Best Buy tests used-games sales in Canada

Retailer tries to get more younger customers

By Danny King -- Video Business, 6/19/2008

JUNE 19 | Best Buy has started selling used videogames at some of its Canada stores as a way of widening profit margins by boosting sales from teenage customers.

The largest U.S. electronics retailer, which gets 17% of its sales from international stores, “just” started a used-games pilot program in Canada, said Bob Willett, CEO of Best Buy’s international unit, in a conference call. Willett declined to say how many stores were involved or if the program would be started at U.S. stores.

Best Buy last month started the program at six of its 133 Future Shop stores in Calgary and might expand it to the entire chain by the end of summer, according to Sterne Agee analyst Arvind Bhatia, who covers U.S. games retailer leader GameStop.

This week, Best Buy said its fiscal first-quarter revenue rose 13% on higher sales of flat-panel TVs and PCs, but earnings fell 6.8% because of lower margins on videogame consoles. Its gross margin fell 0.2% to 23.7%.

Chain stores such as GameStop have boosted sales by trading used games, Willett said.

“In Europe, this is massive,” said Willett. “It’s a phenomenal way of getting to a younger consumer, 12 to 14 years old, who are really the drivers of this.”

Best Buy stores in Canada and China boosted fiscal first-quarter revenue by 26%, while international same-store sales rose 4.7%.

GameStop, the world’s largest videogame retailer, said last month that it had a gross profit margin on its used games of 49%, dwarfing its 26% gross profit margin overall.