Gamestop: Maintaining Relevance in an Online Centered World
Game stores are quickly becoming a thing of the past. And we need to look no further than the behemoth of gaming retail, GameStop. Whether you look at their stock prices fall (down over 90% from where it was in 2015) or simply walk into one of their many stores and witness the mess of lanyards and Funko Pops it’s become, it’s clear to see that retail game stores are not in a great place right now. GameStop also seems to have spread themselves too far, with many locations within just a couple of miles of each other. With online retailers like Amazon offering discounts on new games and the rise of the digital games market, it’s honestly impressive that GameStop hasn’t disappeared completely. It’s sad to see the state that they’re in now. I know a lot of people like to hate on GameStop, but growing up, I always had a good experience going in and talking to the employees. I still order games there from time to time, though it’s a rare occasion I that I stroll in. Still, GameStop is a part of my and so many other gamers’s childhood. It’s been a staple in gaming culture for so many years. And at one time, they were THE place to go for all things gaming. So as GameStop fights for relevancy in a vastly different world from the one they found themselves dominating 10+ years ago, what can be done to save the company? Is there anything, or are they doomed to go the way of Circuit City and Sears, lost in a sea of obscurity, unable to compete in the modern digitally-dominated age?
GameStop’s current core business model is selling used games. Of course, there are plenty of new games and accessories you can buy, but the majority of their profit comes through their trade-in program, where people can trade in their used games for store credit or cash, and GameStop can turn around and sell it at five times the amount. This part of their business has seen a drastic decline in the last year, however, as slightly lower prices on physical games aren’t enough to compete with the convenience (and sometimes even lower prices) of digital. Given the decline of this business model, how is GameStop planning to reinvent themselves?
In April of 2019, George Sherman was appointed as CEO of GameStop. During an earnings call in June, he told investors “As I have been digging into our business, it’s clear to me that we need to transform to remain a viable player in our industry…” Since then, GameStop has gone on to partner with design firm R/GA. Their plan involves new pilot stores related to retro gaming and esports, in addition to designing their stores around giving customers an experience. And it’s this concept of creating an experience as the draw for bringing people into the store that is both essential, and potentially impossible, for GameStop as it stands today.
Experiences are the main reason people choose to go places. It’s the reason we go to restaurants and escape rooms. It’s why people go to the movies instead of merely watching them at home (though that too is on the decline). So when GameStop says they want to turn visiting their stores into experiences, that sounds like it’s the right direction to take. But the question then becomes, how? Aside from the enormous upstart cost surrounding that idea, GameStop’s biggest issue lies in their current model of small stores placed closely together. I live in suburbia, and I’m less than 30 minutes away from five different GameStops, and all of them feel crowded if there are more than eight people in the store. If GameStop wants to transition to this new model, they’re going to have to find completely new spaces for their stores. It’s not a bad idea by any means, but it’s one that will drastically change the face of this 35-year-old company. It will be fascinating to watch as GameStop attempts to save themselves and transition into the next decade. Will they make the jump to survive this next console cycle, or will they soon be a forgotten name, known only as a warning sign to others trying to build a business around gaming retail?
