ANALYSIS: Asda Pre-Owned

Retail’s defence of pre-owned is a simple one.
Consumers trade in their games so they can buy new ones. It helps inflate sales of newly released titles, and the specialist retailers all have stats to back up this claim, too.

But unfortunately that argument has broken down now the likes of Argos, Tesco, Best Buy and Asda have got involved. Because now gamers don’t have to trade in their old titles for a new one, they can swap it for money off a flatscreen TV, a bunch of flowers, or even a haddock.

I don’t mind pre-owned in principle,” one publishing exec told MCV.

But when supermarkets get involved there’s no money coming back into the industry. That’s where the real problem lies and it’s why we need to adopt measures to monetise or even discourage it.”

ENTER ASDA

When it comes to new entrants into the second-hand sector, Asda is making the boldest moves. Its ‘Buy, Play, Trade’ range is clearly labeled, extensive, well promoted and available in a whopping 234 shops.

But this move into pre-owned shouldn’t come as a surprise. For starters, MCV reported in July 2009 that the retailer was considering it. And when you have a team filled with former Gamestation execs – including current Asda head of games Andrew Thompson – it was surely just a matter of time.

But what is the real motivation behind Asda’s move into the used games market?

We held customer listening groups last year, and they told us unprompted that they wanted to trade in with us,” answers Thompson.

In particular, parents warned us that they could not afford to purchase every new game for their kids, so they wanted an option that would allow them to buy more new titles. Furthermore, we were aware that some of our direct competitors were planning pre-owned trials, so yes, we did feel we had to introduce this service for our customers.”

If, as Thompson says, the main aim is to facilitate more new game sales, then why can consumers spend their trade-in money on anything in the store? Surely that ruins the point?

Thompson says that much of it is down to offering what the competition is doing. Tesco, Argos and Best Buy all let customers trade in against anything in store. And he adds that publisher’s do understand the retailer’s position.

We have been open and honest with publishers from the start of our trials, and having world class supplier relationships has always been really important to me,” he says.

With Best Buy, Argos and Tesco all entering the pre-owned market before Asda this year, we have had to make a move to protect our long term games business, and I think that publishers understand that. I genuinely believe that we can use trade-in to grow our market share on new release titles, which will benefit our suppliers.”

THAT’S ASDA PRICE

Indeed, Asda is marketing pre-owned as a means to get new games for cheap. Its debut offer saw FIFA 11 cut to 97p if customers traded a recently-released title. And Thompson says more is to come.

We obviously launched with a bang with the FIFA 11 deal and we plan to offer more great deals on the big titles this Christmas,” he explains. We’re also planning online, outdoor and press campaigns.”

Yet, for all the talk of helping customers, there may be another reason for Asda’s pre-owned invasion.

The Wal-Mart-owned chain has invested millions in its games department, and now the firm is a great games retailer in its own right – it even won the MCV Award for best supermarket this year and now boasts a double-digit share of the games market.

But despite all the success in growing market share, the big bosses at Asda HQ might be wondering when they’re going to start seeing some profit to justify the investment. And the onus is on Thompson and his team to start generating some.

At Asda we strive to save our customers money every day, however, we have to strike the right balance between value for our customers and profitability for the business,” says Thompson.

Trade-in games offer another route for customers to save even more money every day, and I feel it is a real recession buster.”

Perhaps that’s reason enough. It’s been a tough year for games retail, people are spending less and the High Street environment is becoming even more competitive than ever.

And what’s more, Thompson and his team aren’t just entertainment buyers for a grocer, they are games specialists with gaming backgrounds. These guys want to keep up with their rivals and want to keep growing their market share.

It has been a tough year for everyone in games retail but I am really pleased with our share performance,” concludes Thompson.

We have continually outperformed the market which is testament to the foundations laid by Duncan Cross, and the great work that the games buying team have delivered over the year.”

It has become an MCV clich, but pre-owned is not going anywhere. All major games retailers sell second-hand games (see Pre-owned Players) – and if Asda wants to continue to be one it has to do it, too. Whether publishers like it or not.

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PRE-OWNED PLAYERS
Alongside Asda, here are the other competitors in the second-hand games market

CEX
Complete Entertainment Exchange began life in 1992 and is now a chain of well over 100 UK stores. The firm only operates in the used market, buying and selling products such as phones, games, DVDs and CDs.

GAME and Gamestation
Used games are a key part of GAME and Gamestation’s offer. Second-hand represents 27.5 per cent of GAME Group’s revenue, and Gamestation has just launched a new pre-owned-focused points card.

HMV
The entertainment specialist began selling pre-owned in 2008. Set up by former Choices games boss Martin Baxter, HMV’s Re/play offer can be found in all of its stores and takes up a significant chunk of floor space.

Blockbuster
The rental giant focuses a lot on previously played games and DVDs, which includes the selling of ex-rental stock. Once again, second-hand is sold and traded in all of Blockbuster’s UK stores.

Best Buy
The US big box retailer entered the UK this year. Consumers can trade-in games against anything in Best Buy’s giant shops, including TVs and washing machines. However, there are currently just six stores nationwide.

Argos
Since July this year all Argos stores are letting customers trade in around 250 different games for gift cards that can be spent on any product. A full list of titles can be found on the catalogue retailer’s website.

Tesco
Over 60 Tesco stores now accept used video games, and consumers can spend their money on anything in-store. The firm has invested in technology to ensure the experience is as easy for the customer as possible.

The Independents
Indie giants Grainger Games and CHIPS both sell a large number of used games, while an ever-growing number of indies are no-longer selling new games and focusing entirely on the pre-owned games market.