GameStop 2011 Annual Report Download - page 31

international operations are managed by a senior executive, with stores in Europe managed by three senior vice
presidents and managing directors in each region and our stores in Australia and Canada each managed by a vice
president. We also employ regional loss prevention managers who assist the stores in implementing security
measures to prevent theft of our products.
Customer Service
Our store personnel provide value-added services to each customer, such as maintaining lists of regular
customers and reserving new releases for customers with a down payment to ensure product availability. In
addition, our store personnel readily provide product reviews to ensure customers are making informed
purchasing decisions and inform customers of available resources, including Game Informer and our e-commerce
sites, to increase a customer’s enjoyment of the product upon purchase.
Vendors
We purchase substantially all of our new products worldwide from approximately 75 manufacturers and
software publishers and several distributors. Purchases from the top ten vendors accounted for approximately
86% of our new product purchases in fiscal 2011. Only Microsoft, Nintendo, Sony, Electronic Arts and
Activision (which accounted for 17%, 16%, 15%, 13%, and 11%, respectively) individually accounted for more
than 10% of our new product purchases during fiscal 2011. We have established price protections and return
privileges with our primary vendors in order to reduce our risk of inventory obsolescence. In addition, we have
few purchase contracts with trade vendors and generally conduct business on an order-by-order basis, a practice
that is typical throughout the industry. We believe that maintaining and strengthening our long-term relationships
with our vendors is essential to our operations and continued expansion. We believe that we have very good
relationships with our vendors.
Competition
The electronic game industry is intensely competitive and subject to rapid changes in consumer preferences
and frequent new product introductions. We compete with mass merchants and regional chains; computer
product and consumer electronics stores; other video game and PC software specialty stores; toy retail chains;
mail-order businesses; catalogs; direct sales by software publishers; and online retailers and game rental
companies. In addition, video games are available for sale and rental from many video stores. Video game
products are also distributed through other methods such as digital delivery. We also compete with sellers of used
video game products. Additionally, we compete with other forms of entertainment activities, including casual
and mobile games, movies, television, theater, sporting events and family entertainment centers.
In the U.S., we compete with Wal-Mart Stores, Inc. (“Wal-Mart”); Target Corporation (“Target”);
Amazon.com, Inc. (“Amazon.com”); and Best Buy Co., Inc. (“Best Buy”). Competitors in Europe include Game
Group plc (“Game Group”) and its subsidiaries, which operate in the United Kingdom, Ireland, Scandinavia,
France, Spain and Portugal, and Media Markt and Carrefour, which operate throughout Europe, and other
regional hypermarket chains. Competitors in Canada include Wal-Mart, Best Buy and its subsidiary Future Shop.
In Australia, competitors include Game Group, K-Mart, Target and JB HiFi stores.
Seasonality
Our business, like that of many retailers, is seasonal, with the major portion of our sales and operating profit
realized during the fourth fiscal quarter, which includes the holiday selling season. During fiscal 2011, we
generated approximately 37% of our sales and approximately 53% of our operating earnings during the fourth
quarter. During fiscal 2010, we generated approximately 39% of our sales and approximately 57% of our
operating earnings during the fourth quarter.
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