By Tom Paquin
As a college student, I had the decidedly unglamorous job of overseeing the launch of the Nintendo Wii as a shift manager at GameStop. Due to a variety of supply chain challenges at Nintendo, the Wii launch was notorious for a supply drought that lasted well past my tenure with the company. Several years at least. That first holiday season was brutal, as furious parents took every opportunity that they could to berate the twenty-year-old me behind the counter for not possessing the ability to generate a pile of Nintendo Wiis with the power of my mind.
This was not GameStop’s fault, but it represents the natural disadvantages that go along with being a third-party purveyor of in-demand consumer products, and one that is available to be verbally abused in the flesh. Now, nearly two decades later, on top of the natural challenges of retail, digital games downloads and online commerce has led GameStop to dramatically scale back its brick and mortar footprint.
This week, though, GameStop’s stock suddenly shot up on the news that they’d tapped Ryan Cohen of pet ecommerce site Chewy to help fortify their ecommerce business on the news that online sales had shot up by over 300% during the last holiday season.
I think this is a mistake.
Listen, digital sales are great, and the Chewy guy can certainly help GameStop increase digital sales, but there’s a reason why even Amazon is investing in brick and mortar operations. The infrastructure is there, it’s up to businesses like GameStop to use it appropriately.
GameStop is, at its heart, a boutique outfit for game sales (It should come as no surprise that their Canadian footprint still carries the name of one of their acquisitions, Electronic Boutique). While brute forcing a transition to ecommerce may seem like the most expedient way to generate funds, it ignores the fundamentals of its products.
When you buy something from GameStop (assuming you’re not buying a Mega Man keychain or something) you’re not buying a commodity, you’re buying an experience. You’re buying roughly 10-100 hours of entertainment in the form of a game, or a console. You are, ostensibly, purchasing a service. It’s tangible, it’s experiential, and it’s criminal that GameStop is not using its brick and mortar footprint to capitalize on that. Experience is just the tip of the iceberg, too! Here are some ways that GameStop could rebuild themselves as a service company:
So yes—in-store demo kiosks are not new to gaming stores. They’ve existed for years, typically installed by hardware reps that want to highlight a specific game or feature of their system. But in the land where the point of sale is so often online, a video game store should be about 70% kiosks—home-grown kiosks. Kids—being the primary consumers of games—should be compelled to come in, play around, and try before they buy. In a time of near-ubiquitous digital gaming, it’s easier than ever to have consoles ready to allow kids to play demos of whatever game they want. Smart companies (especially digitally-minded ones) would allow customers, once they reach the end of a demo, to purchase the game right from this interface.
There’s obviously a lot of back-end that would have to go in to building proprietary demo machines for a place like GameStop. You’d always want one employee manning the demo areas to keep an eye on kids, make recommendations, and answer questions. You’d likely want to tie playing to a GameStop membership, so kids wouldn’t be compelled to treat the store like an arcade. You’d also want to track plays and purchases (and services, which we’ll talk about in a minute) in a single place. With that in mind, you’ll need to consider a best-in-class customer experience tool. This, combined with some proprietary software, could completely reinvent how a company like Gamestop manages customers.
When I was a Gamestop employee, we sold a card that got you 10% off of used games and a subscription to a magazine. Not very interesting. Today, that same card…gets you 10% off of used games and a subscription to a digital version of that magazine. Redefining the footprint of a Gamestop means redefining subscriptions, too. Perhaps the subscriptions allow extended play inside the store (Gamestop’s own pasta pass) or perhaps access to a digital library of games, similar to what Microsoft has built with its own Game Pass. This one will require careful thinking about value, but should ultimately focus on loyalty, experience, and retention.
An obviously large amount of product that accounts for GameStop’s sales would be video game consoles like the Xbox and PlayStation. These things break down periodically, as do all electronic devices. An in-store service that permitted repairs alongside the typical GameStop buy-back of used merchandise (one of the tenets of their business that we haven’t talked about). By taking that a step further and offering a service alongside the buy-back, you’re building in new revenue opportunities, and, crucially, getting people into the store. Is that difficult as a third-party retailer? Of course it is, but by hiring skilled laborers (the same ones that refurbish systems at depots, another thing that GameStop already does) the potential is there.
By doubling down on digital, GameStop might think that it’s solidifying its business position for the future, but cutting and running on brick and mortar is not the recipe to success, when you already have the infrastructure in place to build an industry-defining service business. Will it require institutional changes? Yes, absolutely, but getting it right might mean the difference between success and failure.