When we spoke to GAME Australia’s ex-Managing Director Paul Yardley for our look at what went wrong with GAME’s Australian retail operation we asked him a question: how optimistic did he feel about the future of video game retail in Australia? And what chance do remaining specialist retailers like EB have in a market that’s clearly in decline?
Paul Yardley said that he felt as though specialist games retailers did have a future in Australia in the short term, but in the long term changes would most likely have to be made.
“I have a real worry about the future,” said Paul, “because if you think about the natural evolution of this market — and let’s be clear boxed products aren’t going away for at least five or ten years — someone’s going to have to sell them. That could be in a generalist sense like a JB Hi-Fi or an EB. But the volume of those sales is going to decline. If you’re EB you have a relative large store footprint and I don’t believe that store footprint is required actually.
Most observers, including Paul himself to an extent, believe that GAME Australia’s own large store footprint was a leading factor in the retailer going into liquidation. Paul said that if EB isn’t careful, it might end up in a similar situation.
“Your average lease length as a retailer can be anything between four and six years so your ability to respond to a change in the market is low,” he explained. “It’s really low. What does that mean? Well, if I was in EB’s shoes I would be thinking very carefully about my store portfolio and working out exactly how many I needed in five years times and make some tough decisions about what stores were going to be making money on five years time.
“There are 22 million people in Australia, and EB has 360 stores in this country? If you do the maths, GAME in the UK had 700 stores and were the market leader and had all the market power. The UK has 70 million people and GAME UK went bust with 700 stores. I know Australia’s more spread out, but I still don’t think that’s the right number of stores.”
Paul was keen to reinforce that he didn’t think EB was going to go under any time soon, just that difficult decisions would most likely need to be made in the coming years.
“I’m not going to prophesise doom on EB because we need specialist retail, we really do, but they definitely have to think long and hard about the property piece and how they make multi-channel work for them,” he said. “I don’t think they’re dead I think they need to use their position — which is a really good one, they’re the biggest in the country, they have all the suppliers behind them. If they just do the right things they will still be here, but it does require a different skill set.”