This Evening I Went To PC World....

There is some belief that out of the burning corpse that is Comet, PC World (and sister brand Currys) will rise from the ashes and finally turn in decent profits. The customers that would have otherwise shopped at Comet, will now turn to the main rival instead. Not only that, but over the two years or so, the company has invested millions in flagship joint-branded PC World & Currys stores with the emphasis on " ensuring a better shopping experience for customers."

"Try as I might, I couldn't actually find anyone to take my money from me"

So, off I popped to my local shop. I knew what I wanted and how much it was. I walked to the section and was greeted by an impressive stand that looked the business. Then I waited. Waited some more. And some more, for good measure. Try as I might, I couldn't actually find anyone to take my money from me. Yet more waiting followed. I understand that staff members will have been with other customers, but for the size of the shop, the number of on floor staff was a bit silly.

No matter, I had made the trip and they would get my money eventually. In the end, I was served, but little inspired confidence. Despite being a self proclaimed "PC Expert", lets call them "Dave", they clearly weren't. I didn't do the big headed move of pointing out what I was buying wasn't even a PC. After several attempts at explaining how I had already made my mind up, it was off to the checkout.

"I know that there is absolutely zero margin in electronic goods"

Now, I know that there is absolutely zero margin in electronic goods. I also get that in order to pay the rent, the bills and the wages, the company needs to make said margin. But on three occasions I was given the spiel about extended warranties. Wouldn't have minded once. But three times. Not only that, but across the course of 2 years, it added up to an eye popping £179! The device itself was only £230.

Erm, except it didn't, as "Dave" had managed to get hold of the wrong product, something costing around £350. After a few more minutes of head scratching and display stand alarms ringing, "Dave" finally admitted defeat and asked someone else where the stock was located. Once back to the counter, the extended warranty premium was significantly reduced, but still not for me. It got to the point where I actually felt bad for "Dave". I started to think about any commission or bonus or even positive mention from his boss I may have been keeping from him by saying no. Images of him not being able to buy food because of my failure to sign my life away on something I didn't want suddenly flashed before my eyes. I was having to try really hard not to say yes.

But I stood firm, apologising profusely of course. In the end, I did at least give "Dave" my details and he got the last laugh as when the check box appeared for "No Marketing" (direct mail) on the screen, he didn't ask me and hit continue without my consent. When I got home, someone had written some codes on the box in red Biro too. Damn. Should have got that extended warranty....

Retail Is Dying, No Kidding

I just bought a few new things and I didn't buy them online. Shock horror. I've always enjoyed the high street. I'm a strong advocate of being able to browse before buying. Being able to to try something out. In many ways, such as clothes, I'd very very rarely shop online. The same applies to sandwiches. So there is a place for a physical, retail shop.

But let's be honest, for things such as electronics or entertainment products, you can research online and then buy at a slightly cheaper price and it doesn't matter that you have to wait days on end for delivery because you bought the right product at the right price.

A sorry sight

Today, I wanted a couple of items myself but decided to give to humble old retail park a chance. First up, I thought I'd see if Comet had a case for my Nexus7 tablet. The sad thing is, I knew it would be a long shot. Sure enough, they didn't have any, but perhaps it was an unfair question. Yet instead of then response being "we will look to see which other Comets have some in stock" or "we don't have any, but I will check to see if we have some on order" or even "I can order one for collection at a later date" what I actually got was "we don't have one but try Argos." Well, I suppose it was helpful in its own way, kind of, but talk about shooting yourself in the foot.

No, not a store opening, just a queue.

Turns out I did indeed go to Argos, but for a PS3 game. Figured I pretty much only use it for video streaming these says and it has been months since I bought a game for it. My first problem was the game was new and therefore not in the printed catalogue. No problem as Argos have touch screen computer thingies to search for products. Only the 4 that were free had all crashed. When I did find one and gone to the till to pay, I got a speech that staff had to say about refunds and then the offer of a Argos Credit Card.

Then, the collection process was a joke. I was called to the collection point before my product had arrived, when it did arrive I could see it sat there but not enough staff we free to hand it to me and then to cap it off, my product was given to someone else! At this point I interjected, but I was not given the game, it went back on the shelf to wait again at the back of the queue. Not only that, but the store was incredibly and unbearably warm.

