Argos ticket increase could spell the end of widespread discounting, as pressure for profit mounts on High Street
Will we see a cessation in rampant price-cutting from UK retail this year? That was the question from trade experts this week, as the High Street began to contemplate its reaction to Argos’ bold step of raising – not dropping – prices in its new catalogue.
Leading outlets have told MCV they are closely monitoring the surprise move from their age-old competitor – which has forged a reputation for ‘going first’ with eyebrow-raising deals on both software and hardware.
The news comes less than a week after MCV revealed that publisher Activision had increased its usual RRP for triple-A Christmas release Modern Warfare 2.
Both Marks & Spencer and Next have also admitted they are being forced to raise their prices – highlighting the frailty of non-food retailers’ margins during a crucial shopping year.
Verdict Research consultant James Flower told MCV: “Games retailers have UK prices set by the manufacturers, and they don’t buy from abroad as much, so are less affected by the weak pound.
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"However, talking broadly, their margins are being squeezed and they face many of the same pressures as Argos. It’s getting to the stage where they effectively need to raise their prices, too.
“However, such a competitive market makes it hard to do so. It’s likely the best way they will achieve this will be by higher margin bundles and less price cutting across software. Games being sold by a big proportion under their RRP will become less prevalent.”
When asked if Sainsbury’s would be raising prices on games this year, a spokesperson told MCV: “We will continue to monitor the rest of the market, however will always remain competitive.”
Asda’s entertainment boss Fergal Gara commented: “We will have to see whether that [Argos] move is relevant to video games or not. Our stance is that we want to remain competitive.”
Morrisons declined to comment on the subject.
An HMV spokesperson said: “[Price rises] are not something we are considering at present.”
Comments
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Price war has not begun in Europe yet.
About time
It's about time the consumer market got it's head into gear. We cannot continually discount product. if no profit is being made by either manufacturer or distributor or retailer then why would the product exist. I know no-one has money at the moment. Or so they say. If you really want something then you will go out and buy it. Hell I do all the time. Yes everything is cheaper off of the internet but is it convenient? Not really. You fancy watching watchmen monday? Sure order it from play on monday and you might have it friday. I enjoy browsing the high street and would rather pay as close to the suggested retail price and know I am not thinking of myself and potentially contributing to someone not losing hours or there job.
don't think so...
>You fancy watching watchmen monday? Sure order it from play on >monday and you might have it friday.
The Last 2 items I ordered from play came with free posting and took 2 days to arrive, one of which was half the price the local PCWorld was doing it for so yes I'll wait. Ebuyer was much the same, ordered Sunday, here Tuesday morning, free shipping.
My last 5-6 pre-ordered games turned up a couple of days early (Weds) thanks to Gameplay, Tescos etc. HMV? Nah, avoid them, the 4-5 day shipping is still true there but the rest? £20 discount and 2 days earlier, no brainer in my book.
Course, if I was that desperate for Watchmen I'd have an import or one of the Near DVD quality snide copies at the boot sale for the last 2 weeks...
Price Wars
Here is hoping that most retailers (including online) raise their prices before Xmas.
I have worked in a similar industry and have witnessed what long term price cutting does; It undermines the industry, puts pressure on the vast majority of people, causes cuts in expenses (this of course includes jobs being lost), and makes many small retailers feel like they are sometimes working for nothing.
I chose to work in the Games industry because of my love for the industry itself AND the decent profit margins. But when it gets to the point of selling brand new releases at 50p profit just to shift them, it makes me wonder what happened?
Do not forget that publishers are also to blame for this. How? It cannot be a level-playing field when they give huge price breaks to the likes of Amazon, Play, Game Group, Argos etc.. Its like pricing control for Indies. We keep getting told that they dont get price breaks however I can confirm (source is from one of the above retailers) that they do indeed get very big price breaks and so can afford to have a price war, and spread their margins around.
Thats my 2pence worth anyway.
Thanks.
Recession
The real long term effect of a recession is to remind all business that the real purpose of being in business is to make a profit
After each recession that we have been through we have always managed to have very very good years
Then slowly but surely we have the return of the idiots who sacrifice profit for market share or growth
Prices up = high street sale down
There is always an alternative to get your software from. If the high street insists on taking it out on the consumer, then the consumer will hit back where it hurts.
Whilst they might not think that £5 is much of a rise, that £5 will suddenly make them more expensive than those shops who decide not to do it. Every person who decides to buy it elsewhere is losing them £55 instead of gaining them £5. I personally can't see any business logic in that at all.
I am more than happy to wait a couple of days and buy online at a discount. As much as gaming and game development are a major part of my life, games are a luxury item. Life goes on without them being bought on day one.
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