GAME could be in trouble after poor Christmas sales

A disastrous Christmas sales slump of 17.6 per cent for GAME and gamestation stores has left the retailer in a precarious position, and could find itself relying on the good will of lenders to survive, reports MCV.

GAME has said it could miss targets needed to satisfy creditors on February 27, 2012. The GAME Group says it “continues to be in regular and constructive dialogue with its lenders, who remain supportive,” but should targets be missed lenders could take action.

While GAME and gamestation’s UK and Ireland stores saw a 17.6 per cent drop in sales in the eight weeks ended January 7, 2012, online offered a glimmer of hope. Online Christmas sales were up 3.9 per cent and annual takings up 1.3 per cent. In addition, half a million new customers joined GAME’s loyalty programme over the holiday season.

Despite the doom and gloom, GAME CEO Ian Shepherd remains positive about the group’s future.

“Our industry had an incredibly tough 2011, and so did we,” Shepherd explained.

“We remain the market leader and have a clear strategy which will return the business to growth. We are adapting to the changing market and are well prepared for the next hardware cycle.”

The group’s total sales fell 11.9 per cent for the year, which is actually better than the UK game market’s annual 13 per cent decline.

While we hope GAME can overcome its difficulties, the increasing importance of digital sales will surely present a problem for the retailer. The next hardware to hit the market is the PS Vita on February 22, which will have a strong emphasis on digital purchases, offering every game digitally via the PlayStation Store – something which Sony’s PSP Go failed to do. Stores like GAME will have to convince consumers that owning physical copies of games is better than downloading titles.