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ANALYSIS Is it Game over for unprepared retailers?

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by Mark Collin

The recent turbulence faced by Game in its struggle to be king of the high-street is testament to the fragile world in which retailers operate. Five years ago, the company was the biggest games retailer on the high-street, and was in fact the first retailer in its sector to be listed on the London Stock Exchange. Now, forget about being number one on every high street, the company is fighting for its very survival under new ownership.

For a company that’s done so incredibly well in the ten years since re-branding to Game, why have events gone so drastically wrong?

Don’t run before you can walk

Like many retailers, Game’s operations have grown aggressively in recent years through acquisition and diversification into new territories. The company acquired Centromail in 2006 (which added 11 stores and 58 franchises to its portfolio), Scoregames in France (adding a further 37 stores) and the then behemoth Gamestation (adding a total of 217 new stores). Since its first store opened, the company has gone from a single store in Stockholm to around 1,300 across Europe in a little over ten years. That’s an astonishing 92 new stores a year.

Although the company’s brand featured on every British high street; while on its acquisition spree it failed to embrace the explosion of different channels and touch points that consumers were embracing on an unprecedented level. Rather (and to its detriment) the company focused its energy and resources on the in-store experience.

Game is not alone

With UK shoppers spending 48 per cent of their monthly retail budget online, clearly, retailers like Game need to do more if they hope to survive. But like Game, many traditional retailers are in a desperate hunt to find suitable partners that can help them transform in to a 21st century retailer.

Traditional retailers are also hampered and held back by the baggage in their technical environment and a lack of guidance needed to make their efforts a success. Many of these companies have the same aspirations as pure online retailers, such as Amazon, The Hut and thetrainline. But unfortunately, they have technical debt and legacy systems inhibiting them from growth.

The challenge is not that of performing pure online retailing, but it is the intersection of rapid proliferation of new channels, satisfying a more demanding and evolved customer base while operating in a constrained environment. Specifically, that environment is one they created decades ago, using bulky hardware and bloated legacy software that is just too expensive to throw out and replace.

Creating a new infrastructure for each channel clearly does not make sense for retailers. Instead they are grappling with several questions: What is the best way to take a new channel to market faster? How do you integrate a new channel to work seamlessly within an existing landscape?

Continuous delivery and experience design: The foundation for retail agility

Opting for a single vendor or platform is not the answer. And yet it’s the path that many retailers take. Instead, it should be about building a secret formula and figuring out what the brand stands for, who the customers are and how they like to engage with your business.

One way of achieving this is through the concept of continuous delivery, a stable foundation on which to build, launch and evolve exciting new customer experiences. Continuous delivery is a software development strategy that optimises the delivery process involved in getting high-quality, valuable software delivered as quickly as possible to customers.

By automating the build, deployment and testing process, and improving collaboration between developers, testers and operations, retailers can get changes released in a matter of hours, sometimes even minutes. For retailers this means being able to release innovative new software products and services before the competition, allowing them to take full advantage of the lucrative opportunities presented by the digital age.

Also embracing an attitude of agile experience design bodes well. By using a highly iterative, test and learn, fail fast culture to design new customer experiences, retailers can canvass opinion using social media and then build out new channel experiences quickly ensuring they are constantly in-tune and fine tuning their brand experience by having fast and real feedback from customers. This approach has been used to great effect online by Google, Flickr et al and also bringing store and on online experiences together using innovation lab techniques demonstrated successfully by the eye-wear app’ at Nordstrom in the US. And the point here is they don’t have to be pixel perfect to begin with, this is more about making sure your idea is on the right track so avoiding expensive ‘big upfront design’.

Taking a more holistic approach with continuous delivery offers significant benefits for retailers of all sizes, but particularly those with customer-centric strategies and aggressive growth plans. Through continuous delivery, organisations can make the most of their investment in legacy systems and applications. Rather than rip out and replace their systems, continuous delivery can extend their functionality, enabling retailers to confidently embrace the plethora of exciting new channels available.

Today we see retailers whose online presence is their exclusive shop window, whilst others see e-commerce as their fastest growing revenue channel. Although the well-done brick-and-mortar store is still a powerful draw; it will be the astute deployment of resources across the multi-channel mix that will determine which retailers thrive, or die.

Mark Collin is client principal Europe at Thoughtworks.

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