Become Amazon, for one. Walmart already has an unmatchable distribution network, so that's set for them.

Regardless, on the lower end, it's still cheaper to have people get their stuff than delivering it to them.

Make game shopping fun. Don't focus on upselling/diverting customers to used copies. Just create an environment that is comfortable full of knowledgeable, non-awkward associates who know gaming's history and its present. Remind them to check their egos and their biases at the door, and simply be good salespeople that have the consumers' interest in mind. Conduct regular tournaments, and not just for Smash or Mario Kart. Speedrun tourneys are also fun. Do cosplay contests or DIY craft contests, and don't be afraid to advertise these to the local public. Be a cultural entity and rise above the standard model.

Reward customers for their used purchases and still make a killing reselling to the next. Have a buyer's reward club where any 5 new purchases gets you a free used game of any value.

There are plenty of ways to create a sustainable marketplace. The fact is, gamers are rabid consumers and place like Gamestop and Toys R Us just aren't taking advantage of that ecosystem to its fullest. It takes work and dedication and energy, but it can be done. The key is the staff. Hire well. And no, that doesn't mean the same thing as pay well. The right job with the right atmosphere will make many a great employee accept a standard or minimum wage to be part of the show.

Walmart and Target don't really have to worry much. That's because neither Toys R' Us or Gamestop have had Amazon as their primary concern. Toys R' Us went under because the last group that bought them saddled them with too much debt. Gamestop, on the other hand, is losing more sales to the big 3 console makers than it is to Amazon. Each of the big 3 has an online store where they sell games digitally. That is what is hurting Gamestop the most.

Walmart, Target and Best buy have to worry about each other as much as they have to worry about Amazon. Amazon is just another competitor. In other words the retailers are more or less fine.

Gamestop has started branching out. Do we know how much money they earned by selling retro consoles/games, and by getting the publishing rights for specific indie titles?

They'll have to shift away from normal $60 game sales and find something else to sell, because $60 game sales are shifting to digital and that will slowly continue until physical sales are irrelevant. Things they could sell are Special Editions with physical goodies (those obviously can't be bought digitally) and just stuff like video-game themed clothing, accessories and collectables.
Sony is already selling PlayStation themed stuff in their online PlayStation Gear store, if I was the boss at a gaming focused retailer I'd contact Sony to bring stuff like that to my store ASAP.

The United States is clearly "over-stored" as too much retail was built in the past 10+ years. The U.S. will no doubt go through a period of store closures and consolidation, but it won't go on forever. Stores like the Department Stores are certainly not doing well, but many other retailers are expanding.

In terms of video games retailers, Walmart, Target, Amazon and Best Buy aren't going anywhere anytime soon. Gamestop is being challenged both by the online price transparency that Amazon and others provide, as well as the trend to buy games online digitally, since this eliminates the ability to buy/sell used games. Gamestop has almost 4,000 video game stores in the U.S., and I would expect over time that number will have to come down meaningfully, but I don't necessarily think it will be a Blockbuster Video-like collapse, although that is a possible scenario.

Gamestop really got lucky with the Switch success(They havent closed a store since June 2017 in the States IIRC), because Nintendo gamers lean more towards physical than xbox/playstation (especially with that paltry 32 gb space on the console).

Their 2017 holiday was much better than the 2016 holiday as a result.

However, this only stalls the eventual shutdown temporarily, and doesn't prevent it.

Tax Amazon rightly and they will evaporate. Bezos' empire is built on unfair competition.

It's the circle of life, my friend.

Pretty sure Amazon has been getting taxed correctly for a few years now. Sales tax is collected for every state they do business in. They used to not be, but I believe they are now.

Any Tax loopholes Amazon is doing right now would be of the following nature: They plan to build a new plant and decide to built it in either Oklahoma or Tennessee. Whichever state gives them the best incentive to build there gets them. That would be their low tax payments. A state government agreeing to collect less.

That would be on the government to stop doing shit like that. I hate when I see some new bill being passed after it gets the votes it needs by basically paying states so much money to say yes. That's no different than what Amazon is doing.