How GameStop Plans To Turn Things Around

"GameStop Reboot."

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Video game retailer GameStop has seen better days. In August, the company announced a huge round of layoffs that impacted more than 100 employees, including some members of the Game Informer staff. The company's stock price is at a near all-time low, trading around $5 per share compared to more than $46 per share back in 2015. GameStop has a plan to turn thing around, and now the retailer has shared more details.

During an earnings call on September 10, GameStop shared more details on what it called the "GameStop Reboot" initiative. The overall aim of this is to "improve the financial performance of the business and implement a series of initiatives that will support the long-term success of the business and value creation for stakeholders."

"We are committed to acting with a sense of urgency to address the areas of the business that are critical to achieving long-term success and value creation for all our stakeholders," GameStop CEO George Sherman said in a statement. "We will set GameStop on the correct strategic path and fully leverage our unique position and brand in the video game industry. Our strategic plan is anchored on four tenets which include, optimizing the core business by driving efficiency and effectiveness, creating the social and cultural hub of gaming within each GameStop, building compelling digital capabilities, and transforming our vendor and partner relationships for an evolving video game industry.

"This is a compelling new strategic vision for the company, and we've already started to execute against all four pillars. We also remain committed to returning capital to shareholders and balancing that opportunity against the need to maintain a strong balance sheet to properly run our business and invest in responsible growth."

The four main pillars of GameStop's Reboot initiative include the following (descriptions written by GameStop):

  • Optimize the Core: Optimize the core business by improving efficiency and effectiveness across the organization, including cost restructuring, inventory management optimization, adding and growing high margin product categories, and rationalizing the global store base.
  • Become the Social / Cultural Hub for Gaming: Create the social and cultural hub of gaming across the GameStop platform by testing and improving existing core assets including the store experience, knowledgeable associates and the PowerUp Rewards loyalty program.
  • Build Digital Platform: Build compelling digital capabilities, including the recent relaunch of GameStop.com, to reach customers more broadly across the omni-channel platform and give them the full spectrum of content and access to products they desire.
  • Transform Vendor Partnerships: Transform our vendor and partner relationships to unlock additional high-margin revenue streams and optimize the lifetime value of every customer.

Sherman spoke at length about each of the pillars during the earnings call; you can listen to the webcast here to hear everything that Sherman had to say.

GameStop is already moving on its plan to right the ship. Just recently, the company re-launched its website (now with ThinkGeek incorporated), featuring a more streamlined shopping experience that aims to allow customers to find what they want and buy it more smoothly. Additionally, GameStop is testing new pilot stores in Tulsa, Oklahoma. Some of the store concepts are focused on competitive gaming and "home-grown e-leagues." While other concept stores will exclusively sell retro games and hardware.

Another part of GameStop's plan to turn things around is to scale down. The retailer confirmed on the earnings call that it plans to close 180-200 "underperforming" stores by the end of the company's current fiscal year (ending February 2020). The store has 5,700 stores worldwide, so the impending closures--if they reach 200 stores--amount to around 3.5 percent of its total store base. The company added that it expects a "much larger tranche of closures" to follow in the coming 12 to 24 months, though a specific number wasn't provided.

Management added that it is "rapidly developing a point of view" on how many more stores it will close in the future. The company is taking a "very specific approach" to looking into specific store closures, the company said. Specifically, the company might look to "de-densify" its store base, which means stores with overlapping trade areas might close. GameStop also pointed out that its average store land lease is two years, so the company isn't generally financially committed to any particular area for an extended period of time.

Don't expect GameStop to turn things around overnight, however. Sherman said on the call, "This transition will take time."

As for GameStop's latest earnings, for the quarter ended August 3, the company saw its total global sales fall 14.3 percent to $1.3 billion. GameStop posted a net loss of $415.3 million for the quarter, which is far worse than the $24.9 million that the company lost during the same period last year.

