Branding Lessons from the GameStop Squeeze

We’re over a month out from a disappointing Christmas shopping season, and GameStop hasn’t enjoyed this much free publicity in years. The retailer struggled throughout 2020 due to periods of record-low mall foot traffic and overall industry shifts towards digital downloads and away from physical game purchases. Despite this (or maybe because of it), GameStop’s stock prices have seen unprecedented growth over the past few weeks. Hedge funds bet on the retailer’s demise, only to lose billions of dollars when retail traders invested in buying up the shares themselves and sent the stocks’ value through the roof.

The situation is a little complicated, but there is more to the story than just stock trading. For marketers, there are important branding lessons that can be learned from this unexpected war on Wall Street.

 

Legacy and Nostalgia Still Have Value

It seems like there is a new announcement every week about a legacy retailer filing for bankruptcy or closing down physical stores. With childhood favorites like Toys “R” Us and Chuck E. Cheese unable to withstand pivots to ecommerce and changing COVID restrictions, it seemed like nostalgia didn’t have the value that it used to for inspiring brand loyalty and keeping consumers engaged.

However, in the case of the GameStop short, many independent investors were motivated by the opportunity to “rescue” a beloved struggling retailer just as much as they were motivated by the chance to make money. Business journalists have pointed out that Reddit, the social media platform primarily responsible for getting retail investors to jump on the tanking stocks, has a massive gamer community among its users. Topics on the website are organized into forums called “subreddits,” and the r/gaming subreddit has over 28 million subscribers.

According to TIME, “The idea that investors there would take offense to short sellers betting against the success of GameStop is easy to understand. Nostalgia, and its defense, may also play a very big role in the financial activism. Feeling targeted by predatory short sellers like Melvin Capital, Reddit users are trying to make them literally pay.”

This move demonstrates that under the right circumstances, nostalgia and legacies can still be extremely strong tools that help brands withstand difficult situations. Knowing this, brand leaders should take the opportunity to identify their most die-hard fans and strategize ways to mobilize them at times when the company really needs it.

 

There is Power in Alternative and Growing Social Media Channels

There are too many high-level marketing leaders at brands and retailers that are completely unaware of what Reddit even is or how it works. Despite the fact that social media has existed in its current form for over a decade now, marketers have a tendency to still treat it like it’s new and novel. The reality is that in 2021, it’s not enough for national brands and retailers to only be familiar with Facebook, Instagram, and Twitter. Alternative and growing platforms like Reddit and TikTok have massive followings, and marketers are losing out on valuable outreach opportunities by neglecting to learn about them.

These channels have really flexed their muscle through this short squeeze, and because fewer marketers are taking advantage of these large and engaged communities, there is less competition than on more mainstream platforms. In order to really stay ahead and nurture loyal consumers, marketers and brand leaders can’t just get comfortable with the big three social media channels – they’ll have to stay on top of growing platforms and get more experimental with their content offerings.

Most companies on the brink of bankruptcy won’t have the luck that GameStop and others recently targeted by retail investors have had. However, brands should still take important lessons away from this ongoing story, because it’s a great case study in the changing values and structures of the Internet. For brands that want to succeed in 2021 and beyond, understanding these changes is going to be more vital than ever before.

  • Brands Demonstrate Values by Sitting Out the Super Bowl
  • How Brands Created the Modern Valentine’s Day