"I was greeted by polite staff, a smile, a cool and stylish environment and quick service."

I needed to chill out and visited a Costa where I was greeted by polite staff, a smile, a cool and stylish environment and quick service. After that, I visited a discount store for cheap chocolate while being gently wafted by air conditioning and cheesy but enjoyable 80's music.

So here's the point. Retail can absolutely survive. But it has to be enjoyable. We all enjoy buying things, but when the environment we shop in has massive queues, fed up staff that aren't knowledgeable, mess on the floor and a drab and dreary look, no wonder we choose to shop elsewhere. The future has to be shops that provide an experience, not a chore. Things move on and evolve, but at present the majority of the high street isn't. Why try to make a cheap buck on extended warranties and credit deals, when you could turn the shop into something exciting and train the staff so that they know and actually care. If the high street becomes enjoyable, that's something then internet will struggle to compete with.

There are people that moan about the high street only becoming "coffee shops, pound stores and clothing" but it has to be said, they are then only ones making an effort.

GAME's Failure | What Went Wrong

GAME is the UK's largest video games retailer. The business grew exponentially through the early 00's, the buy out rival company GameStation in 2007 being their biggest move. Even further back they went on a spree of buying out independent stores and chains like Electronics Boutique (initially a merger until a full takeover in 2004, oddly enough from the company now known as GameStop in the US) to build a games empire of over 670 stores nationwide. But today is a big day for the retail outlet as the administrators are calling time. No one is sure at the time of this blog, but it looks like Game and Gamestation stores nationwide will be closing very soon.

"In April 2010, CEO Lisa Morgan resigned; Looks like she jumped at the right time."

But why did this happen and what does this mean for video games as an industry? The "why" part cannot be answered truly as of yet. I'm sure it will all come out in the wash, but at the moment all the finger pointing is mostly assumptions and educated guesses, most of which I will cover below, plus my own thoughts. In April 2010, CEO Lisa Morgan resigned after a 28% dip in profits in the 2009-10 fiscal year, departing with a promise of reducing stores by at least a 100. Looks like she jumped at the right time.

A thing of the past?

Come January 2012, the then CEO Ian Shepherd issued a profit warning, amid fall stock prices and rumours of the company breaking it's bank loan terms. He remained confident that "the company was in good shape for a recovery" and blamed the poor performance on people only buying the main franchises like FIFA of Call of Duty as opposed to a wider range of titles.

As we now know, recovery was almost impossible. But the point that Mr Shepherd made is what interests me most. While EA's FIFA titles are massively popular and Activision's Call of Duty series continues to break sales and pre-order records, there is the feeling that a lot of people only play those games and nothing else. I personally know a lot of people that see their games console as simply "FIFA Machines" (or Modern Warfare, replace where appropriate). It is seen that, if you really get into such games, then you spend hours upon hours completely engrossed in the action. These titles offer a gaming experience that can, and often does, stretch into hundreds of hours of game time and still continually top the sales charts. The net result could be that a lot of people are less likely to buy anything else, as all their time goes into buying new DLC map packs for COD or packs of Ultimate Team rosters for FIFA, to even further extend the game.

(The same could be true of Wii Fit, Zumba Fitness and Wii Sports - People bought them, but then didn't move on to something new)

While GAME and other retailers have tried to counteract this buy selling vouchers for such downloadable content, there are 2 main problems with that model. First is that your market for such products is limited, as you are appealing to only those who are either too young to have a credit/debit card or those who refuse to input details online. Everyone else can simply buy game add-ons online, through their games console, on the couch, at the touch of a button and be playing it minutes later. Second is that profit margins on such vouchers is virtually non-existent. For instance, after a bit of digging around and talking to someone who owns an independent games shop (apparently one such thing still exists!), the profit on an XBox Live points card (on average) for instance, is around £1.20. To make anything meaningful, you have to sell bucket loads, yet as I have mentioned, you are targeting only a select group of gamers.

"Strong price competition and diminishing margins on new games meant a focus on used games." 

