GameStop 2004 Annual Report Download - page 16

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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 oÅering 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 oÅer all major video game platforms, provide a broad assortment of video game
products and oÅer 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.
OÅering 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 oÅers 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 signiÑcantly higher gross margins than new video
game products.
Building the GameStop Brand. We currently operate most of our stores under the GameStop name and
have substantially completed the rebranding of our stores to the GameStop brand. Building the GameStop
brand has enabled us to leverage brand awareness and to capture advertising and marketing eÇciencies. 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, oÅers 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 eÅorts to be the Ñrst-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 eÇcient distribution network is essential, as a signiÑcant portion of a new title's
sales will be generated in the Ñrst 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
monitor sales trends, customer reservations and store manager feedback to ensure a high in-stock position for
each store. To assure our customers immediate access to new releases, we oÅer our customers the opportunity
to pre-order products in our stores or through our web site prior to their release.
Investing in our Information Systems and Distribution Capabilities. We employ sophisticated and fully-
integrated inventory management, store-level point of sale and Ñnancial systems and a centralized state-of-
the-art distribution facility. These systems enable us to maximize the eÇciency of the Öow of over 5,000
SKUs, improve store eÇciency, optimize store in-stock positions and carry a broad selection of inventory. Our
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