While many traditional brick-and-mortar retailers are closing shop, GameStop is opening 25 to 50 new ThinkGeek locations this year. The retailer is opening the fourth ThinkGeek physical store in the U.S. on May 13 in New York City.

What started as an e-commerce site in 1999, ThinkGeek now has products in more than 4,000 GameStop stores, and was instrumental in helping GameStop generate more than $300 million in revenue in 2015 after it had been acquired last summer.

Mike Mauler
Mike Mauler

Mike Mauler, ‎executive vice president and president of GameStop International, explains why there are more opportunities for ThinkGeek physical stores in this exclusive interview.

How do you decide where to open brick-and-mortar ThinkGeek stores?

We look at a few things. We’re opening 25-50 stores in the U.S. this year. We have three places that we can look at for data: our ThinkGeek e-commerce sales, loot sales within our GameStop stores, and our 46 million PowerUp Rewards members to see where they’re at and what they like to purchase.

What do you look for when deciding whether to flip a GameStop store to a ThinkGeek store?

We look for high traffic locations. We’re doing a combination of flipped GameStop stores and new ThinkGeek stores. We can transfer the video game customers and start off in a location with high traffic. So far, we’ve done high traffic street or mall locations. We’ll be testing high traffic strip mall locations next.

How does GameStop’s knowledge of real estate come into play with this?

We have 6,500 stores worldwide and relationships with every major developer in 14 countries. Most locations in the U.S. are 5 to 10 minutes away from a GameStop. We have a great understanding of small box real estate, more than any other retailer. We know customers by location. We have short lease commitments. We can transfer and close quickly, we have a lot of expertise around that area, and we’re optimizing our portfolio worldwide.

What’s the New York City location like?

The New York store is an existing GameStop store. It’s a multi-floor location that’s done well in the loot category. We’re making one floor a ThinkGeek and the other will remain a GameStop. Internationally, we have a few locations like Swanson Street in Australia, where the entire basement is the Zing Pop Culture brand, and it has done extremely well. This is an extension of that, but the first multilevel example in the U.S.

Do you have a lot of multilevel GameStops in the U.S.?

Most stores in the U.S. are in strip malls, and some are in malls. The New York location is a street store in Manhattan. Internationally, we have five of those multilevel stores, including one in Canada.

How have you seen ThinkGeek impact the demographics of who comes into the stores?

When we converted stores from GameStop to ThinkGeek, we saw a large number of GameStop customers return. But also, a large number of new customers came in. In Australia, where we started in 2014, EB Games stores have a 35 percent female demographic. But we saw that number rise to 65 percent with ThinkGeek. We get them into our loyalty program and try to sell games to them as well.

Can you talk about the power of ThinkGeek’s online audience?

GameStop started physically and now has a strong omni-channel business. ThinkGeek allowed us to buy a company that’s very strong in e-commerce, has strong brands and licenses, and strength in design and manufacturing. It’s allowed us to move up the food chain in a fragmented market. Those Minecraft swords you see all over the world are a ThinkGeek exclusively licensed product. They also have Star Wars, Star Trek, and other exclusive licenses.

How do you decide between e-commerce and physical stores?

The ThinkGeek brand name was strong in the U.S. It helps the stores hit the ground running with a name people recognize. You have to be in one of the stores to see it, but consumers play with the products and interact with the different IPs. Nobody goes online and looks for a Star Trek pizza cutter, but when they go into the ThinkGeek store and see it, they can’t leave without it. There’s real power in being able to touch and interact with these products.

How do these products translate internationally?

Most of the IP in this category are brands like Star Wars, Batman, Superman, and Doctor Who, which translate well internationally. The product categories sold in the store are similar across different countries, and there are a lot of similarities with these brands. The way the customers interact with the product in stores is similar internationally. We found that 50 percent of customers that go to ThinkGeek stores weren’t previous GameStop customers.

Do PowerUp Rewards work across GameStop and ThinkGeek?

Yes. Credit from GameStop stores works at ThinkGeek. We just did a marketing email in Australian stores and the theme was to trade in games to buy something cool for your mom. This week was May the 4th Be With You for Star Wars promotions. And we knew which customers bought Star Wars Battlefront, so we were able to target them. We have everything from t-shirts, to lightsabers, to BB-8 robots and all types of figures to market to them during the largest Star Wars week of the year.

What does always having something going on in pop culture open up for you at ThinkGeek for marketing?

With video games, we have 40 or 50 big games to market around throughout the year. When you add TV shows and movies, there’s something new and exciting coming out almost every week. We’ve already had Zootopia, The Jungle Book, Batman vs. Superman, and now Captain America: Civil War open in theaters. With Game of Thrones, we had premiere night parties, and people would come in and buy Game of Thrones coffee cups. We market around these launches.

What are the best practices when it comes to e-commerce versus physical retail?

We don’t see it as e-commerce versus physical retail. We used to look at it that way, but now we see power through omni-channel. It’s not just e-commerce to the home, it’s mobile, it’s click-and-collect, web-to-store, ship-to-store. Today 40 percent of online orders are click-and-collect. We just added ship-from-store, so our entire inventory is available to consumers and we can ship a rare game straight to your house. We’re optimizing that ecosystem, and you can use trade credits online, which ties everything to the loyalty program and Game Informer.

One thing about e-commerce versus brick and mortar, we’re seeing more brick and mortar stores evolve from e-commerce. Customers demand stores. It’s similar to what we’re seeing with ThinkGeek. Customers want to interface with products.

What does that say about the power of these licenses that ThinkGeek is opening stores while retailers like Sports Authority are closing?

It’s not just about having a store, but the relevance of product and the overall customer experience. There are retailers like Bass Pro Shops that make visiting the store a cool experience. If you support the products customers want to buy with a cool retail experience, a lot of retailers that do this are finding success today.