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Subject: UK game prices set to rise by 10-15% in July rss

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Alex Sagar
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The following announcement was made by Meeples Corner on the 1st of July https://meeplescorner.co.uk/blog/price-rise-announced-010720... I would expect other retailers to follow suite.

Caused by the result of the referendum last week the value of Sterling both against the Euro and in particular the US Dollar has dropped significantly. The levels against the Dollar are the lowest since the 1980’s.

Based on this development Esdevium, the largest distributor of board games in the UK, has announced that from today all products purchased in US Dollar (FFG, AEG, Z-Man Games and many more) have been repriced (= the price has gone up).

This means for us a rise in cost per game between 10%-15%, which we can’t ignore, especially because it looks like this will be a lengthy period of economic problems for the UK which will mean a low Sterling for an extended period of time. We have started to recalculate our prices and have uploaded a first batch of new prices (roughly 200 games, more will follow in the next few days).

These are only games that are not in stock at the moment and have to be re-ordered in the next days or weeks. Prices for games we still have in stock, will not change until we run out of stock and have to re-order the games for the new and higher price.

We will honor existing pre-orders: If you have placed a pre-order before the price changes, we will charge you the old/lower amount once the game has been released.

These changesare only for US games so far. Esdevium will update the prices for games they have to pay for in Euros next week. Games we import directly from Europe will stay at the same price as long as there are no new dramatic developments with the Euro exchange rate and the value of £1 stays around 1.20€.
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Squiz
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Had the same from Boardgameguru

"Foreign Exchange markets

The UK imports nearly all of its hobby games. The fall in the pound against the Euro and the dollar means the price of games has gone up for new releases and restocks. Most items will increase in price when I need to restock them because they are costing me more to purchase. I will do my best to keep prices as competitive as I can"

Top Brexiting....
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Alex Sagar
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To the contrary, the changing exchange rate between the pound and the dollar has a minimal impact on the import price of games - unless you buy directly from another company that is located in the USA with manufacturing in the USA.

In respect to the Euro, it hasn't changed much in relation to the pound and the dollar. The only other big shift has been with the Chinese Yuen.
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Stuart Boston
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BubbleChucks wrote:
To the contrary, the changing exchange rate between the pound and the dollar has a minimal impact on the import price of games - unless you buy directly from another company that is located in the USA with manufacturing in the USA.

Or charges you in dollars. their price has not changed, just the change in the exchange rate.
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Thanks Obama Brexit.
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Andy
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Fair enough, not a lot we can do about this. The real question, however, is whether the prices will fall when the pound strengthens again...
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Alex Sagar
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Nods, but that doesn't really apply to Esdevium in relation to the games they purchase from Asmodee and its associated partners, because Esdevium is owned by Asmodee.

So while the balance sheet of Esdevium could experience a fall in profits if prices remained the same the publishers associated with Asmodee would register a uniform increase on their balance sheets.

In terms of the overall net income for Asmodee their would be little change. It would just mean that the different companies within Asmodee would receive a different slice of the overall return.

Its hard to make a demonstrated loss when you are in essence trading with yourself.

The point of manufacture also needs to be taken into account, because the majority of games are made in Europe or China. If a game is made and shipped to Europe (or it is made in Europe) then the price paid for it will be in Euros. And the Pound to Euro exchange hasn't been hit as hard as the Pound to Dollar exchange rate.

Asmodee is also a predominantly European company, owned by another European company Eurazeo. So most of their direct transactions will be centered on the Euro to Dollar exchange rate or Euro to whatever country they are buying goods from. The dollar exchange rate is more of a concern for Asmodee North America and any direct purchases made on its behalf, but even those transactions tie into the larger companies fiscal outlook. And it's the same for any European distributors outside of the UK that are importing goods into the single market.

When you take into account the manufacturers location linking prices to the dollar is not entirely relevant because the games don't need to go anywhere near the USA and its currency. Any manufacturer can ship to any European country on behalf of a publisher to gain access to the single market, which the UK is still part of, and the recipient distributors would pay in respect to the Euros current value.

The only way that the strength of the dollar could influence the price to UK consumers is if the manufacturer shipped to the USA. The goods would arrive in the US, be passed through the time and cost associated with US customs, then the games would be re-boxed and their contents changed to conform to EU requirements and then they would be sold by the American companies (taking direct payment in dollars) and shipped to a European destination - which makes little sense when you are shipping in bulk.

