GameStop 2006 Annual Report Download - page 28

Field Management and Staff
GameStop’s U.S. store operations are 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 260 districts. Our stores in
Europe are managed by two vice presidents and managing directors in each country. Our stores in Australia and
Canada are each managed by a vice president. Each store employs, on average, one manager, one assistant manager
and between two and ten sales associates, many of whom are part-time employees. Each store manager is
responsible for managing their personnel and the economic performance of their store. 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 daily via 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 have invested in significant management training programs for our store managers
and our district managers to enhance their business management skills. We also sponsor annual store managers’
conferences 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 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 inform customers of available resources, including Game Informer, to increase a customer’s enjoyment of the
product upon purchase.
Vendors
We purchase substantially all of our new products worldwide from approximately 75 manufacturers and
software publishers and approximately five distributors. Purchases from the top ten vendors accounted for
approximately 65% of our new product purchases in fiscal 2006. Only Microsoft Corp., Sony Computer Enter-
tainment of America, Nintendo of America and Electronic Arts, Inc. (which accounted for 14%, 13%, 11% and
10%, respectively) individually accounted for more than 10% of our new product purchases during fiscal 2006. 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 strength-
ening 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.
Competition
The electronic game industry is intensely competitive and subject to rapid changes in consumer preferences
and frequent new product introductions. In the U.S., we compete with mass merchants and regional chains,
including Wal-Mart Stores, Inc. and Target Corporation; computer product and consumer electronics stores,
including Best Buy Co., Inc. and Circuit City Stores, Inc.; other video game and PC software specialty stores
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