One of the nation’s most beloved video game retailers — GameStop — is now employing a perhaps unexpected growth strategy in this age of rising e-commerce: investing in more physical locations. During GameStop’s 2016 Investor Day, CEO J. Paul Raines announced the company’s plan to grow physical video game and electronics sales, predicting a three to five percent increase in earnings over the next four fiscal years as a result. This prediction comes after the end of the second quarter, when GameStop reported an increase in sales as compared to the previous quarter; the company also recently saw a relatively significant gain in market share, further fueling optimism about its future potential.
GameStop already operates over 7,100 locations — including not just GameStop, but also AT&T, Cricket Wireless, and Simply Mac stores — across 14 countries. Of these locations, 450 were purchased in 2015 alone, and the company has plans to purchase roughly the same amount — if not more — this year. Following in the footsteps of companies such as Amazon, GameStop is now employing a strategy of building and acquiring new brick-and-mortar stores in order to increase physical sales. While many retailers nowadays are looking to online sales to boost revenue, CEO Raines still values — and even prioritizes — in-store sales of games, consoles, and other electronic devices in order to keep the company running. As Raines explained to the Dallas Business Journal, “[GameStop’s] core physical games are generating cash flow that [the company] can deploy into other retail concepts to generate growth.”
And keeping physical sales at the forefront of the company’s growth plan is a logical strategy for more reasons than one: nearly two-thirds of GameStop’s sales involve both its website and stores. In addition, even when customers are looking to buy digital video games, around 23 percent of those purchases are made in physical GameStop stores. Therefore, keeping its brick-and-mortar stores flourishing will help GameStop gain and retain sales of its entire range of products.
While this plan to expand will likely bring about many benefits, one challenge GameStop may face with a substantially increased load of stores is the need for efficient and consistent management across all of its retail locations, which will number nearly 8,000 by the end of the year if all goes according to plan. Particularly in order to gauge the effectiveness of its branching out, the company will need to ensure that customer traffic is being thoroughly tracked and analyzed, and that employees are being scheduled at the right times in order to maximize sales. And if all goes well, it’s safe to say that the world’s largest video game retailer won’t be going anywhere anytime soon.
