The road to XBOX ONE. Follow the journey

INTERVIEW: Ian Shepherd

Michael French
INTERVIEW: Ian Shepherd

For some time, GAME Group has been the first to admit that it needs to reclaim relevancy and up its game in terms of hi-tech retailing. 

Hence its unveiling of a new five-point plan two weeks ago that will overhaul the finer points of its GAME and Gamestation brands.

Why change? “The industry is changing, and customers demand it,” says Group CEO Ian Shepherd, whose plan comes into force less than a year after he took over the firm. “We’ve seen structural product differences which favour the specialist, and in tough economic times people bought games from someone who could make it affordable – so we outperformed the market over Christmas.

“But these strengths are our greatest weakness if they lead to complacency.”

He points out the many risks that threaten GAME; increasing competition, the rise of digital content, squeezed margins and so on.

“The hallmark of all these issues is change – customers are changing the games they play, they are changing the way they buy. This is an opportunity for us, because the games market is getting more confusing and we can position ourselves as an aggregator of content and choice. We can turn concerns about the business into growth.”

And GAME sees growth ahead. Internal forecasts show that despite the recent dip, and further pressures ahead, the market, especially the boxed product one, will start growing again from 2013. Says Shepherd: “Growth is coming from the new but the business we are already in is very important.”

So his plan, then, is a cohesive attempt to unite and improve all these areas at once, ready for an reinvigorated market in 2013.

CHANGING CHANNELS

The first point is making the Group a multi-channel retailer. Aren’t all retailers, when they offer online, physical and digital, already multi-channel? Yes, but GAME’s activity hasn’t been good enough.

In the last year, the firm has been moving to a new web infrastructure that unites stock systems. That means a better web offer and more integration with mail order and High Street. The Group soft-launched a new Gamestation.co.uk last month, which includes new video and social content features (first trialled in the firm’s now-aborted GamesNation social network, quietly tested last year) that will also soon be added to GAME.co.uk before a total international roll-out.

Better online services include the the “blindingly obvious” (Shepherd’s words) addition of online pre-owned.

“We have 2,000 SKUs online that show new and pre-owned prices – over the next few months we will engineer that to be all our products. It is a fantastic value proposition online,” he says. “A standalone online competitor cannot do that.”

Another addition is long-time-coming improvements to ‘click and collect’ and mail order in-store.

“Our sites have been the digital representation of our stores,” says Shepherd. “But I want the stores to be a physical manifestation of our websites.” He talks of “endless aisles” of content, where smaller games not given representation on shelves can still be ordered from the shop floor and sent to a customer within 24 hours. No customer will ever be turned away without an order.

“If you work out the maths of what that does to in-store conversion the potential is huge. We are making the convenience of stores available to online customers.”

Shepherd wants to see huge growth in overall online marketshare. Currently, GAME’s total share of the market is around 35 per cent – but it’s only got 15 per cent of the online market.

Along with more joined-up thinking, GAME’s entering new areas too – specifically digital, until now the missing link in its multi-faceted approach. Shepherd is expecting a watershed moment in 2013; by that point digital should have tripled its revenues at GAME to account for just under 10 per cent of its revenues.

The actual investments will focus on a few areas. GAME already has a PC download business, a white-label offer run via Metaboli, but that grew 230 per cent last year and is now a ‘meaningful’ proportion of its PC game sales. Last year it also launched the GAME Home Moonbase on PS3, which sells branded content in the virtual world. GAME is the only retailer on there.

“Unsurprisingly, the thing I’m excited about is mobile” says Shepherd, a former Vodafone retail director. GAME and Gamestation already have iPhone apps, downloaded 250,000 times – impressive on a numbers basis, even more impressive when, the information in them is “relatively thin”.

GAME is currently trialling how it can use WiFi hotspots in its outlets to tap into smartphones when users are in-store. When a customer accesses the web when in a GAME or Gamestation, they’ll be able to access video content and reviews. Staff will be equipped with tablets accessing the same network with demos and more.