Every category except Collectibles saw sales decrease year-over-year.

New hardware sales fell a massive 41.1 percent, a downturn that GameStop attributed to the announcement of next-generation consoles coming in 2020. New game sales fell 5.3 percent overall; Nintendo Switch game sales grew, but it wasn't enough to offset the "weaker title launches" across all systems relative to the same period last year. Accessory sales, meanwhile, fell 9.5 percent, while pre-owned sales fell 17.5 percent. Digital sales fell 11.2 percent "due to weaker title launches." Collectible sales, however, jumped by 21.2 percent, proving to be the only big bright spot for the retailer.

"While we experienced sales declines across a number of our categories during the quarter, these trends are consistent with what we have historically observed towards the end of a hardware cycle," GameStop CFO Jim Bell said. "We will continue to manage the underlying businesses to produce meaningful cash returns, while maintaining a strong balance sheet and investing responsibly in our strategic initiatives."

Looking ahead, Bell said GameStop expects total sales to continue to be down in multiple consecutive quarters to come, as the industry awaits the launch of next-generation consoles in Holiday 2020. He pointed out that both Xbox Scarlett and the PS5 were announced, at least partially, earlier than in the past. This hurt GameStop, he said, because consumers may hold out on buying systems if they know a new one is coming later, while game releases might slow, too, as developers wait to release titles on the new systems.

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Avatar image for Megavideogamer
Megavideogamer

The jury is out on if this plan to revive Gamestop will work. The Game will be Stopped

Avatar image for wretch1d
Wretch1d

Ill say one thing once game stop is gone (EB here) i think everyone will miss them, as digital only have their prices raked into the clouds, and no trade in at all for anything.

Avatar image for justin760
justin760

This wont save them. The reason is that gamers will always choose the quickest, easiest and most convenient way to follow their hobby. For big game releases would you rather buy it digitally, preload the game and be ready to play it at exactly midnight... or drive all the way to the nearest gamestop, wait in a line to buy it, drive home and install the game? Its a far longer process. For people who just want to play a game and arent interested in physical keepsakes, the choice is clear.

I imagine their numbers will be up upon the new console generation, with console sales - but it wont be enough to sustain them. I havent gone to gamestop in years because anything they could possibly offer is beaten by amazon prime or direct digital downloads from steam, sony store etc. I dont see how they can possibly turn things around at this point.

Avatar image for dzimm
dzimm

Eh, I've always liked GameStop, and their trade in policy isn't as bad as some people make it out to be. For instance, if you were to trade in Fire Emblem: Three Houses right now, you'd get $25 store credit. That's comparable to what you'd get selling a used copy on eBay, only without the hassle. And if you're patient, you can buy used games at a substantial discount. I bought Monster Hunter Generations Ultimate for the Switch for 50% less than what a new copy was selling for. Sure, popular and rare games will sell for more, but eBay sellers will happily rip you off, too.

And I've never had a single bad experience in any of their stores. Their employees have always been friendly, knowledgeable, and helpful. One nice perk is that every GameStop will honor warranties and returns no matter where you made the initial purchase, even if it was from a store in another state.

I also recognize that times have changed, and there may not be a place in the market for a dedicated brick-and-mortar game shop, and that it may be too late for GameStop to change their fortunes. If they ever go away, I, for one, will miss them.

Avatar image for valtair
Valtair

Adding and growing high margin product categories. Neat so instead of $5 for a game they'll sell for $50 they'll give $2 to increase the margin. Not gonna help. Too little too late, they were stagnant for too long.

Avatar image for tlpina
tlpina

GameStop is turning into the Blockbuster of Gaming.

They should have invested in an online platform, like Steam or Origin and the built a streaming platform, but they were way too busy jammin' it on us during game trades.

Now, i doubt they can do anything to salvage the situation.

