a customer, it’s a route to market. They’re not a priority for us – getting stock to retail is. We’ll support whichever route to market retailers choose. If we have to sell direct, we’ll do it."
Despite those at the very top of publishers telling MCV that they were nervous Woolworths wouldn’t be able to pay its lease for the third quarter this month – risking insolvency and the demise of EUK – the company has moved to dismiss the rumours.
A spokesperson told MCV: "The Board of Woolworths Group is comfortable with our financial and cash position. We continue to work closely with suppliers and credit insurers in what is a difficult environment for retail and wholesale."
"While it is true that some credit insurers are tightening trade terms, we are trading as normal with our suppliers and continue to do so. EUK will work closely with all of its customers and suppliers to ensure a successful Christmas period for all."
Comments
ha ha ha ha
About F'ing time !!! why not just have a fair price for everyone to sell at, so we can all make a profit, rather than struggling to survive,
hope woolworths goes down, no friends in business,
Re: Re: ha ha ha ha
EUK will be bought by a supermarket. Can't see ASDA or Tesco passing that up.
As for Woolies retail...
Game Over
Insert More Credit
Re: Re: Re: ha ha ha ha
EUK's retail base will not and cannot trade directly with all suppliers as they simply don't have the capacity.
No logistics company would be able to set up to take up the slack in such a short timeframe (it's a 12-18 month planning process).
EUK are the conduit for 20%+ of all entertainment product in the UK.
This affects DVD, Toys and Books as much as V.Games.
Can these market sectors survive without EUK this season?
Seems like you have 3 options. GIve up on 20% of your sales, find another route to this market, find a way of supporting EUK while limiting whatever risk you feel you have.
Your move ?!
Re: Re: Re: Re: ha ha ha ha
Its good news for indies!!!
Re: Re: Re: Re: Re: ha ha ha ha
20% of the market simply doesn't dissapear because one or more retailers can't get the stock to sell, the paying public simply chooses one of the many other alternatives.
Publishers won't and can't reduce their forecasts, so somehow, somewhere the stock will find it's way under the Christmas trees across the land.
The indies and specialists will never have to compete head-on with WW and the like, as their market knowledge and ability to adapt to market shifts and demands will always keep them one step ahead, however the big volume titles will always be cheaper away from the indies, such is the unfair and un-governed pricing that exists in the UK.
I've sold and managed relationships with all these retail and distribtion outlets and the differences between them is consistantly astonishing.
The scarcity power is shifing away from EUK and back to the shop-front, and that's good for all.
You're right, it is the publishers "call", and my guess is many of them would drop EUK like a stone, given the chance.
all i want for xmas
is this !! thats all i want, i hope all this lost leader sales
ends up with companies going bust, its only from 110% greed to dominate the market, there is NO reason why we cant all sell at roughly the same price and all profit and grow, the odd offer here and there with every £40 of shopping bought is fine, im just against the ultra low price on new releases still with a RRP of 49.99 of course we havent sold at this for years, but we make £2 on a new release and still look over priced when fifa 09 is sold at £9 below my cost price !! i hope they go under, with no buy outs, same as the greedy americans gambling with other peoples money,
Re: all i want for xmas
Thanks for saying that, really appreciate that, you made great comments for us poor investors !
Dont forget its ordinary people investing in WLW not just big boys.
Re: Re: all i want for xmas
Many thanks also from the 28,000 colleagues who work for WLW group. Your comments about us going under are not needed or indeed helpful!!! How will these 28,000 people have money to spend in yours or others stores if we go down??? How much laughing will you be doing then?
Re: Re: Re: all i want for xmas
SEAN WELL SAID !
Its been a big worry for small investors, not forgetting all the staff at woolies, all hoping for a decent christmas.
With a JOB lets hope, good luck all.
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