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 Azreal13 wrote:

 Talys wrote:

I still maintain that there is no evidence that a lower price would result in a higher profit for Games Workshop, as we have no data on pricing elasticity. There are people that may leave GW or play other games for plenty of reasons other than price -- for example, "GW can't write good rules" or, "All my friends play X-Wing".
.

Of course there's no evidence, for there to be evidence a thing needs to have happened!

But you're not taking a holistic approach. I wouldn't be surprised that for many people who have walked away from GW, or rejected it, the price needed to illicit a purchase may be lower than break even. There's plenty of ways GW could address the issue of value without necessarily cutting prices, chiefly by focusing on getting people excited to play again, I've always maintained that price ceases to be such an issue if people are excited by the product, and I believe the root cause of the decline is the decreasing popularity of the games systems they sell.

Work on improving the game, throw the odd extra sprue in to boxed sets to improve value, alongside a more flexible option for new players, judicious price cuts where they hurt the least to show willing and then you're just left with the dreadful millstone that is the retail chain to deal with.

I don't think GW is as terrible at retail as you think it is. They've been at it for a very long time, and in this aspect, they're pretty experienced. In some areas, it's the only store for a pretty big radius.

Please note that I'm not saying that cutting prices would NOT result in better aggregate revenue / profit, either in the short, medium, or long term. I was saying that I think that GW has more information than us, and is not willfully self-destructive on the issue of pricing. Whatever they are doing, they genuinely think is the best strategy. But evidently I am wrong.

But I will take JamesY at his word, as he seems pretty credible in what he says, and accept that at least to some extent, the pricing also reflects compensation negotiations with sculptors and other factors in a weird formula that is more arcane than anything else.

Incidentally, what you're describing is exactly what GW is trying to accomplish with AoS. It's polarizing; some people like it, and others hate it. But at least more people like it than played Fantasy Battle. Whether it's a long term success, I don't know. They'll squeeze a little bit of money out of me; I'm not sure how much they'll get in the long term -- probably not much at all, because after all, how many Sigmarites can they build? LOL.

As a former corporate accountant, I'd just like to say there is no way a creative is setting prices for the product line of a publicly listed corporation. It might be a managerial leader of the design time but the idea that the same people who are sculpting the models, designing the rules or doing graphic design are setting prices is just ludicrous.

frozenwastes wrote:
As a former corporate accountant, I'd just like to say there is no way a creative is setting prices for the product line of a publicly listed corporation. It might be a managerial leader of the design time but the idea that the same people who are sculpting the models, designing the rules or doing graphic design are setting prices is just ludicrous.

Ok, I'm not going to continue to try to convince anyone on this point, as a member of staff, I asked one of the sculptors who set the prices, he told me it was the design team. Was he lying? Perhaps, but I can't see why he would, as the conversation wasn't making the pricing policy look good.

Also I used to help design cloths for a gents outfitters. Guess who used to set the prices?

@Talys. Cheers for the kind words mate

Design team doesn't have to equal a sculptor or something. Guess who was the head of product design for GW for a good while? Mark Wells. A laywer and MBA who was also later GW's CEO.

You're making it sound like it was Matt Ward or something. Design team doesn't mean creative type. There's always some sort of management person on teams like this. Like for Magic how Mark Rosewater is the lead designer but Mark Gottlieb is the design team manager. Usually these people have actual business training.

So no, I do not in any way believe a designer is setting GW's prices.

 Talys wrote:

 Azreal13 wrote:

 Talys wrote:

I still maintain that there is no evidence that a lower price would result in a higher profit for Games Workshop, as we have no data on pricing elasticity. There are people that may leave GW or play other games for plenty of reasons other than price -- for example, "GW can't write good rules" or, "All my friends play X-Wing".
.

Of course there's no evidence, for there to be evidence a thing needs to have happened!

