Michael Pachter deemed the UK games retail market ‘a joke’ a few weeks ago slamming British retailers’ attempts to undercut each other with incredibly low, unrealistic prices. The Wedbush Morgan analyst has now clarified what he meant in a new interview.
If you missed Pachter’s original statement, you can find it here.
Speaking with MCV, Pachter explained what he meant in greater detail, “By ‘joke’ I mean that the competitive landscape has put conventional specialty retailers in a position of being unable to make a profit. Some of this is due to operating costs, some due to the price of games relative to average income, some due to slowing traffic in light of the lingering recession.
“The larger impact is that used games aren’t as popular in the UK as the US. GameStop averages over 20 per cent of sales as used. GAME averages around 10 per cent. The margins make up the difference between profit and loss.
“By joke, I was referring to supermarket pricing, and how that plus high costs have prevented GameStop from expanding into the market. Eventually, consumers will have fewer choices if specialty retailers go away.”
Pachter’s reply is followed by quotes from retailers that share his sentiment. It does stand to reason that supermarkets – which generally sell games as cheap loss-leaders – are posing a threat to specialist game stores, as they can’t make back the loss on groceries and other produce in the same way as say, Tesco or ASDA can. It’s a tricky situation for the likes of GAME and CHIPS indeed.
What do you make of the above? Can anything be done to address the issue, or do you disagree with Pachter entirely? Let us know below.