NEWS - Thursday, March 5, 2009

Toys R Us preowned strategy to threaten GameStop?

Toys R Us has dipped its toes into the preowned videogames market with a few test stores in the US - a move which could spell trouble for specialist retail chain GameStop, according to Motley Fool.

It notes that while GameStop posted a 10.2 per cent sales rise over the Holiday period, its best margins come from the second hand games market, and with the increase in the level of activity around digital distribution - which effectively cuts retailers out entirely - the increased competition will force the company to stay on its toes.

"Obviously, Toys R Us draws a much different audience than GameStop," writes Motley Fool. "Having spent more than enough time at both stores, I realise that diehard teen gamers at GameStop wouldn’t be caught dead among the mothers with young children walking the video game aisles at Toys ’R’ Us.

"However, I trust that Toys ’R’ Us isn’t stupid. If it either offers sellers better resale prices or marks down its used titles more aggressively, the same fickle teens that buy used games at GameStop because it’s a better deal than shrink-wrapped titles will gravitate to where the deals are. One way or another, GameStop is going to have to keep its markups in check."



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