But you're not taking a holistic approach. I wouldn't be surprised that for many people who have walked away from GW, or rejected it, the price needed to illicit a purchase may be lower than break even. There's plenty of ways GW could address the issue of value without necessarily cutting prices, chiefly by focusing on getting people excited to play again, I've always maintained that price ceases to be such an issue if people are excited by the product, and I believe the root cause of the decline is the decreasing popularity of the games systems they sell.

Work on improving the game, throw the odd extra sprue in to boxed sets to improve value, alongside a more flexible option for new players, judicious price cuts where they hurt the least to show willing and then you're just left with the dreadful millstone that is the retail chain to deal with.

I don't think GW is as terrible at retail as you think it is. They've been at it for a very long time, and in this aspect, they're pretty experienced. In some areas, it's the only store for a pretty big radius.

It's difficult to be too precise, because the figures themselves aren't exactly specific in what they refer to, but it appears GW spent £50m last FY in order to generate £51.5m in revenue through their own stores.

Now, you may have a different idea of terrible than me...

why is it terrible retailing to profit £1.5m selling toy soldiers in your own stores???
if you said that GW spent £51.5m to generate £50m in revenue, then i would say that is terrible, and unsustainable, retailing...
£1.5m is a tidy sum of profit...

cheers
jah

 Azreal13 wrote:

It's difficult to be too precise, because the figures themselves aren't exactly specific in what they refer to, but it appears GW spent £50m last FY in order to generate £51.5m in revenue through their own stores.

Now, you may have a different idea of terrible than me...

That isn't bad at all. Microsoft loses money at retail as did Nokia during its best years. As a manufacturer, the stores serve as presence, advertising, showroom, and player recruitment. That they can even break even is frankly baffling to me as most major cities have an independent within a shirt distance that will sell at 10%-25% off on the same product AND stock other stuff.

I mean, as much as I like GW models, I'll take discounts and support local small businesses thank you. Also: Buying direct, I'd just purchase online and have it shipped. Maybe not supplies I guess.

One other thing - the numbers you're looking at probably reflect profit as a factor of distribution pricing, not manufacturing cost. In other words, they sell internally to their own stores at the same trade prices they sell to FLGS. This is significant because they make a distribution profit (we assume it's a high margin, right?), and left to just independents, the sales volumes would without doubt be lower, because some people going to an independent will buy non-GW stuff instead, even if they like GW (for example, brushes, paints, etc), not to mention the folks who will buy a non-GW model kit instead.

 jah-joshua wrote:
why is it terrible retailing to profit £1.5m selling toy soldiers in your own stores???
if you said that GW spent £51.5m to generate £50m in revenue, then i would say that is terrible, and unsustainable, retailing...
£1.5m is a tidy sum of profit...

cheers
jah

It's terrible because you could have put £50 million in the bank and generated more than £1.5 M profit from interest payments.

Leaving that aside, Talys mentioned that reducing the price of GW games would not necessarily generate more revenue. There are two points about this that I would like to bring up:

1. AOS is a reduced price game in the sense of the free rules and army books. GW clearly think it will generate more revenue than WHFB. They may be mistaken, and we have not yet seen the price of AOS kits, of course.

2. It is possible that GW simply do not have a sustainable business with the 1/2/3 games they currently publish. It is only in the past five years that they have reduced themselves from selling a fairly wide variety of titles to basically only three. It is in the pas five years that revenues have shown a serious decline.

In this scenario GW won't increase revenue by decreasing prices. They also need to publish more games.

 jah-joshua wrote:
why is it terrible retailing to profit £1.5m selling toy soldiers in your own stores???
if you said that GW spent £51.5m to generate £50m in revenue, then i would say that is terrible, and unsustainable, retailing...
£1.5m is a tidy sum of profit...

cheers
jah

Not profit, revenue

They are spending £50m in order to generate £51.5m revenue.

By their current percentages, that's somewhere in the region of
£150k actual profit.



