How Nintendo Changed Retail Shopping Forever

Everybody credits Nintendo with reviving–and reshaping–the video game industry. But the Big N’s impact extends far beyond games. Over the years, Nintendo has transformed the retail sector, influencing how businesses manage inventory and how consumers interact with the marketplace. And the revolution has been so thorough, you probably never stop to think about it.

So that’s just what we’ll be doing today: looking back at how Nintendo changed retail shopping forever.

Two notable developments include Nintendo’s proprietary system for retailer returns and inventory management, and its aggressive legal actions against video rental stores in the 1980s and 1990s. These moves not only affected the video game industry, they also set new standards in retail practices and copyright enforcement.

First up, a game-changing innovation that’s become so ingrained in the shopping process, it’s faded into the background of everyday life: POS Electronic Registration.

In the late 1980s, as Nintendo solidified its dominance in the U.S. gaming market, the company introduced a proprietary system for managing returns and inventory. At the time, the gaming industry faced a common issue: Retailers were often burdened with unsold stock, and returns could be a logistical nightmare. Many companies dealt with massive returns of unsold cartridges, which cost retailers and manufacturers money.

As the popularity of electronic gaming systems grew throughout the 1990’s, Nintendo realized that its profitability was being greatly impacted by the number of product returns that retailers were accepting.

“The number of products being returned was very concerning because it not only affected our bottom line, but it seemed to indicate we might have a product quality issue,” said Cammie Dunaway, EVP Sales & Marketing, Nintendo of America. “But upon taking a closer look at the returns, we realized that it was really an issue of our retailers not having the tools to enforce return guidelines and their inability to detect fraud.”

So in an effort to reduce fraudulent and ineligible returns, and to create visibility to the full product logistics lifecycle, Nintendo developed a methodology that would give their retailers a foolproof system to track individual products throughout their lifecycle. This system was designed to ensure that everyone in the product chain – manufacturers, retailers, and consumers – was being treated equitably and properly.

The system developed and patented, POS Electronic Registration, includes proprietary methodologies, such as vendor product registration, trending and analysis, and exception reporting and alerts, which would enable the company and its retailers to track individual products by their serial numbers from their moment of purchase.

In short, Nintendo developed a system that let them take control of inventory management for their products. Their POS system ensured that unsold stock could be returned more efficiently. And it let Nintendo dictate how much inventory stores could order and when. This approach allowed Nintendo to regulate supply, avoid market saturation, and ensure that stores didn’t hold excess stock that would need to be returned.

For retailers, this system simplified inventory tracking and returns, making it easier to manage stock levels. But in a broader sense, Nintendo’s system changed the way companies thought about supply chain logistics.

It’s hard to imagine now, but within Gen Y’s lifetime, you didn’t need a receipt to return an item for a refund. You could pick a TV off the curb on garbage day, take it in to Sears or Target, and get the original purhcase price, no questions asked. The latter company made that high-trust model such a central part of its brand that they initially turned down Nintendo’s new POS system. It was only after pretty much every other major retailer had adopted it that Traget finally budged.

From the producers’ standpoint, Nintendo’s POS system showed how manufacturers could actively manage their products’ life cycle; even after they reached store shelves. This epiphany led to new inventory management standards that are still used today, when the balance of power over distribution and returns has shifted in favor of big manufacturers.

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Nintendo’s influence on retail wasn’t limited to inventory control. The Big N also made waves in copyright law, particularly in its legal battles with video rental stores.

In the late 1980s, the video game rental market was blasting off. And Nintendo saw this growing trend as a threat. While the movie rental business had been booming for years, Nintendo feared that the rental model would cut into its game sales. After all, if people could rent games for a fraction of MSRP, why would they bother buying them?

To protect their sales, Nintendo filed lawsuits against rental chains like Blockbuster, using copyright infringement claims as the foundation of their case. After failing to suppress game rentals themselves, Nintendo homed in on a vulnerability overlooked by its foe: game instruction manuals. They argued that many rental stores were providing photocopied manuals along with rented games, which Nintendo claimed violated their copyright.

These legal battles put rental stores in a difficult position, as they either had to stop including manuals with the rented games or pay Nintendo royalties. Eventually, rental stores complied, but the lawsuits had a significant ripple effect on gaming for end users. Gamers who rented Nintendo games often found themselves without access to proper instructions, leaving them to figure out the gameplay mechanics on their own or turn to third-party guides. Nintendo’s lawfare also gave us the advent of Permastruct cases with basic instructions printed inside.

These lawsuits set a precedent for how companies could use copyright law, not just to control the sale of their products, but how those items could be accessed after purchase. It wasn’t long before other manufactuerers followed suit. And now most people think nothing of, say, tech companies controlling how customers can use their software. So Nintendo’s influence on retail extended well beyond the video game industry. Whether it’s digital rights management or legal restrictions on media sharing, you can trace the roots of many current practices back to Nintendo’s early legal battles.

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For consumers, these changes altered the retail experience forever. Nintendo’s actions signaled the decline of social trust and limited access to certain forms of entertainment. But these same actions helped stave off a second video game crash and helped businesses improve inventory management and logistics.

Were the benefits worth the social cost? The answer is up to you. Either way, these changes have had lasting influence on industries far beyond gaming, proving that Nintendo not on revolutionized entertainment—it helped write the playbook for modern retail practices.