Matt Martin
13:42 (BST)
02/05/2007
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Gamestation acquisition necessary for market growth - Morgan
CEO asks suppliers to be supportive to help widen market
The Game Group's GBP 74 million acquisition of rival retail chain Gamestation is necessary for overall market growth, according to CEO Lisa Morgan.
The deal, which was announced today, will give the Game Group a total of 1047 stores - and shrink specialist retail in the UK from two major chains to just one.
As reported on the company's website Morgan stated, "We've been a key partner, as has Gamestation, with our suppliers for some time now and we played an important part in developing and growing the marketplace.
Morgan denied that the acquisition is an attempt to defend GAME's position as a specialist retailer in the videogame market in the face of increased competition from supermarkets, entertainment stores and online outlets.
"We recognise that this marketplace is a growing marketplace and there are more competitors within it, but ultimately this is a strategic acquisition by GAME to develop a second brand on the High Street and ultimately appeal to more customers with a specialist offer, giving better service and driving improvements throughout the Group," she said.
"We're competing for entertainment spend within the marketplace and it really does depend on how you actually define that overall market. Historically, when we've talked about market share at GAME it's been Chart-Track market share and that specifically just covers a specific segment of market."
In terms of integrating the two companies, The Game Group has made assurances that it doesn't want to see stores closed - although consolidation of Gamestation's head office in York with GAME's new facility in Basingstoke is likely.
"We've always actively managed our store portfolio and we'll continue to do that. But this deal is not about closing stores. This deal is about enhancing our customer reach," offered group finance director David Thomas.
Morgan added: "Over time it's our intention that we will integrate the two head office facilities that exist presently into our state-of-the-art, purpose built centre at Basingstoke."
"Ultimately we see the future of the business having one central infrastructure to support both brands. This will take time and obviously is going to be subject to full consultation process, but it is one of the key synergy areas," she revealed.
Any Gamestation-branded concessions in previous owner Blockbuster's stores are to be debranded by the end of next month, and handed back to the movie rental company.
"The Gamestation concessions are not part of the transaction and therefore, within the next couple of months, in fact by the June 30, they will be debranded and no longer trade as Gamestation and the ongoing business will be handled by Blockbuster," confirmed Morgan.
Now with a revitalised business and a swelling of stores Europe-wide, there is speculation that GAME could attempt to tackle GameStop, the company's biggest international rival. The company has yet to comment directly, but Thomas didn't rule out the possibility of further expansion both on home turf and internationally.
"We would take a three to five year view in terms of our future investment and we're very confident that we've got the capability to continue to make investment both internationally and in our home market," he said.
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