Walmart is now jumping into the used game trading industry with exchange kiosks. How does this impact Play N’ Trade and Game Stop? I’m certain this is a smart venture for Walmart. A friend of mine interviewed at RedBox and told me the kiosk business model when scaled is tremendously profitable, and I’m sure Walmart has first hand knowledged of this model from having the RedBox DVD kiosks in their stores. Additionally, attracting young teens into your brick-and-mortar stores undoubtedly is a strategic goal of Walmart.
How greatly this impacts Play N’ Trade and Gamestop is questionable. It is hard to spin this as “helping the industry” as surely Walmart will take more from competitors than it increases the
I contacted Larry Plotnick, CEO of Play N’ Trade for his reaction to the Walmart news. In response, Larry noted:
- We have been aware of this test for some time, and have discussed the use of similar kiosks within our own stores; however it does not fit within our business model.
- The impact of Walmart is taken very seriously, considering the size and scope of their business and we will be watching and tracking their progress in detail.
- We believe there is positive implications to Walmart “legitimizing” used game and trading to a larger/broader demographic
- We strongly believe that our customer service, product offering and immediate customer gratification creates a better overall trading venue then does a kiosk type environment.
- Studies have shown that the significant majority of game trading is done by serious/hardcore gamers that prefer to trade in games for new gaming product (which is typically done in specialty retail not in big box stores)
Larry’s points are fair. Walmart will never be able to create the gamer atmosphere of Play N’ Trade, and gaming is all about experience. Nevertheless, I predict that Walmart will expand the market for used games and trading, but eventually will siphon sales from the established players Play N’ Trade and Game Stop…in any industry there will always be some customers that will chase the best price.
More to come….
(photos from NeoCrisis.com)
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Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-715-8115.
At the end of 2007, Play N’ Trade had a large number of sold but not opened franchises. They also had almost 800k in receivables.
Cannot imagine that financing in 2008 lead to a great improvement, and now the Walmart threat has to slow down the selling of these franchises.
1)If I were a P-n-T operator I would be pushing like crazy to monetize a buy through mail or even local delivery.
2)You can’t beat the gorilla on price. You have to be smarter, nicer, faster, friendlier, LOCAL. Form a club, myspace twitter, local marketing, free game play kiosk at the soccer fields…
When I read this article my thoughts instantly went to long term trends. As I have mentioned I have no problem with transient franchises, or riding trends in the short term, as long as you utilize the proper metrics when evaluating a franchise offering. In particular you have to consider the renewal value negligible and make sure that your rate of return factors in a total return of your investment as well as a profit that compensates you for the risk ensued.
In that regard I found an unrelated article by Nekesa Mumbi Moody relevant to the topic at hand.
“While Armstrong, Dirnt and drummer Tre Cool are still top-sellers without Wal-Mart, Armstrong said the store’s policy is disappointing, considering it has become the dominant seller of CDs with the decline of traditional music stores.”
Thursday, May 21, 2009
Green Day lashes out at Wal-Mart policy
By NEKESA MUMBI MOODY
Note the comment about music stores and then think about gaming shops. I doubt anyone is as passionate in their pursuits as music lovers unless it is BBQ aficionados or home brewers and look what has happened to that market.
Regards,
FuwaFuwaUsagi
Anonymous -
Local delivery may be an I teresting prospect, I imagine it has been considered though. There is only one or two players in the Netflix style game service but they are small… not sure why.
I think there is only so much local catering a store can do, and most are doing it already. I think it may be a business only true game lover can love.
[...] blogger Ryan Knoll contacted Play N Trade CEO Larry Plotnick. On his post on Franchise Pundit (WalMart Trouble for Gaming Franchises Like Play N Trade?) Ryan paraphrases Plotnick’s reaction to the [...]
FuwaFuwaUsagi wrote on May 21, 2009 @ 3:10 pm:
At this point though it is only kiosks experience (Wal-Mart) v. store experience (Play N’ Trade, et al). I think the best analogy is Red Box DVD kiosks v. Blockbuster because of similar selling models. But, I could not find any direct numbers or analysis on how Red Box kiosks sales have impacted Blockbuster.
[...] http://franchisepundit.com/index.php/2009/05/20/trouble-for-gaming-franchises-like-play-n-trade/ [...]
Well, this simply shows how ingenuity, smart tactics, and competitive spirit interplay to assert one’s place in franchising. The franchise zone is full challenges for the franchisors and the franchisees alike to continuously keep up with the trends and find means to be above the rest. In the process, it is unavoidable that the burning desire to impose superiority in standing can provoke conflict along the way.