Tesco: Games retail ‘unsustainable’

The current games retail model is not working, says Tesco’s entertainment chief.

Mass market retailers have told MCV they are finding it hard to justify giving shelf space to games because they are high-risk and low margin products.

But Tesco’s Rob Salter says that this situation can be changed if publishers and retailers work together on a new, sustainable strategy.

I think there is little doubt that the current commercial model for games as packaged goods is unsustainable,” he said.

In determining how resources are allocated, space for example, a retailer looks at key factors like market growth, margin, cost to serve and ease of operation, shrink risk, returns and exit protection, and broader traffic and spend driving properties.

Video games currently scores poorly on every one, and that cannot be good for anyone involved in the games business and for it’s long term future.

We can address many of these issues, but it requires a collective will to do so between both publishersand retailers.

Digital does and will play a key part in the future of the video games business. However, as others have learnt to their cost, having an ambition without a clear plan of transition that retail partners and customers buy into, is even more riskythan the business we are already in.”

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