So while the change in the pound vs dollar exchange rate could have an impact on the division of profits within Asmodee and its subsidary companies, with Esdevium registering a profit reduction, when everything is taken into account the impact on trade and prices has more to do with the strength of the Euro in world markets.

So the outcome of Brexit, in respect to the reduced exchange rate of the pound to the dollar, isn't a huge contributing factor to the overall price of bringing games to the UK.

When you take into account the interdependent nature of global financial trade, with its sprawling web of relationships, the actions of a tiny spider of a country aren't a big deal. Especially when the vast majority of its relationships are still intact and it is in the best fiscal interest of everyone to ensure that they stay intact.

A change like Brexit simply muddies the waters for awhile, causing uncertainty that has a transitional affect on perceived values, with the potential to create ripples that may result in a greater degree of change. Although the ripples of Brexit are more likely to result in juicy concessions from Brussels for member states that might follow suit, which can be used to appease their voters.

A year down the line, after the value of the pound has steadily re-gained lost ground, the justification for maintaining the price rise will evaporate. Now it may be that the all of the companies that increased their prices will respond by lowering them in response to the change. Or, and this is probably more likely, they will decide that their customers have “acclimitised” to the higher prices and leave them as they are.

It is a long standing tradition in business that companies are very quick to raise prices in reference to changes and extremely slow to lower prices in response to changes.
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    Sounds like a great excuse for a price increase though.

             S.


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Paul Lister
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BubbleChucks wrote:
To the contrary, the changing exchange rate between the pound and the dollar has a minimal impact on the import price of games - unless you buy directly from another company that is located in the USA with manufacturing in the USA.

In respect to the Euro, it hasn't changed much in relation to the pound and the dollar. The only other big shift has been with the Chinese Yuen.


This is nonsense. Virtually no games are made in the UK. I (and all other retailers) buy games from both the USA (and Europe) and other companies that buy from the the USA - I am paying a lot more in £s than I was before the 23rd June as are the companies I buy from. Hence the price rises. The last batch of game is paid for in Euros was at 1.167 euros to the £ - a few weeks ago (June 22nd) I was getting 1.30.
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Alex Sagar
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I can fully appreciate your retail predicament Paul and in no way do I wish to make light of it or denounce the great service that Boardgame Guru provides for gamers. The reason behind my initial post was to draw attention to the fact that prices will rise, for the benefit of consumers that weren’t aware of it, and that this is not due to the arbitrary decision of UK retailers. It might have also propelled some consumers to fill up their shopping carts ahead of the re-stock price rises.

When prices rise by a marked amount the retailers are always the first in the firing line and the first to suffer hardships - and unfortunately, along with consumers, the only ones to shoulder the negative burden. If complaints are raised in relation to such matters it is the retailers that have to spend time handling them, along with the potential for reduced revenue from diminished sales.

It would have been nice if the distributors had recognized the position of UK retailers and instead of automatically introducing these price rises they had shown some support and waited until the period of uncertainty in our country had lessened - before contemplating such a dramatic pricing change.

However, I do think it was a little out of order to associate me with the nonsensical and to justify your position with figures that don’t portray the full picture.

Quote:
This is nonsense. Virtually no games are made in the UK. I (and all other retailers) buy games from both the USA (and Europe) and other companies that buy from the the USA - I am paying a lot more in £s than I was before the 23rd June as are the companies I buy from. Hence the price rises. The last batch of game is paid for in Euros was at 1.167 euros to the £ - a few weeks ago (June 22nd) I was getting 1.30.


If you read my third post it is quite clear that I consider the Euro to Pound exchange rate to be the key factor in this, neither did I claim that any games where made in the UK.

I also pointed out that while games may be bought from US publishers by yourself and distributors (some of whom may be under the same corporate umbrella as the aforementioned publishers) the made in China details on many a box clearly indicate that the vast majority of our games aren't manufactured in the US either.

In relation to the Pound vs the Euro kindly take a quick peek at this informative chart.



Now, if you look closely you will see that the Euro to Pound exchange rate in July 2014 was 1.26. If you want to go further back look at its value from mid 2008 to mid 2012, about the same as it is now or lower. During July 2015 it rose to a high of 1.44 leading to many people in the financial markets to assert that it was overvalued.

The reasoning for its high valuation was due to the troubles in Greece, a concentration of elections in other European countries (elections are associated with uncertainty that tends to lower confidence and currency valuations), a risk of quantitative easing flooding the markets with Euros to buy up the debts of Eurozone countries, low inflation from weak consumer demand and low oil prices, and negative interest rates.

