There was once a time when video games retail was dominated by in-person sales and brick-and-mortar establishments. That time is long past, and retailers big and small have had to increasingly transition with the times. Normal retail stores have had to develop serious and maintained online presence to keep up with advertising demands, as well as make supplemental sales to a wider audience. And any major brand that hasn’t already fully transitioned to a click-and-mortar model by 2020 is dead in the water. GameStop is also one of those outlets that has had to adjust.
The gaming company has been losing millions every year since their peak in the early 2000’s. Closures have become an increasingly common thing for the retailer, as they try to stem the flow of debt coming in. GameStop has now announced, across multiple sources, that the ailing retail giant will be closing another 60+ stores in January 2020.
Looking at the list of stores that GameStop has decided to close, a part of the reason has been revealed as to why. Many of these stores are located in plazas, malls and other shopping centers that just don’t have the foot traffic to keep stores profitable anymore. The growth of online retail and digital distribution has hit GameStop and it’s subsidiaries very hard.
The games retailer has had an incredibly rough few years. The stock price crashed last year after several years of losses mounted. The company also allegedly sought a buyout at one point to allow them to renegotiate outstanding debt, which in pure volume is in the hundreds of millions of dollars. No one was interested.
Subsidiaries and competitors have also felt the sting. EB Games in Australia closed 19 stores recently after rent costs became too high to keep the stores profitable. UK retailer GAME also announced the dumping of 40 locations after the worst year in British retail growth since 1995.
The company has made several attempts to reduce operating costs, chiefly by closing stores. The rebranding of several stores to focus more on eSports, collectibles and other niches has also been done to help bring in more revenue. According to the Q3 filings, GameStop posted an adjusted loss of $83.4 million for the quarter in 2019, they still have a ways to go to turn things around. Expect hundreds more stores to close by the end of 2020. But let’s get back to this latest round of shutdowns.
Stores located in 20 US states will be closing by the end of January. In total 62 stores will be closed by the end of this month. The majority of the closing stores were doing liquidation sales as of December 2019, and will all be closed by the end of the month. 7 of the stores revealed in this latest round of closures have already shuttered. You can check the whole list of the closing stores here.
It’s unfortunate for the many employees who will lose their jobs, hopefully they can all land on their feet, because they’re not getting any golden parachutes, unlike executives within these failing companies often do.