GameStop has been in a rough patch recently, and the new numbers were hardly reasons to celebrate — for this past first quarter, which ended May 4th, they had a 13.3% drop in global sales. It’s even worse when you compare it to the previous year’s Q1 results: their net income fell 75%, from $28.2 million to $6.8 million. Its stock prices are plummeting to levels not seen since 2003.
As has been happening in many other chains, GameStop’s results show collectibles and digital game sales rose while other categories like hardware and physical game software fell. This isn’t just a GameStop problem. Video games are kind of in a slump right now. PS4 and Xbox One sales are down since their next generation of consoles are expected by the end of 2020. There also weren’t a lot of major games that came out between February and May.
But even the bright spots in the report don’t bring a lot of outside cheer. In particular, Sony has stopped allowing retailers like GameStop to sell digital game codes, so the nice bump they had in digital game sales is not going to remain. Plus, GameStop wanted to find a buyer to take them over, but they gave up in January because they couldn’t find an investor and/or a financial institution that would agree to a deal. So for now, GameStop has to handle its own future.
GameStop is already making some plans on changes under its new CEO. This “GameStop 2.0” plan is supposed to be a “cultural experience” — like trying out games in the store and a rewards program that provides better deals and trades on used games. They are also investing in esports.
But a big change is already happening: GameStop is closing the ThinkGeek website.
Well, they consider it “moving”, but it’s really shutting down.
While you may be quite familiar with GameStop, let’s take a trip down memory lane in regards to ThinkGeek. ThinkGeek started in 1999 and was an early merchandiser for so-called “geek” (pop culture) merchandise. GameStop acquired ThinkGeek in 2015 for $20 a share after outbidding Hot Topic. ThinkGeek opened its physical location that same year and now has about 40 locations.
Now GameStop is going to host and run all the ThinkGeek.com sales and merchandise. All sales are final and ThinkGeek.com will close on July 2nd. GameStop executives discussed this during a conference call on June 4th, and by the 7th, all the ThinkGeek.com web staff were laid off. But while ThinkGeek won’t have its own website, according to the FAQ, ThinkGeek stores will remain open.
So since the website is closing, then will the ThinkGeek stores eventually close? If the two have already been mixing and are mixing together even more now, will they still want that name? The new CEO recently said that GameStop will “still have a presence for ThinkGeek, and still have that brand at least initially, while we consolidate the backend operations” — initially being the key word here.
I do agree that it is a bit redundant to have two stores selling similar merchandise, but plenty of chains do well with multiple brands. An example is the dimly lit, loud music atmosphere of Hot Topic versus the more couture and socially aware BoxLunch.
I’ve never been to a ThinkGeek store (there’s not even one in my state), but from the pictures it looks like the GameStops I’ve been to, just spread out over the entire store versus half the store. Maybe instead of getting rid of the ThinkGeek name, they should make it like TJMaxx and Marshalls: both basically the same store, just each with a larger selection than the other for certain departments. So GameStops with a bigger emphasis on the GameStop 2.0 atmosphere could be GameStops, but locations with a larger collectibles section and that only stocks the major video game releases (unless ordered) could be ThinkGeek. Having the chain’s stores with different names may make it nicer for customers to go to the location that better serves their interests, whether it’s trying out video games or finding a cool T-shirt.
Another option is the store-in-a-store concept. An example is that many JCPenneys have a Sephora inside of it, allowing for JCPenney cards and other benefits in a smaller package. Perhaps GameStop 2.0 could have all the gaming stuff out and about and then “enter” the ThinkGeek zone if you want to browse collectibles. At least this would keep the name alive, as otherwise, I can see marketers trying to get rid of it so that they can push the idea that “GameStop = cool place for games and more” instead of “GameStop = buy games and some ThinkGeek-level collectibles”.
For me, I will admit to not missing ThinkGeek too much, as I’ve only bought from it a few times. GameStop has had the better selection for anime and video game merchandise. Prices also appeared to jump around a lot, and the free shipping was usually higher than other places like Hot Topic. But it’s sad to see ThinkGeek close a major chapter of its life, whether GameStop really does plan to fully “sunset” the brand or not.
It’s also shocking to think GameStop paid three times what GameStop’s current stock is worth for each stock of ThinkGeek just four short years ago. That kind of reminds me of Sears and Kmart, where two struggling retailers just ended up pulling each other down even more. Instead of laying off the ThinkGeek web administration, GameStop should have hired them to fix their own incredibly frustrating website. It’s 2019; why can’t I easily choose a store and browse what they have instead of having to click each item to find out? Even worse, I can’t open things in a new tab because it’s JavaScript. Get it together, GameStop!
And they need to, because it’s a long wait until Holiday 2020, and if profit continues to fall as severely as it has been (63% for year-over-year for this last quarter), neither Xbox Scarlett nor PlayStation 5 is going to patch those types of losses.