Late last year Kmart removed all copies of Grand Theft Auto V from stores in response to a petition. Back then we pointed out how easy that decision would have been. The truth: video games are a declining market for big retailers like Kmart and have been for some time. The latest quarterly report from Wesfarmers, who own Kmart, re-confirms this.
Kmart had a fairly decent year. Growth in some areas, decline in others. The growth areas? Home and seasonal apparel. Areas in decline? Entertainment. More specifically? Video games and DVDs.
It was significant enough for Wesfarmers to call it out specifically in its quarterly report released today:
Kmart Managing Director Guy Russo said the strong sales growth for the quarter was driven by core ranges in home, seasonal apparel and Easter related ranges. This growth was partially offset by the continued decline within Entertainment categories including video games and DVDs.
This, almost word for word, replicates a statement released in Wesfarmers Quarterly report in late 2014:
Strong sales growth performance was achieved across the apparel and home categories, partially offset by declines in video games and DVDs in the entertainment category.
Again, Wesfarmers was referring to Kmart and the games situation.
You can read our look at the situation with big retailers and video games here. The reality is that video games are becoming a more difficult sell for the Kmarts of the world.
Comments
52 responses to “Video Games Continue To Be A Problem For Kmart”
Well that hardly seems surprising. I don’t know how you’re supposed to not have a decline in videogame sales if you just stop stocking the damn things.
It runs a lot deeper than that. Where you find a K-Mart there’s almost always a JB Hi-Fi or EB Games near by. They see the same thing happen to their gardening section when a new Bunnings opens up. Their auto section went south as soon as stores like Super Cheap Auto started popping up everywhere. They lost this fight with car radios and JB Hi-Fi years ago. That’s why they focus on pleasing family friendly demographics. They sell cheap homeware and clothes for the entire family, and then the rest just sort of compliments that. The reason they sell games to begin with is because it went well with the toys section.
At this point stocking more games means losing more money when those games fail to sell because adults go for the better prices, pre-order bonuses, online shopping, digital, etc and parents will take their kids to EB to buy games because kids see EB/JB as a fun place to go to.
Precisely. It’ll be a cold day in hell when Target stops stocking Skylanders and Disney Infinity.
Funnily enough, I haven’t seen much in the way of amiibo in Target. Perhaps the kids of today just aren’t interested in them, and they are aimed more at the Gen X/Yers among us?
I’ve gotten all mine from Target. They just get cleaned out of there in the first hour or so of opening on a new release 😛
Although mine currently has a whole buttload of the early wave restocks (zelda, link, dk, pikachu) as well as all the Mario Party ones. They’re just hidden away on the back side of the Skylanders shelf.
I actually went into a target nearby today. They had a few Marios, Yoshis and Pikachus for $17 each. They also had a 12GB PS3 for $739.
That’s… amazing. Were they ever that expensive??? I thought they were 300-ish.
I wouldn’t be surprised. The PS2 was going for around $800 when it first released, and I believe the PS1 was similar for a time.
But he’s talking about a 12GB PS3 (not PS4) selling for almost 3 times as much as its worth, costing more than the 500GB PS4 with 4 games.
From this very site:
http://www.kotaku.com.au/2012/09/australian-pricing-and-release-date-for-the-new-playstation-3-confirmed/
300 bucks at launch of the 12GB version, which started with the Super-Slim in 2012.
There must be a story as to why a 12GB PS3 is $739… Madness.
I have no idea what the story behind it is. There were some headphones near it so I decided to check them out. Noticed the PS3, checked the price tag, laughed loudly.
Most places around me sell it for around $200
Yeah, that’s about the extent of amiibo that I’ve seen around Target. Pretty small display compared to the megalith that is Skylanders and Infinity.
KMART and Target are meant to be small holdings within WES’s portfolio that cover the needs a family has that Bunnings and Coles can’t. They’ll keep selling games because from the point of view of a holistic service it’s essential for the average family. Mom and Dad are more likely to stop by the video games section while shopping for something more important as opposed to walking into an EB Games store or JBHiFI.
