Can I buy a SAAB over the internet?
Wow, really? You honestly didn’t get my point?
You claimed that administration is evidence of a failed business plan. It's not. It can be, but more often its evidence of mismanagement of an otherwise sound business plan. Hence the Saab example. Manufacturing premium saloon cars is not a failed business model. Infact it's a very sound and very profitable business model. But despite 'the manufacture of premium saloon cars' being the Saab business plan they still went into administration - because of mismanagement and brand issues.
So you are wrong to cite administration as evidence for your claim that it’s a flawed business model.
The issue almost everyone in this thread seems to miss is that you and me are not the target market for this sort of shop. They don't appeal to us because we just don’t shop like that. We've moved on. I don't buy games from Game either. I buy them online. But we are not the entire market - plenty of people would rather buy offline. I walked past a Thomas Cook at the weekend and it was crammed full of people paying a small fortune for a holiday they could have booked in 15 minutes on the internet for half the price. But they still do it.
This doesn't mean the internet isn't a threat - of course it is. 20 years ago you and me WOULD have bought from someone like Game because where else would we buy from? But it isn't a new threadt It's been there for years. Were there no internet shops in 2009 when Game Group posted profits of almost £100m? Of course there were. The internet has been an issue for high street retail for over 10 years. The emerging popularity of services like Steam is an emerging threat - but it's not yet serious enough to kill retail, 70% of media like this is still sold as packaged products. Steam has taken huge chunks of the PC gaming market but then the PC Gaming market hasn't been useful to retail for years anyway.
What has gone wrong is poor management and inflexibility. As I said previously back in the early 2000's the highstreet was FULL of places to buy Games. An independent Gamestation, HMV with a much bigger presence, Woolworths, even WH Smiths sold Games. If you didn't have a GAME at one end of town the customers would just go over the road to Woolworths. It made sense to have a huge presence. Now, however, this isn't the case. Woolworths have gone. WH Smith don’t sell Games. HMV are clinging on. The market is almost devoid of any real high street competition. You don't NEED 3 stores in a town now. If there isn't a GAME at one end of town the customer will now walk to the GAME at the other end. Therefore where in the past multiple stores captured custom from others, now all it does is drain cash from the business and massively increase overheads.
And huge overheads in a business with low margins = administration.
GAMES misfortune is caused by it's policy of massive expansion in a market that required rationalisation.
What I would imagine will happen now is a new company will emerge from the ashes - perhaps with backing or as part of somebody like Gamestop, which will see GAME remain on the high street but with a far more rational store portfolio.
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