What Do EB Games Global Closures Mean for Australia?

The future of EB Games hangs in the balance following the announcement that its New Zealand operations will close all stores by 31 January 2024. This decision follows a series of challenges faced by the gaming retailer, including competition from online platforms and a significant decline in physical game sales. With the company's managing director citing unsustainable losses, the closure raises questions about the viability of EB Games in Australia as well.

Last updated: 29 October 2023 (BST)

What’s happening now

EB Games has confirmed the closure of its New Zealand business, with all stores set to shut down by the end of January 2024. Following this, the distribution centre will close permanently on 28 February 2024. As part of the transition, the EB Games website will begin servicing New Zealand customers through the Australian site, ebgames.com.au, by the end of March 2026. This move comes as the company contends with mounting losses and a challenging retail environment, with the managing director highlighting that the New Zealand operations have become commercially unviable.

Key takeaways

• All EB Games stores in New Zealand will close by 31 January 2024.
• The distribution centre will cease operations on 28 February 2024.
• New Zealand customers will gain access to the Australian website by March 2026.
• The company has cited a multimillion-dollar loss as a significant factor in its decision.
• Future of Australian stores remains uncertain, with no announcements made regarding their status.

Timeline: how we got here

Understanding the situation requires a look back at key milestones:

• 1997: EB Games Australia launched as Electronics Boutique.
• 2000: The first New Zealand store opens in Auckland.
• 2002: Electronics Boutique rebrands to EB Games globally.
• 2005: GameStop acquires EB Games for $1.44 billion.
• 2020: EB Games Australia closes 20 outlets due to declining sales.
• October 2023: Announcement of New Zealand closures and multimillion-dollar losses.

What’s new vs what’s known

New today/this week

EB Games has officially confirmed the closure of all its stores in New Zealand, which will take effect in January 2024. This announcement follows a period of financial struggle for the retailer, as it faces increased competition and declining sales in physical gaming products. The transition to online services through the Australian website marks a significant shift in their business strategy.

What was already established

Prior to this announcement, EB Games had already begun facing challenges due to competition from major retailers like Amazon and JB Hi-Fi. In 2020, the company closed 20 stores in Australia as part of an effort to streamline operations amidst a changing retail landscape. The ongoing decline of physical game sales has been a persistent issue for the company, leading to concerns about its long-term viability.

Impact for the UK

Consumers and households

While the closure of EB Games in New Zealand does not directly affect UK consumers, it highlights a global trend in the gaming retail market. The decline of physical stores is prompting many consumers to shift towards online purchasing, which may influence the availability and pricing of games in the UK market.

Businesses and jobs

For those employed by EB Games in New Zealand, the closure raises concerns about job security, with an unclear future ahead. The company has mentioned potential relocation opportunities to Australian stores, but it remains uncertain how many employees will take up this offer. The broader impact on the retail sector could also be significant, as it underscores the challenges faced by brick-and-mortar retailers.

Policy and regulation

As the retail landscape continues to evolve, regulators may need to consider policies that support traditional retailers while promoting fair competition with online marketplaces. The closures could trigger discussions about the need for government intervention to protect jobs and support local businesses in the gaming sector.

Numbers that matter

• 38: Number of EB Games stores currently operating in New Zealand.
• 336: Number of EB Games stores in Australia.
• 1.44 billion USD: Amount GameStop paid to acquire EB Games in 2005.
• 20: Number of stores closed in Australia in 2020.
• Multimillion-dollar: Estimated loss incurred by EB Games NZ during the 2024 fiscal year.

Definitions and jargon buster

• EB Games: A retail chain specialising in video games, consoles, and related merchandise.
• GameStop: An American video game, consumer electronics, and gaming merchandise retailer that acquired EB Games.
• Fiscal year: A one-year period that companies use for financial reporting and budgeting.

How to think about the next steps

Near term (0–4 weeks)

In the immediate future, EB Games will focus on the logistics of closing its New Zealand operations, including managing the final inventory and handling employee transitions. Customers may want to take advantage of any clearance sales as stores begin to close.

Medium term (1–6 months)

As the Australian operations continue, it will be crucial to monitor any potential changes in store numbers and locations. Consumers should keep an eye on new online offerings as the company adapts to the digital marketplace.

Signals to watch

• Updates from EB Games regarding the status of Australian stores.
• Changes in the video game retail market, particularly regarding online sales growth.
• Job market trends for retail positions in the gaming sector.

Practical guidance

Do

• Stay informed about the latest announcements from EB Games regarding store closures and relocations.
• Consider online shopping options for video games and related merchandise.
• Follow market trends to understand shifts in the gaming retail landscape.

Don’t

• Don’t panic-buy during clearance sales; assess needs versus wants.
• Don’t overlook opportunities for online purchasing, as many retailers expand their offerings.
• Don’t ignore potential job opportunities that may arise in the evolving retail space.

Checklist

• Check if your local EB Games store is closing and any ongoing sales.
• Review your gaming needs and explore online retailers.
• Stay updated on employment opportunities if you are affected by the closures.
• Follow gaming news for insights into market trends.
• Consider sharing your thoughts on the shift towards digital gaming with friends.

Risks, caveats, and uncertainties

The closure of EB Games in New Zealand raises several uncertainties, particularly regarding the future of the Australian operations. While the company has not announced any immediate closures in Australia, the declining market conditions could prompt further reductions. Additionally, the long-term viability of physical gaming retail is challenged by shifting consumer preferences towards digital purchases. As such, the situation remains fluid, and stakeholders should be cautious about making definitive assumptions.

Bottom line

The closure of EB Games in New Zealand signals significant challenges for the retailer, reflecting broader trends in the gaming market. For consumers in the UK, this serves as a reminder of the changing landscape of retail, particularly as it pertains to video games. As EB Games navigates this difficult period, it will be interesting to see how it adapts and whether it can sustain its operations in Australia.

FAQs

What led to the closure of EB Games in New Zealand?

The closure of EB Games in New Zealand was primarily due to unsustainable financial losses and increased competition from online retailers, making the business no longer commercially viable.

Will EB Games continue to operate in Australia?

As of now, EB Games has not announced any closures for its Australian stores, but the future remains uncertain due to the company's ongoing challenges.

What options are available for New Zealand employees affected by the closure?

EB Games has indicated potential opportunities for New Zealand employees to relocate to Australian stores, but the specifics of these opportunities have yet to be clarified.