Nintendo has today announced that it will be raising the trade price of the Wii in the UK by £18 - £20 GBP because of the continued devaluation of the Pound Sterling in the global economy.
The trade price, which is the one charged to retailers, not customers, hasn't been fully disclosed in the announcement but it does seem like the RRP for customers will stay at £179.99.
The worry is however that, if trade price raises but the RRP doesn't, then the already low margins suffered by retailers on game consoles will be further diminished. Traditionally consoles have made profit from game sales, not the actual hardware; like shaving razors the profit comes from selling the blades, not the handles.
"Due to the severe and continuing depreciation of the pound, we are, unfortunately, having to raise our trade price to UK retailers of Wii hardware," Nintendo said to GI.biz. "The price that they then offer to consumers is, of course, up to the retailers."
Naturally, if margins for retailers fall too low then shops may choose to up the cost of the consoles, or the games, in order to increase profits.
"We are only – reluctantly – raising our trade price now to retailers due to unprecedented and sustained depreciation of the pound. This is a problem brought about by extreme currency fluctuations that are a symptom of the global economic situation," said Nintendo.
Is the British economy in dire straights or is Nintendo just over-reacting? Let us know your thoughts in the forums.
The trade price, which is the one charged to retailers, not customers, hasn't been fully disclosed in the announcement but it does seem like the RRP for customers will stay at £179.99.
The worry is however that, if trade price raises but the RRP doesn't, then the already low margins suffered by retailers on game consoles will be further diminished. Traditionally consoles have made profit from game sales, not the actual hardware; like shaving razors the profit comes from selling the blades, not the handles.
"Due to the severe and continuing depreciation of the pound, we are, unfortunately, having to raise our trade price to UK retailers of Wii hardware," Nintendo said to GI.biz. "The price that they then offer to consumers is, of course, up to the retailers."
Naturally, if margins for retailers fall too low then shops may choose to up the cost of the consoles, or the games, in order to increase profits.
"We are only – reluctantly – raising our trade price now to retailers due to unprecedented and sustained depreciation of the pound. This is a problem brought about by extreme currency fluctuations that are a symptom of the global economic situation," said Nintendo.
Is the British economy in dire straights or is Nintendo just over-reacting? Let us know your thoughts in the forums.
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