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GameStop Risk Rises as It's Not So Essential After All

By Rich Duprey - Mar 24, 2020 at 12:05PM

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The video game retailer reverses its desperate stay-open policy during the pandemic.

GameStop's (GME -3.56%) controversial decision to keep its stores open during the coronavirus pandemic because it was "essential retail" was undoubtedly an effort to survive through the crisis. 

The video game retailer was already just hanging on while awaiting the console upgrade cycle to kick in later this year before the coronavirus pandemic delivered a potential death blow to the company.

Shelter-in-place orders, social distancing, and self-isolation meant even fewer gamers would visit its stores.

A man holds a video game controller holds his head in his hand.

Image source: Getty Images.

Desperate times

The retailer has since rescinded the decision to stay open and is shutting off customer access to stores. Instead, it will process online orders with a curbside pickup program and traditional e-commerce delivery.

CEO George Sherman said in a statement, "As millions of Americans look to GameStop to adjust to their new normal of increased time at home, for work, learning and play, we have implemented practices to help ensure the safety and health of our employees, customers and partners."

The new policy is an attempt to retain customer mind share of its stores at a time when they're virtually required to go online for entertainment. GameStop is undoubtedly worried that its dwindling customer base will not return once they're forced to access entertainment digitally.

The pandemic pushed GameStop to an extreme position, and having had to walk that back, it now needs the crisis to end swiftly and the upgrade cycle to arrive quickly if it is to have a chance of making it through.

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