Over the course of 2016 the markets re-adjusted and by April 2016 the exchange rate was down to 1.25 and looking to fall even further. That’s a fall from 1.44 to 1.25 in the course of less than a year.

Did you receive a notice of price increases in relation to it?

Did you receive a notice of price reductions as a consequence of it rising from 1.26 in July of 2014 to 1.44 in July 2015?

From April to the 23 rd of June the Pound gained ground on the Euro on the belief that the UK would remain part of the European Union. The projections where that it would rise above 1.50 if the UK remained, the valuation that it was trading at when the markets closed prior to the vote taking place. That didn’t happen and it plummeted from this temporary confidence spiked height. Over the last couple of weeks the recovery has been stifled by political arrogance and incompetence which have lengthened the uncertainty.

When it was revealed the Cameron anticipated nothing but victory for the Remain campaign, to the point where no plan of action had been arranged for a Leave result scenario, this severely damaged confidence in the UK economy. And this was on the back of Cameron resigning and Corbyns vote of no confidence. With the leaders of the countries main parties potentially stepping down, the prospect of a General election and the negotiation of vital trade agreements being deferred (until the politicians get their act together) confidence had already been dragged through and trampled into the mud. The only positive boost came when Boris bowed out of the leadership race.

Had Cameron done his duty to his country by providing for both eventualities with strong planning (and the other parties/political figures acted with some restraint and composure instead of concentrated on their own political agendas while flapping about like witless chickens) the Pound would have shown a greater degree of recovery by now.

The only salient notes of positivity and sensibility throughout this fiasco have been from Mark Carney the Governor of the Bank of England. Without his objective financial planning and distance from the wrangling ho ha we really would have been up to our necks in a crap dumpster by now.

So where does this leave us, removing the temporary blip of the Brexit Remain surge, the Pound to Euro exchange rate has fallen from 1.25 to todays rate of 1.17. And that is with the cumulative impact of every imaginable negative affecting its perceived valuation. And let us also not forget that it was already in a steep corrective dive before the Brexit hoopla.

So in total it has fallen 0.08, although I expect it to fall further before it begins its ascent.

I would estimate that by this time next year it will be back to 1.25-1.30, but that is wholly dependent on the impact of the shockwave through Europe (whether other countries leave the Union or their discontent is satisfied by changes and juicy concession) and the actions of our own governmental muppets.

Looking at the overall financial picture there is no real justification for Brexit being the active trigger for levying a substantial price increase on retailers and consumers. To my mind it smacks as a projected price increase to elevate games to the status of luxury products, while denying retailers the opportunity to share in the financial returns associated with that development.

It could be that the Brexit outcome simply provided a convenient hat on which to hang it for PR appearances, a hat which is less obvious than the “for the flags” spin put on the 10-15% price hike in the North American market.

If Brexit is a truthful and credible reason for the sudden price rise then you should be able to look forward to a future communication informing you that prices are set to fall in relation to the end of the temporary period of uncertainty and financial upheaval.

Or it may come after the American Elections when the chance for a recession heightens which could trigger a devaluation of the dollar. Or it could cause it to bubble which might see you receiving another price hike communication.
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Kyle
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Omertron wrote:
BubbleChucks wrote:
To the contrary, the changing exchange rate between the pound and the dollar has a minimal impact on the import price of games - unless you buy directly from another company that is located in the USA with manufacturing in the USA.

Or charges you in dollars. their price has not changed, just the change in the exchange rate.


This, happened in Canada last year, we changed about 30 cents on the dollar against us. Its you, not the games. Foreign currency value has a direct impact on the cost of imported goods. Some stores do not update their menu price as frequently, so the change lags. Some stores don't update price from games bought during better exchange periods to reflect the current. Some stores will update their prices to reflect the current on all imported stock.
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Thom0909
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Sagrilarus wrote:

    Sounds like a great excuse for a price increase though.

             S.


They don't need an excuse. They can raise prices whenever they want.
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CW Lumm
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Sorp222 wrote:

The last batch of game is paid for in Euros was at 1.167 euros to the £ - a few weeks ago (June 22nd) I was getting 1.30.


Come now, Paul. It's profiteering if you're not doing your job at a loss. Lay back and think of England! :-P
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Trent Boardgamer
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InappropriateAndy wrote:
Fair enough, not a lot we can do about this. The real question, however, is whether the prices will fall when the pound strengthens again...


Judging from how it works in Australia it generally takes quite some time to go the other way.
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