Gamestop in America say that "50%" of their profit comes from the used game market. The same could be true of GAME and Gamestation in the UK. Over the past few years, if you visited one of their stores, they had larger store space for their used game range. Strong price competition and diminishing margins on new games (or any electronic goods, including games consoles) meant a focus on used games. Other companies like Computer Exchange have seen growth over the past 10 years or so, focussing on second hand items. It was perfectly logical for GAME to push this area of the market (something that could not be avoided if you bought something new, with staff trained to tell you about trading in the game once you have finished it). Buoyed by the stronger profits garnered from used games, many other business have also entered the used game market place, which is taken away from GAME's market share. The growth of CEX is a main competition, but now even supermarkets like ASDA Walmart offer second hand games.

This however, had a knock on effect. The publishers and developers of games don't see a penny of a used game sale and with GAME stores selling more and more used games, they decided to act. In an unpredictable global economy, not only have publishers invested heavily on their strong franchises and well established titles like FIFA or COD, but in many cases they have also tried to prevent the used game market. Many games now come with online codes, known as an Online Pass. Buy a game new, and you input the one-use-only code to unlock in-game extras and online multiplayer game modes. Buy it second hand, and you can't play that game online without shelling out £6.99 on a code (through your console only, not through in-store vouchers). Therefore, greater incentive to buy new, less used game sales, more money directly to the publishers and less profit for retailers.

So, by chasing greater return on investment, the publishers of games have been hurting the retail games market. Yet, if the retailers perhaps did not focus on the used game market so heavily, the online pass would not be in existence. For GAME it was the perfect storm. Not only were people only buying the big games, they were extending their gaming experience by buying extra game content online and then not buying used because of online codes. Next, throw into the mix GAME's massive expansion of the last 10 years. They had a declining market, a large number of employed staff and long-term rent leases across hundreds of stores. You have to say it was always going to be a struggle. Then again, hindsight is a wonderful thing.

Sadly, with today's rumoured news it looks like the failure to find a buyer means the end for GAME as we know it. There is a brand name that has a high awareness and some loyalty (those GAME reward cards don't count for nothing). There is also still potential for a high street supplier for the gaming industry. While a lot of people buy games online and despite a shift towards downloading games instead of physical copies, there is still strong demand for a boxed, tangible game, seemingly more so than in other entertainment industries.

"A quick glance in the comments section of any GAME related news article shows that a lot of people where unhappy with their pricing."

One main sticking point with the gaming community seems to be that prices were too high at GAME (a quick glance in the comments section of any GAME related news article shows that a lot of people where unhappy with their pricing). While most new release titles in their stores were selling for £40-£45, a quick look around online would net you the same game, brand new, for up to £10 less. A lot of angry internet people like Bob336 or StarWarsRulez86 are quick to lay the blame at their pricing strategy. But with tighter margins, online passes and lower sales of the number of different games sold then the prices had to increase, especially seen as the cost price is most likely to have remained the same.

You could argue then, why were other places cheaper? Well, online outlets like Play.com (based in Jersey) and Amazon (technically registered Swiss, so not part of several EU trading regulations) are in nice cushy positions whereby they pay less or no tax. The EU regulation that helps internet traders avoid tax is about to change however, with a bill recently passed to change the taxing policy to be based on the delivery destination, as opposed to the location of dispatch. However, this will take another 2 years before the effects are seen and way too late to help GAME. Increasing VAT to 20% couldn't have helped GAME's cause either amidst the competition.

But supermarkets do have to pay tax, yet still they manage to be extremely cut throat and competitive. This is actually relatively simple. By selling games in their stores, they are enticing you to shop there and maybe pick up more profitable items like mushrooms or soup. They can afford to offer lower prices as this is offset by the large range of bananas. This also means they can do the odd loss-leader, such as the crazy Call Of Duty Modern Warfare 2 prices that Sainsbury's and ASDA did upon release. Having said all of that, a quick look at ASDA reveals that their prices have actually risen of late too.

In summary then, combining all of the factors mentioned above (some of which are the games industries fault, some of which are GAME's fault) what we are facing in many store closures which means empty shops across the UK and more importantly, the possibility of 6,000 unemployed people. PricewaterhouseCoopers have been selected as the administrators and in sacked GAME CEO Ian Shepherd's final statement it is said that they will "make big changes both to the store estate and in the office, but will be doing so with a view to creating a trading business that we can attract a buyer for." I other words, cutting the fat, job losses and store closures. The word today is that 2,000 jobs will be lost almost immediately and as I passed by my local GameStation on the way home from work, it was shut. A note was over the door stating that Wakefield would be me closest available outlet (quite far from Leeds).

