GameStop 2010 Annual Report Download - page 29

Table of Contents
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 362,000 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 improve
speed of fulfillment in both facilities. The technology used in the distribution centers allows for high-volume receiving, distributions to stores and
returns to vendors.
We distribute merchandise to our Canadian segment from two distribution centers in Brampton, Ontario. We have a distribution center near
Brisbane, Australia which supports our Australian operations and a small distribution facility in New Zealand which supports the stores in New
Zealand. European segment operations are supported by six regionally-located distribution centers in Milan, Italy; Memmingen, Germany; Arlov,
Sweden; Valencia, Spain; Dublin, Ireland; and Paris, France. We continue to invest in state-of-the-art facilities in our distribution centers as the
distribution volume, number of stores supported and returns on such investments permit.
Digital Distribution. We have developed proprietary technology to work in conjunction with both Microsoft and Sony to enable us to sell
digitally distributed game content in our stores, through our in-store kiosks and on our e-commerce sites. The downloadable content typically
available today consists of add-on content developed by publishers for existing games.
Management Information Systems. Our proprietary inventory management systems and point-of-sale technology show daily sales and in-store
stock by title by store. Our systems use this data to automatically generate replenishment shipments to each store from our distribution centers,
enabling each store to carry a merchandise assortment uniquely tailored to its own sales mix and rate of sale. Our call lists and reservation system
also provide our buying staff with information to determine order size and inventory management for store-by-store inventory allocation. We
constantly review and edit our merchandise categories with the objective of ensuring that inventory is up-to-date and meets customer needs.
To support most of our operations, we use a large-scale, Intel-based computing environment with a state-of-the-art storage area network and a
wired and wireless corporate network installed at our U.S. and regional headquarters, and a secure, virtual private network to access and provide
services to computing assets located in our stores, distribution centers and satellite offices and to our mobile workforce. This strategy has proven to
minimize initial outlay of capital while allowing for flexibility and growth as operations expand. To support certain of our international operations,
we use a mid-range, scalable computing environment and a state-of-the-art storage area network. Computing assets and our mobile workforce
around the globe access this environment via a secure, virtual private network. Regional communication links exist to each of our distribution
centers and offices in international locations with connectivity to our U.S. data center as required by our international, distributed applications.
Our in-store point-of-sale system enables us to efficiently manage in-store transactions. This proprietary point-of-sale system has been
enhanced to facilitate trade-in transactions, including automatic look-up of trade-in prices and printing of machine-readable bar codes to facilitate in-
store restocking of used video games. In addition, 13