Automatically Appended Next Post:

 Talys wrote:

 Azreal13 wrote:

It's difficult to be too precise, because the figures themselves aren't exactly specific in what they refer to, but it appears GW spent £50m last FY in order to generate £51.5m in revenue through their own stores.

Now, you may have a different idea of terrible than me...

That isn't bad at all. Microsoft loses money at retail as did Nokia during its best years. As a manufacturer, the stores serve as presence, advertising, showroom, and player recruitment. That they can even break even is frankly baffling to me as most major cities have an independent within a shirt distance that will sell at 10%-25% off on the same product AND stock other stuff.

Microsoft and Nokia are poor examples (as I suspect you realise) having a showroom that is nominally a retail location isn't what GW do, and they're actively pursuing strategies to try and drive footfall to their stores and website, they're not content to pour money into retail as advertising, they clearly want them to succeed, and yet they're barely breaking even (given I did quite a bit of rounding, with a margin that small they could conceivably actually making a loss)

One other thing - the numbers you're looking at probably reflect profit as a factor of distribution pricing, not manufacturing cost. In other words, they sell internally to their own stores at the same trade prices they sell to FLGS. This is significant because they make a distribution profit (we assume it's a high margin, right?), and left to just independents, the sales volumes would without doubt be lower, because some people going to an independent will buy non-GW stuff instead, even if they like GW (for example, brushes, paints, etc), not to mention the folks who will buy a non-GW model kit instead.

I can't see how that's the case, otherwise that revenue stream would show up on the report somewhere, and I've never seen it, so it's either buried deep in the notes somewhere or doesn't exist. Equally if they reported that money as part of the distribution channel, there's no way their stores and Indys could account for over 40% of revenue each.

@Killkrazy: obviously, the people at GW don't think it is terrible to have their own shops...


@Azrael: if you are taking their retail arm in isolation, which it seems like your post was, spending £50m to generate £51.5m, then how is that not a profit of £1.5m for the retail side???

you seemed to be implying that generating £1.5m more than the retail stores cost to sustain is somehow bad business...

am i missing something here???

cheers
jah

Az,

I don't have the data to debate with you (and I don't think it's published in a complete, meaningful way), and sometimes partial information is worse than none at all.

Microsoft and Nokia opened retail outlets to grow mindshare and to drive awareness to their product, and also because they perceive that their retailers don't provide a good enough exhibit or experience to showcase the product.

In the same way, Games Workshop stores display and promote their product reasonably well, and bring awareness to a brand in an industry that doesn't drive enough volume for many of the traditional forms of advertising. As I said, that retail revenue number that you indicated sounds huge.

To determine the profitability for the stores, there must be a cost base for the models (it can't be zero, and the cost of manufacturing would be a poor number to use per store, because the product could have been made 15 years ago and is neither reflective of a current cost, nor replacement cost).

Personally, even though I don't buy anything at them (or at least, so rarely that it doesn't matter), I'm glad GW stores exist. In my mind, the more hobby and gaming shops in the world, the better!

 jah-joshua wrote:
@Killkrazy: obviously, the people at GW don't think it is terrible to have their own shops...


@Azrael: if you are taking their retail arm in isolation, which it seems like your post was, spending £50m to generate £51.5m, then how is that not a profit of £1.5m for the retail side???

you seemed to be implying that generating £1.5m more than the retail stores cost to sustain is somehow bad business...

am i missing something here???

cheers
jah

Yep.

Revenue =/= profit. Their retail arm drew in about 40 something % of their revenue, the total amount of money given to them by their customers. This equates to around £51.5m out of their revenue NOT profit. Therefore the stores generated only 1.5m in revenue over what it appears to have cost GW to run them. As their profit runs at ~10% of their revenue, it is reasonable to extrapolate that out to the whole store network made only 150k for the company, yet required an investment of £50m to do so.

I'm sure that you don't need to be a business genius to see that spending £50m to make £150k isn't a fabulous return on investment, and, as KK rightly points out, they would have made a lot more just by sticking it in the bank.

