GameStop 2009 Annual Report Download - page 21

•Capitalize on Growth in Demand. While sales of new video game hardware decreased from fiscal 2008
to fiscal 2009, the customer base related to the new hardware platforms has expanded. Our sales of new
video game software and used video game products grew by approximately 1% and 18%, respectively, in
fiscal 2009 primarily due to new store growth, the acquisition of Micromania and the acceptance of used
video game products internationally. Our sales of used video game products and new video game software
grew by approximately 28% and 32%, respectively, in fiscal 2008 primarily due to new and acquired store
growth.
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.
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. This
highly efficient distribution network is essential, as a significant portion of a new title’s sales will be generated in the
first few days and weeks following its release. As the world’s largest retailer of video game products and PC
entertainment software with a proven capability to distribute new releases to our customers quickly, we believe that
we regularly receive a large allocation of popular new video game products and PC entertainment software. On a
daily basis, we actively monitor sales trends, customer reservations and store manager feedback to ensure a high in-
stock position for each store. To assist our customers in obtaining immediate access to new releases, we offer our
customers the opportunity to pre-order products in our stores or through our Web sites prior to their release.
Investing in our Information Systems and Distribution Capabilities. We employ sophisticated and fully-
integrated inventory management, store-level point of sale and financial systems and state-of-the-art distribution
facilities. These systems enable us to maximize the efficiency of the flow of over 4,500 SKUs, improve store
efficiency, optimize store in-stock positions and carry a broad selection of inventory. Our proprietary inventory
management systems enable us to maximize sales of new release titles and avoid markdowns as titles mature and
utilize electronic point-of-sale equipment that provides corporate and regional headquarters with daily information
regarding store-level sales and available inventory levels to automatically generate replenishment shipments to each
store at least twice a week. In addition, our highly-customized inventory management systems allow us to actively
manage the pricing and product availability of our used video game products across our store base and to reallocate
our inventory as necessary. Our systems enable each store to carry a merchandise assortment uniquely tailored to its
own sales mix and customer needs. Our ability to react quickly to consumer purchasing trends has resulted in a
target mix of inventory, reduced shipping and handling costs for overstocks and reduced our need to discount
products.
Expand our Digital Growth Strategy to Protect and Expand our Market Leadership Position. We currently
sell various types of products that relate to the digital category, including Xbox live, Playstation and Nintendo
network point cards, as well as prepaid digital and online timecards and digitally downloaded software. We continue
to make significant investments in e-commerce, online game development, digital kiosks and in-store and Web site
functionality to enable our customers to access digital content and eliminate friction in the digital sales and delivery
process. We plan to continue to invest in these types of processes and channels to grow our digital sales base and
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