Edit: While its easy to point out the flaws of stocking video games while mentioning declining video game sales we need to remember that gamers aren’t their target demographic. They stock games because at some point Mom/Dad shoppers are going to need it, not because they’re trying to break into the market segment.
I work at Kmart, we have not restocked games in our store in 6 months. The remaining games are starting to go clearence. So the op post is correct, kmart is not dirivng sales so the quartly report is a given.
Over the last couple of decades (minus the last few years for obvious reasons) maybe 90% of my console, accessories and games came from Kmart. Knowing that they price matched I’d always shop there. I can honestly say the same for DVD’s.
I went to a Kmart a few weeks ago to see if I could pickup a late night copy of Super Smash Bros for my Wii U and was amazed to see just one Wii U title for sale and a whole frickin’ section dedicated to SkyLanders. Well, if they don’t want my money, fine, but they only have themselves to blame for any perceived decline in sales.
Yes, because all those JB HiFis (who also price match) everywhere have nothing at all to do with it.
There’s exactly 10 in a 6km radius of me (20 if I count the CBD stores), but only 2 Targets and 5 K-Marts – there’s 10 JB HiFis within about 2km of where i’m sitting right now at work and a single Target & Kmart.
My local K-Mart had a copy of Oni for PS2.. yes, PS2… listed for $59.95. When I took it to the counter asking if they’d sell it to me cheap, they said they couldn’t discount it. Err….
If K-Mart didn’t poorly price their games and dvd’s they wouldn’t be in this situation. Big W makes a mint off selling the same thing and they have the same amount of stock as K-Mart. They even make games cheaper in the first week.
The entertainment section of those stores seems to shrink every time I go there. There used to be a time when you could walk into these stores and find a decent priced DVD/BR/game on the shelf. Now you walk in and there are four year old sports games and that’s about it.
Of course entertainment sales going to decline if they’ve focused heavily on the areas that they’re seeing growth in.
yeah, 4 year old games at full release date prices
This. The nearest K-Mart to me was still selling both CoD4 and MW2 for $79 in October of last year. 7 and 5 year old games, respectively, at the time. All the games in there was stupidly overpriced. Thing is, most David Jones’ have toy/entertainment depts that would stock these games, but with higher prices, and they receive less traffic annually than article has scored today. I wonder how much of it is to target the cattle consumer– the ‘lazy’ people who’ll just pay whatever, and how much of it is to price them out of competing with the EB so they don’t have to stock so much.
That reminds me of the time I went into the Mr Toys Game Clearance shop (when it existed) and looked at their PSX/1 clear out section. There were literally 10 – 20 copies of Championship Bass.
I went to our local KMart a few weeks ago to look at their games/blu-ray/DVD section and almost missed it. They had about five Xbox One/PS4 games on sale, none of which were reasonably priced or current, and their movie section wasn’t a great deal better. Interestingly their book section was fairly substantial, though stuffed with trashy thrillers and bodice rippers by nobody authors and a handful of trendy recently-became-a-movie titles like The Girl With the Dragon Tattoo, Twlight, Hunger Games, and The Fault in Our Stars.
They’re my go to for cheap homewares and t-shirts but utterly rubbish for anything else.
I recently tried to get a new tablet and while all electronic stores tried to drop the price or at least match other offers, Big W, target and Kmart all refused to budge. They said they simply didn’t have the authority to do it. So why in the world would i buy it from them?? I think they are a little outdated in the in their process
That’s the thing the customer service people in the department stores can’t haggle, they can’t negotiate, they can offer you the price listed or match a price if the store has that policy. They can’t throw in a free cable or anything to make the sale.
Harvey Norman put a lower price on the sticker if you know how to read it, JB can negotiate and throw in free stuff, sometimes buying the stupid warranty can drop the cost or help you add other things and get a better price on the total. Big W, K-Mart and Target can’t do that.
The whole point of stocking such items (and at prices so far under their RRPs) is to attract customers, and upsell them to higher-margin items on the way to the back of the store. Sales may be declining in these sectors but they’ve always been something of a honey pot for diverse department retailers.
