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Pachter clarifies ‘UK games retail market is a joke’ comment

Monday, 25th February 2013 13:18 GMT By Dave Cook

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.

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9 Comments

  1. Pytox

    dat picture :D

    #1 2 years ago
  2. ps3fanboy

    the only joke here is Pachter, look at that pic, LOL!!!

    #2 2 years ago
  3. Optimaximal

    The specialist retailers need to compete with supermarkets the same way they’re having to compete with digital distribution – offer a better, more complete service that rewards a customer for visiting and buying from their store, be it better staff knowledge, better attempts at understanding of what the customer wants (rather than shepherding them towards the latest release/money spinner) or a better selection of games (especially PC/older platforms).

    There’s no point competing with Amazon or Tescos – they just want to shift as many boxes as possible and if someone knows what they want, they’ll just go and get it as cheap as possible – but GabeN’s words re: piracy ring true here. Don’t compete – offer a better service and they will come.

    #3 2 years ago
  4. Dave Cook

    @2 this is adult discussion time about real issues. Get back under your bridge.

    #4 2 years ago
  5. Dragon246

    Patcher gets lot more flak than he deserves, not that he anyone else care though.
    I completely agree with this assessment. Once specialist shops are out, supermarkets can monopolize the biz. Bigger company forces out the smaller fish. Smart biz move, but ultimately harmful to the consumers.

    #5 2 years ago
  6. Dave Cook

    @5 yeah he’s 100% correct. Game stores only sell game products, they can’t rely on the sale of a million loaves of bread to off-set the loss of selling Black Ops 2 cheaper than everywhere else.

    He’s on the money this time.

    #6 2 years ago
  7. Kabby

    Chips went to shit way before the recession and supermarket undercutting became a thing.

    #7 2 years ago
  8. harr0w

    I very rarely agree with him because of his views and predictions mainly because there based on finance and numbers and not a true gamers view, but hey that’s his job. But this time I do as much as I pains me I can’t remember the last time a bought a solid copy from game/game station, let’s face it there PC section looks like a rental shelf in a library. Fucking toss. But the PC market is just a passing thought in the minds of companies like them that’s why its the way it is. I would love to see sales result of tesco’s put up against game/gamestation it would make for some sorry reading.

    #8 2 years ago
  9. reebi

    He doesn’t even mention supermarkets in the previous comment – and he even mentions Dixons selling games… even though they don’t exist any more.

    Pachter is an attention whore.

    #9 2 years ago

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