The company has scooped three MCV Awards and recently posted excellent end-of-year figures. What’s the secret?
It’s because we have a fantastic and perfectly placed product proposition within our stores. As we know, the UK video games market last year reached £4bn – which was a stunning performance for us overall, a real testament to the fact we have reached massmarket status. And GAME within that, particularly in the UK with our dual brand strategy, is able to appeal to a broad range of consumers. We are best placed to take advantage of that.
As the Group owns both main specialist chains do you feel yourselves at the heart of that growth?
I think we are part of that growth, certainly – across the Group last year we added something like 200 stores, and a large portion of those were in the UK. So we are absolutely committed to investing in the overall market place and being part of that growth story.
The games retail space has diversified and expanded quite a lot, despite the loss of Woolworths and Zavvi, with new entrants and retail routes to market. Has that placed much pressure on GAME?
Because we are a specialist in this market, and because that is all we do, we are always watching the market and the competition. I think it’s really important that you never become complacent – you need to have a compelling offer that is evolving constantly to ensure you are looking after customers better than anyone else. So our view on the marketplace is that it will always be competitive because it is an attractive market to be in. We watch our competitors in our local markets – we run weekly competition checks online and offline in every market we trade every single week.
We are very on top of our strategy and can tailor it accordingly.
Have you felt much pressure from the recession? What affect will it have on the GAME Group business through the rest of 2009?
We’ve seen group like-for-like sales down 6.3 per cent year on year, so we are seeing lower revenues in stores year-on-year. Part of that is down to the fact we are up against some hard comparisons, and part of it is down to lower hardware revenues. But we’ll see how it goes – we’re only 11 weeks into our new financial year, and we’re very conscious that customers are looking for great value and we know we can’t be complacent.
We have to be cautious given the wider issues in the market – but at the same time we have a good geographical spread, we have customer offer that lends itself to today’s consumer extremely well and we are working hard to drive over all group profitability. So, we are cautious, but confident in the year ahead – the industry is still performing really well.
Outside of games a number of retailers have suffered or closed. But GAME seems to be an over-achiever that’s under-appreciated. Do you feel GAME has been overlooked by the media commentators in the gloom surrounding the High Street?
We also won an overall specialist retailer of the year award not long ago – I think that has helped put gaming and all games retailers on the map. But we are focused on running the business and driving the best return on investment as we possibly can. I’m very proud of the fact we have reported record results consecutively over the past three years and helped contribute to the wider acceptance of video games.
Your ecommerce business was singled out as a highlight in the financials. Why has it done so well?
For a start, we invested £8m in our e-commerce systems last year in order to make it better for our customers. That investment was spent in two areas: firstly core logistic areas so we could improve our direct to home service, and secondly investing in the actual sites themselves for both GAME and Gamestation to meet the level of standards customers already expect from what they experience in-store.
How can you take that further?
We saw sales growth of 84 per cent last year, which is quite phenomenal – we’ll be pushing hard for further growth.
Online is something like five per cent of our total revenues, but it certainly has been a key part of our focus for a number of years because customers are showing us they want to buy products in stores and online. So it’s important to be there to look after them.
The results also said that Gamestation exceeded your expectations – can you elaborate on that and tell us more about how that integration has gone?
The Gamestation integrations is going extremely well. Last year we delivered synergies of around £10m from the integration – this year we’ve said we’ll deliver around £6m in synergies.
We’re delighted with how it’s going – not only from the strong sales in the Gamestation part of the group, but the benefits that having that as part of our business has provided the rest of the team here.
And you have recently detailed pre-owned revenues for the first time – what prompted that?
Pre-owned is of growing importance in our business and we thought it was important to be transparent in order for our partners to better understand our business model. We will now continue to report against it and its progress.
Can this dispel the myths around pre-owned? You’re effectively pointing out that 82 per cent of your sales are from new product.
That’s the exact point I would make. And likewise when you have a business that is worth £2bn, it’s clearly an important part of it.
And you said your pre-owned sales were up £100m year-on-year – do you see that growing further?
In terms of participation the actual levels were pretty similar year-on-year, as we added around 200 stores last year. But we still consider pre-owned is a key component of our customer offer. Trade-in is probably more important today than at any other point in time – it allows customers a way to get access to new games by using older games as currency. That is key to driving new sales right now.