GameStop to shrink core business as gaming consoles go digital

GameStop (NYSE:GME) has announced plans to shrink its core business—selling video games—and shift the company's focus toward stores that offer other products, such as AT&T wireless service, as it considers acquiring other tech retail chains and offering new merchandise.

As Sony and Microsoft launch gaming consoles that don't require discs, shoppers no longer have to visit physical locations to purchase games, meaning GameStop has had to pivot its retail strategy toward other technology alternatives, such as Apple products and wireless cellphone services.

While the company has already expressed plans to reduce the presence of its namesake stores by 3 percent, it hopes to expand its current Technology Brands unit, with 484 locations, by 350 to 550 locations.

GameStop won approval from the courts to take over 163 locations from bankrupt RadioShack, reported Bloomberg, and the company is still looking for acquisitions, according to GameStop COO Tony Bartel.

Due to a dip in video game sales, GameStop is looking to expand into other technology segments by converting as many as 100 of its stores into one of its Technology Brands outlets. Cricket Wireless, Simply Mac and Spring Mobile, an AT&T reseller, are all part of the Technology Brands unit. There are currently 361 Spring Mobile locations owned by GameStop, as well as 63 Cricket Wireless locations and 60 Simply Mac outlets, which sell Apple computers, phones and tablets.

"What you're going to see is a significant acceleration of percentage of revenue from non-gaming sources," Bartel told Bloomberg.

By 2019 the company's Technology Brands sales will quadruple to $1.46 billion. The retailer recently announced at the annual NRF Big Show that its digital initiatives are successfully wooing millennials, resulting in the largest sales gains in six years.

Last April the gaming retailer launched the GameStop Technology Institute (GTI) to aid in the research and development processes behind creating and implementing the next generation of new, innovative business applications inside retail stores.

For more:
-See this Bloomberg article

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