Avatar image for jaguar10books
jaguar10books

More corporate speak that doesn't make any sense. "Rationalizing the global store base" ?? What the hell does that mean? Gamestop is only good for buying older used games. Amazon has better deals for new games. I always buy hard copies as I can resell them on Amazon if I don't like them. Their Power Up Rewards is a rip-off, their trying to sell you insurance for games is a rip-off and last Christmas I saw a salesperson sell a Mom a refurbished Xbox 360 because her son wanted to play Fortnite. I didn't think that was playable on older consoles but didn't speak up about it. Went home and checked and I was right! I felt so bad for that Mom when her son found out he can't play it on that console! I'm an older gamer (65) and I've had run-ins with Gamestop employees when I question their practices or they think I don't know my S**T. They have also been condescending to me as well.

Avatar image for lokar82
lokar82

@jaguar10books: As a fellow old person, 100% agree! Their salespeople are condescending and their trade-in values were always garbage. If they had a time machine, they should have treated customers fairly, started local coop and competitive gaming leagues in their stores, never started their crap where you get a new game that is not shrink-wrapped, and given shoppers a slight discount. When you can buy games at Target, Best Buy, Walmart, etc. for the same price, there is no reason to make an extra trip to Gamestop and hasn't been in probably a decade. They're not going to recover.

Avatar image for ormgaard
Ormgaard

RIP Gamestop

Bought alot of games and even hardware over the years there, but there is no reason for me to go anymore, physical media is dead and i dont see how Gamestop should be able to compete in the digital space.

Avatar image for zyxahn
zyxahn

I am in the minority here. I have never had a problem with Gamestop. I still like the Power Up Rewards program. I buy a lot of games digitally now. Not because of them, but because of convenience. When 12:00am rolls around. I always give in. So for me, it's convenience first. How easy it is to get it. Then the price. To clarify. If someone offers me a cheap game but I have to travel for it. I'll pay a bit more for it, to have it digitally, right there.

Avatar image for gamer112696
gamer112696

It’s only a matter of time now...they’re done whether they know it or not

Avatar image for hotgamer
hotgamer

They should just give up. If they have to do this much to turn things around, they're already dead and all they're doing is buying themselves a little more time before they finally die for good. I say it's about time Gamestop goes away. They're a cancer to the industry and all they're doing is scamming people.

Digital games are only the same price because Sony, Microsoft and Nintendo don't want to piss of their retail partners (Gamestop being the major one). Maybe if they finally disappear, we can start heading toward lower digital prices. Places like walmart are already undercutting by selling $10 less anyway.

Avatar image for silverphoenix711
SilverPhoenix711

I personally love our GameStop. It's a good size, has awesome collectables, great deals on pre-owned games, and great employees. I know they aren't that great for trade-ins but I like everything else. The new design for the website is great. Makes things a lot easier. It sucks that they are closing down stores but I understand it. I just really hope it's not mine. We have the best one in the state and I think a lot of that goes to the employees. For some reason, this location knows how to pick the best people for the job. All others I've been to, suck to be honest. Hopefully this restructuring will help things turn out better overall. This is the only place I like to pre-order games. Otherwise it's Walmart, Target or Amazon. Everything else is 100 miles away.

Avatar image for screamingsatori
ScreamingSatori

I went to GameStop 2 days ago and bought Far Cry 3 for $4.99, and a couple of months ago got Arkham Origins for the same price. Cheaper than buying used on eBay or Amazon. About a year ago I got NEW copies of Borderlands Handsome Collection and Arkham Knight on sale for $10 each. They may not have the best deals on new releases, but you can certainly find some killer deals on older games.

Avatar image for jsprunk
JSprunk

How Gamestop Is Going to Turn It Around:

1.) Close all stores immediately

2.) Open a digital storefront

3.) Get exclusive PC deals that will never sell on any other digital storefront

Anti-Epic snowflake discussion commence...

Avatar image for Destructionzz
Destructionzz

They need to make Pre-orders not only limited to store-pickup but also via mail. My local GS shut down so now I can't get games at release day anymore, physical copy that is.