I doubt they’ll stop stocking them altogether, they may just focus their lines more to the “kids” range like the DS and educational PC lines.
They certainly don’t need to waste their time with AAA titles aimed at the older market – I can’t remember the last time I bought a game from Kmart.
I would argue that it’s also because the market moves faster these days than it used to. There’s things on Kmart / target shelves at RRP that landed in EB / JB bargain bins more than a year ago.
The specialists are good at keeping up with stock turnover, but the general department stores seem to suffer from the glut of stock that just sits there until it sells. The exception being heavy discounts when items are discontinued by the manufacturer, but the worst gulf in the store between relevance and outright discontinuation would be the games and DVDs. That’s what is hurting them – they can’t treat that market the same as everything else in store that they stock.
Which means getting out completely might be easier than adopting different business practices just for one area that is currently a liability anyway.
Target has some discounting (I’m hoping LEGO Dimensions has heavy discounting or I’m not buying it), but the only time to buy games from K-Mart in the last 5 years is when they have a clearance. They used to be the best department store for games but went downhill and recently Target has shocked me by being a place I check along with big W before walkinginto EB or JB.
This is ridiculous, they barely stock anything. I’ve been to 3 kmarts and neither of them have stocked games shelves, when I ask staff they’re befuddled, its as if they’ve never heard of a game before.
To make it even more confusing they have old consoles in dodgy display cabinets with no one maning the desk and the games 4 isles away with games that are 4-8 months old at full price.
Why would I waste my time at Kmart when i can go to JBHIFI or bigw or EBgames or Target and get something brand new at bargain price, picked up Mortal Kombat at bigw for $68 the day it was released, they had full shelves, Jbhifi had the game for 78 and EB for 89…
These companies cry that they’re in decline, maybe take a look at your stores and the 0 care kept to certain departments.
As someone who reads the quarterly, half year and annual reports of a number of a companies quite frequently can I just say the words used to justify the numerical changes are all filler? Most people who look at them seriously pay little to no attention to them; with more important information being announced via shareholder meetings.
Additionally KMART and Target and relatively small holdings within the Wesfarmers portfolio and at the end of the day they’re in there to round out the company’s exposure to consumer staples. While it’s nice to write articles saying get out of video games as a financial benefit; WES have these holdings to cover all the needs an average family are likely to have and between bunnings, coles food and liquor, kmart and target they are accomplishing exactly that. The games sales are a tiny section of a larger holding and is probably there just for the sake of being there; regardless of its relative performance.
I think you are right. There’ll always be a video games section in these stores, but you won’t find the range or competitiveness that you will find at specialist stores (yes, even EB Games).
This man here gets it.
This dose not surprise me at all given how less floor space the entertainment sections in these stores has now days. Department stores are more focused on clothes than anything else.
kmart and target are great…. if you want skylanders or amiibo, other games not so much. my local ones dont carry much other than those, its also next door to EB
You can’t source AAA video games from Bangladesh super cheaply. That’s probably why Kmart has no interest in them.
I’ve been able get the last 6 months’ worth of major AAA releases for $69 or less at Target. They’re my go-to retailer for big launches these days. Bloodborne for $69, CoD: AW was $64, Xenoblade 3DS was $47. Your JBs aren’t doing anything near that.
Terrible range, terrible pricing, terrible service. And they wonder why sales are declining?
Although if you asked Foxtel or Village Roadshow they’d probably blame piracy 😛
That’s not that surprising. The prices for games at K-Mart are rarely updated as they get older to reflect the actual demand. Combined with nearby competition and genuinely clueless employees (not all, but most) and going to K-Mart to buy games becomes a bit of a last resort unless they have an incredibly low price on brand-new games.
I’m not sure how well managed these stores are, but it would not surprise me if they are poorly managed, given my experience with another Wesfarmers company.
The stock just does not move fast enough. It’s ‘stale’. They ought to hire someone who knows what they’re doing, clear out old stock, and do a complete redesign of their entertainment sections. Are they better off having shelf space occupied by low turnover products than getting rid of whats left at a loss, then reducing floor space on games and covering only the new releases at competitive prices? More space to sell dodgy imports as well.
