CyberShadow wrote:
All that said, this news is doing the rounds and what I utterly, positively shake my head at is....
Quote:
During the first half, the rapid transition from multi-man stores to one-man stores and the reduction of trading hours across the Group caused disruption in our retail chain. We also experienced some decline in sales through independent stockists.
We view these as short-term issues and expect to see growth return in both channels. We continue with our store opening programme (27 stores opened, 20 closed in the period) secure in the knowledge that our one man model allows us to ensure new openings are profitable. In the future we expect to benefit from the more focussed selling operation across all channels against the background of a materially lower cost base.
Maybe I am naive, but isnt this essentially saying 'one man stores caused a huge decline in profits, so we will keep doing exactly the same thing and hope that the results are the opposite this time'?
I think the idea is... well, let me sketch out a scenario.
You're a GW marketing manager. You want to eliminate possible competitors, and the best way to do that is to eliminate the independent store (which has a variety of products) and run your own retail chain that bans competing game systems and models.
So you offer very attractive terms to stores that buy direct instead of using a distributor. A distributor has bargaining power and through aggregation hides information about the retail market. You know that FLGS owners tend to be short-sighted and only barely profitable, so they sign on eagerly. By watching their ordering patterns and sending reps to visit the store (possibly on a promotion trip), you get a good picture of the regional market and the major players. You quickly identify a target.
Now you open an official GW store. A small specialty shop runs on a razor's edge; even a small reduction in market share can kill it. Meanwhile, the GW store is subsidized by its parent company. It can afford to wait. If that doesn't work, then some creative use of shipment delays and restocking problems can help redirect enough customers to the GW store to push the FLGS into a death spiral.
Once that store goes under, you scoop up the remaining market share and use the profits to pay for the next move. In a small market, you might well kill a whole region's access to any games other than GW's. In a bigger market, you might co-exist for a while with other FLGSs in other parts of the same region. In which case you can close your existing store and re-open it near your next target. Overall market declines, but competitors are walled off and so the remaining customers are more price-insensitive. Without good alternatives, customers also are more likely to put up with GW store policies and one-man store hours. This might explain why GW closed 20 stores, opened 27, and calls that an expansion plan.
So that might explain why GW said what it said. They're taking a revenue hit because of the retail musical chairs, but expect to improve long-term profitability because when it's over they'll be the only game in town and can protect their high margins.
Incidentally, that's why I don't buy the argument that GW is bringing people into the hobby. If they weren't around, the hobby stores that they would be bankrupting would still be around growing the hobby. With better selection and prices for players. You don't see those retailers because GW is busily killing them. And the people GW DOES bring into the hobby pretty much only plays GW and aren't likely to stay in the hobby.