Avatar image for borealys
Borealys

*sigh*

Ok, heeeeere we go:

GameStop/EBGames is dying, and fast. We have two locations in my city; one in a mall and the other in a stand-alone. Both locations are either always empty or have the one or two same customers coming in (as told to me by one of the mall location employees). The last time I was in one of the local GameStops was probably about 2 1/2 - 3 years ago. They were offering some kind of exclusive knick-knack I thought was interesting and they were the same price on the game as the BestBuy across the street. I went in and (of course) they didn't have the game in stock and (again of course) they tried selling me not even a "used" copy but a completely different game that wasn't even similar... and it cost more.

When I refused, the employee actually scoffed. Like, loudly and purposefully scoffed at me because I wouldn't buy into their recommendation and sales tactics. When I asked to speak to the manager (because lets face it, it probably wasn't the first time they had done that to someone) they sided with the employee saying "they knew more than I did" about gaming etc and I should listen to them. I think my double-barrel middle fingers at them as I went out the door was sufficient reply. Childish on my part, maybe... but it got my point across.

GameStop needs to stop selling so much used product for nearly full price or ridiculously over-priced used games. Its 2019 for pity's sake. I can go on eBay or Amazon and get a used console or used games for significantly cheaper than ANY GS location. Lower the prices on used and sell more. Keep it high and sell less. Its not rocket science but apparently for their upper management it is.

Also, keep the shopping experience light. Employees need to stop approaching customers every 5 damn minutes. It interrupts the browsing and shopping thats going on and gives the feeling like you're constantly being watched. It's too much pressure. When the customer comes in, say hello and let them know that if they need anything or have any questions to feel free to ask. After 15 minutes, approach and ask if they're finding everything ok or just comment on the game they might be looking at. Knowledgable associates will know at least something about the games they are selling and can start up a conversation with the customer (if the customer is receptive). If the conversation starter is rebuffed, the employees need to back off and let the customer do their thing.

If they want help after that point, they WILL ask for it.

Also, stop stocking so many damn FUNKO figures. I get the other collectibles and figurines but when one entire wall is FULL of those damn FUNKO figures, it feels more like a Toys R Us outlet store and less like a gaming store. Also, the loyalty rewards program sucks.

Bottom line, if GameStop doesn't price competitively against other retailers, cater to the customer's needs instead of their own deluded self-interests, and give actual discounts and incentives that 1) don't crater the company and 2) make it actually worthwhile to shop there, they are going to fail. If they don't drastically change course in the next few years... they're finished. There are too many other places both in-store and online to purchase games. They need to be a cut above the rest in order to survive and thrive.

Sorry this was so wordy.

Avatar image for Simulator_Shock
Simulator_Shock

Gamestop will be dead and gone by the end of next year, and good riddance.

Avatar image for CliffShep
CliffShep

How about not ripping off your customers?

Yeah, that about sums up GameStop. I stopped going there a long time ago. They've never given me a fair trade or decent price for anything that I wanted to sell or trade in. They overcharge on used games and gaming gear. Their membership and magazine are a joke, the magazine has no gaming tips, it's only ads. Gamestop has been taking advantage of kids, teens, and adults alike for decades. Nope, never going back to GameStop and if they go out of business that would be great karma!

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thenephariouson

They need to strike deals with MS, Sony and Nintendo in order that they are allowed to sell Digital game codes/Licences, this would be a good start.

Avatar image for dzimm
dzimm

@thenephariouson: They do sell digital codes

Avatar image for silverman2020
silverman2020

Not being pieces of shit to their employees and forcing them to feel like total douches by busting their balls if they don’t push enough of their anti-consumer bullshit would be a start. GameStop should die and i’m Very happy to see the writing on the wall, and see them totally misinterpret it.