It is sad to see the probable loss of yet another well-known high street name and the unemployment that follows. Not only that, despite their huge losses, GAME and GameStation stores certainly sold a very healthy number of games. While online only sellers, supermarkets and HMV will do well to fill the gap, this is still sure to affect game sales. The lack of a dedicated, specialised game shop on most high streets has to be detrimental to the industry as a whole. By simply having a presence and a big sign on the high street, that reminded people to play video games and helped gaming reach a larger audience. Of course, there is an opportunity here for either a smaller company to become slightly larger (like Grainger Games) and it may not be a bad thing for the consumer in the long run provided whoever it may be that profits from the demise of GAME doesn't make the same errors.

Certainly, GAME made plenty of mistakes, but the games industry itself is far from innocent and it could well be that they have shot themselves in the foot.

Sources | BBC, MCV UK, GFK Chart Track, The Telegraph, The Guardian, TheSixthAxis.com & Reuters.

The Dark Art Of Ordering A Coffee

I do enjoy a good coffee. In my uni days I went a little feral and drank far too much caffeine. However, after giving it up completely for a good 6 months, I can now go back to enjoying a nice warm, sugar fueled, cafemochachino drink at a trendy hangout, with the only worry being how to pronounce the bloody drink.

Me panicking out of shot...

Upon arrival at any one of the million coffee places in town, I normally have a quick read of the menu board. I will quickly  find something suitable and wonder how to say it properly. There are several people in the queue, 3 or 4 staff members and a bustling environment full of city dwellers. In other words, a large audience in which to make a fool of myself in front of. The monologue in my head usually goes along the lines of: "Right, so, it is not small, medium or large, but Grande, Tall, or regular. Then how on earth do I pronounce Espresso Con Panna. Wait, isn't that a realy small drink, so can I even have a Grande of that? Is Grande even that big?! Right, say it again, slowly. Espresso. Con. Panna. Please." Before I've had sufficient practice time, it is my time to shine. I inevitably end up saying something like "one medium Espressa Can Ponne, per favore", recieve a blank look, repeat it again and get something completely different to what I intended. Blown it.

Putting my awkward moments aside, a coffee shop is the perfect example to explain to someone what marketing is. It is often assumed I like watching adverts, which is true and that marketing is merely creating them, not true. "Oh, so, Marketing, is that Advertising then?" To which I have to duly agree to, or change subject. Explaining target markets to your dentist isn't exactly the most exhilarating conversation he will have all day.

"I know coffee smells wonderful, but it is almost as if they deliberately channel the aroma out onto the street"

mmm, coffee

A quick visit to Caffe Nero shows exactly what my answer would actually be. First, that smell. It is absolutely captivating, right? I know coffee smells wonderful, but it is almost as if they deliberately channel the aroma all around the store and out onto the street (a tactic I am certain Subway do, the smell is so potent outside their outlets and oh so inviting). An immediate hook, like in a really catchy song. The silly names in part also portray something that is far more classy and civilized than it actually is. A warm brown liquid is not cool, neither is "a mug of coffee love" (said in a strong Yorkshire accent). But a Caramelatte certainly is. Next, the mugs themselves. Oversized, which means two things. One, more room for cheap froth (as opposed to relatively expensive coffee, boosting margins) and differing from a roadside cafe, a greasy spoon or your home, therefore more upmarket.

Not only that, but price is a major factor. By making the drink way more expensive than it by rights should be able to get away with, plus some brown leather sofas, it creates this illusion of sophistication. To quote one of the best slogan's ever used, a coffee shop is Reassuringly Expensive. Add all of those factors together and you get a product that costs on average 20p-60p to make, being bought for upwards of £4/£5. You see, my mind doesn't work like a normal person's. They won't realise most of this. Or they will, but they won't realise it's all extremely clever and well thought out to create an expensive air so they can charge more.

So, in summary it is over-priced, I make a fool of myself and we all enjoy spending time there. That is marketing.