Since gaming began, local game stores have provided gamers with an easy way to pick up the latest releases, accessories, cheap preowned titles, and most importantly, their hardware. The world of games is rapidly evolving and gamers find themselves each year with more and more content becoming available to them. Many online retailers have locked horns in a battle of cutting costs in order to offer the lowest price on these newest products, but this leaves your local game shop at quite a large disadvantage. Its financial overheads largely determine the way in which the business must be run and unfortunately for us gamers, it leads to not only a frustrating, unavoidable reality for us, but also for the stores themselves.
A recent article written by Vice argued that the game store as we know it now is unsustainable and must evolve into a kind of playground for gamers offering places to play the newest releases, a few hours before the midnight release or to have competitions offering prizes. Though noting this might not be financially sustainable in the long term, the piece did criticise many of the things that are an unavoidable reality for game stores to succeed and weirdly enough, have been a part of it ever since the author had stared upon, “…that huge and ugly Baldur’s Gate box.”
So let’s get down to addressing these issues that, let’s be honest, a lot of us have problems with. First things first is the pricing of games in brick-and-mortar game shops, which according to the Vice article “all strain against the upper limits of their RRP like an over-reaching socialite.” For those not in the know, RRP stands for Recommended Retail Price. Unfortunately, this pricing is a necessity, at least for a physical store. The profit actually made on each piece of mint software is roughly 4%, which ain’t gonna go far against those darned expensive overheads. While the likes of Walmart, Tesco, or any other supermaket can cut the price far below the RRP mainly because they have thousands of other products that they’ll make the profit back on. GameStop, GAME, or whatever your local game store is, doesn’t have this liberty. It’s a curse of the specialist store and one which the business must make up for in other product ranges.
The profit on a lot of mint products isn’t great, for the first time in about three console generations, both Sony and Microsoft are making profits on their home consoles. So you can bet your bottom dollar that your local store was making next-to-nothing if anything at all on them, too. Therefore, both games and hardware have poor profit margins which is arguably going to be a huge problem for the store, considering these are the two main products sold. This gives you an idea as to why stores have such an emphasis on one thing that consumers hate- the hard sell. It’s one of the largest unavoidable necessities of game stores to ensure they remain profitable, especially when it comes to extra products on newly released games or consoles.
Whilst additional products can really give the business a large profit boost on the launch day for a huge franchise such as Call of Duty, it can also cause huge collateral damage to a store’s Profit and Loss (P&L) if this isn’t sold during that crucial launch window. If this happens, this merchandise loses its demand and so is destined for the bargain bin, hitting the store’s profits. It’s like fresh fruit, it’ll sell like wild fire for those first few hot summer days, but leave it too long and that fresh fruit begins to rot and nobody wants it. Skylanders and Disney Infinity on the other hand are a god send, because they cost little to make/ purchase from a supplier but have a much higher RRP, meaning stores can make a fair whack off of each one. That’s why the launch of these games is a gift from the gods to your local game store. Each time a parent picks up a starter pack and attaches every one of those extra characters available at launch, those cash registers are cha-chinging all the way to the bank. They can literally turn the profit margin of a standard starter pack sale from 5% up to 40% with just a few extra characters and a carry case. Of course, these games come out during peak holiday seasons and so the kid’s use of pester power leads to hefty profitable transactions. It’s a tactical business plan made by the publisher, but the store just happens to benefit from this decision, and who can blame them for keeping quiet.
When asking people what else they found annoying about their local store, trade-ins and preowned games seemed to top the list. The two go hand-in-hand so it’s only appropriate that we deal with them in such a way. Now the problem that people had with trade-ins was the poor price that they were receiving. Although some people are grateful to just get a few bucks off their next game, others find the buy low, sell much higher mechanic of the preowned system a con. Unfortunately it all comes down to profitability once again. Preowned games fetch in these companies a significant amount of profit, almost 5 times higher than mint software, and hardware even greater. This is literally the crux of keeping the store afloat, and although it can be a pain in the ass when a used copy of Bloodborne is currently only $5 less than a new copy, it’s not all bad. Not everyone can afford to pick up a brand new game, especially when the aforementioned RRP is $60 and has just risen in the UK to £54.99.
Therefore, preowned allows those with less disposable income a means of playing those games they could never afford when they first came out, or just allows people to save money on a ‘non-necessity.’ Preowned is especially useful when the game can no longer be purchased brand new, and GAME’s longer, 12 month guarantee will most of the time be of benefit to you as well. Granted, there are ethical issues with preowned, and I’ll be the first to support a cut of preowned profits going to the developer, but they do serve their purpose when it comes to consumers.