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Executive Summary 401 Games

401 Games is a large game retailer in Toronto that sells board games, card games, and collectibles. While most of its competitors offer online sales, 401 Games currently only operates brick-and-mortar stores. The company recently moved to a new, larger location. This document recommends that 401 Games both lease more space in its new location to increase inventory and negotiate lower prices, and develop an e-commerce strategy starting with a "Click & Go" option to test online demand before a full website launch. This combined strategy would help 401 Games grow sustainably while maintaining its expertise and customer service.

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287 views4 pages

Executive Summary 401 Games

401 Games is a large game retailer in Toronto that sells board games, card games, and collectibles. While most of its competitors offer online sales, 401 Games currently only operates brick-and-mortar stores. The company recently moved to a new, larger location. This document recommends that 401 Games both lease more space in its new location to increase inventory and negotiate lower prices, and develop an e-commerce strategy starting with a "Click & Go" option to test online demand before a full website launch. This combined strategy would help 401 Games grow sustainably while maintaining its expertise and customer service.

Uploaded by

Diego
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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401 GAMES

Proposal
Prepared by: Diego Benítez Concha
May 17, 2019
Boston, MAS
D’amore-McKim School of Business
401 GAMES

EXECUTIVE SUMMARY

Background and Issue Identification


401 Games is one of the best-known and larger game retailers in Toronto. Established in 1992
as 401 Convenience, they now specialize in selling board games, card games, plus collectibles,
getting sales up to $3 million last year. They also offer an area where the customer can hang out
and play the games for free and organize competitions. The most profitable items are Individual
Cards (contribution margin up to 50%), compared to the presentations of cards and board
games (average contribution margin of 20%).

Despite that out of 13 competitors that the company has, 12 offer online sales (which usually
can offer the same product at a lower price), 401Games's prices are very competitive on the
market. Up to this moment, they have maintained loyal to their strategy of only a "brick &
mortar" store.

The company just moved out to a new location with the main-level store floor and a basement
plus an additional option to lease more space. With the new opportunities ahead, this document
tries to give recommendations with the information available.

Options Available
• Rent more space

Leasing more area means more space both for aisles and storage. If you can stock more,
you can negotiate with the suppliers for a lower price so the company could reduce the prices
(which are already competitive) or it can be more profitable. Also, the game area, offered to
the customer can get larger with new features , like snacks and drinks (as a competitor
already offers).

• Develop an e-commerce strategy

As mentioned, 12 out of 13 competitors offer online sales. The products that 401 Games
sells, can be easily managed by delivery and therefore attract new clients that preferred to
buy online. According to The U.S. Department of Commerce’s International Trade
Administration, "... (Canada's) one of the world’s heaviest users of the internet, Canadians
have embraced electronic commerce amid a major disruption in retail channels…
approximately 88.5 percent of all Canadians have access to stable internet service¹”
401 GAMES

• Geographic Expansion

The Greater Toronto Area has a population of 6.4 millions of people. If 401 Games set up
new stores in Toronto first and then in other major cities like Vancouver and Ottawa, they can
reinforce their presence and their brand.

Recommendations
The recommendation is to develop a conjoint strategy of Leasing more space and becoming an
Omni-Sales Retailer.

If 401 Games lease the rest of the building, it will have to spend $87,500.00, but this extra
space will make the storage larger so it can have more stock capacity. This means that the
buyer can negotiate a lower price with the suppliers. As mentioned, the margins of the products
(except for the Individual Cards), are just 20%. If they can get an extra discount, the sales can
have an additional margin of $232,500.00. It can gives them a surplus of $145.000.

To b e g i n with the
Omni-Sales retailer and counting on the newly added stock, 401 Games can start offering a
"Click & Go" modality, in which the client can order and pay the product, or article, online and he
goes to pick it to the store. This way they can start to get preferences of the market so they can
develop a consistent packaging strategy afterward.

401 Games has the potential of growing in a sustainable way and jump into new ways of doing
business but always maintaining their distinctive expertise and excellent customer service.

Notes

¹ https://www.export.gov/article?id=Canada-eCommerce

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