Do they? Gamestores changed from 95% being about games to 40% games and 60% merchandise and other stuff. Why sell only digital consoles anyway especially when physically sales seem to shrink on average year by year;..
I wouldn't think they make most their money from the crappy merchandise, that's to supplement sales. 'Game stores' don't exist anymore. GAME exists and is a good mix but it's mostly games they also sell digital product codes for game but not all (how they are still in business after the last year I do not know). Online stores exist for most purchases, big retails like Tesco or Sainsburys for bigger titles. CEX only exists because physical games exist. :P
If retail is to survive in the long run Sony, MS and Nintendo need to allow digital code sales for all it's games to be purchased from them. This will in turn form the digital storefronts to actually have competitive prices (which they don't). Many games on the digital stores remain RRP when physical retail from used or online stores has reduced the price of said games to £15-20, the a digital store front sale appears and the game is only reduced to how much you can get it in physical anyway.
If Overwatch was reduced to what I can buy it as used, from ebay, on the digital store, I would have bought it ages ago to get rid of the disc but it's still £16 even on sale. I bought it in 2016 for £25.