GameStop 2010 Annual Report Download - page 23

Table of Contents
these types of processes and channels to grow our digital sales base and enhance our market leadership position in the video game industry and in
the digital aggregation and distribution category.
Targeting a Broad Audience of Game Players. We have created store and online environments 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. Our online properties, including e-commerce sites and Kongregate.com, continue to
evolve to meet the needs of consumers looking to research or buy traditional boxed product video games, download the latest PC games or play
browser and casual games on their PCs or Android mobile devices.
Enhancing our Image as a Destination Location. Our stores and e-commerce sites serve as destination locations for game players and gift
givers due to our broad selection of products, compelling PowerUp Rewards loyalty programs, 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. In our stores, 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.
Kongregate.com serves as a destination for gamers seeking the latest in online game play with over 35,000 games from over 8,000 developers
in a social environment in which gamers can connect with their friends and compare achievements. Many of the favorite Kongregate games are
available through the Kongregate app in the Android marketplace for use on Android mobile devices.
Consistently Achieving High New Release Market Share. We employ a variety of rapid-response distribution methods in our efforts to be the
first-to-market and consistently in stock 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. 7