Grainger Games, Gameseek and Games Centre are three well known media retailers who have disappeared from our high streets and the Internet in recent months. There can be little doubt that media retailing is a highly competitive market and it’s contracting even more with the pending closure of Tesco Direct and that includes the closure of the Tesco marketplace which has proven to be a profitable outlet for media retailers.
The market is so challenging that it’s led to Nick Whitehead, boss of Xbite Limited, to put out a company update confirming that they are not experiencing the significant issues other companies are facing.
Nick reports that last year their turnover reached £38m and this year it will be slightly less but with a significant increase in margin. They have also diversified and now instead of being 100% reliant on video games it now represents just under 50% of their income.
Xbite UK income has generally flat lined during April and May and while they feel disappointed with this result, in light of the recent negative events they are clearly outperforming the market. Xbite are making significant investments in software and infrastructure, including starting a £1 million warehouse extension in January 2018 of 21,000 square feet.
There are further challenges to come as Xbite are one of the merchants trading successfully on the Tesco Marketplace and having driven significant volumes for the few merchants accepted on the marketplace, consumers will now be looking elsewhere to buy. The challenge for retailers such Xbite is how to capture these customers – A Tesco customer may well be more likely to look for an alternative big brand retailer before they turn to traditional marketplaces or smaller retailer website.
“I feel Xbite will experience our best peak period in our history in Q4 2018 as we are poised to take advantage of the investments we have made to date. It’s easy to focus on the negative news which is dominating the press in general retailing, but Xbite continues to invest and see growth in a number of areas and is not experiencing the significant issues other companies are facing.”
– Nick Whitehead, MD, Xbite Limited
With the contraction of the market, there are still opportunities for retailers and merchants to prosper even in a tough environment. Consumers aren’t going to stop buying the latest games and consoles, but they may be looking for better deals, bundles and value for money. That puts even greater pressure on margins.
If you’re in the media business, whether on marketplaces or your own website, what challenges are you facing? Are you, as Xbite are, optimistic and planning and shaping your business for the future or do you have more pessimistic expectations from the next 12 months?