GameStop 2005 Annual Report Download - page 21

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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
The U.S. store operations of both Historical GameStop and EB have been integrated and are now managed by a
centrally-located senior vice president of stores, four vice presidents of stores and 28 regional store operations
directors. The regions are further divided into districts, each with a district manager covering an average of 14
stores. In total, there are approximately 250 districts. Our stores in Europe are managed by two vice presidents and
managing directors in each country. Our stores in Australia and Canada are managed by two vice presidents. 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 and
to maximize our profitability, we provide our employees with targeted incentive programs to drive overall sales and
sales of higher margin products. We also provide our U.S. 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 regional loss prevention managers who assist the stores 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 and buying patterns of
the store’s local market. These communications also give field management access to relevant inventory levels and
loss prevention information. We also sponsor an annual store managers’ conference in the U.S., Canada, Europe and
Australia, which we invite all video game software publishers to attend, and operate an intense educational training
program to provide our employees with information about the video game products that will be released by those
publishers in the holiday season.
Customer Service
Our store personnel provide value-added services to each customer, such as maintaining lists of regular
customers, notifying each customer by phone when new titles are available, and reserving new releases for
customers with a down payment to ensure product availability. In addition, our store personnel readily provide
product reviews to ensure customers are making informed purchasing decisions and offer help-line numbers to
increase a customer’s enjoyment of the product upon purchase.
Vendors
We purchase substantially all of our new products for U.S. stores from approximately 70 manufacturers and
software publishers and approximately five distributors. Purchases from the top ten vendors accounted for
approximately 75% of our new product purchases in fiscal 2005. Only Sony, Microsoft and Electronic Arts
(which accounted for 18%, 13% and 11%, respectively) individually accounted for more than 10% of our new
product purchases during fiscal 2005. We have established price protections and return privileges with our primary
vendors in order to reduce the risk of inventory obsolescence. In addition, we have no purchase contracts with trade
vendors and conduct business on an order-by-order basis, a practice that is typical throughout the industry. We
believe that maintaining and strengthening our long-term relationships with our vendors is essential to our
operations and continued expansion. We believe that we have very good relationships with our vendors.
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