GameStop 2011 Annual Report Download - page 25

Download and view the complete annual report

Please find page 25 of the 2011 GameStop annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

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.
Mobile Products. In 2011, we began a new category of business which we refer to as Mobile. We began to
take trades of pre-owned iPods®, iPhones®and iPads®in our U.S. stores and in certain stores in other markets.
We also began selling a small variety of tablets in 200 of our U.S. stores which come preloaded with several
digital games designed for play on tablets.
Store Operations
As of January 28, 2012, we operated 6,683 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,
including data from our PowerUp Rewards loyalty program, 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.
9