Retail Is Not Dying

There was an interesting article on Gamasutra today.  While it is specifically concerned with an analysis of GameStop, I believe that it holds an important lesson for the broader retail market of the games industry.

At first glance, it would seem like the retail market has never been more challenged than it is today.  There are more alternatives to brick-and-mortar stores than ever before; in games alone, we now have a variety of platforms, each with their own digital delivery systems and currency (iOS, Kindle, Facebook, etc.), even PC gaming has digital delivery services that cover wide swathes of the market (Steam, GoG, etc.), and publishers are more and more capable of reaching out directly to their own consumers (Activision Blizzard, EA, etc.).  If that fails to meet your needs, you can currently buy any number of console or PC titles either directly from the platform holders or at a variety of online outlets (Amazon being the mothership).

Matt Matthews points out, astutely, in his article that even as online businesses are thriving, conventional retail outlets are taking advantage of these new economies by providing currency purchasing through cards.  His example is Steam Wallet sales for GameStop, but look around your local Target or Walmart, and you’ll easily find an entire section devoted to virtual currency sales representing most of the above mentioned businesses and quite a few others besides.  In other words, people are buying physical items at brick-and-mortar stores that represent virtual currency for online activities.  What is with that?

There are two aspects of this that are not going to shift radically anytime soon; there will be a gradual shift, to be sure, but it’s more likely to be generational.  The first is a resistance to e-commerce.  While many of us have moved wholeheartedly into the 21st century, embracing online shopping, banking, and bill-paying, there are still many people who remain skeptical or outright refuse to put their credit card information into more sites than they absolutely have to.  That’s aside from all the people who do business in cash out of necessity, like having no credit cards, limited access to banking, budgeting in cash, or being kids.  I have little doubt that the Millenials are going to convert faster and in higher numbers than Generation X did, but that’s a slow process, and it’s going to take time.

The second important consideration here is gift-giving.  Again, the social conventions here are going to be slow to change, because the polite e-mail that says you’ve received a gift just isn’t going to have the same impact as the pretty little box with a bow on it, or even the Hallmark card (and the fact that they haven’t gone out of business should tell you something about the longevity of outdated businesses) with a card tucked inside.  There are very good reasons why the traditional “holiday window” extended from the calendar fourth quarter into the following quarter and publishers are now willing to launch high-profile, big investment titles in January rather than squeezing everything out in December.

Keeping in mind impulse buying, the joys of browsing, cluster purchasing behaviors, personal interaction, and the merits of physical artifacts as nostalgia inducers, there are plenty of reasons why brick-and-mortar stores are not going anywhere.  Smart businesses understand this and are partnering, rather than resisting.  And that trend will extend the lifecycle much longer.

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