Game Group plans e-commerce and IT boost

Game Group will invest £10 million in IT infrastructure and its online business this year.

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Game Group has revealed that it will be investing £10 million in IT infrastructure and its online business this year.

The games retailer made the announcement as part of its preliminary results report for the 52 weeks to 31 January 2010, where it recorded a 27 percent fall in group profit to £90.4 million, from £124 million the previous year. Group revenues were down to £1.7 billion, from £1.9 billion in 2009. Its online business contributed revenues of £97 million, and operating profit of £4.9 million.

In addition to the £10 million investment in IT and e-commerce, Game expects to spend a further £5 million on distribution centre infrastructure and between £5 million and £10 million on store opening and refurbishment. The retailer has been steadily reducing its capital expenditure during the recession, from £30 million last year and £53 million the previous year.

Peter Lewis, chairman of Game, said: "Our results were delivered against the backdrop of a very difficult trading environment, which saw the global PC and video games market decline by over 20 percent.

"Complementing our traditional store offer, we are today announcing the launch of a number of initiatives to strengthen our position in the growing e-commerce and digital markets."

Although Game plans to invest in its online business, it will also focus on its physical stores, which it said delivers 94 percent of the group’s revenues. As part of its IT investment, the company is therefore planning to install “customer conversion technology” and top-up card activation capabilities in its outlets.

As well as Game’s e-commerce websites, which can be accessed through a dedicated iPhone app, launched in 2009, the company has an established digital download site featuring more than 1,000 titles. The company said that its global websites receive 112 million visits a year. However, compared to its physical stores, these other channels make a much lower contribution to the group’s revenues, with e-commerce delivering over 5 percent of revenues, and digital providing less than one percent. Nonetheless, Game said that digital was a “growing” part of its business.

The company unveiled a number of new online initiatives in its latest results. Recently, it has established a presence in Playstation Home, the online portal for Playstation 3 players, called Game Moonbase. It is also currently beta testing a new social network site called Gamesnation.

Also in the pipeline is a new download site for mobile phone games, and the company plans to launch a new global e-commerce platform over the next two years. Called Websphere, the platform will link up Game’s global network to provide a universal online portal.

"It will give us a single view of customer behaviour across our stores and websites, and improve our services further. Game will invest £5 million this year and the next in this e-commerce platform," the company said.

Game believes that its multichannel investments will contribute to a positive outlook for the group, even with its plans to reduce its physical stores to from 695 to 550 in the UK by Christmas 2013.

"Whilst we remain mindful of the challenging market in which we operate, the forthcoming new technology further enhances the profile of the specialist retailer. This, together with our value driven offer to maintain a market leading position, investment in new channels to market, and our focus on cost reductions leads the Board to be confident in the Group’s future prospects," Lewis said.

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