This doesn't account for intangibles like brand awareness, recruitment, advertising etc, but in pure cash terms, GW without their stores is the same as GW with them, except all the ancillary staff needed for staff managment, leases, utilities etc would be fewer, so one could fairly convincingly argue that they'd be better off.

i guess i should have said a plus, instead of a profit...
given the benefits of what GW see their shops providing, i don't see how you could convince me that those shops operating at a plus is a bad thing...
like i said, if the shops were losing them money, i could get behind your argument...
it doesn't appear that they are, by your numbers...
as long as they are bringing in more than they cost to run, then i am sure GW are happy to keep the retail chain...

cheers
jah

 Talys wrote:
Az,

I don't have the data to debate with you (and I don't think it's published in a complete, meaningful way), and sometimes partial information is worse than none at all.

Really? I'm content that the figures in the accounts are sufficient to prove my case. I'm not trying to argue Devestators outsold Assault Squads here, all the info is right there, and it is reasonable to assume presented in the best light they can.

Microsoft and Nokia opened retail outlets to grow mindshare and to drive awareness to their product, and also because they perceive that their retailers don't provide a good enough exhibit or experience to showcase the product. In the same way, Games Workshop stores display and promote their product reasonably well, and bring awareness to a brand in an industry that doesn't drive enough volume for many of the traditional forms of advertising.

I know, my background is in retail mangement, specifically in consumer electronics, mainly in cellphone retail, I'm well aware, it still doesn't alter the fact that their motivation, and consequently parameters for success were very different to GW, who seem to be actively pursuing the idea of making their stores the main revenue stream, not just showrooms (for instance, Nokia stores were front and centre in some very pricey real estate, not tucked away in a corner somewhere.)

As I said, that retail revenue number that you indicated sounds huge.

It isn't, the stores have been generating around the same percentage for years, and presumably been just as big an overhead.

To determine the profitability for the stores, there must be a cost base for the models (it can't be zero, and the cost of manufacturing would be a poor number to use per store, because the product could have been made 15 years ago and is neither reflective of a current cost, nor replacement cost).

Determining the profitabilty of the stores, you simply substitute the amount they cost to run plus a percentage of company wide overhead, taxes etc from the amount they generate and there you go, not a precise accounting figure, but we know how much they cost to run and how much money they generate in revenue, what you're proposing may be necessary for an audit, but it isn't really needed for this level of discussion.

Personally, even though I don't buy anything at them (or at least, so rarely that it doesn't matter), I'm glad GW stores exist. In my mind, the more hobby and gaming shops in the world, the better!

They're not really hobby stores though, are they? They're just kiosks designed to try and shift plastic. I haven't seen or stepped foot in a GW in years that compares to any of the indys I'm familiar with, in fact all GW stores have done in the UK is make the superior indy stores a rarer animal, thankfully yet another positive of GW's slow decline is that indys seem to be able to open and survive without relying on GW, should they choose to stock it, so they're making a bit of a comeback.


Automatically Appended Next Post:

 jah-joshua wrote:
i guess i should have said a plus, instead of a profit...
given the benefits of what GW see their shops providing, i don't see how you could convince me that those shops operating at a plus is a bad thing...
like i said, if the shops were losing them money, i could get behind your argument...
it doesn't appear that they are, by your numbers...
as long as they are bringing in more than they cost to run, then i am sure GW are happy to keep the retail chain...

cheers
jah

My quick and dirty maths means there's every chance they're making a loss, and my rounding of figures just made it look like a small profit. Could be slightly the other way of course, but being obliged to spend over 40% of your income on something that barely makes it money back isn't a fabulous place to be in. I'd much rather make less money to earn the same profit and be more able to react to the changing market. GW didn't need to double down on stores like it has, some of its golden years were achieved with a much smaller retail presence and greater number of indy retailers, it seems all they've done is drive those indys out of business, saddle themselves with greater overhead and exposure to risk, yet not reaped an appropriate award for what it's cost them to do so.

