GameStop 2009 Annual Report Download - page 28

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information about the video game products that will be released by publishers in the holiday season. All video game
software publishers are invited to attend the conferences.
GameStop’s U.S. store operations are managed by a centrally-located senior vice president of stores, three vice
presidents of stores and 31 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 305 districts. Our
international operations are managed by a senior executive, with stores in Europe managed by a senior vice
president, two vice presidents and managing directors in each country and our stores in Australia and Canada each
managed by a vice president. We also employ regional loss prevention managers who assist the stores in
implementing security measures to prevent theft of our products.
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 several distributors. Purchases from the top ten vendors accounted for approximately 85%
of our new product purchases in fiscal 2009. Only Nintendo, Sony, Microsoft, Electronic Arts and Activision (which
accounted for 23%, 17%, 12%, 12%, and 11%, respectively) individually accounted for more than 10% of our new
product purchases during fiscal 2009. We have established price protections and return privileges with our primary
vendors in order to reduce our risk of inventory obsolescence. In addition, we have few purchase contracts with
trade vendors and generally conduct business on an order-by-order basis, a practice that is typical throughout the
industry. We believe that maintaining and strengthening 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. We compete with mass merchants and regional chains; computer product
and consumer electronics stores; other video game and PC software specialty stores; toy retail chains; mail-order
businesses; catalogs; direct sales by software publishers; and online retailers and game rental companies. In
addition, video games are available for sale and rental from many video stores. Video game products are also
distributed through other methods such as digital delivery. We also compete with sellers of used video game
products. Additionally, we compete with other forms of entertainment activities, including movies, television,
theater, sporting events, casual and mobile games and family entertainment centers.
In the U.S., we compete with Wal-Mart Stores, Inc. (“Wal-Mart”); Target Corporation (“Target”); Best Buy
Co., Inc. (“Best Buy”); Movie Gallery, Inc. (“Movie Gallery”); and Blockbuster, Inc. (“Blockbuster”). Competitors
in Europe include Game Group plc (“Game Group”) and its subsidiaries, which operate in the United Kingdom,
Ireland, Scandinavia, France, Spain and Portugal, and Media Markt and Carrefour, which operate throughout
Europe, and other regional hypermarket chains. Competitors in Canada include Wal-Mart, Best Buy and its
subsidiary Future Shop. In Australia, competitors include Game Group, K-Mart, Target and JB HiFi stores.
Seasonality
Our business, like that of many retailers, is seasonal, with the major portion of our sales and operating profit
realized during the fourth fiscal quarter, which includes the holiday selling season. During fiscal 2009, we generated
approximately 39% of our sales and approximately 55% of our operating earnings during the fourth quarter. During
fiscal 2008, we generated approximately 40% of our sales and approximately 56% of our operating earnings during
the fourth quarter.
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