GameStop is reportedly closing at least 150 stores, or about 3 percent of its locations, in response to a growing consumer preference for digital storefronts.
After a harsh 16 percent drop in store profits and a 14 percent drop in overall sales, GameStop CEO J. Paul Raines blamed a “steep decline in retail pricing” on a wider spread of holiday season discounts. But a far more likely reason is the effect of consumers turning from brick-and-mortar retail locations to the digital marketplace. The trends aren’t difficult to see: between 2009 and 2015, physical sales dropped from 80 percent to just 44 percent, while digital sales skyrocketed from 20 percent to 56 percent of the industry.
Raines said that the Nintendo Switch release “provided a dramatic lift in traffic in stores,” and believes the console “has real potential to be Wii-like in its ability to expand the gaming category from core to broad audiences.” But despite the promising performance of the new console, expecting it to become a phenomenon on the level of the Wii seems optimistic.
GameStop is countering its foundering performance with an expansion of its collectible-centric locations this year, adding 35 stores to the current total of 86 locations. Will it be enough to shore up the losses to Steam, and the respective online PlaysStation and Xbox marketplaces? Only time will tell.
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