Boxed games distributors are torn over whether supplying stock on a consignment basis is beneficial to the industry.
The practice – where retailers can stock products without owning them until a sale is completed – has become a tempting option for retailers with limited funds. GAME, for one, has had to use this over the past few weeks for example.
“It’s one of a number of options that help retail ‘de-risk’,” said Gem’s UK general manager Darren Houghton. “However, for the supplier, it comes with its own unique set of cash flow concerns. Carte blanche consignment is probably unrealistic, as it is very much ‘cost of goods’ specific when scaling the risk/return.”
Natasha Tyrrell, general manager for UK distribution at Sony DADC, added that as more retailers and firms in the supply chain focus on cutting costs, the consignment model could “become the norm”.
Mastertronic’s distribution arm, The Producers, has been trading for years on a consignment basis with many of its sales partners and customers.
“If the sell-through volumes are there, then it can be of benefit to both parties. It is likely to see an increase this year,” the firm’s operations director Dermot Stapleton told MCV.
But suppliers such as Koch Media, Creative Distribution and Bright Red Entertainment aren’t so sure, with the latter describing it as “risky”.
“I don’t think this is possible in video games, the financing is not the same as it is in, say, music CDs,” said Koch’s MD Craig McNicol.
Creative’s new business manager Kevin Young added: “We would sooner customers buy what they need and come back for more at a later date, than to have to constantly monitor sell through.”