It’s game on for Sainsbury’s and Asda

Asda and Sainsbury’s are to battle it out for the gamer’s pound this summer, as they both ramp up their presence in the gaming sector to increase sales and claim market share.

They are both set to unveil new in-store gaming areas that will include branded aisles as part of their growing investment in entertainment (MW last week).

The increased commitment comes as no surprise. The industry has reported a strong sales growth, spurred by the launch of the Nintendo Wii and Sony PS3 consoles. The huge popularity of the recently launched Grand Theft Auto IV and the WiiFit exercise board is also credited with increasing the appeal of gaming and further explains the supermarket chains’ move, say retail experts.

“Retailers are quick to spot an opportunity in the market and, just as they did with the mobile phone market, they see the gaming sector as the next big thing. Sainsbury’s recognises it has been on the back-foot when it comes to bolstering its non-food offer, and is already increasing its games ranges in stores,” says Planet Retail research director Brian Roberts.

More to play for

“Also, the gaming market provides higher margins than food, and retailers like Tesco and Asda, which have already achieved success in non-food, will build on that and dip into one of the strongest performing sectors in retail,” explains Roberts.

Mike Godliman, director of retail consultancy Pragma Consulting, points out that the gaming market has not only been growing in sales but also extending its demographic range, therefore making it easier to attract mums out for their weekly shop at Asda or Sainsbury’s. The Nintendo Wii, for instance, is said to appeal to female or older consumers rather than hardcore gamers.

Asda plans to introduce its new in-store gaming formats in 130 stores in July and August, with a further 30 to be converted by the end of the year. The new format has been developed in partnership with Nintendo, to create areas where DS users can try out games, download content and access the internet.

Tesco has also been moving aggressively into the gaming sector and undercutting the prices of new and popular releases such as Tomb Raider: Anniversary featuring Lara Croft, which sparked a price war with Asda last summer.

Specialist games stores such as HMV and Game have also been boosting their efforts to provide a range of popular gaming products to broaden their appeal to new customers. Game Group recently reported pre-tax profits soared by more than 150% last year on the back of a 41% rise in like-for-like sales. The strong figures follow the launch of popular consoles like Wii and PS3 last year. HMV is also devoting more space in its stores to gaming, launching dedicated “games floors” and “games booths” in some outlets.

Supermarket sweep-through

“Grocers will cause great angst in the specialist sector because they can price aggressively and cream off the top-selling and popular high-ticket items,” says Mintel director of retail research Richard Perks.

But Pragma’s Godliman says the impact will not be wide-ranging, adding: “No doubt the specialists will feel some pain about the grocers undercutting them, but the core gaming consumers in the 16to 30-year-old segment are unlikely to go to Tesco or Asda to browse for games.”

Roberts agrees and concludes: “As ever, food retailers will be able to offer cheap prices but they will never be able to match the authority and knowledge that the specialists can offer.”