Placer Bites: Game on for GameStop & Best Buy’s Future

In this week’s Placer Bites we dive into two consumer electronics brands that have been taking some heat. But could there be sparks of something more?

In this week’s Placer Bites, we dive into two consumer electronics giants facing some intense criticism. But is it all warranted?

Starting In On GameStop

It hasn’t been an amazing 2019 for GameStop, which marked a weaker than expected Q2 earnings call with an announcement that they’d also be closing nearly 200 underperforming stores. Yet, the are some indications that Q3 may have given the brand a needed silver lining. July and August were 2.2% and 4.7% above the baseline for the period beginning with January 2018, a significant improvement from 2018 numbers where the same months were 0.1% above the baseline in July 2018 and 0.7% below in August 2018.

Diving in deeper shows this potentially positive trend even more clearly. Comparing quarterly visits nationwide year over year, saw a decrease in average daily visits in Q1 and Q2 2019. Q1 2019 saw 5.6% fewer visits than the same quarter in 2018, while Q2 saw 3.9% fewer visits than the year prior. However, looking at average daily visits in July and August compared to the Q3 2018 average shows an increase of 3.8% in 2019. 

Will this necessarily drive improved same-store sales? No.

Does it show that the company still possesses the brand equity necessary to drive a transformation? Certainly.

The Best Buy?

Best Buy beat expectations in Q2 but still suffered a drop in value with heavy concerns over the impact of tariffs on margins. But an additional concern came from growing online sales at the expense of offline performance. The question centers around how the brand will position itself via-a-vis a transition from pure offline retail to a bricks-and-clicks approach that attempts to leverage both assets.

The concern didn’t just find its basis in general fears but in declining visits to stores. Comparing traffic to the baseline for nationwide visits from January 2018 through August 2019 painted a difficult picture for the consumer electronics giant. The first six months of 2019 were below the baseline for the period. And Q3 kicked off to a slow start with 2019 visits in July 1.5% below the baseline compared to 2.5% above in 2018. Yet, August showed signs of a potential turnaround. Visits were 11.3% above the baseline for the period, besting August 2018 which rose 6.6% above. 

And this is a critical time for the retailer who is now building into the holiday period which is so critical to its offline performance. Can they overcome a week kick-off to the year to rebound in time to dominate the critical retail peak?

  1. […] itself as providing “unprecedented visibility into consumer foot traffic,” put out a positive note on GameStop. […]

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