GameStop Rolls Out New Concept Store to Penetrate $12B Market

Summer 2017 has brought many superhero-themed movies to theaters. From "Wonder Woman" to "Spider-Man: Homecoming," people have been flocking to the theaters to get in on the excitement. And yes, these franchises do make a lot of money from ticket sales, but that’s not where the money train ends.

The global collectibles category is expected to exceed $16 billion by 2019. This summer, GameStop and sister brand ThinkGeek are teaming up for a big splash, making brick-and-mortar stores "sexy again" by converting approximately 200 GameStop stores into what the company is calling its “50/50 store concept.”

The 50/50 stores will dedicate 50 percent of the retail space to video game merchandise, and the other 50 percent will showcase collectibles, which will further expand the gaming experience for shoppers.

Total Retail talked with Bob Puzon, senior vice president of merchandising for GameStop, about the retailer's new 50/50 store concept and what it means for the company's future.

Total Retail: Why launch the new 50/50 store concept?
Bob Puzon: In 2016, we continued to broaden the product mix within our global video game stores to better serve the needs of our diverse customers. Part of that included the introduction of dedicated collectibles sections in all our video game stores.

Collectibles is a $12 billion market in the U.S., and is expected to exceed $16 billion by 2019. This category provides a natural extension to our video game business through exclusive and unique pop culture merchandise representing top licensed franchises, including Star Wars, Star Trek, Pokémon, Marvel and DC Comics, and Harry Potter to name a few.

We know that 45 percent of our PowerUp Rewards loyalty members spend more than $300 per year on pop culture and collectibles merchandise, so we already had a significant number of customers interested in purchasing collectibles in our GameStop stores each year. We saw this as an opportunity to find new ways to increase the traffic flow into our stores.

TR: What was the motivating factor behind this new in-store strategy?
BP: Since first entering the category in 2014, our global collectibles business has continued to represent our fastest-growing business segment. In 2016, this business generated close to $500 million in sales, an increase of nearly 60 percent vs. 2015. We anticipate this business continuing to grow, and becoming a $1 billion business by 2019.

Our customers told us they liked the fact we were offering unique collectibles products within our video game stores, as it offered them the opportunity to extend their excitement for their favorite video game franchise through the purchase of branded apparel, backpacks, housewares and other unique items.

Also, we believe increasing our collectibles footprint inside our GameStop video game stores will help bring in incremental revenue and margin growth opportunity by offering new products that meet the needs of our customers.

TR: Is GameStop seeing a trend where customers are embracing their “inner geek"? How do collectibles fit into this trend?
BP: Yes. Narrowly defined, collectibles is a $12 billion industry in the U.S., slightly larger than the physical video games category. We believe this category should exceed $16 billion by 2019.

As I mentioned previously, our collectibles business helps extend the gaming experience for our customers by allowing them to connect at a deeper level with their favorite game title and/or franchise through unique merchandise such as pop vinyl’s, apparel or statues of characters from the game.

As the premier provider of pop culture products that appeal to our customers’ interests, we believe we're positioned to grow the profitability of our video game stores by expanding the types of collectibles we offer in our stores.

TR: How many 50/50 stores are planned to roll out this year?
BP: For 2017, we're planning to convert approximately 200 GameStop video game stores into what we're calling our 50/50 video game and collectibles store concept.

TR: Why is GameStop concentrating on brick-and-mortar at a time when so many other retailers seem to be closing stores and shifting focus to e-commerce?
BP: We believe physical stores are still viable for the retail industry.

While we offer customers access to our robust omnichannel strategy, our physical retail stores are where the real magic of video gaming takes place. Our stores and associates create a social community where gamers can experience gaming innovation. You cannot experience the knowledge and expertise of our store associates in an online environment.

TR: How will collectibles help GameStop grow in the future?
BP: Our global Collectibles business is part of our ongoing transformation efforts in where we're continuing to expand our business beyond the physical video game category by entering new multibillion-dollar retail categories, and make physical retail sexy again.

We believe we have a lot of room for growth in this multibillion-dollar category. We currently have an estimated 3 percent market share, and the business continues to represent our fastest-growing segment.

In addition to expanding the collectibles sections within our GameStop video game stores, we will offer customers access to unique collectibles products through our robust omnichannel strategy, exclusive customer offers through our PowerUp Rewards loyalty program, the opening of new ThinkGeek collectibles stores, and securing licensing agreements with some of the world’s top franchises, including Star Wars, Harry Potter and Pokémon, to name a few.