Retail

GameStop to Add 28,000 Workers as Video Game Retail Thrives

GameStop Corp. (NYSE: GME) will add 28,000 holiday workers for 2015. Buying video games from brick-and-mortar retailers has not died. As a matter of fact, the business model is thriving.

Management said:

GameStop, a family of specialty retail brands that makes the most popular technologies affordable and simple, today revealed its plans to hire more than 28,000 seasonal associates nationwide as the company prepares for the upcoming holiday shopping season.

This year’s total number of seasonal hires represents an increase of approximately 12% when compared to the same period in 2014. The increase signifies GameStop’s commitment to providing exceptional service during the holidays, as the retailer gears up to provide unique and lasting solutions for every holiday customer, including new and pre-owned video game products, and collectible items sure to be on everyone’s wish list.

While the job additions are well below those of Wal-Mart Stores Inc. (NYSE: WMT), which will add 60,000, and Target Corp. (NYSE: TGT), which will add 70,000, GameStop is a much smaller company, with revenue of $9.3 billion last year and operating income of $618 million.

As video games have moved online and to smartphones, the theory was that GameStop’s business would be ruined and that the company would have to rapidly shrink. On the contrary, GameStop supports almost 6,700 locations. Management has been clever enough to sell smartphones and tablets, many of them refurbished and sharply discounted. GameStop does the same with refurbished video game platforms. It has become a huge trade-in business for people who want to turn in current products, which are then sold at well below the price of new versions of the same games.

Video games may have gone online and become part of the smartphone culture. Some of these games are free. Yet GameStop has proven that the paid part of the market continues to do better than survive. It is one of the few examples that brick-and-mortar retailers do not have to be destroyed by e-commerce.

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