GameStop 2005 Annual Report Download - page 14

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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 world’s largest retailer of new and used video game products and PC
entertainment software by focusing on the following strategies:
Continue to Execute Our Proven Growth Strategies. We intend to continue to execute our proven growth
strategies, including:
• Continuing the practices of Historical GameStop and EB of opening new strip center stores in our target
markets and new mall stores in selected mall locations.
• Increasing our comparable store sales and operating earnings by capitalizing on industry growth, increasing
sales of used video game products and our Game Informer magazine and increasing awareness of the
GameStop brand.
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 stores focus on
the electronic game enthusiast who demands the latest merchandise featuring the “hottest” technology immediately
on the day of release and the value-oriented customer who wants a wide selection of value-priced used video game
products. Our stores offer 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 largest retailer of used video games
in the world 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 Historical GameStop’s stores under the
GameStop name. Within the next 12 to 24 months, we intend to rebrand all of the EB 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
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