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Tesco: Current videogame retail model is not working

The head of Tesco’s entertainment division, Rob Salter, has said that the current retail model for videogames is “unsustainable”. 
At present, Slater says that the high-cost and low-margin that games offer to retailers means its becoming ever more difficult to dedicated store space to them. 
“I think there is little doubt that the current commercial model for games as packaged goods is unsustainable,” said Slater.
“In determining how resources are allocated, space for example, a retailer looks at key factors like market growth, margin, cost to serve and ease of operation, shrink risk, returns and exit protection, and broader traffic and spend driving properties.
“Video games currently scores poorly on every one, and that cannot be good for anyone involved in the games business and for it’s long term future.”
Slater goes on to say that a new relationship must be worked out between retailers publishers and that any new distribution channels (digital, for example) should have a very clear strategy behind them.
“We can address many of these issues, but it requires a collective will to do so between both publishers and retailers. 
“Digital does and will play a key part in the future of the video games business. However, as others have learnt to their cost, having an ambition without a clear plan of transition that retail partners and customers buy into, is even more risky than the business we are already in.”
Despite Slater’s statements, Tesco in recent weeks has been extremely aggressive with its games marketing strategy in the face of GAME’s struggles. It has gone so far as to call itself ‘the home of gaming‘ and has slashed the price of many high-profile games, including SSX and Mass Effect 3.
Source: MCV

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