GameStop 2009 Annual Report Download - page 26

providing our subscribers with a discount on selected merchandise. We also operate the Web site
www.gameinformer.com, which is the premier destination for moment-by-moment news, features and reviews
related to video gaming. English version results from Game Informer operations are included in the United States
segment where the majority of subscriptions and sales are generated. Other international version results from Game
Informer operations are included in the segment in which the sales are generated.
E-Commerce
We operate several electronic commerce Web sites in various countries, including www.gamestop.com,
www.ebgames.com.au, www.gamestop.ca, www.gamestop.it, and www.micromania.fr, that allow our customers
to buy video game products and other merchandise online. The sites also offer 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 geographic segment where the sales originate.
Advertising
Our stores are primarily located in high traffic, high visibility areas of regional shopping malls, strip centers
and pedestrian shopping areas. 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 distribution facilities in various locations throughout the world, with each location
strategically located to support the operations in a particular country or region. 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
our facilities 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. 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 distribution facilities also typically
support refurbishment of used products to be redistributed to our stores.
We distribute products to our U.S. stores through 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. The state-of-the-art facilities in both U.S. locations are designed to effectively control and
minimize inventory levels. Technologically-advanced conveyor systems and flow-through racks control costs and
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