GameStop 2004 Annual Report Download - page 21

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Game Informer
We publish Game Informer, a monthly video game magazine featuring reviews of new title releases, tips
and secrets about existing games and news regarding current developments in the electronic game industry.
The magazine is sold through subscription and through displays in our stores. For its February 2005 issue, the
magazine had more than 2,000,000 paid subscriptions. According to Advertising Age magazine, Game
Informer is the 26th largest consumer publication in the U.S. and had the third largest increase in paid
circulation among U.S. consumer magazines in 2004, with an increase in excess of 43%. Also, according to
Advertising Age magazine, Game Informer had the largest increase in paid circulation in 2003, with an
increase in excess of 45%. Game Informer revenues are also generated through the sale of advertising space. In
addition, we oÅer the GameStop loyalty card as a bonus with each paid subscription, providing our subscribers
with a discount on selected merchandise.
E-Commerce
We operate an electronic commerce web site at www.gamestop.com that allows our customers to buy
video game products and other merchandise on-line. The site also oÅers customers information and content
about available games, release dates for upcoming games, and access to store information, such as location and
product availability. In 2003, we entered into an arrangement with Amazon.com, Inc. under which we are the
exclusive specialty video game retailer listed on Amazon.com.
Advertising
Our stores are primarily located in high traÇc, high visibility areas of regional shopping malls and strip
centers. Given the high foot traÇc drawn past the stores themselves, we use in-store marketing eÅorts such as
window displays and ""coming soon'' signs to attract customers, as well as to promote used video game
products and subscriptions to our Game Informer magazine. Inside the stores, we feature selected products
through the use of vendor displays, ""coming soon'' or preview videos, signs, catalogs, point-of-purchase
materials and end-cap displays. These advertising eÅorts are designed to increase the initial sales of new titles
upon their release. We receive cooperative advertising and market development funds from manufacturers,
distributors, software publishers and accessory suppliers to promote their respective products. Generally,
vendors agree to purchase advertising space in one of our advertising vehicles. Once we run the advertising, the
vendor pays to us an agreed amount.
As part of our brand-building eÅorts and targeted growth strategies, in the last three years, we expanded
our newspaper advertising in certain targeted markets at certain key times of the year. In addition, we
expanded our use of radio advertising in certain markets to promote store openings. We plan to continue these
eÅorts in Ñscal 2005.
Information Management
Our operating strategy involves providing a broad merchandise selection to our customers as quickly and
as cost-eÅectively as possible. We use our inventory management systems to maximize the eÇciency of the
Öow of products to our stores, enhance store eÇciency 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 eÅectively control and minimize inventory levels. A
technologically-advanced conveyor system and Öow-through racks control costs and improve speed of
fulÑllment. 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 Ñrst-to-market distribution network, we
utilize the services of nine oÅ-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
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