“There is an awful lot we can do to make many things happen with that technology,” says Shepherd.

HI-TECH RETAILING

Improving the technology in-store plays into the second part of Shepherd’s plan – making stores more appealing.

“Over the next few months you will see us be very active in trialling new technology that we can bring in stores,” he says, naming web-enabled billing, those handheld units for staff and more interactive displays.

How customers perceive what can be done inside a GAME is key, especially in terms of how High Street outlets can play a part in digital content. GAME already sells points cards for Facebook and other social games, and recently added a range of Xbox Live Arcade download cards.

“GAME can play a role in market discovery,” says Shepherd. “A lot of digital content sold today is add-ons to already existing physical content. It’s a mistake to think of them as being bought by separate customers – they are not.

“And we can help people find those lost games, the ones they don’t buy otherwise.”

His great example is black and white platformer Limbo, a critics’ favourite on XBLA. “The game has been nominated for all sorts of awards, but really, how many people have played it? Not many.” Or at least, not many of GAME’s customers. Shepherd thinks they can be easily converted onto Limbo, Trials HD, or other games, using a compelling display and sales offer in store. Plus customers can buy these  XBLA games with cash or by trading in other boxed games for them.

“The value is clear – we will tell the developers, tell Microsoft that we can make these games famous by promoting them in-store.”

All these improvements to the in-store experience occur against a backdrop that sees GAME intent on closing more outlets – with a target to get the store count down to around 550 – but not lose any market share. Given the business has been built on a series of acquisitions, its lease and property portfolio is varied. The firm’s still in the throes of tidying that up.

But Shepherd is optimistic. “The stores are at the heart of what we can carry into the new parts of the gaming market. 2.8m people walked into one of our stores in a single week in February. That number of opportunities does not come easy.”

DOING SOMETHING DIFFERENT

Differentiating what people see in-store doesn’t just mean high-end interactive displays and digital content. The third and fourth element to GAME’s reinvention is making the most of the ways it can be unique from the competition.

Pre-owned plays a big part in that, as does encouraging other new ownership models – such as the ‘temporary trade-in’ BuyBack offer.

Other areas include an emphasis on own label peripherals, with a plan to double that in the next few years.

GAME also wants to score more releases with exclusive content – across retail and digital, and globally – saying its market share goes up a third when it carries them.

TALKING TO CUSTOMERS

However, innovative and long-overdue changes won’t make any impact if GAME doesn’t start telling consumers about them. Hence point five: stronger customer relationships.

Using its reward cards for both chains, GAME plans to ramp up direct contact with its core audience. The company will send 12m direct emails or mails to customers this year, a huge jump on the 500,000 in 2010. These could encourage £95m more spending from its customer base.

One trial statement sent to Reward Card holders last year drove back a 25 per cent return on investment, proof that targeted messages work, says Shepherd. “We made less than £5m from encouraging customers to buy extra things last year. By 2013 that can be up to £100m. So it’s a step change, like everything else we have planned.”

THE REVOLUTION

All five points of the plan work together to help overhaul the Group, not by growing beyond games, but keeping it focused on it. While there’s a transformation ahead, GAME and Gamestation will focus on what they do best: games.

“This is about using what we’ve got to generate and drive growth,” Shepherd says. “So for instance physical retail will catapult us into a leading position in digital content.

“Our industry is built on our understanding of the customers we have. We could have explored lots of markets and moved beyond the games market to find other things to sell.

“But the biggest financial opportunity to us is to go with the gamer and go with our core market and take those slices of the games market that we don’t currently take.”

The Group may have found itself playing catch up, but already elements to each of the above changes are being implemented. The change has already started.

“Bold businesses are great at reinventing themselves. But too few strategies ever leave the PowerPoint deck. Too many say they are going to change but don’t. We will be bold about reinventing ourselves,” says Shepherd.
“We’re determined to bring this to life. And what we have planned is something our competitors will find it hard to match.”

Advertisement

Tags: game group plc

Follow us on

  • RSS