Avatar image for jenovaschilld
jenovaschilld

Uh for some reason I cannot put a link to an article at gameindustrynews.biz made for those in the gaming industry. but here try this link or simply copy paste if you can

https://www.gamesindustry.biz/articles/2019-09-11-gamestop-ps5-and-project-scarlett-wont-shut-us-out-with-digital-sales

https://www.gamesindustry.biz/articles/2019-09-11-gamestop-ps5-and-project-scarlett-wont-shut-us-out-with-digital-sales

Should gamestop be in business or stay in business ???? Not sure myself. They do need transparency and better practices. I personally shop on Amazon since i have prime- great deal btw.

Is physical going away ... not this gen or probably 9th gen either. Digital licenses or digital games (since you actually do not own shit, but a temporary license) is much more profitable to publishers and platform holders. But until they lower their prices on AAA/new games compared to physical - ill take physical any day. At least with physical you can still barter, trade, resale, give to family, friends cooworkers, or even put it on craigslist for a hand job. Right after you buy a new $60 digital game it is then worth ZERO value, it is just permission given to that holder for whatever time or access that publisher decides. I also have Suikoden 1, and 2 in original cases/ manuals - which has a much higher value now then in did in the past. digital continues to have zero value. I also like the old jewel cases, manuals, etc.

Avatar image for naruto945
naruto945

$5 store credit every game you preorder and then buy if you’re a rewards member. BAM thank me later

Avatar image for chippiez
Chippiez

@naruto945: $10 if you want to compete with Amazon.

Avatar image for Thanatos2k
Thanatos2k

So really they have no plan, other than to pressure employees even more to shill for subscriptions, preorders, and tradeins.

Avatar image for jinzo9988
jinzo9988

They have to do what everyone else isn't doing to be successful. They're one of if not the only chain that has brick and mortar shops everywhere and who are for the most part gaming only. If I want an upcoming new game, I can pre-order on Amazon and never leave the house as I get it delivered. If I want the most for my used game, I can sell it online for more than what Gamestop will pay me for it (and I get paid actual money, not fucking store credit). If I want the best value for a particular game I'm looking for used, I could probably find it online cheaper than what Gamestop is going to sell it to me for. If I want to buy a game, I have access to practically limitless stock online. All this without being harassed into buying like 7 other things by another person.

You know what online doesn't allow me to do? Play a brand new release on a kiosk to see if I like it or not. Get together with friends and have a game session locally on the Switch in a comfortable area with the ability to just broadcast what we're doing on a TV via Switch dock. Exclusive promos... buy this new game and hey, get a cool exclusive keychain or some other knick knack free. They need to find those things that you can't get from online shopping and push those things.

Avatar image for Tekarukite
Tekarukite

@jinzo9988: beat me to it!

They can't rely on used-games sales as they used to. Everything is going digital.
Set up download stations so people can buy a digital copy and download it quicker than at home.

Set up gaming spaces to make it social. Buying a game could be an EVENT like it used to be.

Avatar image for Barighm
Barighm

Blah blah blah. Try this instead:

1. Stop charging new prices for busted up game boxes and scratched discs.

2. Stop lying to me and honour the sales and discount cards you sell me.

3. Enough with this bullcrap about being unable to return a used game just because I "broke the label". How the hell else was I supposed to find out the disc inside was scratched beyond readability?

4.. When you sell me an empty box with no game inside, GIVE ME A REFUND instead of treating it as a "used game" trade.

Avatar image for Terminator95
Terminator95

" Restructuring " ! 🤔

Avatar image for Tidus1012
Tidus1012

Gamestop struggle is worse than magikarp's.

Avatar image for WarGreymon77
WarGreymon77

Um... I didn't read anything in the four step plan about not forcing their employees to be annoying shills, or stop gutting brand new games... you know, the reasons people don't like Gamestop?

Avatar image for ballashotcaller
ballaShotCaller

@WarGreymon77: exactly, can't wait to go try their new "social hub" experience only to have an employee nervously ask me 10 times if they should ring me up for the game I'm trying.

