‘Mario cuts through everything’: How EB Games survived retail’s great battle

In a world dominated by deep discounts, online competition and soaring shop rents, it’s hard to understand how a 20-year-old retailer like EB Games could not only survive, but thrive.

On the surface, it seems the video gaming chain has the odds stacked against it, with a sprawling 400-strong store network, fierce competition both in malls and online, and a languishing US parent company at the centre of one of the biggest short squeezes in recent history.

Despite nearly 400 stores and fierce competition, EB Games is a strong, profitable business.
Despite nearly 400 stores and fierce competition, EB Games is a strong, profitable business. Credit:Jason South

But for its customers and staff, the stores – known for their seemingly perennial sales and deep bins of pre-owned games – offer something unlike any others. Former manager Claire Tester likens the experience to heading to a local bar or cafe, albeit a bit nerdier.

“Although it may sound strange, just like a bar EB Games stores have regulars who come into a store not just to purchase things but to discuss new trends in the video game industry,” she said.

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“As nerd culture has entered the mainstream, the acceptance of pop culture and nerdy merchandise has meant EB Games can engage with the more casual gamer, who wants to feel part of a community.”

EB Games, or Electronics Boutique as it was once called, began in south-eastern Pennsylvania in the late 70s before quickly spreading across the US and then internationally. The company’s first Australian stores opened in 1997, and at the time it was the only nationwide video game retailer.

By the early 2000s, the chain had over 2200 locations across the world. In 2005, the company merged will fellow video game retailer GameStop in a $1.44 billion deal, which saw its US stores rebranded. However, its Canadian and Australian operations kept the EB Games name.

Today, GameStop’s 380 Australian EB Games and Zing Pop Culture stores are, remarkably, the company’s only profitable segment. For the 2019 calendar year, they reported a profit of $US9.4 million ($12.4 million): modest, but far better than the $US343 million loss recorded in the US.

Across the first and second quarters of 2020, GameStop’s Australian stores were again the only part of the global business not to report huge COVID-related losses, with sales soaring 30 per cent. The company plans to continue to open stores, despite swathes of fellow retailers closing locations by the hundred.

The recent sales jump was also aided by EB Games choosing to keep its stores open throughout the April lockdown, along with a broader boost as stuck-at-home Australians found themselves with more time to game.

An EB location visited by The Age and The Sydney Morning Herald this week felt worlds away from many of the other hollow-looking retailers in the same shopping centre. The store was clean, packed with stock, and replete with a customer asking futilely if the store had any Playstation 5 consoles available.

EB Games was the only profitable segment for parent company GameStop in 2019.
EB Games was the only profitable segment for parent company GameStop in 2019.Credit:AP

That’s not to say the business hasn’t been without issues – it closed 19 stores in early 2020 as a cost-cutting measure – but to seasoned retail expert and QUT academic Gary Mortimer, the chain represents “the exception to the rule”.

“At face value, the physical model is hard to comprehend,” he said. “You would expect EB to be highly exposed to digital disruption, but there’s a number of other reasons why it’s successful.”

“Number one is its staff, who are highly engaged in the gaming space and are just so well connected with customers. They talk the language of gamers, a bit like how JB Hi-Fi staff do with consumer electronics.”

Mr Mortimer also believes EB’s diversification into games merchandise through the establishment of its Zing brand in 2014 has been vital, allowing the company to tap in to the lucrative, higher-margin games merchandise market of t-shirts, figurines and bobbleheads. The company operates 133 Zing stores across the country.

Fans line up for the midnight release of a new Pokemon game in 2018.
Fans line up for the midnight release of a new Pokemon game in 2018.Credit:Meredith O’Shea

Former staff agree that the business’ merchandise pivot has been key to EB’s survival in Australia’s tough retail landscape. However, they also point to EB’s massive pre-owned games segment as a major part of its success.

Martin Barnes, a Melbourne-based marketing student and esports commentator who worked for EB Games for three years, said pre-owned sales were a major priority for company management.

“That was drummed into us as a very important part of the business because the margin on pre-owned games is insane in comparison to the margin on selling new games,” he said.

Mr Barnes also noted the company’s focus on game pre-orders and prerelease events, which it often runs for major series releases such as Pokemon or Call of Duty, as another reason for EB’s continued popularity.

Chris Holst still regularly shops at EB Games with his kids, and has fond memories of working at the chain in the early 2000s, having met his wife there. He too believes much of the retailer’s success is embedded within the broader acceptance of gaming culture in society.

“It’s that atmosphere. It’s not just about the gameplay, it’s about the culture and wearing your colours,” he said. “As someone who’s about to turn 40 and has a room full of Mario and Zelda stuff, that’s a huge part of it.”

“For a lot of years, video game merchandise was really hard to come by, but now it’s everywhere. Mario cuts through everything.”

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