Gametraders And The Strategies For Playing The Game

The Australian:

Mongolian military leader Genghis Khan seems an unusual role model for a video games franchisor.
Yet Mark Langford, creator of the boom South Australian business Gametraders, credits Khan as the ‘the father of franchising’ because the 13th century commander encouraged meritocracy and allowed his troops to use initiative to make decisions in the field.

‘That’s really what a good franchisee has to do,’ says Langford, whose business rocketed into the BRW Top 100 fastest-growing companies last year.

Set up in June 2000 in a humble service station in the Adelaide suburb of Mitcham, Gametraders has evolved into a 37-store enterprise that specialises in buying, selling, trading and renting new and used video games. From the latest Sony PS3 to old favourites such as Atari and Sega Megadrive, the franchise chain stocks it.

It has been an exciting ride for Langford, a former Cairns real estate agent who moved back to South Australia in the late 1990s with no career plans.

Setting up a small retail business that included trading the popular Pokemon cards at the height of the game’s boom taught Langford a couple of valuable business lessons - store location is crucial and the wrong product mix (he originally sold anything from games to kites) is guaranteed to fail.

The operation thrived for nine months as Pokemon fans flocked to his store, ‘but when the craze died the writing was on the wall’. Undeterred, Langford’s success in trading the Pokemon cards convinced him that he could do the same with computer games.

He set up Gametraders 6 years ago with a view to selling second-hand games only. Word soon got out to school children that they could buy great games cheaply - and get rid of their old products at the same time.

Winner of the Franchise Council of Australia’s franchisor and franchisee awards in 2003 and 2004 and with 10 or more stores in each of South Australia, Queensland and Victoria, Langford’s hunch that trading games could be a big business has proven right. For the year to June 2006, sales hit $13.7 million, and based on figures so far this financial year that is expected to jump to about $25 million for the year to June 2007.

Reflecting on the journey from ‘a little service station to a major multi-million-dollar business’, he attributes Gametraders‘ success to a willingness to take a chance and to invest money into the concept. In years past, he hired extra staff when revenues did not justify it. And he spent significant amounts on IT development and marketing when cash flow was tight. ‘Every single cent we have made has gone back into the company,’ Langford says. ‘It’s always been about getting the brand out there and being seen. The focus on the bottom line has always been down the track.’

Gametraders has also been prepared to change course to satisfy the market. A few years ago, Langford listened to his customers and decided to introduce new games into the stores. Fearful of lower margins and rising inventory costs, many franchisees opposed the move.

The decision, however, has been a masterstroke… Read on.