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Walmart newest player in used games

Walmart has extended an electronics trade-in program to the gaming category and will introduce the sale of refurbished games later this year in a move that could boost traffic to the entertainment department.

The program begins March 26 and positions Walmart as the newest competitor in the used game market it values at $2 billion. Customers will be able to trade in functioning video games in their original packaging and apply the value immediately towards the purchase of anything sold at Walmart and Sam’s Club, both in stores and online. The used games will be refurbished and made available for purchase later this year when a “certified pre-owned” game program is introduced in stores and online.

“Gaming continues to be an important business for us and we’re actively taking aim at the $2 billion pre-owned video game opportunity,” said Duncan Mac Naughton, Walmart’s chief merchandising and marketing officer. “When we disrupt markets and compete, our customer wins. They’ll save money on video games and have the flexibility to spend it however they want.”

Walmart’s move follows the introduction of similar programs by Best Buy and Target in 2010. However, the retailer seen as most likely to be most disrupted by Walmart’s move is GameStop. Walmart is sure to launch the program with aggressive trade-in values on used games and that could siphon traffic away from GameStop’s 6,600 stores, more than two thirds of which are in the U.S.

Walmart’s new program will be available at more than 3,100 stores nationwide and builds on the retailer’s existing trade-in programs involving tables and smartphones.
“While new releases will remain the focus of our gaming business, we’re glad to give our customers the option to buy pre-owned games,” Mac Naughton said.

The program’s launch comes as the entertainment category undergoes a transformation at Walmart. Deflation in segments such as televisions, a deceleration in the growth of tablets and the ongoing decline of music and video in physical formats has created growth challenges in the category.

Walmart had little to say about the performance of the entertainment department or gaming category specifically after the holiday season. The company said same store sales in entertainment, which includes toys, declined in the mid-single digits although data from the NPD Group showed Walmart gained share during the holiday season.

“While we were pleased with our share performance, we continued to face challenges related to ongoing entertainment industry contraction,” Walmart U.S. president and CEO Bill Simon said when Walmart reported fourth quarter results.

In contrast, GameStop had a record-setting holiday season with U.S. same store sales up 7.1% and total sales for the nine week holiday period ended January 4, up 9.3% to $3.15 billion. The results were driven by the introduction of new gaming consoles which caused sales of hardware to nearly double from the prior year and more than offset weakness in software sales.