Az, I don't know where you're getting your figures from. Here is the latest available:

http://investor.games-workshop.com/2015/01/13/half-yearly-report-2014/

On Page 9, it shows that the Operating Profit for Retail, restated to 1 year ended 1 June 2014 is -196k GBP, and for 6 months ended 30 November 2014 is -1.286m GBP. Since Christmas is a critical season for retail, the 12-month period is probably more useful when considering retail viability.

Operating profit for the 6-month period ended 30 Nov. is

Trade 4,272
Retail -1,286
Mail Order 5,309

It's actually a smaller loss than the 6-month period ended 2013. Also, I never realized Internet sales were so significant. Although I should, as there is a guy in our group who buys $2k+ per month straight from GW/FW's website because he can't be bothered to drive to a store, 30% discount be damned. I guess that's also why GW is so restrictive about its FLGS selling stuff online -- it's way too profitable for GW.

In summary, I think you should abandon your "quick and dirty maths" as you put it, and just accept p.9 of the financial report, which actually breaks down the operating profits and losses

Considering the many benefits that GW stores bring, plus, I believe that goods sold to Retail show as profit on the manufacturing side, it's just a no-brainer to keep them running.
And also: I do consider GW stores hobby stores. They sell hobby goods, and when you go into one, you can buy everything that you need to build, paint, and play miniatures and GW wargames. That there may be better alternatives for some hobby supplies doesn't make them just "kiosks".

The last full year report, I took the percentage revenue and subtracted the declared costs for the channel from it. Seems I was optimistic!

I read about half this thread and this is my evaluation:

I don't give a **** about GW. Right now I'm having fun with 40k. When it stops being fun or GW implode I'll move on to another miniature game. Life is too short to worry about this or that.

Specifically, Az, I believe that the sales between GW and its stores are captured under "Total group core business operating profit", under "Product and Supply", which is worth 4.5m profit.

In the current period, the total retail sales = 22.4m.

Apply trade discount, that's 13.4m that the stores must pay GW.

4.5m profit from 13.4m in product seems quite reasonable.


Yes, it's left to right hand, but you need to do it to figure out the stores' performance, the same way Microsoft retail stores don't sell Office365 with a $0 cost and Apple retail stores don't sell iPhones based on manufacturing cost.

If GW stores didn't exist some of that 22.4m (maybe less) would go through Trade or Mail Order, instead of Retail, and off of both, GW would have made more profit, though probably less than 4.5m. There is a question of whether an independent is better at selling and promoting GW product than GW (I would argue that in some cases, yes), but that's a whole other discussion.


Automatically Appended Next Post:

ninepaces wrote:
I read about half this thread and this is my evaluation:

I don't give a **** about GW. Right now I'm having fun with 40k. When it stops being fun or GW implode I'll move on to another miniature game. Life is too short to worry about this or that.

At the end of the day, yeah, that's all I care about too

If 40k died, I'd spend some more time on other miniature games, but video games would get a lot more love from me.

ninepaces wrote:
I read about half this thread and this is my evaluation:

I don't give a **** about GW. Right now I'm having fun with 40k. When it stops being fun or GW implode I'll move on to another miniature game. Life is too short to worry about this or that.

Splendid.

 Azreal13 wrote:

ninepaces wrote:
I read about half this thread and this is my evaluation:

I don't give a **** about GW. Right now I'm having fun with 40k. When it stops being fun or GW implode I'll move on to another miniature game. Life is too short to worry about this or that.

Splendid.

I'd like to thank you for your contribution.




Thank you for your contribution.

 Talys wrote:
Specifically, Az, I believe that the sales between GW and its stores are captured under "Total group core business operating profit", under "Product and Supply", which is worth 4.5m profit.

In the current period, the total retail sales = 22.4m.

Apply trade discount, that's 13.4m that the stores must pay GW.

4.5m profit from 13.4m in product seems quite reasonable.


