I think amount of physical games is declining in real terms, though. I actually buy a lot of them, as one of my weaknesses are portable console systems. I've noticed that new releases are much harder to find in general now; Limited Run's entire business model is based on the fact most smaller games are digital first or digital only.

Also no, the current decisions for the retail stores make me feel like they will lose a lot of goodwill if they transition. The stores barely keep any stock on hand at all, and are increasingly being emptied of goods. I'm legitimately worried they will shutter them all soon; 3 local gamestops where I live have closed in a year or two.

I've actually seen ideas brought up that they don't necessarily have to (only) transition to digital. They already are planning to transition to selling PC parts at their physical stores; I've seen people suggest they also sell physical board games as well, which has had somewhat of a renaissance this past decade. I've definitely seen the remaining big box bookstores (pretty much Barnes and Noble at this point) move out of their core content in a similar fashion.

GameStop could also take advantage of physicality and become community spaces for eSports events or even tabletop gaming, collectible card game tournaments, etc. Basically become general "geek" stores and not just gamer stores.