Game Digital has hired an external distribution company to handle all the games consoles sold on Black Friday as it expects the US-inspired discount day to be bigger than ever this year.
The company was forced to issue a profit warning in January after heavy competition on Black Friday in 2014 forced it to give away some of its top-quality games in order to sell new consoles.
The problems at the retailer, which listed on the stock market last year, were partly responsible for a 4.5% fall in underlying profit to £38m in the year to 25 July. Sales rose 2.3% to £962m.
Martyn Gibbs, the chief executive, said he still viewed Black Friday as an opportunity to recruit new customers to Game’s loyalty scheme and so encourage them to spend more in the long term.
“We could hit a higher margin for one day but then we would not recruit 50,000 or 100,000 customers. It’s very simple for us.”
He said selling a console could start a relationship with a customer that could affect the outlook of the company for the next eight years.
This year Game Digital is likely to sell a broader range of products as the potential market for the retailer’s games has vastly increased, with more than a million more people in the UK now owning one of the new generation of gaming consoles such as an Xbox One.
After last year’s profit hit, Gibbs believes Game has also struck a better balance on the package of consoles and games it will be offering this Black Friday.
He said handing over all the distribution of consoles to a third party over Black Friday would enable Game Digital’s own warehouse in Basingstoke, Hampshire, to focus on getting its software and other products out to shoppers.
The move comes after a number of businesses, including Marks & Spencer and delivery company Yodel, struggled to cope with a surge in demand for deals over Black Friday last year. This year Yodel is recruiting 7,000 extra delivery drivers for the festive season as it expects four times as many people to take advantage of the Black Friday promotions this year.
The company is also substantially increasing staff in its stores for the day and has invested in its website to handle the expected surge in demand.
“We are planning for it to be bigger,” Gibbs said.
Another likely area of focus on Black Friday and into next year will be toys-to-life games – children’s computer games linked to physical toys. Games such as Skylanders enable children to place a toy on a “portal” and see it come to life in a game. Gibbs said sales of such games rose 80% in the year after Lego entered the market.
Gibbs said the games were opening up the market to a completely different type of customer. Nearly 60% of the games are bought for young girls.
