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Overview
‘The Game Station’ (‘TGS’) is a unique retail business in Christchurch which sells and rents video games and associated items. In business for 14 years, due to its dual nature of retail sales and rental it could be viewed as two businesses in one.
‘The Games Station’ has been a solid performer for over a decade, and has even maintained positive cash-flow through recent years of recession. It is now seeing an up-turn with further potential to expand after diversification into a new product range that has shown a ‘hockey stick’ growth increase in revenue.
There is very little competition in its chosen markets, and in many categories no other shops in Christchurch are selling the same items.
It is the largest specialist video game store in New Zealand and the Vendor says that through their own research it can surmise that it is the leading video game rental shop in New Zealand, far out renting any video store in game rentals.
With a customer membership database of 25,000 customers (4,000 of which are active members) ‘The Game Station’ has many loyal customers.
Customers
The Game Station has a wide range of customers, including many businesses.
Video Rental Stores
A good relationship is established with a few video rental stores in Christchurch who also rent games
Insurance Companies
Services many insurance companies to help customers who have had games stolen
Gaming Cafés
To small internet gaming businesses in Christchurch where people play PC networked games like Warcraft and Counterstrike etc
Membership
‘TGS’ encourages customers to sign up as a “Member”, which means giving their name and address etc, which is entered in the POS database 82% of ‘TGS’ income is from members. The membership database contains approximately 25,000 member details. Of those 4,000 are classified as “current” as they have done a transaction in the last 12 months. (6,000 in the last 24 months).
Their average age is 37, and 80% of them are male.
On record is nearly 4,000 good email addresses for all members.
Gold Members
‘TGS’ has an automated system of recognising particularly loyal customers, who then get upgraded to “Gold” status. 27% of ‘TGS’ income is from Gold Members, who are 11% of all active members. This is reached by purchasing or renting a high dollar amount within 12 months.
Members get a new Gold membership card with this status, and discounts of buying and renting from then on.
Suppliers
The Game Station sources products to sell and rent from a wide range of suppliers.
New Zealand and Australia based game suppliers
Approximately 90% of new product stock is supplied by official NZ game distributors. 8% is from Australia, which is mostly for collectible figures
A wide range of web based businesses internationally
A miscellaneous range of products is purchased from non-official overseas suppliers.
Customers Themselves
‘The Game Station’ has a Second Hand Trading licence, so can buy used games and related items from customers which are sold on with good margins.
Sometimes customers will trade a game, and sometimes ‘TGS’ pays cash for a game. Paying cash is a competitive advantage that other game retailers do not do.
In the 2010 tax year approximately $50,000 worth of stock was purchased in this way.
Staff
There is one full-time Manager, two other full-time staff members, and a part-time staff member. The full-timers scored an average of over 90% in a mystery shopper generated survey in 2009. Hours worked by staff vary a bit through the year when filling in for each other due to leave etc. In December most staff work longer hours as the shop is busier and open longer than normal hours before Xmas.
Management Overview
Management is primarily by one manager, with minimal input by the two Directors (generally a weekly meeting). The manager has worked at The Game Station for a total of 10 years, and has experience in video shop management as well.
Computer System
The in-house developed system, called “Gplus”, is an advanced Point-of-sale (POS) and Accounting system unique to ‘TGS’. Programmed in Microsoft Access which is known by most computer programmers and easy to maintain.
Full ownership and rights of Gplus and attached systems are included in selling ‘The Game Station’ as an on-going concern. Procedures for how to use most of the program are documented in the ‘TGS’ Procedures manual, but can also be shown by the existing staff who are all experts at using it
Sales Summary
Sales are of “New” and “Used” items. The most significant volume is “New”.
Over 80% of our sales profit is from five key categories, and 27% of the profit is not from games but DVD and figures.
Sales new profit overall is up by 39% in the period April to October 2010 compared with April to October 2009, mainly due to three areas:
- Collectible figures, up 292%. This is due to significantly expanding the range and the public becoming more aware we have these
- Manga DVD, up 86%. Also due to expanding the range
- Xbox 360, up 30%. due to selling more copies of hit titles. Overall the number of titles sold is about the same
Future Potential
We’re entering into a very exciting time in the Gaming Industry, and ‘TGS’ is perfectly placed to take advantage of this.
New visual game control technologies from Microsoft (‘Kinect’) and Sony (‘Move’) are just now being released to market. These technologies allow precise control of games without the use of a traditional controller. Movies and music can be controlled with the wave of a hand. These technologies are set to give huge growth in the gaming market through Christmas and over the next 12 months.
Rental income continues to be a strong profit area, although overall rental income is down, some categories like Playstation 3 are increasing. New peripherals like the Playstation Move and Xbox Kinect controllers will increase rental interest.
Manga DVD’s are very profitable categories which have a good “shelf life”. There is potential to expand the range of these by adding new shelving etc.
Sales profit from key gaming systems, Playstation 3, Xbox 360, and PC games is growing.
Sales on www.trademe.co.nz continue to grow, especially since ‘TGS’ set up a dedicated store early in 2010. Since then ‘TGS’ TradeMe sales have increased dramatically.
‘TGS’ Collectible figures business has grown rapidly. With just a very small display area in the shop, ‘TGS’ have seen this go from strength to strength and believe this could be developed in to a healthy business within itself.
Price
Tangible Assets $125,000.00 (approximately)
Intangible Assets $60,000.00
Stock $80,000.00 (approximately)
Total price $265,000.00 (approximately)
Rental stock is on the plant list so treated as a tangible asset as per the financial accounts. However, the rental stock figure is a moving target as rental stock is purchased on an ongoing basis.
Contact Liz Satherley
03 379 0379, 021 649 010
Ref: 30357
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