Walmart to Buy Used Video Games - Analyst Blog

Wal-Mart Stores Inc. WMT has recently announced plans to accept used video games from its customers and offer store credit in return as an initiative to expand its trade-in program. The new video game trade-in service will be rolled out on Mar 26 at more than 3100 Walmart and Sam's Club stores, both online and in-store.

The world's largest retailer will accept popular video game consoles, including Sony Corp.'s SNE PlayStation3 and Microsoft Corp.'s MSFT Xbox 360, provided they are in working condition and in their original packaging. The customers will then get a trade-in value for the games accepted by the company, which can be immediately applied towards the purchase of anything at Walmart and Sam's Club stores. Walmart will refurbish the traded-in games, label them as ‘Certified Pre-owned' and sell them later in 2014 in stores and on its website at relatively lower prices.

Walmart seeks to gain market share in the $2 billion pre-owned video game market through its trade-in program as gaming is the fastest-growing form of entertainment. Walmart started its trade-in program late last year when the company offered credits for used tablets and smartphones that could be used to purchase new devices. Apart from smartphones, tablets and video games, customers can receive credit for a wide range of products such as MP3 players, cameras and laptops through these trade-in programs.

Walmart has been struggling of late with disappointing earnings results in all the four quarters of fiscal 2014. Thus, the company is seeking new ways to boost revenue amid macro-economic headwinds like budget-strained customers, reductions in government benefits, higher taxes, tighter credit and higher group health care costs.

The move to accept used video games to its stores will help the company to combat slowing store traffic. In fact, this initiative might pose a threat to video game retailer GameStop Corp GME, as it will allow 110 million video game users to receive value for their products. Walmart currently holds a Zacks Rank #4 (Sell).