Losing its Virginity

You’ve reported a successful first year. What has been the biggest challenge during the re-brand?

The first challenge was the speed in which we had to re-brand the business. We did about 112 stores in a two-and-a-half week period. But what has perhaps been the biggest challenge is taking over a credible brand such as Virgin Megastores, and not knowing what the consumer reaction would be. Thankfully, looking at the like-for-like sales and our traffic flow, the reaction has been extremely positive. So we are delighted.

Has your games offering performed above expectations?

Yes it has, significantly. Games now account for 30 per cent of our total sales and the like-for-likes have been incredible. We communicated to you a while ago that we were looking to grow our gaming space, and we’ve delivered that, and now the growth has been nothing short of phenomenal. We’re absolutely delighted and even a little bit stunned by our performance.

Upon saying that, we have still got a long way to go and we are not going to be complacent. We will increase gaming space again next year, and we have just finished our Game Zone in our Oxford Street store. The whole Zone looks unbelievable, and we’ve had great support from the likes of Nintendo, Sony, Xbox and EA.

Our commitment to games is 100 per cent, and our conference in two week’s time will be our biggest games conference to date. Now I’m looking forward to next year’s results.

Are games bigger than music?

Yes, games is our number two format and is catching up with DVD quickly. If Blu-Ray progresses as well as the industry expects, then it may be difficult for games to catch DVD in total. But it’s a nice battle to have to worry about.

You mentioned in your report that Blu-Ray sales rose 300 per cent this year. Was the PS3 a factor in this?

Certainly, it was a massive factor. The PlayStation 3 is our biggest selling Blu-Ray device, and we include Blu-Ray DVDs in our console bundles. So the PS3 has been a big influence in the format’s success, and that is sure to continue going forward.

Do you see a time where you would become a games specialist instead of a multi-retailer?

I’d like to think that we are a long way down that road now, especially if you look at our space, our offers and the depth of catalogue that we stock. If you compare some of our stores against a GAME, then we have a bigger range.

Of course not all our staff are dedicated to games, but if you went to a lot of our stores now, a big proportion of them are purely selling games. If GAME is the games specialist, then I like to think that our offer is a specialist offer.

HMV has expressed interest in the pre-owned market. Is that something that interests you?

Not at this moment. We don’t see pre-owned as a key strategy for 2009, but I would never say never. It certainly has its opportunities but it also has its complications. I’d have thought the time taking up swapping games could really hurt HMV during the key Christmas period.

Are you looking at the digital download market?

We’re going to announce our digital plans at our conference in a week’s time. So we have plans and you’ll know all about these in due course.

You plan to open five to ten stores every year for the next three years. Are you confident of achieving this?

HMV has 250 stores in the UK, and we only have half that. So there are a lot of key cities and shopping centres where there isn’t a Zavvi. But we’re also looking at stores we can re-site, which will make up some of that five to ten.

What do you expect to be the biggest video game and console this coming Christmas?

As hardware goes, Wii and DS will be our numbers one and two. PS3 and Xbox will be fighting to compete, but I can’t see either of those selling more than Nintendo’s consoles.

In terms of software, LEGO Batman has incredible appeal and will do phenomenally well, Bond is very interesting, Guitar Hero, Pro Evo and Gears of War 2 will obviously do well, and then the likes of Brain Training will also be up there.

Considering the amount of DS units being sold, Brain Training will be an ideal purchase for the gifting period. As far as the race to number one goes, I’ll stick my neck out and go for FIFA ‘09.

Are there too many games coming up? And is price cutting a concern?

There could be price cutting certainly, and maybe there are too many titles. I think it’s best to see what each publisher has planned for each title and then make sure you back the right one. What Nintendo has planned is very exciting, and it’s important for us to back their products with the right space and excellent merchandise. That way we can reap the rewards of what will be an exciting marketing campaign,.

Are you looking to introduce more Game Zone centres, like the one in Oxford Street?

Interactivity is very important to gaming, and we’ll be looking at increasing the amount of pods we currently have. We’re constantly looking at making sure our customer has a great experience, and our new Liverpool store will have our biggest games department outside of London.

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