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Borealys

@ballashotcaller: I just pictured that interaction in my head and audibly snorted lol

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santinegrete

Capitalizing in everything I hate, but you still sell retail. I'm divided because I don't want retail to die, ever, but a retailer that forces me to purchase preowned to execute my order is not cool.

Avatar image for chippiez
Chippiez

too little too late. Physical sales are a thing of the past. Evolve or die.

Avatar image for Tidus1012
Tidus1012

@chippiez: You wish, it's only a mith, 73% of gamers still prefers and buys physical copies.

Avatar image for Simulator_Shock
Simulator_Shock

@Tidus1012: Not really, the game industry is increasingly pushing more and more towards an all digital future and console games are heading in that direction whether you like it or not.

Avatar image for jinzo9988
jinzo9988

@Tidus1012: I prefer physical copies for my Switch, but I don't prefer physically being at their store to buy them. I just buy from Amazon since I buy other things from there anyway.

Avatar image for Barighm
Barighm

@Tidus1012: Nope. He's right. It was recently reported that digital sales surpassed the 50% mark on traditional gaming markets for the first time since they started tracking digital sales, and let's not forget they're pushing for digital stores so very, very hard with only Sony promising to continue the classical model next gen. Soon you won't really have a choice. s

So, no, the preference does not match the reality.

Avatar image for valtair
Valtair

@Barighm: Exactly like PC in the early 2000's is what is happening with consoles now. Soon you will buy digital copies of games exclusively or you won't be buying a game at all. There are already games out there that you cannot buy physical copies of and that number will only increase. The only place that will hold off on digital only for the longest is nintendo because they are the slowest to change anything about their model.

Avatar image for slakor
slakor

If they converted their stores to arcades with bars in them I would go back. Even better arcades with weed in them. As it stands now I could be perfectly happy never setting foot in another of their stores.

Avatar image for BMWPro77
BMWPro77

All I know is that they're starting the "Retro" locations in the wrong place. Why not start them in larger markets like NY/NJ/CT or Los Angeles? Tulsa, OK.? I mean why not begin in a market that they have the most exposure? This doesn't make much sense to me however I hope they are able to turn things around.

Avatar image for neurogia
Neurogia

All Gamestop needs to do is offer competitive pricing, undercut the competition, provide preorder incentives, and run proper sales. Sorry, but in its current state, no one needs Gamestop when you can get games cheaper from Amazon, WalMart, BestBuy...or even import directly from Japan.

But, the number one factor is people will always buy the cheapest price...which Gamestop never has.

Avatar image for sweet_jcs
sweet_jcs

@neurogia: Ding Ding Ding!!! All they have to do is offer the best price and people will buy there. Their sales are not actually sales for new (er) games. I preferred Amazon when they had 20% off new releases, and now with gcu gone, I've gone to the hell hole that is Walmart for my last two purchases (Fire emblem and astral chain). I think the last game I bought from GameStop was tetris effect when it was first on sale for $19.99.

Avatar image for ballashotcaller
ballaShotCaller

@neurogia: It does if you know when to look but Amazon and Best Buy have had the best deals on new games with their 20% off. This really destroyed Gamestop because any knowledgeable gamer would shop at the competitors instead. As soon as Gamestop started really going under then Best Buy and Amazon stopped their 20% off new games programs.

Avatar image for Barighm
Barighm

@ballashotcaller: Not sure what you're talking about because I've never seen a sale from GS that wasn't soundly trounced by other competitors. Amazon's used game practices blow GS out of the water, and GS doesn't have a sale that isn't approved by the major publishers, so if there is a sale going on at GS, chances are everyone else is also having it...except you can actually refund your games if they don't work everywhere else.

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ghost140

Wonder when the CEO's performance bonus kicks in.

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edargnwod

So in other words, nothing.

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