GameStop 2010 Annual Report Download - page 25

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Table of Contents
Used Video Game Products. We believe we are the largest retailer of used video games in the world. We provide our customers with an
opportunity to trade in their used video game products in our stores in exchange for store credits which can be applied towards the purchase of other
products, primarily new merchandise. We have the largest selection (approximately 3,000 SKUs) of used video game titles which have an average
price of $16 as compared to an average price of $42 for new video game titles and which generate significantly higher gross margins than new video
game products. Our trade-in program provides our customers with a unique value proposition which is generally unavailable at mass merchants, toy
stores and consumer electronics retailers. This program provides us with an inventory of used video game products which we resell to our more
value-oriented customers. In addition, our highly-customized inventory management system allows 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 trade-in program also allows us
to be one of the only suppliers of previous generation platforms and related video games. We also operate refurbishment centers in the U.S., Canada,
Australia and Europe where defective video game products can be tested, repaired, relabeled, repackaged and redistributed back to our stores.
PC Entertainment and Other Software. We purchase PC entertainment software from over 20 publishers, including Electronic Arts, Microsoft
and Activision. We offer PC entertainment software across a variety of genres, including Sports, Action, Strategy, Adventure/Role Playing and
Simulation.
Downloadable Content and Subscription, Time and Points Cards. The proliferation of online game play through Microsoft Xbox Live, the
PlayStation Network and online PC gaming sites has led to consumer demand for subscription, time and points cards (which we call digital
currency) and digitally downloadable content for existing video games. We sell a wide variety of digital currency and we have developed technology
to sell downloadable content in our stores and on our U.S. Web site. We believe we are the leading retailer for the sale of digital currency and
downloadable content for Xbox Live and the PlayStation Network.
Accessories and Other Products. Video game accessories consist primarily of controllers, memory cards and other add-ons and, since
September 2010, the Sony Move motion controller. We also carry strategy guides, magazines and trading cards. We carry over 300 SKUs of
accessories and other products. In general, this category has higher margins than new video game and PC entertainment products.
Store Operations
As of January 29, 2011, we operated 6,670 stores, primarily under the names GameStop, EB Games and Micromania. We design our stores to
provide an electronic gaming atmosphere with an engaging and visually captivating layout. Our stores are typically equipped with several video
game sampling areas, which provide our customers the opportunity to play games before purchase, as well as equipment to play video game clips.
We use store configuration, in-store signage and product demonstrations to produce marketing opportunities both for our vendors and for us.
Our stores average approximately 1,400 square feet and carry a balanced mix of new and used video game products and PC entertainment
software. Our stores are generally located in high-traffic "power strip centers," local neighborhood strip centers, high-traffic shopping malls and
pedestrian areas, primarily in major metropolitan areas. These locations provide easy access and high frequency of visits and, in the case of strip
centers and high-traffic pedestrian stores, high visibility. We target strip centers that are conveniently located, have a mass merchant or supermarket
anchor tenant and have a high volume of customers.
Site Selection and Locations
Site Selection. Site selections for new stores are made after an extensive review of demographic data and other information relating to market
potential, competitor access and visibility, compatible nearby tenants, accessible parking, location visibility, lease terms and the location of our other
stores. Most of our stores are located in highly visible locations within malls and strip centers. In each of our geographic segments, we have a
dedicated staff of real estate personnel experienced in selecting store locations.
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