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Game shop buys cheap supermarket consoles to resell. It’s legal, but is it ethical?

I know I’m late to this – it happened in October – but I hadn’t seen this story until I read a reader’s letter in the new issue of GamesTM magazine. The gist: Sainsbury’s was flogging consoles at a loss, and a significant proportion of those consoles were bought not by punters, but by managers of games shops. According to MCV:

The latest round of price slashing kicked off at Sainsbury’s over the weekend, with the retailer cutting £30 off the price of Xbox 360 and Wii hardware – an offer which meant the 360 was available for under £100. Armies of staff from GAME, Gamestation, CHIPS and numerous independents then swooped to snap up the cut-price consoles.

“With 360 and Wii on sale at these prices we allowed our store managers to supplement their stock by buying consoles from their local Sainsbury’s,” explained GAME Group CEO Lisa Morgan.

“Availability was very inconsistent, but on the whole it was a worthwhile exercise. Our strategy is centred on giving our customers choice, good value and having the best possible availability going into the Christmas period.”

That’s “good value” in the sense of “ensuring nobody can get it cheaper than we sell it for”, I presume. The Telegraph wrote:

Lisa Morgan, the chief executive of Game, confirmed that the retailer’s store managers had bought almost 1,000 of the estimated 2,000 consoles sold by Sainsbury’s. The consoles were later resold in Game stores.

What do you think? I’m sure such behaviour is legal, but is it ethical?

12 replies on “Game shop buys cheap supermarket consoles to resell. It’s legal, but is it ethical?”

Since when is any of this shite ethical?

The wii sells so well because it is/was difficult to get (and the shortfalls are rumoured to be deliberate). Supply and demand being fed by deliberate stock manipulation.

Sainsbury’s sold them at a loss to increase footfall in their stores to try and get these new customers to buy Sainsbury’s products, or at least buy their games from there.

Also the wii itself, although fun, is nowhere near as good as the hype suggests. It’s a laugh (especially in company) but not worth the markup that many people paid in the first year.

It may not be legal. Here’s the Competition Commission’s remit:

We investigate and address issues of concern in three areas:

• In mergers – when larger companies will gain more than 25% market share and where a merger appears likely to lead to a substantial lessening of competition in one or more markets in the UK.

• In markets – when it appears that competition may be being prevented, distorted or restricted in a particular market.

• In regulated sectors where aspects of the regulatory system may not be operating effectively or to address certain categories of dispute between regulators and regulated companies.

Surely this is covered by the second point. It would at the very least warrant an investigation. If anyone complains to them.

Friend of mine worked in a suburban Ottakers (don’t exist any more, should be safe ground) a couple of Xmases back. Big thing was the Harry Potter book that came out at the time (possible the frist few months of the year). The local mega-supermarket (still very much in existence) were selling it really low priced. When they ran out of stock they bought up the Ottakers supply to keep up with the demand. The manager of the branch then sent staff round to pick up cheap copies for them to sell.

And, folk wonder how we got in this mess?

Having a big Tesco in my town didn’t stop Asda opening up and doing very nicely, so, if Tesco are preventing competition, they’re not very good at it.

> Selling at a loss could be considered to fall under that too.

How? Selling at a loss doesn’t prevent competition; it is competition. Buying up all your competitor’s stock and reselling it from your own stores at a higher price is unequivocally preventing competition, in that you are taking measures to ensure that a price offered by one of your competitors is not actually available to the public.

Besides, when Microsoft are selling the units to Sainsbury’s at a loss, one can hardly complain that Sainsbury’s are doing the same.

You know, what really gets on my tits about this kind of stuff is that when we do it, eg by importing from abroad, the manufacturers throw a big fit because it messes with their cosy distribution agreements. Grey imports are bad! But when shops screw us around, which is what I’d characterise this as, that’s just our tough shit.

@squander two:
> Buying up all your competitor’s stock and reselling it from your own stores at a higher price is unequivocally preventing competition, in that you are taking measures to ensure that a price offered by one of your competitors is not actually available to the public.

Yep, that’s my take on it too.

> How? Selling at a loss doesn’t prevent competition; it is competition.

Unless you just do it long enough to put a smaller competitor, who can’t afford to keep selling at a loss, out of business. How come I, the leftie, know more about how capitalism works than the tireless defenders of multinational corporations do?

> How come I, the leftie, know more about how capitalism works than the tireless defenders of multinational corporations do?

That would be an excellent question, if the preceeding sentence didn’t display such an impressive lack of knowledge.

> Unless you just do it long enough to put a smaller competitor, who can’t afford to keep selling at a loss, out of business.

You’re wrong to start with the word “unless”. No, competing with someone so vigorously that they go out of business doesn’t mean that you’re not really competing. And selling at a loss doesn’t cease to be competitive if you only do it for a certain amount of time.

I think you’re confusing “preventing competition” with “putting a competitor out of business by outcompeting them”.

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