Given GameStop's advantage as a market leader, no one's going to expect Walmart to seize the market. But even if the retail giant was successful at securing 15% share of the pre-owned market, which is a very conservative number, this still represents $300 million in sales.
That's not what Walmart is after.
The company has made it known that new game releases will remain its focus. But management also understands that it is a low-margin business. By issuing an in-store credit for the trade-in, Walmart will be able to entice customers to purchase other items while they are in the store, higher-margin products.
What's more, it doesn't cost Walmart anything to be in this business. The company already has an electronics department that promotes new game releases. It's a perfect parallel.
But is the company now cool?
At the time of publication, the author held no position in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.