It’s no secret that the once prosperous UK high street is teetering on the brink of total collapse; a wholly possible future further highlighted a couple of weeks ago by the closure of some 277 GAME and Gamestation stores across the UK and Ireland.
Speaking as someone who still works in high street retail in my hometown, and who has witnessed some 62 various retail outlets, both big and small, shut their doors for the last time over the course of the last 12 months, one does begin to question the future of high street retail and if it even has a future at all?
Regardless of your personal view of GAME Group and its sister company, Gamestation, (who were acquired by GAME in 2007 for a staggering £75 million), there’s no question that recent events point to the very real possibility that Britain’s once thriving high streets are in danger of slipping away altogether.
Of course there are many factors as to why there is a steady decline in Britain’s high streets; the struggling economy, mismanagement, retail parks given the green light to set up on the outskirts of town’s and cities, online trading, aggressive pricing from the supermarkets and so forth. As far as video game retail goes the increase in popularity, (with consumers, developers and publishers alike), of digital distribution has also clearly played its part in the demise of the high street games specialist.
While all of this may be true it’s clear in the case of GAME Group that they overreached themselves, a belief firmly held by the administration at PwC. Speaking to Sky News, PwC valuation manager Mike Jones said “GAME Group had two fundamental problems. First of all there was a very ambitious overseas expansion into seven territories in addition to the UK. On top of that the UK store portfolio is very extensive. Before we made the closures GAME had 610 stores in the UK. That footprint and that high fixed cost is very difficult to maintain.”
“There is a migration to online,” he also admitted. “Having said that, there’s a role for a niche retailer on the high street like GAME, and of course GAME itself, like many physical retailers, also has an online offering. So, while that’s part of an evolution, it wasn’t necessarily something that GAME wasn’t reacting to.”
The question I would raise, however, is just how much longer can one sustain a niche business on the high street in light of online traders, digital distribution and many of the industries big players – not just those dealing in video games – eagerness to move into these market places? Fifteen, ten, five years? And with rumours of Microsoft taking the first step in moving away from physical media with their next generation console gaining momentum perhaps even less for game retailers?
You also have to factor in how the general public’s buying habits have changed in recent times.
New data released by the Entertainment Retail Association shows how increasingly important online and digital sales have become to consumers. With regards to the video games market an eye-brow raising 45% of games bought were done so via online traders and digital distribution, a figure that will undoubtedly rise over the course of the next 12-18 months. Physical media may still make up the brunt of sales at the current time, but again, for how much longer?
Of course no one can predict the future and there may very well still be room on the high street for a specialist games retailer, but arguably the real question is this: does anybody really want to take up that risk when other options are, at least from the perspective of a sustainable business model, far more attractive?