GameStop 2008 Annual Report Download - page 20

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video game software units in the United States currently exceeds 1.5 billion units. As the substantial installed base
of video game hardware and software continues to expand, there is a growing demand for used video game products.
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 continue to be the world’s largest retailer of new and used video game products and PC
entertainment software and strengthen that position by executing the following strategies:
Continuing to Execute our Proven Growth Strategies. We intend to continue to execute our proven growth
strategies, including:
• Opening new stores in our domestic and international target markets; and
• Increasing our comparable store sales and operating earnings by capitalizing on industry growth and
increasing sales of used video game products.
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
and gift givers 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, making them the most knowledgeable
associates in the video game retail market. Our stores are equipped with several video game sampling areas, which
provide our customers with 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 believe 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 provides 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 generally unavailable at most 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. Substantially all of GameStop’s U.S. and European stores are operated under
the GameStop name, with the exception of the Micromania stores acquired in France. 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 “Edge” loyalty card and our website. The “Edge” 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 website allows our customers to buy games online and to learn about the latest video
game products and PC entertainment software and their availability in our stores. In 2007, GameStop introduced its
new brand tagline “Power to the Players” and launched a television, radio and newspaper advertising campaign to
increase awareness of the GameStop brand. In 2008, the Company expanded its advertising campaign to continue to
build brand awareness.
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