GameStop 2003 Annual Report Download - page 25

Table of Contents
Information Management
Our operating strategy involves providing a broad merchandise selection to our customers as quickly and as cost-effectively as possible. We use our inventory
management systems to maximize the efficiency of the flow of products to our stores, enhance store efficiency and optimize store in-stock and overall investment in
inventory.
Distribution.We operate a 210,000 square foot state-of-the-art distribution center in Grapevine, Texas. By operating with a centralized distribution facility, we
effectively control and minimize inventory levels. A technologically-advanced conveyor system and flow-through racks control costs and improve speed of fulfillment.
The technology used in the distribution center allows for high-volume receiving, distributions to stores and returns to vendors. Inventory is shipped to each store at least
twice a week, or daily, if necessary, in order to keep stores in supply of products. In order to support our first-to-market distribution network, we utilize the services of
eight off-site, third-party operated distribution centers that pick up products from our suppliers, repackage the products for each of our stores and ship those products to
our stores by package carriers. Our ability to rapidly process incoming shipments of new release titles and deliver them to all of our stores, either that day or by the next
morning, enables us to meet peak demand and replenish stores at least twice a week. We have purchased a new 420,000 square foot headquarters and distribution center
in Grapevine, Texas and we intend to move our distribution center operations to that facility by early 2005.
Management Information Systems.Our proprietary inventory management system and point-of-sale technology show daily sales and in-store stock by title by store.
Systems in place use this data to automatically generate replenishment shipments to each store from our distribution center in Grapevine, Texas, enabling each store to
carry a merchandise assortment uniquely tailored to its own sales mix and rate of sale. Our call lists and reservation system also provide our centralized buying staff
with information to determine order size and inventory management for store-by-store inventory allocation. We constantly review and edit our merchandise categories
with the objective of ensuring that inventory is up-to-date and meets customer needs. We use a centralized PC network-based information system based in our corporate
offices, in order to minimize initial outlay of capital while allowing for flexibility and growth as operations expand.
Our in-store point-of-sale system enables us to efficiently manage in-store transactions. This proprietary point-of-sale system has been enhanced to facilitate trade-
in transactions, including automatic look-up of trade-in prices and printing of machine-readable bar codes to facilitate in-store restocking of used video games. In
addition, our central database of all used video game products allows us to actively manage the pricing and product availability of our used video game products across
our store base and re-allocate our used video game products as necessary.
Field Management and Staff
Our United States, Puerto Rico and Guam store operations are managed by a centrally located vice president of stores, three divisional vice presidents and 13
regional store operations directors. The regions are divided into 120 districts, each with a district manager covering an average of 12 stores. Our stores in Ireland are
managed by the founders of Gamesworld Group Limited, in which we acquired a controlling interest in June 2003. Each store employs, on average, one manager, one
assistant manager and between two and ten sales associates, many of whom are part-time employees. We have cultivated a work environment that attracts employees
who are actively interested in electronic games. We seek to hire and retain employees who know and enjoy working with our products so that they are better able to
assist customers. To encourage them to sell the full range of our products, we provide our employees with targeted incentive programs to drive sales. We also provide
our employees with the opportunity to take home and try new video games, which enables them to better discuss those games with our customers. In addition,
employees are casually dressed to encourage customer access and increase the “game-oriented” focus of the stores. We also employ 13 regional loss prevention
managers who assist the field in implementing security to prevent theft of our products.
Our stores communicate with our corporate offices via daily e-mail. This e-mail allows for better tracking of trends in upcoming titles, competitor strategies and in-
stock inventory positions. In addition, this communication allows title selection in each store to be continuously updated and tailored to reflect the tastes
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