It is difficult to over-emphasise the change that has taken place at GAME in the last 12 months. This time last year – following a profit warning the previous November – chairman Peter Lewis described the previous 12 months as “an immensely difficult transitional year” and spoke of his disappointment in such a “sharp drop in profits.”
This year, the phraseology is quite different. Rather than disappointment and decline, GAME group chief executive Lisa Morgan speaks of excitement and expansion. “Ultimately GAME is a specialist retailer and it couldn’t get more exciting than this,” she begins. “This is what we’ve been working towards for around 18 months to two years – growing our business and internationally preparing our store options as best we can.”
In particular, that international element is key – the majority of the headline-grabbing 80 new stores are set to spring up in Europe – particularly in Spain and France. And that European vision is driven largely by the advent of a new console cycle, says Morgan.
“We believe that now we’ve got all the new formats on our shelves it’s about driving the installed bases and selling as much software as we can. We are very much at the start of the new cycle and as a business we have an operation that has as many stores in Europe as we have in the UK, which is very different to when we launched PS2.
“We’re very very focused on developing the markets that we’re in. We launched in three new territories last year – namely Australia, Portugal and Norway, and we’re also very focused on those.”
But that’s not the only area in which GAME is looking to stamp its authority – online retail is a key battleground too, says group finance director and deputy chief executive David Thomas: “Currently our online revenues for our UK business represent a little bit less than four per cent of our sales. We have very clear internal targets and we do see that we will drive significant growth through that channel.”
The brave new world of the web has also brought about an increased focus on downloads – but Thomas is reticent to fully reveal how GAME plans to address this increasingly significant threat to retail.
“It’s an area that we are very aware of and have spent a lot of time researching. At the moment we do offer our customers the opportunity to download PC games, either as a one-off game or a subscription based service.”
Facing the difficult question of what might happen if publishers choose to cut retail out entirely in coming years, Morgan is defiant: “We’re a specialist games retailer and we work more closely with the publishers than anyone else. Our partnerships are strong, and I think GAME has worked hard with publishers to drive gaming to a much more mass-market arena.
“And we will continue to build on those relationships and grow the market together. I believe GAME as a brand is a very important group for customers. And as long as people want to shop with us we will be a key part of the games market.”
We may be some way off cutting out retail entirely, but one issue rooted formly in the here and now is the pre-owned market. Will the rise of new formats take the emphasis off this vital element to GAME’s offering?
“Pre-owned is a key part of our offer and in the video games market,” says Morgan. “It has a key role to play in serving customers and helping them trade in their old games for new. But ultimately we are absolutely focused on the new formats. There’s a broad range of product available for our customers and it is all about driving every opportunity within the business.”
It is another tough question – and GAME has had more than enough to answer in the last few years – but judging by Lisa Morgan and David Thomas’ responses, it seems the mood is one of confidence.
To take the next step, it is clear that GAME must break out of its stronghold on the UK High Street and conquer the European and online markets. In the space of a year, it seems the mood at GAME HQ has been transformed as its financial turnaround continues. Now GAME has to ensure that it can take full advantage of the opportunities ahead.