GameStop 2011 Annual Report Download - page 22

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to invest in 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. In
fiscal 2011, we grew our digital product receipts by 57%.
•Store Opening/Closing Strategy. The Company has an analysis-driven approach to store opening and
closing decisions. We intend to continue to open new stores in targeted markets where we do not
currently have a presence and can take market-share from uncontested competitors, as well as in markets
in which we already operate where we have a demonstrated track record of successful new store openings
and have realized returns on invested capital that have exceeded our internal targets. We analyze each
market relative to target population and other demographic indices, real estate availability, competitive
factors and past operating history, if available. In some cases, these new stores may adversely impact
sales at existing stores, but our goal is to minimize the impact. On average, our new stores opened in the
past three fiscal years have had a return of original investment of less than two years. We will be
aggressive in the analysis of our existing store base to determine optimal levels of profitability and close
stores where profitability goals are not being met or where we can attempt to transfer sales to other
nearby existing stores and increase overall profits. We utilize our PowerUp Rewards loyalty program
information to determine areas that are currently underserved and also utilize our database to ensure a
high customer transfer rate from closing locations to existing locations. We opened 285 new stores and
closed 272 stores in fiscal 2011, decreasing the number of stores we opened and significantly increasing
the number of stores we closed compared to previous years. We opened 359 new stores and closed 139
stores in the 52 weeks ended January 29, 2011 (“fiscal 2010”). We opened 388 new stores and closed 145
stores in the 52 weeks ended January 30, 2010 (“fiscal 2009”). We plan to open approximately 150 new
stores and close approximately 200 stores in fiscal 2012.
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 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 50,000
games from over 14,000 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 for use
on mobile devices.
Consistently Achieving High New Release Market Share. We focus marketing efforts and store associates
on driving the sale of new release video game products, both physical and digital. We employ a variety of
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