Yes, it's left to right hand, but you need to do it to figure out the stores' performance, the same way Microsoft retail stores don't sell Office365 with a $0 cost and Apple retail stores don't sell iPhones based on manufacturing cost.

If GW stores didn't exist some of that 22.4m (maybe less) would go through Trade or Mail Order, instead of Retail, and off of both, GW would have made more profit, though probably less than 4.5m. There is a question of whether an independent is better at selling and promoting GW product than GW (I would argue that in some cases, yes), but that's a whole other discussion

Actually, I disagree, subtracting the cash spent from the cash generated probably gives a clearer picture of the true circumstances than assessing how much money GW gave itself. It's real money vs paper money.

 Azreal13 wrote:

 Talys wrote:
Specifically, Az, I believe that the sales between GW and its stores are captured under "Total group core business operating profit", under "Product and Supply", which is worth 4.5m profit.

In the current period, the total retail sales = 22.4m.

Apply trade discount, that's 13.4m that the stores must pay GW.

4.5m profit from 13.4m in product seems quite reasonable.


Yes, it's left to right hand, but you need to do it to figure out the stores' performance, the same way Microsoft retail stores don't sell Office365 with a $0 cost and Apple retail stores don't sell iPhones based on manufacturing cost.

If GW stores didn't exist some of that 22.4m (maybe less) would go through Trade or Mail Order, instead of Retail, and off of both, GW would have made more profit, though probably less than 4.5m. There is a question of whether an independent is better at selling and promoting GW product than GW (I would argue that in some cases, yes), but that's a whole other discussion

Actually, I disagree, subtracting the cash spent from the cash generated probably gives a clearer picture of the true circumstances than assessing how much money GW gave itself. It's real money vs paper money.

No, it's not.

Stores must buy inventory from GW. It's real money, either generated from store sales or from borrowing money from GW. If a store sells a $100 model, its gross profit should be $40, not $70.

Just look at trade revenue vs trade profit. Retail revenue vs profit from internal sales to GW retail will be a similar ratio.

So, you don't see GW's stores buying stock from GW as paper money?

It's pure accountancy, no doubt to mitigate tax, and nothing else.

 Azreal13 wrote:
So, you don't see GW's stores buying stock from GW as paper money?

It's pure accountancy, no doubt to mitigate tax, and nothing else.

It is real money, man. When a GW store sells a mini the store gets MSRP. The retail portion gets credit for its sale, and the wholesale division gets credit (paid) for their work. Otherwise, who pays for the shipping, the stock at the distribution center, the cost of storage at the DC, the inventory manager, the shippers/receivers, and all that? Why should the DC be penalized for shipping to a GW retail store over an independent?

If it's as you put it, what is the 4.5m products and services core revenue for? But I digress. It's silly arguing this, and we're just taking in circles now, so I give up Believe whatever you wish; I won't try to convince you otherwise.

So the money, given to GW is artificially divided amongst internal departments.

It all goes to the same place, GW Retail isn't some separate company, GW as a gestalt entity still makes 100% of the profit less the production costs, unlike a sale made by an outside agency.

How they write this down has absolutely no effect on money in and money out.

 Azreal13 wrote:
So the money, given to GW is artificially divided amongst internal departments.

It all goes to the same place, GW Retail isn't some separate company, GW as a gestalt entity still makes 100% of the profit less the production costs, unlike a sale made by an outside agency.

How they write this down has absolutely no effect on money in and money out.

I must really suck at explaining things. I'll try one last time, another way. GW might lose money at retail but still make profit through its retail channel, because it makes more money at the wholesale level than it loses at the retail level.

If other retailers could sell the same amount of product, gw would make the same wholesale profit (for the sake of argument, just say 4.5m, off of 22m in 6 months, ok?), and NOT take a retail loss. But a reasonable expectation is that stores not owned by GW that also sell competing products may sell less GW product than a GW store. Also, there are some GW stores in good locations where independent s don't have a strong presence, or don't promote GW at all.

