Tomahawk, WI 03/20/2014 (Basicsmedia) – After warding off one of the largest retailers in America Best Buy Co Inc (NYSE:BBY). GameStop Corp. (NYSE:GME) is now faced with yet another challenge from consumer retail industry. The video game specialty retailer took lead in the gaming market from Best Buy in 2010 and has enjoyed good growth and profits in the years following its win against the consumer goods retailer. It now sells half of PlayStation3 and Xbox 360 which are bought in US. Wal-Mart Stores Inc (NYSE:WMT) the renowned discount retailer is now foraying into the market at a touch-point which is deeply profitable for Game Stop which trades used video games and consoles.

Why Used Games Are Still Value for Game Stop?

GameStop earns 30% of the revenues from the old games trade in segment of its business model. Besides being a large chunk of the revenues, the used games are a high margin product as it constitutes 50% of the overall gross profits for the company.

Wal-Mart is known for its cost cutting strategies and unlike many other so-called value deal offering retailers like J.C. Penney Company Inc (NYSE:JCP) it does not mark up list prices to make room for hidden profits on deals.

Would Wall-Mart Be Able To Grab A Pie Of Game Stop’s Revenues?

 

Wal-Mart Stores Inc (NYSE:WMT) currently has 10% of the market share in consumer electronics, the category under which video games fall. On the other hand, Best Buy holds a 22% share in the America consumer electronics market. It might be hard for GameStop to beat this challenge but considering the size of competitor they have crossed over in the past.

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