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PrePlayed Chain Captures Consumer Attention

8 Jun, 2004 By: Holly J. Wagner

Move over, Movie Trading Company.

As used-disc trading gains steam, other media-trading chains are springing up and expanding as fast as they can to meet demand.

“In the past two years, until the big guys started getting into it, nobody really talked about it,” said Ed Geiske, COO of PrePlayed, an eight-store chain that is expected to double by the end of the year. Geiske and his partners started the chain in 1997 in Green Bay, Wis., and have rapidly expanded both corporate and franchised stores. Today, the chain has a combination of corporate and franchised stores in Philadelphia; East Madison, Wis.; and Baltimore, and is scheduled to open stores this year in Boston, and markets in Ohio, Texas and Florida.

The chain trades in used DVDs, video game software and consoles, CDs, musical instruments and electronics, a retail model that helps make the chain more resilient to downturns in any one product line, and convenient for consumers looking for a broad array of home entertainment choices.

The principals are no strangers to trading in used goods: one of the founders came from the now-defunct CD Warehouse, and another from Play It Again Sports, a chain that buys and sells used sporting and exercise equipment. After their noncompete agreements expired, they opened PrePlayed.

“Preowned inventory management is a completely different animal from dealing with new or rentals,” Geiske said. “Our stores carry nothing but preowned. We have a totally different philosophy: Why should we compete with Best Buy and Circuit City?”

With that in mind, PrePlayed prices used product lower than many of the game-trading and video-specialty chains. PrePlayed can afford to, because it can buy from consumers at much lower than new prices and still make a profit selling for less than big competitors.

“They are trying to integrate pre-owned into a new model, which doesn't really work if you want to be in preowned,” Geiske said.

“What we do in our POS is more proactive. We don't set our prices according to new. The minute that product hits the shelf, our prices are dictated by the POS system,” he said. “It will lower the price until it sells. Stores may price a product differently in Texas from Virginia, but it's priced at a level that people will buy it.”

The software factors in a combination of in-store and corporatewide data, Geiske said. The version he will promote at the Home Entertainment show in Las Vegas, available for other retailers' use, runs off a national database, which aggregates information from indies that buy the software and feeds back pricing information based on market, title popularity and time on the shelf. It also accommodates different payouts for store credit and cash transactions.

“The majority of the people sell for cash, but our chain also offers store credit. Most of these people don't want the credit. This is stuff that has been sitting in their closet. If they don't want something else that is in your store, they can go to lunch,” Geiske said. “It keeps the customer in the store while you do the buy, and they are happy because they got the cash.”

Managers can choose when and how often to run a report on price changes that simultaneously print new stickers for items. It also records seller ID information and automatically puts a 10-day hold on items bought from consumers, to comply with secondhand dealer laws.

“I can run an account and tell [authorities] everything that Joe Schmo has sold us,” Geiske said. “Since we have started putting these policies into effect, the number of incidents we have has dropped like a rock. The thieves don't want to give us their information.”

PrePlayed stores all have disc-repair machines, which lets the store resurface products for resale. Working with those machines also helps train staff.

“Anyone who is buying also does repairs. They quickly become attuned to what is repairable and what isn't,” Geiske said. Discs carry a lifetime warranty so if a product doesn't work, they can exchange it or have it repaired at no charge.

As more dealers struggle with an industry in flux, the folks at PrePlayed see used trade as the future.

“Right now, because we are seeing so much interest in the independent market and with Blockbuster doing exactly the same thing, it's obvious to me that the video stores that are out there now really have no choice but to do something like this,” Geiske said. “Their revenues are dropping, and they will not be here five years from now.”

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