Does that make any sense?

Herzlos wrote:

Trasvi wrote:

GW does many things very well - it just happens to include things that you don't value: complete ranges of rank&file, characters, monsters and vehicles.

Assuming scale is consistent-ish, you don't need a single company to produce the complete range, or the rules. My 28mm WW2 Soviet army has troops and vehicles from a host of manufacturers and can be used with any ruleset. Neither of those have anything to do with scultping quality though.

GW's done remarkably well to convince people you must buy everything from the same company. It's probably the best thing they've managed and I think the only reason they are still on the go.

That is definitely not a GW-only thing.
Every other 'big' sci-fi or fantasy game uses pretty much exclusively their own minis - and subbing in models from other companies is actually significantly rarer in these games than GW games in my experience. I've yet to see someone using 3rd party minis in Malifaux or Warmachine, but nearly all my regular 40k opponents feature at least 1 non-GW model in their forces.
Historical games are a bit different here because they essentially can't be IP protected. Two companies producing 28mm Sherman tanks should produce essentially identical looking minis.
Its a business decision, to be sure: You make the rules for something and a model for it, 99% of players are going to buy that model from you. You make a model, 99% of customers are going to use it in your game. A significant part of the value of your models is that it fits with and identifies with other models you produce.

This really shouldn't be a surprising idea. Most other mini manufacturers don't do eclectic, one-off models with no tie ins to anything else they produce. They won't make ONE dwarf - they'll make 5 dwarf warriors, 5 dwarf riflemen, and two dwarf characters (for example). The more expansive the range, the more value as you can build an entire warband/army that fits together seamlessly.

 Talys wrote:

 Azreal13 wrote:
So the money, given to GW is artificially divided amongst internal departments.

It all goes to the same place, GW Retail isn't some separate company, GW as a gestalt entity still makes 100% of the profit less the production costs, unlike a sale made by an outside agency.

How they write this down has absolutely no effect on money in and money out.

I must really suck at explaining things. I'll try one last time, another way. GW might lose money at retail but still make profit through its retail channel, because it makes more money at the wholesale level than it loses at the retail level.

If other retailers could sell the same amount of product, gw would make the same wholesale profit (for the sake of argument, just say 4.5m, off of 22m in 6 months, ok?), and NOT take a retail loss. But a reasonable expectation is that stores not owned by GW that also sell competing products may sell less GW product than a GW store. Also, there are some GW stores in good locations where independent s don't have a strong presence, or don't promote GW at all.

Does that make any sense?

It's not that I don't understand you, I just disagree with you. You're getting sucked into the financial shell game that is corporate accounting.

My assertions are simple - GW spend around 50m on the stores, the stores generate around 51.5m in revenue. Even if they're making a "profit" at the distribution end, they're still spending the same amount on the retail chain as they're taking in, near as dammit.

Where do you see that they spend GBP50m on the stores, anyways? All I see is $36m COGS and $76m operating expenses. I'm not arguing with you, I just want to know where it is.

If you took out the stores, GW would sell a lot less product (unless you disagree with that). It's really as simple as that. Even if stores didn't ever make a dime in the end calculus, they are driving sales to GW instead of other products. It's more players, more mindshare, more awareness, new players, a place for existing players to socialize, and some of which translates into purchases from other channels, and in the end, is a good thing.

 jah-joshua wrote:
@Killkrazy: obviously, the people at GW don't think it is terrible to have their own shops...


@Azrael: if you are taking their retail arm in isolation, which it seems like your post was, spending £50m to generate £51.5m, then how is that not a profit of £1.5m for the retail side???

you seemed to be implying that generating £1.5m more than the retail stores cost to sustain is somehow bad business...

am i missing something here???

cheers
jah

Naturally, it's easy to forget that GW started as a games retailer originally, and it is the only real constant in their history. It ought to be their no1 core competency.

IMO they ought to be selling a much wider range of games in their shops, to maximise effectiveness of their retail chain.