GameStop 2003 Annual Report Download - page 19

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Table of Contents
manufacturers and third-party software publishers have produced a wide variety of software titles for each of these hardware platforms. Based on internal company
estimates, we believe that the installed base of video game software units in the United States exceeds 625 million units.
PC Entertainment Software.PC entertainment software is generally sold in the form of CD-ROMs and played on multimedia PCs featuring fast processors,
expanded memories, and enhanced graphics and audio capabilities.
Business Strategy
Our goal is to enhance our position as the nation’s largest specialty retailer of new and used video game products and PC entertainment software by focusing on the
following strategies:
Targeting a Broad Audience of Game Players.We have created a store environment targeting a broad audience including the electronic game enthusiast, the casual
gamer and the seasonal gift giver. Our mall stores primarily focus on the electronic game enthusiast who demands the latest merchandise featuring the “hottest”
technology immediately on the day of release. Our strip center stores also serve the electronic game enthusiast, but focus on serving the value-oriented customer by
offering a wide selection of value-priced used video game products and the opportunity to trade in used video game products in exchange for store credits applicable to
future purchases, which, in turn, drives more sales.
Enhancing our Image as a Destination Location.Our stores serve as destination locations for game players due to our broad selection of products, knowledgeable
sales associates, game-oriented environment and unique pricing proposition. We offer all major video game platforms, provide a broad assortment of video game
products and offer a larger and more current selection of merchandise than other retailers. We provide a high level of customer service by hiring game enthusiasts and
providing them with ongoing sales training, as well as training in the latest technical and functional elements of our products and services. Our stores are equipped with
several video game sampling areas, which provide our customers the opportunity to play games before purchase, as well as equipment to play video game clips.
Offering the Largest Selection of Used Video Game Products.We are the nation’s leading provider and carry the broadest selection of used video game products for
both current and previous generation platforms. We are one of the only retailers that provide video game software for previous generation platforms, giving us a unique
advantage in the video game retail industry. The opportunity to trade in and purchase used video game products offers our customers a unique value proposition
unavailable at mass merchants, toy stores and consumer electronics retailers. We obtain most of our used video game products from trade-ins made in our stores by our
customers. Used video game products generate significantly higher gross margins than new video game products.
Building the GameStop Brand.We currently operate most of our stores under the GameStop name and are completing the rebranding of our remaining stores to the
GameStop brand. Building the GameStop brand has enabled us to leverage brand awareness and to capture advertising and marketing efficiencies. Our branding
strategy is further supported by the GameStop loyalty card and our web site. The GameStop loyalty card, which is obtained as a bonus with a paid subscription to our
Game Informer magazine, offers customers discounts on selected merchandise in our stores. Our web site allows our customers to buy games on-line and to learn about
the latest video game products and PC entertainment software and their availability in our stores.
Providing a First-to-Market Distribution Network.We employ a variety of rapid-response distribution methods in our efforts to be the first-to-market for new video
game products and PC entertainment software. We strive to deliver popular new releases to selected stores within hours of release and to all of our stores by the next
morning. This highly efficient distribution network is essential, as a significant portion of a new title’s sales will be generated in the first few days and weeks following
its release. As the largest specialty retailer of video game products and PC entertainment software in the United States, with a proven capability to distribute new
releases to our customers quickly, we believe that we regularly receive a disproportionately large allocation of popular new video game products and PC entertainment
software. On a daily basis, we actively
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