GameStop 2012 Annual Report Download - page 30

Download and view the complete annual report

Please find page 30 of the 2012 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 123

  • 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
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123

Our stores communicate with our corporate offices daily via e-mail. This e-mail allows for better tracking of
trends in upcoming titles, competitor strategies and in-stock inventory positions. In addition, this electronic
communication allows title selection in each store to be continuously updated and tailored to reflect the tastes
and buying patterns of the store’s local market. These communications also give field management access to
relevant inventory levels and loss prevention information. We have invested in significant management training
programs for our store managers and our district managers to enhance their business management skills. We also
sponsor annual store managers’ conferences at which we operate intense educational training programs to
provide our employees with information about the video game products that will be released by publishers in the
holiday season. All video game software publishers are invited to attend the conferences.
GameStop’s U.S. store operations are managed by a centrally-located senior vice president of stores, four
market vice presidents of stores and 30 regional store operations directors. The regions are further divided into
districts, each with a district manager covering an average of 14 stores. In total, there are approximately 300
districts. Our international operations are managed by a senior executive, with stores in Europe managed by two
senior vice presidents, one vice president and with managing directors in each region. Our stores in Australia and
Canada are 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 over 80 manufacturers, software
publishers and several distributors. Purchases from the top ten vendors accounted for approximately 88% of our
new product purchases in fiscal 2012. Only Sony, Activision, Nintendo, Microsoft and Electronic Arts (which
accounted for 17%, 16%, 14%, 13%, and 11%, respectively) individually accounted for more than 10% of our
new product purchases during fiscal 2012. 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;
direct sales by software publishers; and online retailers and game rental companies. Video game products are
also distributed through other methods such as digital delivery. We also compete with sellers of pre-owned 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”). Competing video game specialists in
Europe include Game Retail Limited based in the United Kingdom and its Spanish affiliate, Game Stores
Iberia. Throughout Europe we also compete with major consumer electronics retailers such as Media Markt,
15