GameStop 2008 Annual Report Download - page 26

Game Informer is the twelfth largest consumer publication in the U.S. and for its February 2009 issue, the magazine
had approximately 3.5 million paid subscriptions. Game Informer revenues are also generated through the sale of
advertising space. In addition, we offer the GameStop loyalty card as a bonus with each paid subscription, providing
our subscribers with a discount on selected merchandise. Game Informer operations are included in the United
States segment where the majority of subscriptions and sales are generated.
E-Commerce
We operate an electronic commerce website at www.gamestop.com that allows our customers to buy video
game products and other merchandise online. The site also offers customers information and content about available
games, release dates for upcoming games, and access to store information, such as location and product availability.
In 2005, we entered into an arrangement with Barnes & Noble under which www.gamestop.com became the
exclusive specialty video game retailer listed on www.bn.com, Barnes & Noble’s e-commerce site. E-commerce
results are included in the United States segment where the majority of the sales originate.
Advertising
Our stores are primarily located in high traffic, high visibility areas of regional shopping malls and strip
centers. Given the high foot traffic drawn past the stores themselves, we use in-store marketing efforts such as
window displays and “coming soon” signs to attract customers, as well as to promote used video game products.
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 efforts are designed to increase
the initial sales of new titles upon their release.
On a global basis, 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.
In the last several years, as part of our brand-building efforts and targeted growth strategies, we expanded our
advertising and promotional activities in certain targeted markets at certain key times of the year. In addition, we
expanded our use of television and radio advertising in certain markets to promote brand awareness and store
openings.
Information Management
Our operating strategy involves providing a broad merchandise selection to our customers as quickly and as
cost-effectively as possible. We use our inventory management systems to maximize the efficiency of the flow of
products to our stores, enhance store efficiency and optimize store in-stock and overall investment in inventory.
Distribution. We operate a 410,000 square foot distribution center in Grapevine, Texas and a 260,000 square
foot distribution center in Louisville, Kentucky. We currently use the center in Louisville, Kentucky to support our
first-to-market distribution efforts, while our Grapevine, Texas facility supports efforts to replenish stores. In order
to enhance our first-to-market distribution network, we also utilize the services of several off-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 at the Louisville and third-party facilities and deliver those shipments to all of our stores, either that day
or by the next morning, enables us to meet peak demand and replenish stores at least twice a week.
The state-of-the-art facilities in Grapevine, Texas and Louisville, Kentucky are designed to effectively control
and minimize inventory levels. Technologically-advanced conveyor systems and flow-through racks control costs
and improve speed of fulfillment in both facilities. The technology used in the distribution centers 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. Our U.S. distribution facilities also support
refurbishment of used products to be redistributed to stores.
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