GameStop Downsizing Video Game Shelf Space

27 Aug, 2015 By: Erik Gruenwedel

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GameStop, the nation’s largest video game retail chain, is downsizing in-store space devoted to video games as it ups collectibles and trend, including action figures, T-shirts, posters, gifts and merchandise related to Hollywood movies and TV shows.

Dubbed “Loot,” the business unit started as an experiment in Australia two years ago and now represents GameStop’s fastest-growing segment, up 200% year-over-year. The retailer plans to incorporate recently acquired e-commerce site ThinkGeek into the merchandise fold as well, selling collectibles related to Marvel, “Game of Thrones,” “The Big Bang Theory,” “Star Trek,” “Star Wars,” and “Doctor Who,” among other brands.

“As we see opportunities, we will continue to remodel GameStop stores to give more linear footage to Loot merchandise and less to video games,” CEO Paul Raines said on the Aug. 27 fiscal call. “In the most recent quarter alone, those new businesses accounted for almost 23% of our gross profit and we expect to see that grow.”

Indeed, GameStop plans to leverage fan events such as Comic-Con and license movies such as Minions, Inside Out, and video game Batman: Arkham Knight. The chain expects strong sales growth in the second half of 2015, driven by entertainment launches such as Fallout 4, The Hunger Games: Mockingjay — Part 2 and upcoming blockbuster Star Wars: Episode VII — The Force Awakens.

“In a recent survey, 67% of GameStop customers indicated they plan to purchase collectibles in the next 12 months. This is a huge opportunity for us to tap into,” said Michael Hogan, EVP of strategic business and brand development.

Indeed, GameStop is targeting sales of $200 million to $250 million, not including ThinkGeek, in Loot. The category is projected to grow to more than $500 million in business globally over the next three years.

Separately, GameStop is expanding the Zing Pop Culture game/toys retail chain in Australia and Dublin, Ireland, with plans for a U.S. bow under the ThinkGeek brand.

“We know that when the consumer is at a [movie] launch, they want to get every kind of item they can related to that particular title. If you're in line for Batman, you want the Batman t-shirt, the game, the everything that there is. And of course there's always been a lack of that merchandise. So we believe that the Loot has a significant place in our stores,” CEO Raines said.

Meanwhile, second-quarter (ended Aug. 1) net income topped $25 million from $24.6 million during the previous-year period. Revenue topped $1.76 billion from $1.73 billion a year ago.

 

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