Thoughts on GameStop & AMC

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To be clear, the stock price surges for GameStop and AMC had little, if not nothing, to do with their offline traffic, online traffic, or any other normal metric. However, they do provide a good opportunity to take a deeper look at two brands in flux.

The Current Reality

Obviously, the loss of offline visits didn’t help either brand, with AMC feeling the brunt of the pandemic. Visits for the brand have been recovering, but never saw a visit gap smaller than 76.6% when comparing monthly visits year over year. Now this is understandable considering the unique impact the pandemic had on theatres and on the wider film sector.

For GameStop, the situation was also challenging. While the brand did recover to see the visit gap down to just 19.9% in August, the resurgence of COVID cases returned the visit gap to 27.1% in November and 24.1% in December.

Overall, 2020 saw monthly visits down 72.1% and 27.8% on average year over year for AMC and GameStop respectively. Yet, these numbers don’t tell the full story for either brand. For example, in January and February, the two brands saw the average monthly year-over-year gap as low as 0.7% and 2.1% respectively. While nothing to brag about, it was a much better start than many expected following a year where the same monthly average visit gap was 8.3% and 2.9%. 

The Optimist’s Case

These numbers are critical as they present a scenario where things may not be rosier than ever before, but certainly don’t guarantee doom. And this is important as it helps underscore why there could be real reason for optimism, even though both brands need to evolve.

For GameStop, the optimist’s thesis would likely center around the growing popularity of video games and the simultaneous growth in eGaming. This idea that an activity as digitally oriented as gaming could have a real offline pull may be novel, but it’s gaining traction. Should GameStop prove capable of leveraging this to create a more experiential in-store feel that makes a visit exciting enough to offset ordering online, there’s a real chance for growth. In fact, if done properly, it could position the chain in a better direction than it’s had in a long time.

For AMC, the optimistic case would likely center around a few things. Firstly, in periods of economic uncertainty, movies become an affordable means of escape and getting out of the house. And while COVID will hopefully end soon, the economic consequences will linger far longer, creating an opportunity for the chain to fill that role. Secondly, the ‘theatre’ concept has certainly not been maximized. While big blockbusters are an obvious draw, a subtle tear-jerking drama may actually be better consumed on Netflix at home. But what about sports? What about blockbuster TV shows and premiers? There’s a huge opportunity to expand the focus of theatres to reach into new areas where group viewing is a huge draw. Finally, the theatre doesn’t need to be a limited idea. Focusing on more upscale experiential viewing could create more bang for buck for visitors and the chains themselves – presenting premium opportunities where the advantage of theatre-viewing is enhanced.

The Pessimistic Perspective

For both, the pessimistic case centers around outdated concepts. We don’t need a video game store to buy video games and why go to the theatre when we have Netflix, Disney+, and seemingly 6,000 other digital streaming platforms. Obviously, there’s more to it than just this, including the costs of keeping stores running, but that’s the central challenge they’re looking to overcome.

Where Will It Go…

Like most other retail narratives, we need to be careful not to go for the simplest explanation, as it often obscures as much as it reveals. Both AMC and GameStop are facing significant challenges to reaching their fullest offline potential. Yet, both have opportunities in front of them that could lead to very successful futures. In both cases, it will likely rely on a mix of leveraging brand relationships they already have, while simultaneously pushing the boundaries of what they provide to create more evolved and enticing experiences.

Will it be easy? No. Is it possible? Of course.

Will these brands drive a turnaround? Visit Placer.ai to find out.

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