So they should build an EB into the stores? If Wesfarmers cared about the Video Game industry and sales, they could just open a store to compete. EB are trying really hard to adapt, and with the digital distribution boogeyman lurking I’d be hard pressed to invest my dollars into bricks and mortar video game retail when there are so many other easier avenues to make money.
But you are right they need to get small quantities of the hot titles and sell out. If they had 20 copies of Mortal Kombat X (per store) and sold it at $60. It would generate demand and preorders (and as much as I hate them stores and executives love them) and drive a short burst of activity every big game. It would cut down on shelf space which they could use for the new Statue based games which is where they can make money off games.
They don’t even need to be that good at doing deals. If they sold at $80 and gave you $25 Console Dollars with the game it would be almost as good as selling the game for $55. They don’t really need an exclusive they just need to give you something to value add. Console Dollars is generic enough that they aren’t going to run out, and a good enough reason to go to them over another store.
Oh and to be clear Console Dollars are game cards with a value on them. It also includes iTunes cards, Steam Cards, essentially any gift card for an online service.
I bought my Master System from Kmart over 23 years ago. I used to love going into Kmart and looking at the glass cabinets chock full of Master System games
🙁
Yeah I remember them days when there was like a double sided isle full of Game Boy, SNes, Mega Drive and PC games all proudly displayed. Gone are them days.
I fear for my kids wanting a digital gift copy of a game or album or even a freaking voucher for Steam. Yuck. That is not a present you unwrap.
Digital 🙁
Speaking of Amiibos in Kmart, I noticed they were selling Japanese Amiibos there with a few stickers over it with some English – is this normal for Australian stock?
(I dont buy these things, genuine question)
Nintendo has been sourcing Japanese stock to make up for supply shortages here. Pretty sure they’re still coming from Nintendo Australia, it’s not like the retailers are importing from overseas or anything.
Makes sense
Sounds like these things were more popular than they expected!
It has become normal! At the store I work in (not K-Mart) we also stock Japanese versions. This is due to the high demand for Amiibo’s and the fact that the English factories aren’t putting out enough quantities to meet the demand.
I’m not sure if that will be something that sticks around for a while or just a momentary solution.
There wasnt a big selection – I think I remember just 3 characters?
Target, KMart and BigW always have a page full of games stuff in just about every catalogue they put out. There is usually a page for DVD’s too. Never a single BR ever.
Games have become a speciality item in which people not only want to buy the games but get information about them and even talk about them, services that Kmart and Target simply don’t have the ability or willingness to provide.
Places like JB Hi Fi and EB Game have people that specialise in games and therefore are a more attractive place to buy them from.
As someone who works at one of the other options for buying video games in Australia, I definitely understand this. Comparing their range to ours, along with the fact we do trade-ins, special editions, etc. it makes sense that people prefer to shop somewhere more specialised.
I can see K-Mart and Target one day giving up on gaming completely. Otherwise it’d take a large overhaul and re-stocking to bring people back in.
If they put a bit more effort in, they might get some more sales. My local Kmarts have about 5 games in stock at any one time, across ALL consoles. Can’t buy what is not there.
I’d happily shop there, in fact I’d really like if they did stock games, as it’d give me something to do while the missus spends an hour in the clothing section 😛
Target and BigW seem to do it just fine
k-Mart should be boycotted for violating consumer rights anyway.
There is very little profit it games now with high prices to retailers who hope to get the RRP of a $99 game, no one simply pays that anymore, unless you go to EB and don’t get a price match. You have to sell most new release games around $79 and with a buy price of around $70 ex gst leave little profit, so its no surprise games are struggling in sales. Also there aren’t a lot of new titles to play either which would slow sales and profits in that section as well.
What consumer right did they take from you? Sure they took a game from their shelves, a game you may or may not be old enough to even buy yourself. They didn’t stop anyone ever being able to buy it, they just don’t stock it anymore.