By now, everyone knows that RadioShack filed bankruptcy a few weeks ago. As part of the bankruptcy, the company is closing bunch of stores and selling others to Sprint. Some of the stores that are being abandoned will transition to new owners, including GameStop.
One of GameStop's lesser-known brands, Spring Mobile, will be moving in to 163 of RadioShack's dark stores. Those stores do not sell videogames, as you might expect, but instead are AT&T authorized dealers. This 1,500 employee brand will be expanding from around 300 stores to more than 450 with this single transaction, making it a huge expansion for the company.
What is interesting about this transition is in business concept. These stores, which are currently under RadioShack's control, have for the past 10 years sold AT&T phones (and Cingular before them), along with Sprint and Verizon or T-Mobile (depending on the year). Under those circumstances, RadioShack was unable to maintain the cost of the stores, even with additional revenue options available.
This means that GameStop is hoping that, while limiting the product line available in the stores, they will be able to sell more of that product category than their previous tenants. The concept of limiting scope can be successful for retail, as other revenue options may actually be driving profits down. Over the past few years, however, RadioShack's revenue and profits came more and more from wireless sales. Here in the end, some stores reported 40% of their revenue from wireless, meaning that this isn't that big of a change in business model.
Will GameStop be able to make a successful move into stores that couldn't succeed on increasingly wireless sales with only wireless sales? What do you think? Let us know in the comments section.
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