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GameStop Taking Big Box Used Game Competitors 'Seriously'

Paul Raines, CEO of leading used games retailer GameStop, said that the company is taking big box retailers' move into the pre-owned space "seriously," but he said rivals have had no impact on business yet.
GameStop is the leader in the used game business -- the company's July quarter saw $517 million in gross profit, and nearly half of that came from used software and hardware. In recent years, big box retailers such as Best Buy and Walmart have taken notice of used game potential, attempting to enter the used games market and take share from GameStop. But GameStop CEO Paul Raines said in a Thursday earnings call that GameStop's used sales remain strong despite rivals' efforts. "We know where all the competitors' stores are," said Raines. He added that GameStop is keeping a close eye on how those competitors are affecting business at adjacent GameStop locations. "We simply have not seen an impact," he said. Raines noted that some big box retailers have only announced plans to start dealing in used games, while others have started used game businesses, but on a very limited scale. "Of course, we take them seriously, we watch them closely. Believe us, a lot of the traffic in those competitors' stores are our guys testing the process, so we're all over that," Raines said. To fend off competitors, GameStop continues to work on initiatives like the PowerUp consumer rewards program as well as in-store digital downloads and a growing e-commerce and online digital distribution business. The retailer also sees expansion opportunities in the growing number of Blockbuster store closures as that company fights off bankruptcy. GameStop executive chairman Dan DeMatteo said, "Over the last year and a half or two years, Blockbuster has closed a lot of stores, and so has Hollywood [Video], and that has given us real estate opportunities into centers that heretofore we could not get into because they had exclusives. So that has been a positive." DeMatteo said in particular, the closure of those stores gives GameStop expansion opportunities within highly dense urban areas such as L.A., "which is a difficult real estate market." "Oftentimes what's happening is we're actually taking a piece of the Blockbuster stores, the landlords break up those stores into two or three smaller stores. So it's a positive for us to grow market share and get into markets that we heretofore couldn't get into."

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