The physical retail industry is struggling and has been for some time now. Shops were already weathering storms of increased internet shopping, and increased expenses before COVID-19 hit and shuttered thousands as countries went into lockdown. One of those companies that is struggling is GameStop, and the company is having to make more cuts. Earlier this year, GameStop announced it would be closing over 300 stores but with what has happened that number is going to rise to between 400 and 450 stores worldwide. There has also been confirmation more stores will close next year.
GameStop had tried to defy lockdown regulations earlier this year in a bid to keep trading, with the company marketing itself as an essential retail space. That went as well as you may imagine with local governments enforcing closures of the stores. Following all of this, CEO George Sherman took a 50% pay cut, while Chief Financial Officer Jim Bell took a 30% cut. Other staff were also impacted by wage cuts and inventory purchases dropped. The company was also trying to reach agreements with landlords over missed rental payments due to the pandemic.
While Gamestop saw sales rise online by 800% over the last few months that still only made up for 20% of the company’s total sales, and performance overall is down by almost 13% compared to last year. Last year, the company was already struggling and had shuttered stores already around the world. It is difficult to see how GameStop will survive long term even with a new generation of consoles on the horizon. Both Microsoft and Sony are pushing digital sales with their digital only options with the discless PS5 and Xbox Series S, which will further dampen physical sales including the second-hand market for the next generation.